EXHIBIT 4.3.3
Form of
LEASE AGREEMENT
dated as of December 21, 1993
between
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, NATIONAL ASSOCIATION,
not in its individual capacity
except as expressly set forth herein,
but solely as Owner Trustee,
as Lessor
and
SMITH'S FOOD & DRUG CENTERS, INC.,
as Lessee
Certain rights of the Lessor under this Lease Agreement have been assigned
to, and are subject to a security interest in favor of, Wilmington Trust
Company, as Indenture Trustee, pursuant to the Trust Indenture and Security
Agreement dated as of December 21, 1993, between the Lessor and Wilmington
Trust Company, as Indenture Trustee, as such Indenture may be amended,
modified or supplemented from time to time in accordance with the
provisions thereof. This Lease Agreement has been executed in several
counterparts. To the extent, if any, that this Lease Agreement 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
Agreement may be created through the transfer or possession of any
counterpart hereof other than the "original executed counterpart," which
shall be identified as the counterpart containing the receipt therefor
executed by the Indenture Trustee on or following the signature page
thereof. See Section 21(f) for further information concerning the
respective rights of the several holders of counterparts hereof.
This counterpart is not the original executed counterpart.
TABLE OF CONTENTS
Pages
SECTION 1. Definitions 1
SECTION 2. Lease of the Leased Property; and Lease Term. 1
(a) Lease 1
(b) Lease Term 1
(c) Severance 2
(d) Descriptions 2
SECTION 3. Rent; Adjustments to Rent. 2
(a) Interim Rent 2
(b) Basic Rent 2
(c) Supplemental Rent 2
(d) Method of Payment 3
(e) Adjustments to Rent 4
(f) Computation of Adjustments 4
(g)Sufficiency of Interim Rent, Basic Rent and Supplemental
Rent 6
(h) Returned Amounts 6
SECTION 4. Net Lease. 6
SECTION 5. Use of the Premises; Relinquishment of Possession 7
(a) Use 7
(b) Termination 7
SECTION 6. Warranty of the Lessor 8
(a) Title; Quiet Enjoyment 8
(b) Disclaimer of Other Warranties 8
(c) Enforcement of Certain Warranties 9
SECTION 7. Liens 10
SECTION 8. Operation and Maintenance; Modifications 10
(a) Operation and Maintenance 10
(b) Inspection 11
(c) Modifications 12
(d) [INTENTIONALLY OMITTED] 12
(e) Title to Modifications 12
(f) Funding of the Costs of Modifications 13
(g) Removal of Property 13
(h) Trade and Other Fixtures 14
(i) Contest of Requirements of Law 15
(j) Investment Credit Pass-Through 15
SECTION 9. Event of Loss 16
(a) Notice of Condemnation, Casualty or Event of Loss 16
(b) Repair 16
(c) Event of Loss; Payment of Casualty Value 16
(d) Other Condemnation or Casualty 17
(e) Termination of Lease Term 17
(f)Application of Payments on an Event of Loss and Lease
Termination 17
(g) Application of Payments Not
Relating to a Lease Termination 18
(h) Application During Event of Default 19
(i) Temporary Condemnation 19
(j) Substitution Right 20
SECTION 10. Insurance 20
(a) Required Insurance 20
(b) Other Insurance 22
(c) Self-Insurance 22
(d) Insurance to be Commercially Available 22
SECTION 11. Rights To Assign or Sublease; Assignment
as Security; Subordination and Attornment 22
(a) Assignment by the Lessee 22
(b) Sublease by the Lessee 23
(c) Assignment by Lessor as Security for
Lessor's Obligations 24
(d) Other Assignments by the Lessor 25
(e) Attornment 25
SECTION 12. Lease Renewal 25
(a) Option for Fixed-Rate Renewal 25
(b) Fair Market Renewal Options 26
SECTION 13. Notices for Renewal; Determination of
Fair Market Rental Value 26
(a) Expiration of Basic Term 26
(b) Expiration of Renewal Terms 26
(c) Elections 27
(d) Determination of Fair Market Rental Value 27
(e) Maximum Term of Lease 27
SECTION 14. Obsolescence Or Uneconomic Usefulness Termination 27
(a) Termination Notices 27
(b) Events Prior to Termination Date 28
(c) Events on Termination Date 28
(d) Substitution 30
SECTION 15. Events of Default 34
SECTION 16. Remedies 35
(a) Remedies 35
(b) No Release 39
(c) Remedies Cumulative 39
(d) Allocation of Basic Rent 39
SECTION 17. Notices 39
SECTION 18. Successors and Assigns 40
SECTION 19. Right To Perform for Lessee 40
SECTION 20. Granting of Easements. 40
SECTION 21. Amendments and Miscellaneous 41
(a) Amendments in Writing 41
(b) Survival 41
(c) Severability of Provisions 42
(d) True Lease 42
(e) Further Assurances 42
(f) Original Lease 42
(g) GOVERNING LAW 42
(h) Headings 42
(i) Concerning the Owner Trustee 43
(j) Lien of the Indenture 43
(k) Counterpart Execution 43
(l) Estoppel Certificates 43
(m) No merger 44
(n) Recordation 44
(o) Signs 44
(p) Ground Lease 45
SCHEDULE 1 TERMS AND BASIC RENT
48
SCHEDULE 2 CASUALTY VALUES
49
SCHEDULE 3 TERMINATION VALUES
50
SCHEDULE 4 PRICING ASSUMPTIONS
51
EXHIBIT A - PROPERTY DESCRIPTION
EXHIBIT B - FORM OF WAIVER OF SURETYSHIP DEFENSES
EXHIBIT C - FORM OF LEASE ASSIGNMENT
APPENDIX A - DEFINITIONS
LEASE AGREEMENT
LEASE AGREEMENT (this "Lease") dated as of December 21, 1993, between
State Street Bank and Trust Company of California, N.A., a national banking
association, not in its individual capacity, except as expressly provided
herein, but solely as Owner Trustee under the Trust Agreement dated as of
December 21, 1993 with the Owner Participant (the "Lessor"), as Lessor, and
Smith's Food & Drug Centers, Inc., a Delaware corporation (the "Lessee"),
as Lessee.
WHEREAS, the Lessor owns the Improvements on and the Estate for Years
in the Property, and Remainderman owns the Remainderman Interest in the
Property, such interests constituting all right, title and interest in the
Property, as more fully described in Exhibit A attached hereto (such
Improvements and Estate for Years, together with any other interest of the
Lessor in the Property, as used in this Lease, the "Leased Property");
WHEREAS, the Lessee, the Lessor and the Remainderman have entered
into the Tripartite Agreement and the Lessor and Remainderman have entered
into the Option Agreement, which set forth certain rights of the Lessee,
the Lessor and the Remainderman with respect to the Property;
WHEREAS, the Lessee desires to lease from the Lessor the Leased
Property and the Lessor is willing to lease to the Lessee the Leased
Property upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. Definitions. For purposes of this Lease, capitalized
terms used herein but not defined herein shall have the meanings assigned
to them in Appendix A. Unless otherwise indicated, references in this
Lease to sections, paragraphs, clauses, appendices, schedules and exhibits
are to the same contained in or attached to this Lease.
SECTION 2. Lease of the Leased Property; and Lease Term.
(a) Lease. Upon the terms and subject to the conditions of this
Lease, the Lessor hereby leases to the Lessee and the Lessee hereby leases
from the Lessor the Leased Property.
(b) Lease Term. The term of this Lease shall be as follows:
(i) Interim Term. The interim term (herein referred to as the
"Interim Term") shall commence on the date set forth in Schedule 1
attached hereto and shall terminate at the end of the day before the
Basic Term Commencement Date.
(ii) Basic Term. The basic term (herein referred to as the
"Basic Term") shall commence on the Basic Term Commencement Date set
forth in Schedule 1 attached hereto and shall terminate on the Basic
Term Termination Date set forth in Schedule 1 attached hereto,
unless terminated prior to, or extended beyond, such Basic Term
Termination Date on the terms and conditions provided in this Lease.
(c) Severance. Pursuant to the Improvements Deed, the Improvements
in respect of the Leased Property, each Modification, and every portion
thereof have been severed from the Land on which it is located, and it is
the intention of the Lessor and the Lessee that such shall be and remain
severed, to the maximum extent permitted by Applicable Law, from such Land.
(d) Descriptions. The Leased Property is described in Exhibit A.
SECTION 3. Rent; Adjustments to Rent.
(a) Interim Rent. The Lessee shall pay to the Lessor an amount equal
to the amount set forth as "Interim Rent" set forth on Schedule 1 attached
hereto ("Interim Rent") on the Interim Rent Payment Date set forth in such
Schedule 1 for the payment thereof.
(b) Basic Rent. The Lessee shall pay to the Lessor, as basic rent
(herein referred to as "Basic Rent") for the Leased Property, the following
amounts:
(i) on each Basic Rent Payment Date occurring during the Basic
Term, an amount equal to the product of (A) the Property Cost for
the Leased Property set forth in Schedule 1 and (B) the amount set
forth under the column entitled "Applicable Percentage" on
Schedule 1 set forth opposite such Basic Rent Payment Date, in
advance or arrears as set forth in Schedule 1;
(ii) on each Basic Rent Payment Date occurring during a Fixed-
Rate Renewal Term, if any, an amount determined as provided in
Section 12(a); and
(iii) on each Basic Rent Payment Date occurring during a Fair
Market Renewal Term, if any, an amount determined as provided in
Section 12(b).
(c) Supplemental Rent. The Lessee shall pay to the Lessor, or to
whomever shall be entitled thereto, as supplemental rent (herein referred
to as "Supplemental Rent"), the following amounts:
(i) when due, any amount payable hereunder as Casualty Value
or Termination Value;
(ii) when due, amounts equal to any amounts payable by the
Lessor in respect of auxiliary payments pursuant to Section 1.14 of
the First Supplemental Indenture or Premium, if any, payable on any
Notes or under the Indenture as a result of the refunding of the
Notes pursuant to Section 2.5 or the refinancing of Notes pursuant
to Section 2.6 of the Participation Agreement or the termination of
the Lease pursuant to Section 14(c);
(iii) when due, or when no due date is specified, within 15 days
after a written demand is made on the Lessee, any amount (other than
Basic Rent or amounts payable as provided in clauses (i) and (ii)
above) that the Lessee is required to pay to, or for the account of,
the Lessor, the Owner Participant, the Remainderman, the Indenture
Trustee, the Pass Through Trustee or any Indemnitee, under this
Lease or any other Transaction Document;
(iv) on demand and, in any event, not later than the Basic Rent
Payment Date next succeeding the date such amounts shall be due and
payable hereunder, to the extent permitted by Applicable Law,
interest (computed on the same basis as interest on the Notes is
computed) on any Rent not paid when due at a rate per annum equal to
(x) in the case of such portion of Rent equal to the then due
principal, interest and premium thereon on the Notes, the Overdue
Interest Rate and (y) in the case of such portion of Rent not
described in clause (x), interest on any other Rent not paid when
due at a rate per annum equal to the Equity Interest Rate;
(v) when due, if applicable, during the Lease Term, an amount
equal to all amounts payable by the Lessor, as ground lessee, to the
Remainderman, as ground lessor, or otherwise under the Ground Lease;
and
(vi) on the Debt Refinancing Date, an amount, if any, equal to
the excess of the principal amount of the Series J Notes being
redeemed plus all accrued and unpaid interest thereon over 105% of
the original principal amount of such Series J Notes being redeemed.
(d) Method of Payment. Subject to Section 11(c) hereof, each payment
of Rent shall be made in U.S. dollars in immediately available funds no
later than 1:00 p.m., local time at the place of receipt, on the date such
payment shall be due and payable hereunder, and shall be paid either (i) in
the case of payments other than Excepted Payments, to the Lessor at its
address determined in accordance with Section 17, or at such other address
as the Lessor may specify by notice in writing to the Lessee, or (ii) in
the case of Excepted Payments, to such Person as shall be entitled to
receive such payment at such address as such Person may specify by notice
to the Lessee. If the date on which any payment of Rent is due hereunder
is not a Business Day, such payment shall be made as aforesaid on the next
succeeding Business Day, with the same force and effect as if made on the
nominal due date provided for in this Lease. Payments shall in all events
only be made within the continental United States.
(e) Adjustments to Rent. The percentages for Basic Rent, Casualty
Value and Termination Value set forth, respectively, in Schedule 1,
Schedule 2 and Schedule 3 have been calculated, in part, on the basis of
the Pricing Assumptions. If (i) the Notes are refunded or refinanced
pursuant to Section 2.5, Section 2.6 or Section 2.7 of the Participation
Agreement, (ii) the characterization of the portions of the Leased Property
by depreciation category as set forth in the Appraisal delivered pursuant
to Section 3.1(m) of the Participation Agreement is different from that
contained in the Pricing Assumptions, (iii) any of the Pricing Assumptions
with respect to the calendar date corresponding to the Closing Date, the
rate or rates of interest on, or amortization of, the Notes or the amount
of Transaction Expenses proves to have been incorrect or (iv) a Trigger
Event shall have occurred, then, and in each such case, such percentages
for Basic Rent, Casualty Value and Termination Value shall be adjusted
(upward or downward), so as to preserve the Owner Participant's Net
Economic Return (and, if in connection with a Trigger Event, in accordance
with Section 2.7(c) and Annex I of the Participation Agreement) and the
Pricing Assumptions shall be revised accordingly. Any adjustments pursuant
to this Section 3(e) shall (A) to the extent possible and not inconsistent
with the foregoing, minimize the present value cost of the Basic Rent to
the Lessee (subject to the requirements of Section 3(f)), and (B) satisfy
the provisions of Revenue Procedure 75-21, section 467(b) (2) of the Code
(as in effect at the time the adjustment is made), any other applicable
statutes, regulations, revenue procedures, revenue rulings or technical
information releases and any new requirements, if applicable, relating to
the subject matter of such revenue procedure to the same extent and in the
same manner as such provisions are satisfied under the Pricing Assumptions.
(f) Computation of Adjustments.
(i) Upon the occurrence of an event requiring adjustments to
the percentages for Basic Rent, Casualty Value and Termination Value
pursuant to Section 3(e), the Owner Participant shall make the
necessary computations on a basis consistent with that used by the
Owner Participant in the computation of the percentages for Basic
Rent, Casualty Value and Termination Value set forth, respectively,
in Schedule 1, Schedule 2, and Schedule 3, taking into account only
the event giving rise to the adjustments and the provisions of
Section 3(e) (if applicable). Subject to paragraph (ii) of this
Section 3(f), such adjustments shall be effective from and including
the date the Owner Participant shall have furnished to the Lessee a
certificate signed on behalf of the Owner Participant by a
Responsible Officer confirming that such adjustments have been
properly computed in accordance with the provisions of this Lease,
and shall remain effective until changed in consequence of any
inaccuracy discovered in the course of any verification procedure
conducted pursuant to paragraph (ii) of this Section 3(f) or in
consequence of any event occurring thereafter requiring further
adjustment pursuant to Section 3(e).
(ii) Within 60 days after the Owner Participant shall have
provided the Lessee with a certificate pursuant to paragraph (i) of
this Section 3(f), the Lessee may request that the Owner Participant
promptly furnish all information necessary to permit the
confirmation of the accuracy of the Owner Participant's computation
of the adjustments described in such certificate by an independent
accounting firm selected by the Owner Participant and reasonably
satisfactory to the Lessee (the "Qualified Accounting Firm").
