EXHIBIT 10.2
AMENDED AND RESTATED GROUND LEASE AGREEMENT
THIS AMENDED AND RESTATED GROUND LEASE AGREEMENT (this "Agreement"
herein), dated as of September 21, 2001 is entered into by and between:
(1) NOVELLUS SYSTEMS, INC., a California corporation ("Ground
Lessor"); and
(2) ABN AMRO LEASING, INC., an Illinois corporation ("Ground
Lessee").
RECITALS
A. Ground Lessor is the lessee of the land described in Exhibit A (as
more fully defined below, the "Land" under an Amendment and Restatement of
Ground Lease made effective as of July 1, 1998 by and between The Board of
Trustees of Stanford University ("Stanford"), as lessor, and Ground Lessor, as
lessee (as amended, the "Stanford Lease"). Pursuant to that certain Ground