Within 30 days after its receipt of such information, such Qualified
Accounting Firm either shall confirm the accuracy of such
computation or shall notify the Owner Participant and the Lessee
that such computation and the resulting adjustments proposed by the
Owner Participant are inaccurate. In the latter event, the Owner
Participant shall consult with the Lessee and such Qualified
Accounting Firm as to the proper computation of the adjustments,
whereupon the Owner Participant shall recompute the adjustments in
such a manner as shall enable such Qualified Accounting Firm to
confirm their accuracy. If such Qualified Accounting Firm is unable
to confirm the accuracy of such adjustments, then the Owner
Participant and the Lessee agree to submit the matter to a second
Qualified Accounting Firm or other independent Person acceptable to
each of them and the conclusion of such firm or other Person as to
the proper adjustments shall be conclusive and binding on the
Lessee, the Owner Participant and the Lessor. All expenses incurred
by the Owner Participant and the Lessee in connection with the
verification procedures described in this paragraph (ii) (including
the fees and expenses of the Qualified Accounting Firm, such second
Qualified Accounting Firm or such other independent Person, as the
case may be) shall be paid by the Lessee unless the verification
results in a readjustment from the original adjustment of more than
5%, provided, that the present value (calculated at 7.9% per annum)
of the Basic Rent for the remaining Interim Term and the Basic Term
proposed by the Owner Participant as of the date of the adjustment
shall also be more than 2 basis points greater than the present
value (calculated at 7.9% per annum) of the Basic Rent for the
remaining Interim Term and the Basic Term as determined by such
Qualified Accounting Firm or other independent Person, in which case
all such expenses shall be paid by the Owner Participant. Each
adjustment of the percentages for Basic Rent, Casualty Value and
Termination Value may, but need not (unless requested by the Lessee,
the Lessor or the Owner Participant), be evidenced by the execution
and delivery of a supplement to this Lease in form and substance
satisfactory to the Lessee and the Owner Participant, and shall be
effective as provided herein without regard to the date on which
such supplement to this Lease is so executed and delivered. The
Lessee, the Lessor and the Owner Participant agree that the sole
responsibility of the verifier shall be to verify the calculation of
the amount of a rent adjustment under this Section 3 and that
matters of interpretation of this Agreement are not within the scope
of the verifier's responsibilities. Any Qualified Accounting Firm
or other independent Person which takes part in the verification
procedure must agree in writing to maintain the confidentiality of
all information provided during the verification procedure, and in
no event will the Lessor be required to provide such Qualified
Accounting Firm or other independent Person with copies of any of
its tax returns.
(g) Sufficiency of Interim Rent, Basic Rent and Supplemental Rent.
The Lessee agrees that (i) the amount of the installments of Interim Rent
and Basic Rent payable on the Interim Rent Payment Date and on each Basic
Rent Payment Date, as the case may be, shall at all times be at least equal
to the aggregate amount of scheduled principal payments (other than
principal due by reason of prepayment or acceleration) and accrued interest
due and payable on such Interim Rent Payment Date, if any, or on such Basic
Rent Payment Date in respect of all Related Notes Outstanding on and as of
the date of such payment and (ii) each payment of Casualty Value or
Termination Value (when added to all other amounts required to be paid by
the Lessee under this Lease in respect of any Event of Loss or termination
of this Lease, respectively) shall at all times be at least equal to an
amount sufficient, as of the date of payment, to pay in full the principal
of and interest on all Related Notes then scheduled to be Outstanding on
and as of such date of payment.
(h) Returned Amounts. Following the receipt by the Lessor of an
indemnification agreement from the Lessee, in form and substance reasonably
satisfactory to the Lessor, the Lessor shall rebate to the Lessee any
amounts received by the Lessor from the Indenture Trustee pursuant to
Section 5.2 of the Indenture.
SECTION 4. Net Lease.
This Lease is a net lease and the Lessee hereby acknowledges and
agrees that the Lessee's obligation to pay all Rent hereunder, and the
rights of the Lessor in and to such Rent, shall be absolute, unconditional
and irrevocable and shall not be affected by any circumstance of any
character, including, without limitation: (i) any setoff, abatement,
counterclaim, suspension, recoupment, reduction, rescission, defense or
other right or claim that the Lessee may have against the Lessor, the Owner
Participant, the Remainderman, the Indenture Trustee, any Noteholder, any
vendor or manufacturer of or contractor or subcontractor for the Leased
Property or any part of any thereof, or any other Person for any reason
whatsoever; (ii) any defect in or failure of the title, merchantability,
habitability, condition, design, compliance with specifications, operation
or fitness for use of all or any part of the Leased Property; (iii) any
damage to, or removal, abandonment, dismantling, requisition, taking,
condemnation, loss, theft or destruction of all or any part of the Leased
Property or any interference, interruption or cessation in the use,
possession or quiet enjoyment of the Leased Property by the Lessee or by
any other Person for any reason whatsoever or of whatever duration; (iv)
any restriction, prevention or curtailment of or interference with any use
of all or any part of the Leased Property; (v) any insolvency, bankruptcy,
reorganization or similar proceeding by or against the Lessee, the Lessor,
the Remainderman, the Owner Participant, the Indenture Trustee or any other
Person; (vi) the invalidity, illegality or unenforceability of this Lease,
any other Transaction Document or any other instrument referred to herein
or therein or any other infirmity herein or therein or any lack of right,
power or authority of the Lessor, the Remainderman, the Lessee, the Owner
Participant, the Indenture Trustee, any Noteholder, the Pass Through
Trustee, or any other Person to enter into this Lease, any other
Transaction Document or to perform the obligations hereunder or thereunder
or consummate the transactions contemplated hereby or thereby or any
doctrine of force majeure, impossibility, frustration or failure of
consideration; (vii) the breach or failure of any warranty or
representation made in this Lease or any other Transaction Document by any
Lessee, the Lessor, the Remainderman, the Owner Participant, the Indenture
Trustee, or any other Person; or (viii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing. The Lessee
hereby waives, to the extent permitted by Applicable Law, any and all
rights that it may now have or that at any time hereafter may be conferred
upon it, by statute or otherwise, to modify, terminate, cancel, quit or
surrender this Lease or to effect or claim any diminution or reduction of
Rent payable by the Lessee hereunder, except in accordance with the express
terms hereof. The Lessee agrees that, if for any reason whatsoever this
Lease shall be terminated in whole or in part by operation of law or
otherwise, then, except as otherwise provided herein (including, without
limitation, Section 16 hereof ), the Lessee shall pay, to the maximum
extent permitted by Applicable Law, to the Lessor or any other Person
entitled thereto, an amount equal to Interim Rent, each installment of
Basic Rent and all Supplemental Rent at the time such payment would have
become due and payable in accordance with the terms hereof had this Lease
not been terminated in whole or in part. Each payment of Rent made by the
Lessee hereunder shall be final and the Lessee shall not seek or have any
right to recover all or any part of such payment from the Lessor or any
Person for any reason whatsoever except payments made in error. All
covenants, agreements and undertakings of the Lessee herein shall be
performed at its cost, expense and risk unless expressly otherwise stated.
Nothing in this Section 4 or elsewhere shall be construed as a guaranty by
the Lessee of any residual value in the Leased Property or as a guaranty of
the Notes or the Pass Through Certificates. The Lessee's absolute and
irrevocable covenant to pay Rent, as provided in this Section 4, shall not
affect the Lessee's rights, at law or in equity, otherwise to enforce the
Lessor's obligations under this Lease or any other Transaction Documents,
or to bring an action at law or in equity against the Lessor or the Owner
Participant based on such party's gross negligence (or, with respect to
claims which arise while the Lessor or the Owner Participant is present on
the Leased Property, negligence), willful misconduct, misrepresentation or
breach of contract.
SECTION 5. Use of the Premises; Relinquishment of Possession.
(a) Use. The Lessee shall use and occupy the Leased Property for any
use permitted by Applicable Law. The Lessee shall not permit any use that
constitutes a public or private nuisance or any unlawful use upon or in the
Leased Property or any portion thereof. In addition, Lessee at its option,
so long as it is in compliance with each of its obligations hereunder and
under the other Transaction Documents, may elect to not use the Leased
Property and leave it vacant, provided that (a) if Lessee is Investment
Grade, the Leased Property may not be left vacant for more than six (6)
years and (b) if Lessee is not Investment Grade, the Leased Property may
not be left vacant for more than three (3) years.
(b) Termination. Unless the Lessee has theretofore acquired the
Leased Property as provided herein, on the Lease Termination Date the
Lessee shall surrender possession of the Leased Property to the Lessor (or
to a Person specified by the Lessor to the Lessee in writing not less than
30 days prior to the Lease Termination Date unless such Lease Termination
Date results from a termination pursuant to Section 16, in which event
without prior notice). At the time of such surrender, the Leased Property
shall be free and clear of all Liens (other than Permitted Liens described
in clauses (a), (b) (c), (h) and (j) of the definition of Permitted Liens)
and in the condition and state of repair required by Section 8(a)(i), as
evidenced in part by, at the Lessor's request, (1) the delivery by the
Lessee of the Environmental Report set forth in Section 9.3 of the
Participation Agreement, and (2) an inspection by the Lessor of the Leased
Property pursuant to the terms of Section 8(b) of the Lease.
SECTION 6. Warranty of the Lessor.
(a) Title; Quiet Enjoyment. The Lessor warrants, covenants and
agrees that, unless an Event of Default shall have occurred and be
continuing the Lessee's peaceable possession, use and enjoyment of the
Leased Property in accordance with this Lease shall not be interfered with,
interrupted or disturbed by the Lessor or any other Person claiming by or
through the Lessor or acting at the direction of the Lessor (exclusive of
the Indenture Trustee).
(b) Disclaimer of Other Warranties. As among the Owner Participant,
the Indenture Trustee, the Remainderman, the Lessor and the Lessee,
execution by the Lessee of this Lease shall be conclusive proof of the
compliance of the Leased Property with all requirements of this Lease.
Except as provided in Section 6(a), the Leased Property is leased in its
present condition without representation or warranty by the Lessor and
subject to the existing state of title, to all Applicable Laws now or
hereafter in effect and, without limiting the generality of the foregoing,
to all present and future Liens (exclusive, however, of Lessor's Liens).
The Lessee has examined the Leased Property and title thereto and has found
all of the same satisfactory for all purposes. The Lessor has not made an
inspection of the Leased Property or of any fixture or other item
constituting a portion thereof, and, except as provided in Section 6(a),
the Lessor makes no warranty or representation, express or implied or
otherwise, with respect to the same or the location, use, description,
design, merchantability, habitability, fitness for use for any particular
purpose, condition or durability thereof, or as to the title thereto or
ownership thereof or otherwise, it being agreed that all risks incident
thereto are to be borne by the Lessee. In the event of any defect or
deficiency of any nature in the Leased Property or any fixture or other
item constituting a portion thereof, whether patent or latent, the Lessor
shall have no responsibility or liability with respect thereto.
Notwithstanding the foregoing, the Lessor, in its individual capacity,
warrants and represents that on the Closing Date it shall have received
whatever title to the Leased Property that was conveyed to it pursuant to
the Transaction Documents, free of Lessor's Liens attributable to it (in
its individual capacity). Nothing in this Section 6(b) shall be construed
to constitute a waiver of or operate as an estoppel of the Lessor's or the
Lessee's right to enforce any claim or right either of them may have
against any third party in connection with the acquisition, design,
structure, erection, assembly, installation, inspection, testing, start-up,
operation and maintenance of the Leased Property or any Part thereof, or as
to the quality or the material, equipment or workmanship in or of the
Leased Property or any Part thereof, nor shall anything in this Section
6(b) operate to create any rights in any third party. THE LESSOR HEREBY
DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED (OTHER THAN AS
EXPRESSLY SET FORTH HEREIN OR AS SET FORTH IN SECTION 6(a)), INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OF
HABITABILITY WITH RESPECT TO THE LEASED PROPERTY OR ANY FIXTURE OR OTHER
ITEM CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANOTHER LAW NOW OR HEREAFTER IN EFFECT OR
OTHERWISE, EXCEPT THAT THE LESSOR HEREBY REPRESENTS AND WARRANTS THAT THE
LEASED PROPERTY IS AND SHALL BE FREE OF LESSOR'S LIENS ATTRIBUTABLE TO IT.
(c) Enforcement of Certain Warranties. (i) Subject to clause (ii)
below, the Lessee hereby assigns and sets over to, and the Lessor hereby
accepts the assignment of, all of the Lessee's right, title and interest,
and estate in, to and under, any and all warranties of and other claims
against dealers, manufacturers, vendors, contractors and subcontractors
relating to the construction, use and maintenance of the Leased Property or
any portion thereof now existing or hereafter acquired (excluding from such
assignment any such warranties and claims in respect of any property title
to which is vested in the Lessee and warranties and claims which by their
terms are not assignable by Lessee without loss of any of the benefits of
such warranties or claims); provided, however, that the Lessor shall have
no obligations under, or liabilities with respect to, any such warranties
and claims.
(ii) Unless an Event of Default shall have occurred and be
continuing (i) the Lessor authorizes the Lessee (directly or through
agents), at the Lessee's expense, to assert diligently for the
Lessor's account, during the Lease Term, all of the Lessor's rights
(if any) under any applicable warranty and any other claim that the
Lessee or the Lessor may have against any vendor, manufacturer,
contractor or subcontractor with respect to the Leased Property or
any portion thereof; and (ii) any amount recovered by the Lessee
under any such warranty or other claim against any vendor,
manufacturer, contractor or subcontractor shall be applied in
accordance with Sections 9(f), (g) and (h).
(iii) Unless an Event of Default shall have occurred and be
continuing, the Lessor agrees, at the Lessee's expense, to cooperate
with the Lessee and take all action reasonably necessary as
specifically requested by the Lessee to enable the Lessee to enforce
all of the Lessee's rights (if any) under this Section 6, such
rights of enforcement to be exclusive to the Lessee and further
agrees that (unless an Event of Default shall have occurred and be
continuing) it will not, during the Lease Term, amend, modify or
waive, or take any action under, any applicable warranty and any
other claim that the Lessee may have under this Section 6 without
the Lessee's prior written consent. The Lessee agrees, at its
expense, to diligently assert all of their rights under such
warranties and any other claims that the Lessee may have against
such vendor, manufacturer, contractor or subcontractor with respect
to the Leased Property or any portion thereof. Any amount recovered
by the Lessee under any such warranty or other claim against such
vendor, manufacturer, contractor or subcontractor shall be applied
in accordance with Sections 9(f), (g) and (h) of this Lease.
SECTION 7. Liens.
The Lessee shall not directly or indirectly create, incur or suffer
to exist any Lien on or with respect to the Leased Property or the Lessor's
or Remainderman's title thereto or interest therein except Permitted Liens.
The Lessee, at its expense, shall promptly take and diligently pursue such
action as may be necessary to discharge any Lien (other than Permitted
Liens) that may arise.
SECTION 8. Operation and Maintenance; Modifications.
(a) Operation and Maintenance.
(i) The Lessee shall (aa) keep and maintain all portions of
the Leased Property in good condition and will make all repairs and
replacements necessary to keep all portions of the Leased Property
in good repair and condition consistent with the standard of
maintenance employed by the Lessee as of the Closing Date with
respect to similar properties located in the general geographic area
where the Leased Property is located, provided that nothing
contained in this Lease shall be deemed to prevent Lessee from
changing the interior configuration of the Leased Property so long
as the Leased Property continues to be maintained as specified
above; (bb) use, possess, occupy, maintain and repair the Leased
Property and make Modifications (if any) in compliance with all
Applicable Laws (including without limitation Environmental Laws)
and applicable Governmental Actions, other than any Applicable Law
or Governmental Action (x) being contested in good faith by
appropriate proceedings in accordance with the provisions of Section
8(i) or (y) prior to the last day of the Lease Term the failure to
comply with which would not have an adverse effect on the value,
utility or remaining useful life of the Leased Property except to an
insignificant extent; (cc) use, possess, service, maintain or repair
the Leased Property in all material respects as may be required to
comply in all material respects with the conditions of all insurance
policies required to be maintained pursuant to Section 10 and to
preserve warranty rights referred to in Section 6(c); (dd) use,
possess, occupy, maintain and repair the Leased Property and make
modifications in compliance in all material respects with the
obligations of Lessor relating to the Leased Property under all
Permitted Exceptions; and (ee) use, possess, service, maintain and
repair the Leased Property so as to keep the Leased Property
maintained in a manner at least equal to the care and diligence used
by the Lessee with respect to similar buildings or property owned or
leased by it and utilized in the operation of the Lessee's Business
in the general geographic area where the Leased Property is located,
provided, that with respect to the structural components of the
Leased Property, such structural components shall be maintained in a
manner at least equal to the care and diligence used by Lessee with
respect to similar property owned or leased by it wherever located.
(ii) [INTENTIONALLY OMITTED]
(iii) [INTENTIONALLY OMITTED]
(iv) The Lessee shall deliver a notice to the Lessor promptly
upon the Lessee's becoming aware of or receiving notice of the
intent by a Governmental Authority to (x) take an action that would
constitute a Condemnation, (y) investigate the Leased Property for a
material violation of Applicable Law under which liability may be
imposed on the Owner Participant or the Lessor, or (z) investigate
the Leased Property for any violation of Applicable Law under which
criminal liability may be imposed upon the Owner Participant or the
Lessor.
(b) Inspection. Upon not less than 15 days' notice to the Lessee or
immediately if an Event of Default shall have occurred and be continuing,
any of the Lessor, the Remainderman, the Owner Participant and the
Indenture Trustee and their authorized representatives shall have the right
to inspect the Leased Property (subject, in each event, to Applicable Law
and applicable confidentiality undertakings and reasonable restrictions to
access and procedures as may be established by the Lessee) at their
expense, during normal business hours and at reasonable intervals
accompanied by representatives of the Lessee designated by the Lessee;
provided, that, unless an Event of Default shall have occurred and be
continuing, any inspection hereunder shall not unreasonably interfere with,
interrupt or disturb the normal conduct of the Lessee's Business. Upon not
less than 15 days' notice to the Lessee or immediately if an Event of
Default shall have occurred and be continuing, the Lessor, the
Remainderman, the Owner Participant and the Indenture Trustee and their
respective authorized representatives shall have the right (subject, in
each event, to Applicable Law and applicable confidentiality undertakings
and reasonable procedures as may be established by the Lessee), at their
expense, to inspect the books and records of the Lessee as relating to the
Leased Property and, with the reasonable consent of the Lessee, to make
copies of and extracts therefrom (other than copies of and extracts from
proprietary data and information), and may, at their expense and upon 15
days' notice to the Lessee discuss the Lessee's affairs, finances and
accounts with Lessee's executive officers, all during normal business hours
at reasonable intervals; provided, that, unless an Event of Default shall
have occurred and be continuing, any inspection hereunder shall not
interfere with, interrupt or disturb the normal conduct of the Lessee's
Business. None of the Lessor, the Owner Participant, the Remainderman or
the Indenture Trustee shall have any duty whatsoever to make any inspection
referred to in this Section 8(b) or shall incur any liability or obligation
by reason of not making any such inspection.
(c) Modifications. The Lessee, at its expense (unless financed by
the Lessor as provided in Section 8(f)) and subject to Section 8(i), shall
make any Modification required by any Applicable Law or Governmental
Action. So long as no Event of Default or Special Default has occurred and
is continuing, the Lessee may also make any Modifications that the Lessor
agrees to finance pursuant to Section 8(f) below. So long as no Event of
Default or Special Default has occurred and is continuing, the Lessee, at
its expense (unless financed by the Lessor as provided in Section 8(f)),
from time to time may make any other Modification that the Lessee, in its
sole discretion, may deem necessary or desirable; provided, however, that
the Lessee shall not have the right to make any Modification (other than
Modifications referred to in the first sentence of this Section 8(c)) if
such Modification would diminish the value, utility or remaining useful
life of the Leased Property (other than to an insignificant extent) or
cause the Leased Property to be characterized as limited use property (as
described in Section 4.09 of Revenue Procedure 75-28 or Revenue Procedure
76-30). The Lessor shall not make any Modification prior to the Lease
Termination Date without the prior written consent of the Lessee.
(d) [INTENTIONALLY OMITTED]
(e) Title to Modifications. Title to each Modification and shall
vest as follows:
(i) in the case of each Nonseverable Modification, the Lessor
shall, to the extent permitted by Applicable Law, without further
act, effective on the date such Nonseverable Modification shall have
been completed, acquire title to such Nonseverable Modification and
the Lessee agrees to execute such deeds or other instruments
required by Applicable Law to confirm or effect such passage of
title;
(ii) in the case of each Severable Modification for which the
Lessor shall have provided or arranged financing (in whole or in
part) of the cost of such Modification by a Supplemental Financing
or an Approved Equity Financing, the Lessor shall, without further
act, effective on the date such Supplemental Financing or Approved
Equity Financing shall have been provided, acquire title to such
Modification and the Lessee agrees to execute such deeds or other
instruments required by Applicable Law to confirm or effect such
passage of title; and
(iii) in the case of each Severable Modification for which the
Lessor shall not have provided or arranged financing (in whole or in
part) of the cost of such Modification by Supplemental Financing or
an Approved Equity Financing, the Lessee shall retain title to such
Modification.
Immediately upon title to a Modification vesting in the Lessor
pursuant to subparagraph (i) or (ii) of this Section 8(e), such
Modification shall, without further act, become subject to this Lease and
be deemed part of the Leased Property for all purposes hereof. Upon
request by the Lessor or the Lessee, the Lessor and the Lessee shall
execute, acknowledge, and deliver a supplement to this Lease confirming the
addition of any Modification which, pursuant to this Section 8(e) shall
become part of the Leased Property.
Modifications title to which remains in the Lessee pursuant to
subparagraph (iii) of this Section 8(e) shall not be deemed a part of the
Leased Property and in case of a Casualty, the Lessee shall have the right
to recover the value thereof as its own loss from any insurance company
with which it has insured the same, or to claim an award in the event of
Condemnation, notwithstanding that any such Modifications might be
considered a part of the Leased Property, subject to Section 9(f).
(f) Funding of the Costs of Modifications.
(i) Based upon a request from the Lessee, the Owner
Participant may in its sole discretion make an equity investment in
any Modification, but shall have no obligation to do so, in
accordance with the procedures of this subparagraph (f). If the
Owner Participant agrees to make such an equity investment, the
Owner Participant shall finance through an equity investment in the
Lessor the costs of such Modifications referred to in any such
notice (an "Approved Equity Financing"). In connection with any
such financing, the parties shall enter into an amendment to this
Lease pursuant to which the Lessee agrees to lease the Modifications
financed by the Owner Participant pursuant to this subparagraph (i)
for a term equal to the remainder of the Basic Term and any
exercised Renewal Terms and for the Basic Rent determined in
accordance with this subparagraph (i) and otherwise on the same
terms and conditions as set forth in the Lease. Basic Rent,
Termination Value and Casualty Value shall be adjusted so that the
Basic Rent payable by the Lessee with respect to any Modifications
will provide the Owner Participant with a net economic return
comparable to the net economic return on comparable transactions
with comparable credits at the time being financed by the Owner
Participant Parent or its Affiliates as may be determined by the
Owner Participant in its sole judgment.
(ii) [INTENTIONALLY OMITTED]
(iii) If the Owner Participant does not, pursuant to this
Section 8(f), finance the entire cost of any Modification through an
equity investment in the Lessor, the Lessee may request the Lessor
to issue, and upon such request the Lessor shall execute, such
documents and instruments, in form and substance reasonably
satisfactory to the Lessor, as shall have been provided to it by the
Lessee in order to effect the issuance to one or more Persons (other
than the Lessee, Affiliates or any other Person affiliated with the
Lessee within the meaning of Section 318 of the Code or any agent
thereof) of one or more series of Additional Notes under the
Indenture, and shall use the proceeds thereof to pay the cost of
such Modification (to the extent not financed by an Approved Equity
Financing) subject to Section 9.2 of the Participation Agreement and
Section 2.13 of the Indenture (a "Supplemental Financing").
(g) Removal of Property. Subject to compliance with Applicable Law
and so long as no Event of Default shall have occurred and be continuing,
the Lessee at any time during the Lease Term may remove any Severable
Modification or any other property to which the Lessee shall have title;
provided that the Lessee, at its expense and prior to the Lease Termination
Date, shall repair any damage to the Leased Property caused by such removal
and (in the case of any removal of property not constituting a Severable
Modification) shall restore any diminishment (except to an insignificant
extent) in the value, utility or remaining useful life of the Leased
Property caused by such removal. In addition, if at any time during the
Lease Term the Lessee shall conclude that any property included in the
Leased Property in respect of which the Lessor shall have title is
unnecessary and can be removed without diminishment of the value, utility
or remaining useful life of the Leased Property, the Lessee may remove such
property and, upon such removal, without further act, title thereto shall
vest in the Lessee or in such Person as shall be designated by the Lessee,
free of the Lien of the Indenture; provided, that, at any time after the
Lessee shall have removed an aggregate of such property having an aggregate
original cost of more than $200,000, the Lessee shall give the Lessor, the
Owner Participant, the Remainderman and the Indenture Trustee written
notice that such property has been removed and pay the net proceeds of sale
of such removed property to Lessor. If any component is removed from the
Leased Property for the purpose of replacement thereof with another
component, title to such removed component shall remain in the Lessor, no
matter where such removed component is located, until such time as the
component constituting a replacement thereof shall have been incorporated
into the Leased Property, at which time, without further act, title to such
removed component shall vest in the Lessee or in such Person as shall be
designated by the Lessee, free of the Lien of the Indenture. Each such
replacement component shall be free and clear of all Liens (except
Permitted Liens), shall upon installation become a part of the Leased
Property (with title thereto vesting in the Lessor), shall be in good
operating condition as, and shall have a value, utility and remaining
useful life at least equal to, that of the component removed and the
removal thereof shall not diminish the value, utility and remaining useful
life of the Leased Property, it being assumed for purposes of this sentence
that such removed component was in the condition and state of repair
required by Section 8(a).
(h) Trade and Other Fixtures. All trade and other fixtures, personal
property, machinery, equipment and the like in the Leased Property (as
described in Schedule 9 of the Participation Agreement or Section 8(e)(iii)
of this Lease) are acknowledged by the Lessor to be the Lessee's property
and do not constitute part of the Leased Property (all such fixtures,
property, machinery, equipment and the like (other than those expressly
made subject to the Lease pursuant to a Lease Supplement) being referred to
as "Lessee's Property"). Without the Lessor's prior written approval, the
Lessee may alter or improve or substitute or remove any Lessee's Property
as it may desire, at its own expense. The Lessee shall be under no
obligation to maintain, repair or replace any such Lessee's Property in
accordance with this Lease or otherwise and the provisions of this Section
8 (other than this subparagraph (h)) shall not apply to the Lessee's
Property. Any such Lessee's Property now or hereafter made, purchased or
installed by or for the Lessee shall remain the property of the Lessee and
in case of a Casualty, the Lessee shall have the right to recover the value
thereof as its own loss from any insurance company with which it has
insured the same, or to claim an award in the event of Condemnation,
notwithstanding that any Lessee's Property might be considered a part of
the Leased Property. Without the Lessor's consent, the Lessee may remove
all or any of such Lessee's Property at any time during the Lease Term, or,
with Lessor's consent, the Lessee may abandon the same, in whole or in
part, to the Lessor at the expiration or earlier termination of the Lease
Term by vacating the Leased Property without removing the same, in which
case such property shall become part of the Leased Property for the
purposes of Section 5(b); provided that in the case of any such removal,
the Lessee shall repair any damage to the Leased Property caused by such
removal. If an Event of Loss shall have occurred, the Lessee shall be
solely entitled to any condemnation award or insurance proceeds
attributable to the Lessee's Property. The Lessor shall have the option,
exercisable at any time within 60 days prior to the end of the Lease Term,
to purchase all or any part of Lessee's Property for a purchase price equal
to the lower of the cost or the Fair Market Sales Value of such Lessee's
Property.
(i) Contest of Requirements of Law. If, with respect to any
requirement of Applicable Law or any Governmental Action relating to the
use, operation, maintenance or repair of the Leased Property or the
construction or installation of any Modification, (i) the Lessee is
contesting diligently and in good faith by appropriate proceedings such
requirement or Governmental Action, or (ii) compliance with such
requirement or Governmental Action shall have been excused or exempted by a
valid nonconforming use permit, waiver, variance, extension or forbearance
exempting the Lessee from such requirement or Governmental Action or (iii)
the Lessee shall be making a good faith effort and shall be diligently
taking appropriate steps to comply with such requirement or Governmental
Action (and if no Event of Default has occurred and is continuing, unless
the Lessee shall have posted security of a type acceptable to the Lessor in
an amount sufficient to compensate the Lessor if such Event of Default is
not cured, remedied or waived or otherwise ceases to exist), then the
failure by the Lessee to comply with such requirement or Governmental
Action shall not constitute a Default or Event of Default hereunder;
provided that such contest or noncompliance does not extend beyond the last
day of the Lease Term and does not involve (1) any danger of foreclosure,
forfeiture or loss of the Leased Property or any part thereof, (2) criminal
liability being imposed on the Lessor, the Trust, the Owner Participant,
the Remainderman, the Indenture Trustee or any Noteholder, (3) any
substantial danger of the sale of, or the creation of any Lien (other than
a Permitted Lien) on, the Leased Property, (4) material civil liability
being imposed on the Lessor, the Trust Estate, the Owner Participant, the
Remainderman, the Indenture Trustee or any Noteholder or (5) with respect
to the conditions noted in clause (ii) above, the extension of the ultimate
imposition of such Applicable Law beyond the last day of the Lease Term if
the exemption in question shall not be available to the Lessor, any
subsequent lessee or any purchaser of the Leased Property after the end of
the Lease Term. The Lessee shall provide the Lessor with notice of any
contest of the type described in clause (i) above in detail sufficient to
enable the Lessor to ascertain whether such contest would be reasonably
likely to have any adverse effect of the type described in the above
proviso.
(j) Investment Credit Pass-Through. The Lessor agrees that, upon the
reasonable request of the Lessee, it will cooperate in good faith with the
Lessee to pass through or make available to the Lessee any credit that
might be allowable for Federal income tax purposes in connection with the
acquisition, installation or use of any Modification or any repair,
construction or reconstruction of the Leased Property, in each case that is
financed by the Lessee; provided, however, in no event shall the Lessor or
the Owner Participant be required hereunder to take any action that in the
good faith judgment of the Owner Participant could adversely affect the
Lessor or the Owner Participant.
SECTION 9. Event of Loss.
(a) Notice of Condemnation, Casualty or Event of Loss.
(i) If any substantial part of the Leased Property shall
suffer a Condemnation or a Casualty the Lessee shall promptly, and
in any case within 10 Business Days after such event, so notify the
Lessor.
(ii) If an Event of Loss shall occur, then the Lessee may, at
its sole election and by written notice to the Lessor, within 180
days after the occurrence of such Event of Loss, determine whether
or not the Lessee desires to reconstruct the Leased Property
pursuant to Section 9(b); provided, however, that the Lessee may not
elect to reconstruct the Leased Property pursuant to Section 9(b)
unless an independent architect selected by the Lessee and
reasonably acceptable to the Lessor shall have determined that the
Leased Property is reasonably expected to be substantially completed
in accordance with Section 9(b) within the period ending on the
earlier of (a) the second anniversary of the date of the Event of
Loss or (b) the scheduled Lease Termination Date.
(b) Repair. If the Leased Property or any part thereof shall suffer a
Condemnation or Casualty which does not constitute an Event of Loss, or if
an Event of Loss occurs and the Lessee does not elect to terminate this
Lease pursuant to Section 9(c), the Lessee shall make or cause to be made
such repairs as are necessary to ensure that the Leased Property is
maintained in the condition and state of repair required under Section
8(a)(i) and all insurance proceeds or condemnation awards payable with
respect to such event shall be made available to Lessee to effect such
repair in accordance with Section 9(g). In such event, the Lessee shall,
within one year of the occurrence of such Condemnation or Casualty,
commence the reconstruction of the Leased Property so that the
reconstruction is completed by the earlier of (i) the second anniversary of
the Casualty and (ii) the Lease Termination Date and the resulting Leased
Property shall have a value, utility and remaining useful life at least
equal to that which the Leased Property had immediately prior to its
destruction or damage. No Rent shall be abated hereunder during the time
in which the Lessee undertakes its repairs.
(c) Event of Loss; Payment of Casualty Value. If an Event of Loss
shall occur and the Lessee does not elect to repair the Leased Property
pursuant to Section 9(b), the Lessee shall pay to the Lessor and the
Remainderman on the applicable Casualty Value Date specified below, the
Casualty Value determined as of the aforesaid Casualty Value Date to the
extent not previously paid to the Lessor or Indenture Trustee as insurance
proceeds or condemnation awards. From the date of the Event of Loss to and
including the Casualty Value Date specified below, all Rent shall continue
to accrue and be paid by the Lessee when due. Such Casualty Value shall be
paid by the Lessee on the Casualty Value Date occurring next after the 90th
day after the date of Lessee's notice pursuant to Section 9(a)(ii),
(provided, that if insurance or other proceeds have been received by the
Lessee for such Event of Loss prior to such date, such proceeds shall be
paid to the Lessor by the 30th day after receipt of such proceeds),
together with all unpaid Rent due on or before such Casualty Value Date
plus an amount equal to the reasonable fees and out-of-pocket expenses of
the Owner Participant, the Remainderman, the Lessor and the Indenture
Trustee related to such Event of Loss. The Lessee, at its own cost, shall
take all appropriate action in connection with any claim relating to an
Event of Loss and the payment of Casualty Value; however, the Lessor, the
Remainderman and the Indenture Trustee may participate in any such action
at their own cost. Upon the payment of the Casualty Value and the other
amounts payable by the Lessee specified above, the Lessor shall effect a
Transfer to the Lessee. In the event that the Lessor shall effect a
Transfer to the Lessee, neither the Lessee nor its Affiliate shall use the
Leased Property in Lessee's Business for a period of at least five (5)
years following the date of termination of this Lease, nor shall the Lessee
rebuild the Improvements to a size (measured by total rentable square feet)
which is within five percent (5%) of the size of the Improvements prior to
the Event of Loss or to the same configuration as the Improvements prior to
the Event of Loss.
(d) Other Condemnation or Casualty. In the case of a Condemnation or
Casualty not constituting an Event of Loss or with respect to which the
Lessee does not elect to terminate this Lease pursuant to Section 9(c),
this Lease shall continue, and each and every obligation of the Lessee
hereunder and under each Transaction Document shall remain in full force
and effect.
(e) Termination of Lease Term. Upon a Transfer by the Lessor to the
Lessee pursuant to Section 9(c) and the payment of the amounts specified in
the Indenture, the Notes and this Lease to the Persons entitled thereto,
the Lease Term shall end without further act on the part of the Lessor or
the Lessee and all of the obligations of the Lessee hereunder (other than
any obligation expressed herein as surviving termination of this Lease)
shall cease. In all other cases set forth in this Section 9, the Lease Term
shall continue and this Lease shall remain in full force and effect.
(f) Application of Payments on an Event of Loss and Lease
Termination. Payments received by the Lessor (other than proceeds of
insurance carried by the Lessor or the Owner Participant pursuant to
Section 10(b)) or the Lessee (other than proceeds of insurance carried by
or on behalf of the Lessee pursuant to Section 8(h) or Section 10(b)) from
any Governmental Authority, insurer or other Person, plus the amount of any
payments that would have been due from an insurer but for the Lessee's self-
insurance or policy deductibles, as a result of an Event of Loss to which
Section 9(c) applies shall be applied as follows:
(i) all such payments shall be promptly paid to the Lessor for
application pursuant to the following provisions of this Section
9(f), except that the Lessee may retain any amounts that at the time
are payable to the Lessee under the provisions of clauses (ii) or
(iii) below;
(ii) so much of such payments (applying any payments from
insurers (including payments attributable to any Lessee's self-
insurance) before any payments from other Persons (including
Governmental Authorities)) as shall not exceed the amount of
Casualty Value and other amounts required to be paid by the Lessee
pursuant to Section 9(c) shall be applied in reduction of the
Lessee's obligation to pay such amount if the same has not already
been paid by the Lessee or, if the same has already been fully paid
by the Lessee, shall be applied to reimburse the Lessee for its
payment of such amount; and
(iii) the balance, if any, of such payments representing
proceeds of insurance carried by the Lessee and amounts attributable
to self-insurance by the Lessee shall be paid over to, or retained
by, the Lessee; and
(iv) the balance, if any, of such payments representing
payments received from any Governmental Authority, insurer or other
Persons shall be paid as follows: (A) to the Lessee, an amount equal
to such balance multiplied by a fraction, the numerator of which
shall be the number of days remaining in the Basic Term and all
Fixed-Rate Renewal Terms (or if the Lessee has exercised its option
under Section 12(b), the number of days remaining in the current
Fair Market Renewal Term) as of the date of the occurrence of the
Event of Loss and the denominator of which shall be the number of
days equal to the remaining useful life of the Leased Property as of
such date, and (B) to the Lessor and the Remainderman, an amount
equal to the remainder of such balance, as their interests may
appear.
(g) Application of Payments Not Relating to a Lease Termination.
Payments received by the Lessor (other than proceeds of insurance carried
by the Lessor or the Owner Participant pursuant to Section 10(b)) or by the
Lessee (other than proceeds of insurance carried by or on behalf of the
Lessee pursuant to Section 8(h) or Section 10(b)) from any Governmental
Authority, insurer or other Person, plus the amount of any payments that
would have been due from an insurer but for Lessee's self-insurance or
policy deductibles, with respect to any Condemnation or Casualty not
constituting an Event of Loss, or with respect to which the Lessee does not
elect to terminate this Lease pursuant to Section 9(c), shall be applied as
follows:
(i) an amount of such payments from insurers or from other
Persons including Governmental Authorities, but excluding payments
attributable to any Lessee's self-insurance, equal to the Cost
Threshold shall be paid over to, or retained by, the Lessee, which
the Lessee agrees to use for repair or replacement of the Leased
Property pursuant to Section 9(b) or, in the case of a Condemnation,
at the Lessee's option, to restore the affected property as nearly
as reasonably possible to its condition, function and use existing
immediately prior to such Condemnation;
(ii) the balance of such payments from insurers or from other
Persons including Governmental Authorities, but excluding payments
attributable to the Lessee's self-insurance, shall be held by the
Lessor or (so long as the Indenture shall be in effect) the
Indenture Trustee as security for the obligations of the Lessee
under this Lease, but any amounts so held shall be released and paid
over to the Lessee from time to time so long as no Special Default
shall have occurred and be continuing, in each case upon
presentation to the Lessor or the Indenture Trustee, as the case may
be, of a Lessee Request specifying the amount so to be released, and
annexing invoices (not previously paid using funds referred to in
subparagraph (i) of this Section 9 or previously used as a basis for
any release of funds pursuant to this Section 9(g)) demonstrating
expenditures made or to be made by the Lessee upon receipt of such
funds, in either case, as required by Section 9(b) for repair of the
Leased Property in excess of amounts attributable to the Lessee's
self-insurance or policy deductibles or, in the case of a
Condemnation, at the Lessee's option, to restore the Leased Property
as nearly as reasonably possible to its condition, function and use
existing immediately prior to such Condemnation;
(iii) the balance, if any, of such payments representing
proceeds of insurance carried by the Lessee shall be paid over to,
or retained by, the Lessee; and
(iv) the balance, if any, of such payments from any
Governmental Authority or other source shall be paid to the Lessor,
the Remainderman and the Lessee in proportion to the loss suffered
by each.
(h) Application During Event of Default. Notwithstanding the
foregoing provisions of this Section 9 or the provisions of Section 10, if
an Event of Default shall have occurred and be continuing, any amount that
otherwise would be payable to or for the account of, or that otherwise
would be retained by, the Lessee pursuant to Section 10 or this Section 9
(except as otherwise provided in Section 8(h)) shall be paid to the Lessor
or, so long as the Indenture shall be in effect, to the Indenture Trustee,
as security for the obligations of the Lessee under this Lease; provided,
however, that if such Event of Default shall be cured, remedied or waived
or otherwise cease to exist, any such amounts held by the Lessor or the
Indenture Trustee, as the case may be, shall be promptly released and paid
over to the Lessee.
(i) Temporary Condemnation. Notwithstanding any other provision to
the contrary contained in this Section 9, in the event of a temporary
condemnation, this Lease will remain in full force and effect and Lessee
will be entitled to the proceeds allowable to such temporary condemnation
and Lessor will pay over to Lessee any amounts received by Lessor with
respect thereto; except that such portion of the proceeds allocable to the
time period after the Termination Date will be paid to Lessor or the
Remainderman in accordance with their interests.
(j) Substitution Right. In the event that Lessee has the right to
terminate this Lease following an Event of Loss, in lieu of paying to the
Lessor the Casualty Value pursuant to Section 9(c), Lessee may utilize its
right of substitution pursuant to Section 14.
SECTION 10. Insurance.
(a) Required Insurance.
(i) Subject to the provisions of Sections 10(c) and (d), the
Lessee shall carry and maintain, or cause to be carried and
maintained, the following insurance coverage, in each case with
insurers having an A.M. Best Company ("Best's") rating of at least
"B+" (or a comparable rating from Best's) or such other insurers
selected by the Lessee and reasonably acceptable to the Lessor:
(A) special form property insurance (all risk type),
with respect to the Leased Property, including, without
limitation, fire, theft, flood, water damage, collapse,
earthquake, windstorm, hail, boiler and machinery (if objects
exist), lightning, explosion, falling objects (i.e., aircraft),
back-up and seepage of sewers and drains, and business
interruption, and with coverage limits at least equal to full
(100%) replacement cost of the Leased Property, exclusive of
architectural and engineering fees, excavation footings and
foundations, and with such other terms as are comparable to such
special form property insurance (all risk type) maintained
generally by entities engaged in the Lessee's Business with
respect to buildings and property similar in size and use to the
Leased Property occupied by entities engaged in the Lessee's
Business in the same geographic area ("Similar Buildings"),
endorsed to provide that (l) losses shall be adjusted as
provided in Section 10(a) (iii), (2) the Lessor (in its
individual and trust capacity), the Remainderman, the Owner
Participant, and, so long as any Notes are Outstanding, the
Indenture Trustee (in its individual and trust capacity)
(collectively, the "Additional Insureds") are included as the
additional insureds, as their interests may appear, but shall
not be liable for the payment of premiums, (3) any payment
thereunder shall be made to the Indenture Trustee so long as the
Indenture is in effect, and otherwise to the Lessor, except,
provided that no Event of Default has occurred and is
continuing, that payments of less than the Cost Threshold shall
be paid solely to any Lessee, (4) if available in the commercial
insurance market without imposing unduly burdensome terms and
conditions on the Lessee, the insurer thereunder waives all
rights to subrogation against the Additional Insureds with
respect to their respective interests in the Leased Property,
and (5) such insurance shall be primary without right of
contribution of any other insurance carried by or on behalf of
any Additional Insured with respect to its interest in the
Leased Property; and
(B) commercial general liability insurance covering
claims arising out of the ownership, operation, maintenance,
condition or use of the Leased Property in such amounts not less
than $50 million (provided that this provision shall not be
implied to bind any subtenant to maintain such insurance in
excess of $1 million) combined single limit per occurrence and
with such other terms as are comparable to the commercial
general liability insurance that is maintained generally by
entities engaged in the Lessee's Business with respect to
Similar Buildings, endorsed as provided in clauses (2), (4) and
(5) of Section 10 (a) (i) (A).
(ii) Prior to the expiration of such insurance, the Lessee
shall renew such insurance and within 10 days after such renewal,
the Lessee shall furnish the Lessor a report that includes: (A) a
copy of the certificate of insurance signed by an independent
insurance broker or the insurer, describing in detail the insurance
then maintained pursuant to this Section 10; and (B) a certificate
signed by a Responsible Officer of the Lessee stating that such
insurance and any self-insurance maintained by the Lessee is in
accordance with this Section 10.
(iii) All losses shall be adjusted with the insurance companies
and all insurance proceeds shall be collected, including by the
filing of appropriate proceedings, by or on behalf of the Lessee,
and all insurance proceeds paid in respect of insurance maintained
pursuant to Section 10(a) (i) (A) shall be paid as provided in
Section 10(a) (i) (A) (3) and be applied as provided in Section
9(f), (g), (h) or (i), as the case may be, subject, however, to any
priority allocations of such proceeds as set forth in the insurance
policies or as required under Applicable Law.
(iv) Provided that such endorsements are available in the
commercial insurance market, the Lessee shall obtain endorsements to
the insurance policies carried pursuant to Section 10(a) (i)
providing that (w) the insurers waive any right of set-off or
counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of any Lessee or any
Additional Insured (unless obtaining this endorsement in the
commercial insurance market would impose unduly burdensome terms and
conditions on the Lessee), (x) the respective interests of the
Additional Insureds shall not be invalidated by any act or neglect
by any Lessee, including breach of any warranty contained in such
policies, (y) no lapse, cancellation or material change with respect
to such policies shall be effective as to an Additional Insured
until at least 30 days after receipt by such Additional Insured of
written notice thereof and (z) the coverage afforded by such
policies shall not be affected by the performance of any work in or
about any Modification.
(b) Other Insurance. Nothing in this Section 10 shall prohibit the
Lessee from maintaining at its expense insurance on or with respect to the
Leased Property, naming the Lessee as insured and/or loss payee for an
amount greater than the insurance required to be maintained under this
section 10, unless such insurance would conflict with or otherwise limit
the availability of or coverage afforded by insurance required to be
maintained under Section 10(a). Nothing in this Section 10 shall prohibit
the Lessor or the Owner Participant from maintaining at its expense other
insurance on or with respect to the Leased Property or the operation, use
and occupancy of the Leased Property, naming the Lessor or the Owner
Participant as insured and/or loss payee, unless such insurance would
conflict with or otherwise limit the insurance required to be maintained
under Section 10(a).
(c) Self-Insurance. Notwithstanding anything to the contrary in this
Lease, the Lessee may satisfy all or a portion of the insurance
requirements set forth in Section 10 through self-insurance by the Lessee
(by means of deductibles, self-insured retentions or otherwise), provided,
that the amount of such self-insurance with respect to the Leased Property
per occurrence may not exceed the lesser of (i) one percent (1%) of the net
worth of the Lessee and (ii) $5 million.
(d) Insurance to be Commercially Available. If any insurance required
to be maintained by the Lessee pursuant to this Section 10 is not
maintained by the Lessee or any Affiliate of the Lessee because such
insurance is not available in the commercial insurance markets or, with
respect to the insurance required under Section 10 and any related terms
required by Section 10, cannot be purchased at commercially reasonable
rates (including without limitation flood and earthquake insurance), then
the Lessee shall be required only to maintain such coverage or insurance at
such levels as is maintained generally by the Lessee with respect to
Similar Buildings, the provisions of this Section 10 to the contrary
notwithstanding.
SECTION 11. Rights To Assign or Sublease; Assignment as Security;
Subordination and Attornment.
(a) Assignment by the Lessee.
(i) Upon 30 days prior written notice to the Lessor, without
the consent of the Lessor or the Indenture Trustee, the Lessee may
assign its right, title and interest in, to and under this Lease,
the Leased Property or any portion thereof to any Person, provided,
that such assignment shall include an assumption of all of the
Lessee's obligations under this Lease and that concurrently with an
assignment, the Lessee unconditionally agrees to waive any and all
suretyship defenses (pursuant to a waiver in substantially the form
of Exhibit B) and (A) the Indenture Trustee and the Owner
Participant shall have received from Lessee's Counsel a favorable
opinion in form and substance reasonably satisfactory to the
Indenture Trustee and the Owner Participant as to the due
authorization, execution, delivery and enforceability of such
assignment and waiver, as appropriate, and to such other matters as
the Indenture Trustee or the Owner Participant may reasonably
request regarding such assignment, (B) no Event of Default or
Special Default shall have occurred and be continuing, (C) such
assignment shall not cause any adverse tax consequences to the Owner
Participant, the Remainderman, the Indenture Trustee, the Pass
Through Trustee, the holders of the Pass Through Certificates, or
the Noteholders (other than, in the case of the Owner Participant,
consequences for which the Owner Participant would be indemnified in
a manner acceptable to the Owner Participant), (D) upon giving
effect to the proposed assignment, the assignee will not be in
breach of any covenant, agreement or condition required to be
performed or observed by the assignor in the Lease, (E) the Lessee
shall have duly authorized, executed and delivered to the Indenture
Trustee and the Owner Participant the assignment, (F) such
assignment, as appropriate, shall not violate any provisions of
Applicable Law and (G) such assignment shall not release the Lessee
from or impair the primary liability of the Lessee in respect of any
of obligations as Lessee hereunder or in respect of any of its
obligations under any of the other Transaction Documents.
(ii) The Lessee may assign its right, title and interest in, to
and under this Lease to any Person and be thereupon released from
its obligations under this Lease if the Lessor shall have given its
prior written consent to such assignment to such Person, which
consent may be conditional; provided that no release under this
Section 11(a)(ii) shall occur so long as any Notes are Outstanding.
(b) Sublease by the Lessee.
(i) Upon 30 days prior written notice to the Lessor, but
without the consent of the Lessor, provided that no Event of Default
or Special Default shall have occurred and be continuing, the Lessee
may at any time sublease less than 50% of the rentable square
footage of the Leased Property to any Person for a term not to
extend beyond the expiration date of the Basic Term or the
expiration date of any then exercised Renewal Terms; provided, that
such subletting shall be subject and subordinate to this Lease and
shall not release the Lessee from or impair the primary liability of
the Lessee in respect of any of its obligations as Lessee hereunder
or in respect of any of its obligations under any of the other
Transaction Documents. The Lessee may grant the applicable
sublessee(s) the right to extend the term of its/their sublease(s)
to the extent the Lessee exercises its right to renew this Lease
under Section 12 hereof. As a condition to the foregoing, no such
sublease shall cause any adverse tax consequences to the Owner
Participant (other than consequences for which the Owner Participant
would be indemnified by the Lessee pursuant to the terms of the
Transaction Documents or another written undertaking by the Lessee
to indemnify the Owner Participant if the Lessee is Investment Grade
(or if the Lessee is not Investment Grade, in a manner and amount
acceptable to the Owner Participant in its sole discretion)).
(ii) The Lessee, provided that no Event of Default or Special
Default shall have occurred and be continuing, may at any time
sublease more than 50% of the rentable square footage of the Leased
Property to any Person for a term not to extend beyond the
expiration date of the Basic Term or the expiration date of any then
exercised Renewal Terms without the consent of the Lessor; provided,
that (A) the Lessee shall be Investment Grade at the time such
sublease is executed or (B) the proposed subtenant is Investment
Grade at the time such sublease is executed. In all other cases,
the Lessee may sublease more than 50% of the rentable square footage
of the Leased Property only with the prior written consent of the
Lessor, which consent will not be unreasonably withheld or delayed.
No sublease entered into pursuant to this Section 11(b) shall
release the Lessee from or impair the primary liability of the
Lessee in respect of any of its obligations as Lessee hereunder or
in respect of any of its obligations under any of the other
Transaction Documents. Any such sublease shall be subject and
subordinate to this Lease. The Lessee may grant the applicable
sublessee the right to extend the term of its sublease to the extent
the Lessee exercises its right to renew this Lease under Section 12
hereof. As a condition to the foregoing, no such sublease shall
cause any adverse tax consequences to the Owner Participant (other
than consequences for which the Owner Participant would be
indemnified by the Lessee pursuant to the terms of the Transaction
Documents or another written undertaking by the Lessee to indemnify
the Owner Participant if the Lessee is Investment Grade (or if the
Lessee is not Investment Grade, in a manner and amount acceptable to
the Owner Participant in its sole discretion).
With respect to any sublease described in Section 11(b)(ii)
above, the Lessee must assign such sublease to the Lessor, which may
further assign such sublease to the Indenture Trustee, and the
sublessee shall consent in writing to such assignments and
acknowledge and be bound by Section 11(c) as if the sublessee were
the Lessee under this Lease Agreement.
(c) Assignment by Lessor as Security for Lessor's Obligations. To
secure the indebtedness evidenced by the Notes, the Lessor will assign to,
and create a security interest in favor of, the Indenture Trustee of (i)
its right, title and interest (excluding any Excepted Rights) in and to
this Lease, including the right to receive payments of Rent (excluding any
Excepted Payments), to the extent provided in the Indenture, and (ii) its
right, title and interest in and to the Leased Property. The Lessee hereby
(x) consents to such assignment and such security interest and to the terms
of the Indenture, (y) agrees that the Lessee shall pay directly to the
Indenture Trustee at the Indenture Trustee's Office (until the Lien of the
Indenture and the Related Supplemental Indenture shall have been
discharged) all amounts of Rent (other than Excepted Payments) due or to
become due to the Lessor, and (z) agrees that, to the extent provided in
the Indenture (until the Lien of the Indenture shall have been discharged),
the Indenture Trustee shall have or shall share with the Lessor such rights
of the Lessor hereunder (other than Excepted Rights and the right to
receive Excepted Payments) as are specified in the Indenture.
(d) Other Assignments by the Lessor. During the Lease Term, the
Lessor may transfer, sell or convey the Leased Property or assign its
rights and obligations under this Lease only in accordance with the
Transaction Documents, including, without limitation, the limitations
contained in Section 5.5 of the Indenture and Article VIII of the
Participation Agreement.
(e) Attornment. Subject to the terms of Sections 6.4(b), 6.5(b) and
6.8(b) of the Participation Agreement, this Lease and the Lessee's interest
hereunder shall be subject and subordinate to the Indenture, the Related
Supplemental Indenture and any amendments, modifications, extensions or
renewals thereof. The provision of this subsection shall be self-operative
and no further instrument of subordination shall be required. In the event
of (i) the foreclosure of any mortgage made by the Lessor covering the
Leased Property (including, without limitation, the Indenture), (ii) the
giving of a deed in lieu of foreclosure by the Lessor with respect to the
Leased Property, (iii) a transfer of the Leased Property resulting from the
filing of a petition in bankruptcy or other similar insolvency proceeding
by or against the Lessor, or (iv) any other transfer by the Lessor of title
to the Leased Property permitted by the terms of the Transaction Documents,
then the Lessee shall, at the request of the purchaser or transferee, as
the case may be, attorn to the purchaser or other transferee, including the
Indenture Trustee, upon any such foreclosure, sale or transfer, and
recognize such purchaser or other transferee as the Lessor under this
Lease. The purchaser or other transferee (i) shall not be liable for prior
acts or omissions of the Lessor (but in no event shall such purchaser or
other transferee be relieved from its obligation to comply with this Lease
from and after the date such purchaser or other transferee acquires its
interest), (ii) shall not be subject to any claims, offsets, defenses or
counterclaims, which the Lessee may have against the Lessor, (iii) shall
not be bound by any payment of Basic Rent that the Lessee might have paid
for more than one six month period to the Lessor and (iv) shall not be
bound by any amendment, modification or termination of the Lease entered
into other than in accordance with the terms of this Lease.
SECTION 12. Lease Renewal.
(a) Option for Fixed-Rate Renewal. Subject to the notice requirement
set forth in Section 13(a) or 13(b), as the case may be, and to the
provisions of Section 13(c), provided that no Event of Default or Special
Default shall have occurred and be continuing, the Lessee shall have the
option to renew the term of this Lease at the end of the Basic Term and at
the end of any Fixed-Rate Renewal Term (as hereinafter defined) for up to
five (5) periods of five (5) years each (or such shorter period required to
comply with the next proviso of this sentence) (each such period being
called a "Fixed-Rate Renewal Term"); provided, that in order for Lessee to
extend the Lease Term with respect to the Leased Property for the first
Fixed-Rate Renewal Term, Lessee must also have extended the Related Leases
for their first Fixed-Rate Renewal Terms (such requirement is not
applicable to any Renewal Term after the first Renewal Term). On each
Basic Rent Payment Date during a Fixed-Rate Renewal Term, the Lessee shall
pay to the Lessor Fixed-Rate Renewal Basic Rent in semi annual installments
in arrears on each Basic Rent Payment Date during such Fixed-Rate Renewal
Term.
(b) Fair Market Renewal Options. Subject to the notice requirement
set forth in Section 13(a) or 13 (b), as the case may be, and to the
provisions of Section 13(c), provided that no Event of Default or Special
Default shall have occurred and be continuing, the Lessee shall have the
option to renew the term of this Lease at the end of any Renewal Term for
one or more periods of not less than two (2) years, as determined by the
Lessee in its sole discretion and specified in its notice of renewal (each
such period being herein called a "Fair Market Renewal Term"), provided
that with respect to any period after December 31, 2043, the Lessee may not
renew the Lease Term for a Fair Market Renewal Term (i) if as a result
thereof the Lease Term would extend beyond 80% of the estimated economic
useful life of the Improvements (measured from the beginning of such
Renewal Term) as determined by an Appraisal Procedure at the time of such
renewal or (ii) if the Appraisal Procedure shall have determined that at
the end of such Fair Market Renewal Term there remains less than 20% of the
Fair Market Sales Value of the Improvements as of the beginning of such
Fair Market Renewal Term (determined without regard to inflation or
deflation during such Fair Market Renewal Term); and provided further that
at any time that the foregoing limitations shall cause the Fair Market
Renewal Term to be less than two years, the Lessee shall have the option to
renew this Lease for a Fair Market Renewal Term equal to such shorter
period. On each Basic Rent Payment Date during each Fair Market Renewal
Term, the Lessee shall pay to the Lessor the Fair Market Rental Value of
the Leased Property in semiannual installments in arrears on each Basic
Rent Payment Date during such Fair Market Renewal Term.
SECTION 13. Notices for Renewal; Determination of Fair Market Rental
Value.
(a) Expiration of Basic Term. Not later than 24 months prior to the
expiration date of the Basic Term and provided no Event of Default or
Special Default shall have occurred and be continuing at such time, the
Lessee may give to the Lessor notice of the Lessee's election (i) to return
the Leased Property to the Lessor pursuant to Section 5 or (ii) to exercise
an option to renew this Lease for a Fixed-Rate Renewal Term pursuant to
Section 12(a). Failure of the Lessee to give any such notice shall mean
that the Lessee shall have made the election provided in clause (i).
(b) Expiration of Renewal Terms. Not later than 270 days prior to
the expiration date of any Renewal Term and provided no Event of Default or
Special Default shall have occurred and be continuing at such time, the
Lessee may give to the Lessor notice of the Lessee's election (i) to return
the Leased Property to the Lessor pursuant to Section 5, (ii) provided that
such Renewal Term does not extend beyond twenty-five (25) years following
expiration of the Basic Term, to exercise an option to renew this Lease for
a Fixed-Rate Renewal Term pursuant to Section 12(a) or (iii) to exercise
the option to renew this Lease for a Fair Market Renewal Term pursuant to
Section 12(b). Failure of the Lessee to give any such notice shall mean
that the Lessee shall have made the election provided in clause (i). In
the event that the Lessee elects to extend the Lease Term for a Fixed-Rate
Renewal Term which extends beyond the twenty-fifth anniversary of the
expiration of the Basic Term, the period of such Fixed-Rate Renewal Term up
to and including such twenty-fifth anniversary shall constitute a Fixed-
Rate Renewal Term, and the period after such date shall constitute a Fair
Market Renewal Term.
(c) Elections. Any election made by the Lessee pursuant to Section
13(a) shall be irrevocable by the Lessee, and such election shall be
binding on the Lessor. If Lessee has made the election under Section
13(b), if the Lessee does not wish to accept the Fair Market Rental Value,
Lessee, upon notice to the Lessor delivered not more than thirty (30) days
after the determination of Fair Market Rental Value, shall elect to renew
this Lease for a Fixed-Rate Renewal Term (if the time period for electing
Fixed-Rate Renewal Terms has not expired) rather than a Fair Market Renewal
Term.
(d) Determination of Fair Market Rental Value. If the Lessee shall
give to the Lessor notice of the Lessee's election to renew this Lease for
a Fair Market Renewal Term pursuant to Section 12(b) then, within 30 days
of Lessor's receipt of such notice, the Lessee and the Lessor shall use
reasonable efforts to agree upon the Fair Market Rental Value of the Leased
Property during such Renewal Term. If the Lessee and the Lessor are unable
to agree upon such Fair Market Rental Value, such value shall be determined
by the Appraisal Procedure.
(e) Maximum Term of Lease. In no event shall any Renewal Term extend
beyond December 31, 2070.
SECTION 14. Obsolescence Or Uneconomic Usefulness Termination;
Substitution.
(a) Termination Notices. If, at any time after the first anniversary
of the Basic Term Commencement Date, the Lessee shall have determined in
good faith (such determination to be conclusively evidenced by a
certificate of a Responsible Officer of the Lessee evidencing such
determination) that the Leased Property is obsolete or uneconomic for use
(including, without limitation, by reason of the amount of expenditures
required to comply with Section 8), or surplus to the Lessee's needs the
Lessee shall have the option to terminate this Lease on any Termination
Value Date that is specified by the Lessee (a "Termination Date") in a
notice to the Lessor and the Remainderman (a "Termination Notice") given
not later than one hundred eighty (180) days prior to the proposed
Termination Date; provided that no Event of Default or Special Default
shall have occurred and be continuing on the date that the Lessee gives
such Termination Notice; and provided further the Lessee shall be entitled
to rescind any such Termination Notice at any time prior to the date that
is thirty (30) days before the proposed Termination Date, but may not
rescind more than one Termination Notice or any Termination Notice later
than thirty (30) days prior to the proposed Termination Date.
(b) Events Prior to Termination Date. No later than thirty (30) days
following receipt by the Lessor and the Remainderman of the Termination
Notice, the Lessor shall elect, by written notice to the Lessee, (i) to
sell the Lessor's right, title and interest in respect of the Leased
Property to the Lessee free and clear of all Lessor's Liens against payment
by the Lessee of the Termination Value together with all other amounts
payable by the Lessee as set forth below, (ii) to retain ownership of the
Leased Property in lieu of its right to receive payment by the Lessee of
the Termination Value, in which case it shall, as a condition to its right
to retain the Leased Property, deposit with the Indenture Trustee, on or
prior to the third Business Day prior to the Obsolescence Redemption Date,
cash in an amount (or Permitted Investments maturing prior to the
Obsolescence Redemption Date in a principal amount) equal to the unpaid
principal amount of the Related Outstanding Notes, on such Obsolescence
Redemption Date, or (iii) to have the Leased Property sold (by the Lessee
as non-exclusive agent if the Lessor so elects), in which case the Lessee
shall be obligated to pay the excess, if any, of the Termination Value over
the Sales Proceeds retained by the Lessor pursuant to Section 14(c) (iii)
together with all other amounts payable by the Lessee as set forth below.
Should the Lessor elect under clause (i) above, the Lessee shall purchase
the Lessor's right, title and interest in respect of the Leased Property
and the Remainderman's Interest free and clear of all Lessor's Liens and
Remainderman's Liens and the Lien of the Indenture for the amounts
specified in clause (i). Should the Lessor elect under clause (iii) above
the Lessee, as the Lessor's non-exclusive agent, shall use its reasonable
efforts to obtain cash bids for the purchase of the Leased Property. The
Lessor and the Remainderman also shall have the right to obtain such cash
bids, either directly or through agents other than the Lessee. The Lessee
shall certify to the Lessor the amount and terms of each bid received by
the Lessee and the name and address of the Person (who shall not be the
Lessee or any Affiliate or Tax Affiliate of the Lessee) that submitted such
bid within 10 days of receipt of any bid. The Lessor and the Remainderman
shall be under no duty to solicit bids, to inquire into the efforts of the
Lessee to obtain bids or otherwise to take any action in connection with
any such proposed termination of the Lease other than to effect a Transfer
to the Person named in the highest bid among the aggregate of the bids
certified by the Lessee to the Lessor and those obtained by the Lessor
against receipt of the payments provided for in such bid.
(c) Events on Termination Date.
(i) If the Lessor has elected to sell the Lessor's right,
title and interest in respect of the Leased Property to the Lessee
free and clear of all Lessor's Liens and the Lien of the Indenture,
the Lease Term shall, subject to the payment by the Lessee of the
amounts specified in clauses (A) or (B) below, end on the
Termination Date and, subject as aforesaid, all of the Lessee's
obligations hereunder (other than any obligation expressed herein as
surviving termination of this Lease) shall thereupon cease and the
Lessee shall pay to the Lessor and the Remainderman (or, in the case
of Supplemental Rent, to the Person or Persons entitled thereto) on
the Termination Date (A) (v) the Termination Value, plus (w) any
accrued but unpaid Basic Rent due on or prior to such Termination
Date, plus (x) all Supplemental Rent (other than Termination Value)
unpaid on such Termination Date, plus (y) an amount equal to the
Premium, if any, payable on the Related Outstanding Notes, together
with accrued and unpaid interest on such Related Outstanding Notes,
as of the Obsolescence Redemption Date (to the extent not included
in (A)(w) above), plus (z) an amount equal to the reasonable fees
and out-of-pocket expenses of the Owner Participant, the Lessor, the
Indenture Trustee, the Remainderman and the Pass Through Trustee
related to such election and the related redemption of the Notes, or
(B) if the Lessee shall elect to exchange full recourse securities
for the Related Outstanding Notes pursuant to Section 9.1 of the
Participation Agreement, the amount payable to the Lessor pursuant
to clause (A)(v) above shall be reduced by an amount equal to the
unpaid principal balance of the Related Outstanding Notes.
(ii) If the Lessor has elected to retain ownership of the
Leased Property pursuant to and has otherwise complied with Section
14(b)(ii), the Lease Term shall, subject to the payment by the
Lessee of the amounts specified in clauses (w) through (z) below,
end on the Termination Date and, subject as aforesaid, all of the
Lessee's obligations hereunder (other than any obligation expressed
herein as surviving termination of this Lease) shall thereupon cease
and the Lessee shall pay to the Lessor (or, in the case of
Supplemental Rent, to the Person or Persons entitled thereto) on the
Termination Date (w) any accrued but unpaid Basic Rent due on or
prior to such Termination Date, (x) all Supplemental Rent (other
than Termination Value) unpaid on such Termination Date, (y) an
amount equal to Premium, if any, payable on the Related Outstanding
Notes, together with accrued and unpaid interest on such Related
Outstanding Notes (to the extent not included in (w) above), as of
the Obsolescence Redemption Date, and (z) an amount equal to the
reasonable fees and out-of-pocket expenses of the Owner Participant,
the Lessor, the Indenture Trustee, the Remainderman and the Pass
Through Trustee related to such election and the redemption of the
Related Notes, and the amount deposited by the Lessor pursuant to
Section 14(b)(ii) shall, at the Lessee's election, be (A) applied to
the redemption of the Related Outstanding Notes or (B) paid to the
Lessee if the Lessee elects to assume the Related Outstanding Notes
pursuant to Section 9.1 of the Participation Agreement.
(iii) If the Leased Property is to be sold on the Termination
Date to a bidder pursuant to Section 14(b)(iii), the Lessor shall,
on the Termination Date (but only upon receipt of the sale price and
all additional payments specified in the next sentence) effect a
Transfer for cash to the Person that submitted the highest bid prior
to such date (should such a Person exist). The Sale Proceeds shall
be retained by the Lessor and, if applicable, the Remainderman
(subject, however, to the provisions of the Indenture, including the
requirement that on such Termination Date there shall have been paid
to the Indenture Trustee an amount sufficient to pay in full the
unpaid principal amount of the Related Outstanding Notes on the
Obsolescence Redemption Date and all Premiums, if any, and interest
accrued and unpaid on the Related Outstanding Notes as of such
Termination Date and to accrue on the Related Outstanding Notes from
such date to the Obsolescence Redemption Date); provided that if the
Related Outstanding Notes have been exchanged for unsecured, full
recourse securities of the Lessee on the Termination Date pursuant
to Section 9.1 of the Participation Agreement, then the Lessor shall
retain such Sales Proceeds to the extent that such Sales Proceeds
exceed the unpaid principal amount of the Related Outstanding Notes
on the Termination Date and the Lessee shall be entitled to the
balance of such Sales Proceeds upon payment of the amounts set forth
in clauses (v), (w), (y) and (z) of the following sentence. In
addition, on such Termination Date, the Lessee shall pay to the
Lessor (or, in the case of Supplemental Rent, to the Person or
Persons entitled thereto) (v) an amount equal to the excess, if any,
of the Termination Value, determined as of such Termination Date,
over the Sale Proceeds allocable to Lessor (except that if the
Related Outstanding Notes have been exchanged for unsecured, full
recourse securities of the Lessee on the Termination Date pursuant
to Section 9.1 of the Participation Agreement and the amount of the
Related Outstanding Notes exceeds the Sales Proceeds allocable to
Lessor, then the Lessee shall only be obligated to pay the Lessor
the excess, if any, of Termination Value over unpaid principal
amount of the Related Outstanding Notes), (w) any accrued but unpaid
Basic Rent due on or prior to such Termination Date, (x) if the
Lessee has not exchanged the Related Outstanding Notes for its
unsecured, full recourse securities on the Termination Date pursuant
to Section 9.1 of the Participation Agreement, an amount equal to
any Premium payable on the Related Outstanding Notes as of the
Obsolescence Redemption Date and any interest to accrue on the
Related Outstanding Notes from and including such Termination Date
to the Obsolescence Redemption Date (to the extent not included in
(w) above), (y) an amount equal to the reasonable fees and out-of-
pocket expenses of the Owner Participant, the Lessor, the
Remainderman and the Indenture Trustee related to such termination
and (z) all unpaid Supplemental Rent (other than Termination Value).
(iv) If the Lessee and the Lessor have failed to sell the
Leased Property on or prior to the Termination Date set forth in the
Termination Notice, the Lessor shall elect to retain the Leased
Property in accordance with Section 14(b)(ii) above, to require the
Lessee to purchase the Leased Property under Section 14(b)(i) and
the provisions of Section 14(c)(i) shall become applicable, or to
extend the time during which the Leased Property may be sold
pursuant to Section 14(c)(iii) for an additional one (1) year period
after the Termination Date. If the Leased Property has not been
sold by the end of such (or any subsequent) one (1) year extension,
the Lessor may again make the election provided under this Section
14(c)(iv).
(v) In the event that the Lessee elects to terminate this
Lease pursuant to Section 14(a) and the Lessee purchases the Leased
Property pursuant to Section 14(c)(i), the Lessee covenants that it
will not use the Leased Property in Lessee's Business for a period
of at least five (5) years following the Termination Date.
(d) Substitution. At any time during the Lease Term, provided that
no Event of Default or Special Default shall have occurred and be
continuing, if the Lessee determines in good faith that the Leased Property
shall have become obsolete or uneconomic for use in Lessee's Business or
surplus to the Lessee's needs, or following an Event of Loss as provided in
Section 9(j), the Lessee may give written notice that it intends to provide
to the Lessor and the Remainderman a substitute parcel of real property
consisting of a fee estate, which must be split into an estate for years
and a remainder interest (or, following the Estate for Years Expiration
Date, an interest in land, subject to a ground lease, and an interest in
improvements) (the "Substitute Parcel"), having a fair market value,
utility and useful life at least equal to the fair market value, utility
and useful life of the interests in the Leased Property owned by each of
the Lessor and the Remainderman at the time of the substitution, which will
be substituted for the Property in accordance with the requirements set
forth below.
The Lessee may not elect to substitute a Substitute Parcel for the
Leased Property unless the Lessee provides to the Lessor, the Remainderman
and the Indenture Trustee, as applicable:
(i) appraisals by the Appraiser (or another independent
appraiser who is a member of the American Institute of Real Estate
Appraisers of the National Association of Realtors, with at least
ten (10) years experience in the valuation of commercial real estate
in the metropolitan area in which the Substitute Parcel is located
and who is reasonably acceptable to the Lessor and the Remainderman)
indicating that the Fair Market Sales Values, utility and remaining
useful life of the land and improvements and the respective
interests therein of the Remainderman and the Lessor of the
Substitute Parcel are not less than the Fair Market Sales Values,
utility and remaining useful life of the land and the improvements
and the respective interests therein of the Remainderman and the
Lessor of the Leased Property and otherwise reasonably satisfactory
in all respects to the Lessor and the Remainderman;
(ii) warranty deeds in form and substance substantially
equivalent to the Deeds and Remainder Deeds, as the case may be (the
"Substitution Deeds"), duly executed and acknowledged by the Lessee,
conveying (A) to the Lessor good and marketable fee simple title to
the Improvements located on such Substitute Parcel, (and, prior to
the Estate for Years Expiration Date, an estate for years for a term
equal to the then-remaining term of the Estate for Years with
respect to the Leased Property) and (B) to the Remainderman good and
marketable fee simple title to the land component of the Substitute
Parcel (subject to the Estate for Years, if applicable), subject
only to Permitted Exceptions;
(iii) a lease agreement (a "Substitute Lease") duly executed by
the Lessee providing for the lease of the Substitute Parcel by the
Lessor to the Lessee upon all of the terms and conditions set forth
in this Lease, except that the term of such Substitute Lease shall
be equal to the then remaining term under this Lease and the Basic
Rent payable under such Substitute Lease on each Rent Payment Date
shall be equal to the Basic Rent which would have otherwise been
payable under this Lease on the corresponding Rent Payment Date;
(iv) a memorandum of lease (a "Substitute Lease Memo") with
respect to the lease agreement described in clause (iii) above, duly
executed and acknowledged by the Lessee and in proper form for
recording;
(v) an amended and restated Supplemental Indenture amending
and restating the Supplemental Indenture for the Related Leased
Property substituting the Substitute Parcel and Related Trust Estate
for the Trust Estate described in such original Supplemental
Indenture and otherwise on the same terms and conditions as the
original Supplemental Indenture for such Leased Property, in proper
form for recording (the "Substitute Indenture Supplement");
(vi) an amendment to each of the Option Agreement and
Tripartite Agreement, in each case, substituting the Substitute
Parcel for the Related Leased Property;
(vii) an opinion of counsel confirming and updating the opinions
delivered by Lessee's Special Counsel pursuant to Section 3.1(t) of
the Participation Agreement and opining, subject only to reasonable
and customary assumptions, exceptions and qualifications, that (A)
the execution and delivery by the Lessee of the Substitution
Documents and the performance by the Lessee of its obligations under
the Substitution Documents have been duly authorized by all
necessary corporate action on the part of the Lessee, (B) the
Substitution Documents have been validly executed and delivered by
the Lessee, (C) the Substitution Documents constitute the legal,
valid and binding obligations of the Lessee enforceable against the
Lessee in accordance with their respective terms, (D) the Substitute
Indenture Supplement is in proper form for recording in the
appropriate land records for the jurisdiction in which the
Substitute Parcel is located and, when recorded on such records,
will be effective to create a valid and perfected lien upon and
security interest in the Trust Estate described in the Substitute
Indenture Supplement;
(viii) a certification with respect to the Substitute Parcel by
the Lessee containing representations and warranties substantially
similar to those made by the Lessee in Section 5.1(d), (h), (k), (p)
and (v) of the Participation Agreement;
(ix) (A) to the Indenture Trustee, an ALTA Form B-1970 Extended
Coverage Lender's Policy of Title Insurance issued by the Title
Underwriter in an amount equal to the outstanding principal balance
of the Related Notes and insuring the lien of the Indenture and the
Related Supplemental Indenture to be a valid first priority mortgage
lien on the Trust Estate described in the Substitute Indenture
Supplement, subject only to Permitted Exceptions and (B) to the
Lessor and the Remainderman, an ALTA Form B-1970 Extended Coverage
Owner's Policy of Title Insurance issued by the Title Underwriter in
an amount equal to the Fair Market Sales Value of the Substitute
Parcel and insuring (x) that the Lessor has good and marketable fee
simple title to the Improvements located on the Substitute Parcel
and in the Estate for Years in the Substitute Parcel (if applicable)
and (y) that the Remainderman has good and marketable fee simple
title to the Substitute Parcel (subject to the Estate for Years, if
applicable), subject, in either case, only to Permitted Exceptions;
(x) an American Land Title Association form survey of the
Substitute Parcel, dated no more than 90 days before the date of the
substitution, certified to the Lessor, the Indenture Trustee, the
Remainderman and the Title Underwriter by a land surveyor duly
registered and licensed in the state where the Substitute Parcel is
located and acceptable to the Lessor and the Remainderman, showing
all buildings and other improvements, any off-site improvements, the
location of any easements, parking spaces, rights of way, building
set-back lines and other dimensional regulations and the absence of
encroachments, either by such improvements or on to such property,
and other defects, and otherwise reasonably acceptable to the Lessor
and the Remainderman;
(xi) a Phase I environmental study by a qualified, independent
environmental consulting or engineering firm reasonably acceptable
to the Lessor and the Remainderman with respect to the Substitute
Parcel indicating that the Substitute Parcel is in full compliance
with Section 5.1(p) of the Participation Agreement;
(xii) (A) evidence that Lessee has paid any and all transfer
taxes, recording fees, mortgage recording taxes, intangibles taxes
and similar charges in connection with such substitution and (B) a
commitment by the Lessee to pay all of the Lessor's, the Indenture
Trustee's and the Remainderman's reasonable costs and expenses
(including reasonable attorney's fees) incurred in connection with
such substitution;
(xiii) an opinion of tax counsel selected by the Owner
Participant and reasonably acceptable to the Lessee confirming that
the Lessor, the Owner Participant and the Remainderman will not
suffer or incur any adverse tax consequences (other than
consequences for which the Owner Participant would be indemnified by
the Lessee pursuant to the terms of the Transaction Documents or
another written undertaking by the Lessee to indemnify the Owner
Participant if the Lessee is Investment Grade (and if the Lessee is
not Investment Grade, in an amount and in a manner acceptable to the
Owner Participant in its sole discretion)); and
(xiv) such other documents or instruments as the Lessor, the
Indenture Trustee, the Remainderman and their respective counsel may
reasonably request.
SECTION 15. Events of Default.
The term "Event of Default," wherever used herein, shall mean any of
the following events (whatever the reason for such event and whether it
shall be voluntary or involuntary, or come about or be effected by
operation of law, or be pursuant to or in compliance with any Applicable
Law or Governmental Action), and any such event shall continue to be an
Event of Default if and for so long as it shall not have been remedied,
cured or waived:
(a) the Lessee shall fail to make, or cause to be made, any payment
of Basic Rent within ten (10) days after the same has become due, or any
payment of Casualty Value or Termination Value within ten (10) days after
the same shall become due;
(b) the Lessee shall fail to make, or cause to be made, any payment
of Supplemental Rent other than Casualty Value and Termination Value within
thirty (30) Business Days after the same shall become due, in each case
after the Lessee receives written notice of such failure from the Lessor or
the Indenture Trustee;
(c) the Lessee shall fail to carry or maintain in full force any
insurance required under Section 10(a), and such failure shall continue
until the fifth day before the end of the period during which, under the
terms of the applicable policy, the lapse or cancellation of such policy is
not effective as to the Additional Insureds named therein;
(d) the Lessee shall fail to perform or observe any material covenant
or agreement (other than those referred to in clauses (a), (b) and (c)
above) to be performed or observed by it under any Transaction Document
(other than the Tax Indemnification Agreement) to which it is a party, and
such failure shall continue, after the Lessee shall have been given a
written notice by the Lessor or the Indenture Trustee specifying such
failure and requiring it to be remedied, for a period of 60 days (or, if
the same is susceptible of cure but cannot reasonably be cured within such
60 day period, within 360 days of receipt of such notice) so long as any
Lessee is diligently proceeding to remedy such failure;
(e) any representation or warranty made by the Lessee in any
Transaction Document (other than the Tax Indemnification Agreement) to
which it is a party shall prove to have been incorrect in any material
respect when such representation or warranty was made and shall remain
material and materially incorrect at the time in question, unless the fact,
circumstance or condition that is the subject of such representation or
warranty is made true within 60 days after notice thereof shall have been
given by the Lessor or the Indenture Trustee to the Lessee;
(f) the Lessee shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of the Lessee or any
substantial part of its property, or the Lessee shall consent to any such
relief or to the appointment of or taking of possession by any such
official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors; or an
involuntary case or other proceeding shall be commenced against the Lessee
seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other proceeding shall
remain undismissed or unstayed for a period of 90 consecutive days;
(g) an Event of Default has occurred and is continuing under any of
the Other Leases; and
(h) the Lessee shall have assigned, subleased or otherwise
transferred its right, title and interest in and to this Lease in violation
of Section 11.
SECTION 16. Remedies.
(a) Remedies. Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, the Lessor at its
option may, by notice to the Lessee, declare this Lease to be in default,
and at any time thereafter (unless all Events of Default shall have been
remedied, cured or waived), or if there shall exist an Event of Default
described in Section 15(f), the Lessor may, to the extent permitted by
Applicable Law, exercise one or more of the following remedies, except as
hereinbelow expressly otherwise set forth, as the Lessor in its sole
discretion shall elect:
(i) The Lessor may terminate the Lessee's right to possession
of the Leased Property by any lawful means, in which case this Lease
and the Lease Term shall terminate and the Lessee shall immediately
surrender possession of the Leased Property to the Lessor. In
addition, and regardless of whether the Lessor shall elect to
terminate the Lessee's right to possession, the Lessor shall be
entitled to recover from the Lessee: (A) the worth at the time of
the award of the unpaid Rent which had been earned at the time of
termination; (B) the worth at the time of award of the amount of
interest on such unpaid Rent which would have been earned from the
date such unpaid Rent was due and payable until the time of the
award; (C) the worth at the time of award of the amount by which the
unpaid Rent for the balance of the term after the time of award
exceeds the portion of such Rental loss that the Lessee proves could
be reasonably avoided; and (D) any other amount necessary to
compensate the Lessor for all the detriment proximately caused by
the Lessee's failure to perform its obligations under this Lease or
which would be likely to result therefrom. The worth at the time of
the award of the amounts referred to in clauses (A) and (B) shall be
computed by allowing interest as specified in the Lease. The worth
at the time of award of the amount referred to in clause (C) shall
be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%). Efforts by the Lessor to mitigate damages caused by
the Lessee's Default or breach of this Lease shall not waive the
Lessor's right to recover damages under this paragraph. If
termination of this Lease is obtained through the provisional remedy
of unlawful detainer, the Lessor shall have the right to recover in
such proceeding the unpaid Interim Rent, Basic Rent and Supplemental
Rent, together with such damages as are recoverable therein, or the
Lessor may reserve therein the right to recover all or any part
thereof in a separate suit for such Rent and/or damages.
(ii) The Lessor may sell the Leased Property or any part
thereof, together with any interest of the Lessor under the Deed
(subject to the rights of the Remainderman contained in the Option
Agreement and subject to any sublease entered into under Section
11(b)(iv) of this Lease), at public or private sale, conducted in
accordance with Applicable Law, as the Lessor may determine, free
and clear of any rights of the Lessee therein and without any duty
to account to the Lessee with respect to such sale or for the
proceeds thereof (except to the extent required by clause (v) below
if the Lessor shall elect to exercise its rights thereunder), in
which event the Lessee's obligation to pay Basic Rent with respect
to the Leased Property or the part thereof that has been sold, as
the case may be, for periods commencing after the date of such sale
shall terminate (except to the extent that Basic Rent is to be
included in computations under clause (v) below if the Lessor shall
elect to exercise its rights thereunder);
(iii) The Lessor may continue the Lease and the Lessee's right
to possession in effect (under California Civil Code Section 1951.4)
after the Lessee's breach and abandonment and recover the Rent as it
becomes due, provided the Lessee has the right to sublet or assign,
subject only to reasonable limitations. Sections 11(a) and (b)
hereof set forth the limitations of the Lessee's right to sublet or
assign, which limitations the Lessee and the Lessor agree are
reasonable. Acts of maintenance or preservation, efforts to relet
the Leased Property or the appointment of a receiver to protect the
Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(iv) [INTENTIONALLY OMITTED]
(v) Unless the Lessor shall have sold the Leased Property
pursuant to clause (ii) above, the Lessor may, whether or not the
Lessor shall have exercised or shall thereafter at any time exercise
its rights under clause (i), (iii) or (vii) of this Section 16(a) by
notice to the Lessee specifying a payment date, which shall be a
Casualty Value Date that is not sooner than the 30th day after the
date of such notice, demand that the Lessee pay to the Lessor, and
the Lessee shall pay to the Lessor, on the payment date specified in
such notice, (A) as liquidated damages for loss of bargain and not
as a penalty (in lieu of the Basic Rent due after the payment date
specified in such notice) and (B) in the case of a payment pursuant
to Section 16(a) (v) (D), as consideration for the obligation to
Transfer the Leased Property to the Lessee and to surrender the
Leased Property, any unpaid Rent due as of the payment date
specified in the notice and, in the case of a payment pursuant to
Section 16(a)(v)(D), if the Fair Market Sales Value is greater than
Casualty Value, a pro rata portion of Basic Rent accruing from the
last Basic Rent Payment Date to the payment date specified in the
notice (in each case other than Basic Rent to be paid in advance
payable on or before such payment date relating to any period after
such payment date if the Lessor shall have received an amount equal
to Fair Market Sales Value of the Leased Property pursuant to
Section 16(a) (v) (D)), plus whichever of the following amounts the
Lessor, in its sole discretion, shall specify in such notice
(together with interest on such amount at the Overdue Interest Rate
from the payment date specified in such notice to the date of actual
payment):
(A) an amount equal to the excess, if any, of (1)
Casualty Value, computed as of the payment date specified in
such notice, over (2) the Fair Market Rental Value of the Leased
Property (determined in an Appraisal Procedure on the basis of
the then actual condition of the Leased Property) for the
remainder of the Lease Term after discounting such Fair Market
Rental Value semiannually to present value as of the payment
date specified in such notice at 7.9%;
(B) an amount equal to the excess, if any, of (1) such
Casualty Value over (2) the Fair Market Sales Value of the
Leased Property (determined in an Appraisal Procedure on the
basis of the then actual condition of the Leased Property) as of
the payment date specified in such notice;
(C) an amount equal to the excess, if any, of (1) the
present value as of the payment date specified in such notice of
all installments of Basic Rent until the end of the Basic Term
or the then current Renewal Term, as the case may be, discounted
semiannually at 7.9%, over (2) the present value as of such
payment date of the Fair Market Rental Value of the Leased
Property (determined in an Appraisal Procedure on the basis of
the then actual condition of the Leased Property) until the end
of the Basic Term or such Renewal Term, as the case may be,
discounted semiannually at 7.9%; or
(D) an amount equal to the higher of such Casualty
Value or Fair Market Sales Value of the Leased Property
(determined in an Appraisal Procedure on the basis of the actual
condition of the Leased Property) as of the payment date
specified in such notice;
Upon payment by any Lessee of all amounts payable by it under
Section 16(a)(v) (D) and under the other Transaction Documents, the
Lessor shall effect a Transfer to the Lessee and the Lease Term
shall end and all the Lessee's obligations hereunder (other than any
obligation expressed herein as surviving termination of this Lease)
shall cease;
(vi) If the Lessor shall have sold the Leased Property or any
part thereof pursuant to clause (ii) above, the Lessor, if it shall
so elect by notice to the Lessee, may 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 bargain and not as a
penalty (in lieu of Basic Rent due for periods commencing after the
next Casualty Value Date following the date of such sale), any
unpaid Rent due as of the next Casualty Value Date following the
date of such sale, plus the amount of any deficiency between the
Sale Proceeds and Casualty Value, computed as of such Casualty Value
Date, together with interest at the Overdue Interest Rate on the
amount of such Rent and such deficiency from the date of such sale
until the date of actual payment;
(vii) In the event the Lessor rescinds or terminates this Lease,
(A) no reletting, reentry or taking of possession of the Leased
Property 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, (B) 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 (C) no act or thing done by the Lessor or any of its
agents, representatives or employees shall be deemed an acceptance
of a surrender of the Leased Property, and no agreement accepting a
surrender of the Leased Property shall be valid unless the same be
made in writing and be executed by the Lessor;
(viii) The Lessor may, as a matter of right and without notice
to Lessee or anyone claiming under the Lessee, apply to any court
having jurisdiction to appoint a receiver or receivers of the Leased
Property, and the Lessee hereby irrevocably consents to such
appointment and waives notice of any application therefor. Any such
receiver or receivers shall have all the usual powers and duties of
receivers in like or similar cases, including, without limitation,
the right to collect rents, and the right to perform any acts which
it deems necessary or desirable to preserve the value, marketability
or rentability of the Leased Property, or part thereof or interest
therein;
(ix) The Lessor may exercise any other right or remedy that may
be available to it under Applicable Law or proceed by appropriate
court action to enforce the terms hereof or to recover damages for
the breach hereof; and
(x) The Lessee hereby acknowledges that an Event of Default
hereunder will cause Lessor to suffer damages not contemplated by
this Lease or the parties hereto, the exact amount of which will be
impracticable or extremely difficult to ascertain. Such damages
include, but are not limited to, the loss of profit occasioned as a
result of the unique nature of this Lease, and the consequences of
default under the Indenture. Accordingly, upon the occurrence of
any Event of Default, the parties hereby agree that the payment of
liquidated damages under Sections 16(a)(v) and (vi) represent a fair
and reasonable estimate of the damages the Lessor will suffer by
reason of the occurrence of an Event of Default hereunder.
(b) No Release. Except as otherwise provided in Section 16(a), no
rescission or termination of this Lease, in whole or in part, or
repossession of the Leased Property or exercise of any remedy under Section
16(a) shall relieve the Lessee of any of its obligations under this Lease.
Except as otherwise provided in Section 16(a), the Lessee shall be liable
for any and all unpaid Rent due hereunder before, after or during the
exercise of any of the foregoing remedies, including all reasonable legal
fees and other reasonable costs and expenses incurred by the Lessor by
reason of the occurrence of any Event of Default or the exercise of the
Lessor's remedies with respect thereto. At any sale of the Leased Property
or any part thereof pursuant to this Section, the Indenture Trustee may bid
for and purchase such property.
(c) Remedies Cumulative. Except as expressly set forth therein, no
remedy under Section 16(a) is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy provided thereunder or
otherwise available to the Lessor at law or in equity. No express or
implied waiver by the Lessor of any Default or Event of Default hereunder
shall in any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default. The failure or delay of the Lessor
in exercising any right granted it hereunder upon any occurrence of any of
the contingencies set forth herein shall not constitute a waiver of any
such right upon the continuation or recurrence of any such contingency or
similar contingencies and any single or partial exercise of any particular
right by the Lessor shall not exhaust the same or constitute a waiver of
any other right provided herein. To the extent permitted by Applicable
Law, the Lessee hereby waives any right now or hereafter conferred by
statute or otherwise that may limit or modify any of the Lessor's rights
and remedies provided in this Section 16.
(d) Allocation of Basic Rent. If, for the purpose of Section 16(a)
(ii), it shall become necessary to allocate a portion of the Basic Rent
payable hereunder to any part of the Leased Property, such allocation shall
be in the same proportion as the original cost of such part bears to
Lessor's Cost.
SECTION 17. Notices.
Except as otherwise provided herein, all communications,
declarations, demands and notices provided for in this Lease shall be given
or made in the manner set forth in Section 13.1 of the Participation
Agreement. So long as any Notes remain Outstanding, the Lessee shall give
the Indenture Trustee copies of any notices required to be given to the
Lessor.
SECTION 18. Successors and Assigns.
This Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted
assigns.
SECTION 19. Right To Perform for Lessee.
Subject to the provisions of the Indenture, if an Event of Default
shall have occurred and be continuing, the Owner Participant or the Lessor
may, but shall not be obligated to, to the extent not prohibited by
Applicable Law, itself make any such payment or perform or comply with any
such agreement as the Lessee shall be obligated to pay, perform or comply
with under this Lease, and the amount of such payment and the amount of the
reasonable expenses of the Owner Participant or the Lessor incurred in
connection with such payment or the performance or compliance with such
agreement, as the case may be, together with interest thereon at the Equity
Interest Rate, shall be deemed Supplemental Rent, payable by the Lessee
upon demand. The Owner Participant or the Lessor shall give the Lessee at
least two Business Days' notice before taking any action in accordance with
the preceding sentence, provided that the failure to give such notice shall
have no effect upon any of the rights of the Owner Participant or the
Lessor thereunder.
SECTION 20. Granting of Easements.
If no Event of Default hereunder has occurred and is continuing,
subject to the limitation set forth in Article 12 of the Indenture, the
Lessor will join with the Lessee, from time to time at the request of the
Lessee (and at the Lessee's sole cost and expense), with respect to their
interests in the Leased Property to (i) grant, in the ordinary course of
the Lessee's business or in furtherance of the Development Plan (as
hereafter defined), easements, restrictions, covenants, licenses, rights of
way and other rights and privileges in the nature of the foregoing, (ii)
amend or release, in the ordinary course of the Lessee's business or in
furtherance of the Development Plan, existing easements and appurtenances
which benefit or burden the Leased Property, (iii) dedicate or transfer
portions of the Leased Property for road, highway or other public purposes,
(iv) execute, amend, release and deliver restrictive covenants and
restrictions and any amendments thereto in the ordinary course the Lessee's
business or in furtherance of the Development Plan for the benefit of the
Lessee's business as operated on the Leased Property which establish
certain exclusive use rights burdening adjacent properties and which burden
the Leased Property and/or establish common area rights and obligations
benefiting and burdening the Leased Property, or (v) execute and deliver
any instrument, in form and substance reasonably acceptable to the Lessor,
necessary or appropriate to make or confirm such grants easements,
restrictions, releases, dedications, transfers or amendments to any person,
with or without consideration; provided, however, that the Lessor shall not
be required to take any such action, or grant, release, dedication,
transfer or amendment, unless the Lessor shall have received a certificate
of an authorized officer of the Lessee (and said certificate shall be true)
stating that (x) such grant or release was granted in the ordinary course
of the Lessee's business or in furtherance of the Development Plan does not
interfere with and is not detrimental to the conduct of the Lessee's
business on the Leased Property as contemplated and permitted hereby and
does not impair the usefulness of the Leased Property for the purposes
contemplated and permitted hereby or reduce the Fair Market Sales Value,
utility or remaining useful life of the Leased Property or impair Lessor's,
Indenture Trustee's or any other Indemnitee's interest in the Leased
Property (except in the case of a grant or release in furtherance of the
Development Plan, to an immaterial extent; and otherwise in each case, to
an insignificant extent) or cause the Leased Property to be characterized
as limited use property (as described in Section 4.09 of the Revenue
Procedure 75-28 or Revenue Procedure 76-30), (y) the consideration, if any,
being paid for said grant, release, dedication, transfer or amendment or
other such instruments described in this Section 20, is paid to the Lessee,
and (z) a duly authorized and binding undertaking is provided by the
Lessee, in form and substance satisfactory to the Lessor, to 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, as though such grant, release, dedication,
transfer or amendment had not occurred and to perform all obligations of
the grantor or party effecting the release under such instrument of grant
or release during the Lease Term.
In connection with this Section 20, if applicable, the Lessee and the
Lessor have attached to this Lease Exhibit C, which sets forth the Lessee's
proposed development plan for certain portions of the Leased Property (the
"Development Plan"). The Lessor agrees that the Lessor and the
Remainderman shall not be entitled to any compensation relating to their
review, consent, execution and delivery of any instruments described in
this Section 20, which relate to the Development Plan.
SECTION 21. Amendments and Miscellaneous.
(a) Amendments in Writing. The provisions of this Lease may not be
waived, altered, modified, amended, supplemented or terminated in any
manner whatsoever except by written instrument signed by the Lessor and the
Lessee or, in the case of a waiver, the party against whom enforcement of
the waiver is sought. It is understood and agreed by the parties hereto
that any waiver, alteration, modification, amendment, supplement or
termination of this Lease that requires the consent of the Indenture
Trustee, all the Noteholders or a Majority in Interest of Noteholders (in
each case as provided in the Indenture) shall not be effective unless and
until such consent shall have been obtained as provided in accordance with
the provisions of the Indenture.
(b) Survival.
(i) The obligations of the Lessee to pay Supplemental Rent and
the obligations of the Lessee under Sections (4), 5(b), 6, 7, 8(e)
(with respect to Modifications constructed prior to such expiration
or termination), 8(g), 9(c), 9(h), 14(c)(v), 16, 18 and 21(b)
through (p) shall survive the expiration or termination of this
Lease; provided, however, that, after the expiration or termination
of this Lease, the Lessor shall not have any right or be entitled
to any remedy in respect of the Lessee's failure to perform its
obligations under Section 19 except the right to institute an action
seeking specific performance and/or recovery of actual damage.
(ii) The obligations of the Lessor under Sections 6(a) (to the
extent that a claim thereunder shall exist on the Lease Termination
Date) and 9 shall survive the expiration or other termination of
this Lease.
(c) Severability of Provisions. Any provision of this Lease that may
be determined by competent authority to be prohibited or unenforceable in
any jurisdiction, as to such jurisdiction, shall not be effective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
(d) True Lease. This Lease is intended as, and shall constitute, an
agreement of lease, and nothing herein shall be construed as conveying to
the Lessee any right, title or interest in or to the Leased Property,
except as a lessee.
(e) Further Assurances. From time to time, as and when reasonably
requested by either party hereto, the other party will promptly execute and
deliver, or cause to be executed and delivered, all such documents and
instruments as may be reasonably necessary to carry out the intent and
purposes of this Lease.
(f) Original Lease. The single executed original of this Lease
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the front
cover and containing the receipt of the Indenture Trustee therefor on or
following the signature page thereof shall be the "Original Executed
Counterpart" of this Lease. 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."
(g) GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO
THE CHOICE OF LAW DOCTRINE OF SUCH STATE.
(h) Headings. The division of this Lease into sections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Lease.
(i) Concerning the Owner Trustee.
(A) State Street Bank and Trust Company of California,
National Association, is entering into this Lease solely as
Owner Trustee under the Trust Agreement and not in its
individual capacity except as expressly stated herein.
Accordingly, except as stated herein, each of the
representations, warranties, undertakings and agreements herein
made on the part of the Owner Trustee as Lessor (and not in its
individual capacity) is made and intended not as a personal
representation, warranty, undertaking or agreement by or for the
purpose or with the intention of binding State Street Bank and
Trust Company of California, N.A. personally, but is made and
intended for the purpose of binding only the Trust Estate.
Except as expressly stated herein, no personal liability or
responsibility is assumed hereunder by or shall at any time be
enforceable against State Street Bank and Trust Company of
California, N.A. or any successor in trust on account of any
action taken or omitted to be taken or any representation,
warranty, undertaking or agreement hereunder of the Owner
Trustee (in its fiduciary capacity) provided, however, that (a)
the Lessee or any person acting by, through or under any Lessee,
making a claim hereunder, may look to the Trust Estate for
satisfaction of the same and (b) State Street Bank and Trust
Company of California, N.A. or its successor in trust, as
applicable, shall be personally liable for its own gross
negligence, willful misconduct or bad faith in the performance
of its duties as Owner Trustee or otherwise and for its breach
of its covenants, undertakings, representations and warranties
contained herein, to the extent such were made in its individual
capacity.
(B) If a successor owner trustee is appointed in
accordance with the terms of the Trust Agreement, such successor
owner trustee, without any further act, shall succeed to all the
rights, duties, immunities and obligations of the Lessor
hereunder and the predecessor owner trustee shall be released
from all further duties and obligations hereunder.
(j) Lien of the Indenture. The Lessee hereby agrees that, except as
provided in Sections 8(d), 8(e), 8(g) and 8(h), any property subject to the
Lien of the Indenture and the Related Supplemental Indenture that is to be
transferred hereunder shall be transferred subject to such lien and
security interest.
(k) Counterpart Execution. This Lease may be executed in any number
of counterparts and by each of the parties hereto in separate counterparts,
all such counterparts together constituting but one and the same
instrument.
(l) Estoppel Certificates.
(i) The Lessee agrees, at any time and from time to time, upon
not less than 30 days' prior written notice from the Lessor or the
Remainderman, to execute, acknowledge and deliver to the Lessor or
the Remainderman a statement in writing (w) certifying that this
Lease is unmodified and in full force and effect (or if there have
been modifications, that this Lease is in full force and effect as
modified and stating the modifications hereto); (x) stating the
dates to which the Rent and other charges hereunder have been paid
by the Lessee; (y) stating whether or not the Lessee has knowledge
that the Lessor is in default in the performance of any covenant,
agreement or condition contained in this Lease, and, if the Lessee
has knowledge of such a default, specifying each such default; and
(z) stating the address to which notices to the Lessee shall be
sent.
(ii) The Lessor agrees, at any time and from time to time, but
not more often than three times in one (1) year, upon not less than
30 days' prior written notice from the Lessee or the Remainderman,
to execute, acknowledge and deliver to the Lessee or the
Remainderman a statement in writing (w) certifying that this Lease
is unmodified and in full force and effect (or if there have been
modifications, that this Lease is in full force and effect as
modified and stating the modifications hereto); (x) stating the
dates to which the Rent and other charges hereunder have been paid
by the Lessee; (y) stating whether or not the Lessor has knowledge
that the Lessee is in default in the performance of any covenant,
agreement or condition contained in this Lease, and, if the Lessor
has knowledge of such a default, specifying each such default, and
(z) stating the address to which notices to the Lessor shall be
sent. If so requested by the Lessee or the Remainderman, the Lessor
shall also address such estoppel certificates to lenders, partners,
investors or others with a bona fide business purpose requesting the
same. The Lessor shall, if requested by the Lessee or the
Remainderman, deliver an estoppel certificate, in the substance and
form described above, relative to the status of any ground lease,
underlying lease or first mortgage.
(m) No merger. There will be no merger of this Leased Property or of
any leasehold or subleasehold estate hereby or thereby created with the fee
or any other estate or ownership interest in the Leased Property or any
part thereof by reason of the fact that the same Person may acquire or own
or hold, directly or indirectly, (a) this Lease or any leasehold or
subleasehold estate created hereby or thereby or any interest in this Lease
or in any such leasehold or subleasehold estate and (b) the fee estate or
other estate or ownership interest in the Leased Property or any part
thereof, and this Lease will not be terminated for any cause except as
expressly provided herein.
(n) Recordation. The Lessor and the Lessee agree that a memorandum
of this Lease in recordable form shall be recorded in the Official Records
of the County where the Leased Property is located, at the cost of the
Lessee.
(o) Signs. The Lessee shall have the exclusive right to place its
signs in, on and about the Leased Property, provided the same are in
compliance with Applicable Law and provided that such signs are purchased
and installed at the sole cost and expense of the Lessee and are removed
from the Leased Property at the expiration or earlier termination of the
Lease Term at the Lessee's sole cost and expense and without damage or
destruction to any of the Leased Property. The Lessor shall not be
permitted to erect or place signs in, on or about the Leased Property
without the Lessee's prior written consent, which consent may be with-held
by the Lessee for any reason.
(p) Ground Lease. The terms of this Section 21(p) will be effective
only during such time as the Lessor will be the lessee of the Land from the
Remainderman under the Ground Lease.
(a) The Lessee will perform, at the Lessee's sole cost and
expense, all of the terms, covenants and conditions of the Ground
Lease (including the obligation to pay Basic Rent thereunder which
shall not reduce the Basic Rent payable to the Lessor hereunder),
which are to be performed by the lessee under the Ground Lease. The
Lessee will indemnify, defend and hold the Lessor harmless from and
against any and all loss, damage and expense which the Lessor may
suffer or incur as a result of any failure by the Lessee to perform
such terms, covenants and conditions.
(b) Any amendment or modification of the Ground Lease by the
lessor and the lessee thereunder will not be binding upon Lessee
without the written consent of the Lessee, and any such amendment or
modification (a copy of which the Lessor will furnish to the Lessee
within fifteen days (15) after the execution thereof) will be
subordinate to the rights of the Lessee hereunder.
(c) As long as the Ground Lease will be in existence, (i) the
Lessee will send to the lessor under the Ground Lease, at its
address set forth in the Ground Lease or at such other address as
said lessor may from time to time designate in writing to the
Lessee, a copy of each notice or other communication which the
Lessee will serve on the Lessor hereunder; and (ii) the Lessor will
promptly send to the Lessee a copy of each notice or other
communication which the Lessor will receive from the lessor under
the Ground Lease.
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
to be duly executed in New York, New York, by an officer thereunto duly
authorized as of the date and year first above written.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION, a
national banking association, not in its
individual capacity, except as expressly set forth
herein, but solely as Owner Trustee, as Lessor
By:__________________________
Name:
Title:
SMITH'S FOOD & DRUG CENTERS,
INC., as Lessee
By:__________________________
Name: Michael C. Frei
Title: Senior Vice President
The address of the within named Lessor is:
750 Main Street
Suite 1114
Hartford, Connecticut 06103
The address of the within named Lessee is:
1550 South Redwood Road
Salt Lake City, Utah 84014
Attention: General Counsel
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ___ day of December, 1993, before me ______________, the
undersigned officer, personally appeared W. Jeffrey Kramer who acknowledged
himself to be Assistant Vice President of STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association
and that he, being authorized to do so, executed the foregoing instrument
for the purposes therein contained by signing the name of the corporation.
In witness whereof, I hereunto set my hand and official seal.
(Notarial Seal) ______________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ____ day of December, 1993, before me
__________________, the undersigned officer, personally appeared
____________ who acknowledged himself to be the _____________ of SMITH'S
FOOD & DRUG CENTERS, INC., a Delaware corporation, and that he as such
__________, being authorized to do so, executed the foregoing instrument
for the purposes therein contained by signing the name of the corporation
by himself as ____________.
In witness whereof, I hereunto set my hand and official seal.
[Notarial Seal) _______________________________
Notary Public
SCHEDULE 1
TERMS AND BASIC RENT
1. Terms
(a) The Interim Term shall commence on December __, 1993 and end on
___________________.
(b) The Basic Term shall commence on _______________________ (the
"Basic Term Commencement Date") and end on __________________________ (the
"Basic Term Termination Date").
(c) The First Fixed-Rate Renewal Term, if exercised, shall commence
on the Basic Term Termination Date and end on the fifth anniversary of the
Basic Term Termination Date.
(d) All other Renewal Terms, if exercised, shall be determined
pursuant to Section 13 of this Lease.
2. Rent
(a) Interim Rent. Interim Rent shall be zero.
(b) Basic Rent. On each payment date set forth below ("Basic Rent
Payment Dates"), Basic Rent shall be an amount determined by multiplying
$_____________ ("Property Cost") by the percentage corresponding to such
Basic Rent Payment Date.
Basic Rent Payment Date Applicable Percentage
[need advance/arrears?]
(c) Fixed-Rate Renewal Terms. On each [date] and [date] during any
Fixed-Rate Renewal Term, Basic Rent shall be an amount determined by
multiplying Property Cost by ___%.
3. The Lessor Purchase Price for this Property is $_____________.
4. The Remainderman Purchase Price for this Property is $_______________.
SCHEDULE 2
CASUALTY VALUES
Casualty Value on any Casualty Value Date shall be determined by
multiplying Property Cost by the Lessor's Casualty Value Percentage set
forth below and adding to such product the Remainderman's Casualty Value.
Lessor's Casualty Remainderman's Casualty Value
Value Percentage Casualty Value Date
[Monthly Casualty Values]
SCHEDULE 3
TERMINATION VALUES
Termination Value on any Termination Date shall be determined by
multiplying Property Cost by the Lessor's Termination Value Percentage set
forth below and adding to such product the Remainderman's Termination
Value.
Lessor's Termination Remainderman's Termination
Value Percentage Termination Value Date
[Monthly TV's]
SCHEDULE 4
PRICING ASSUMPTIONS
APPENDIX A
FORM OF
DEFINITIONS AND RULES OF USAGE
For Form of Definitions and Rules of Usage
Please See "Appendix A" to
the Participation Agreement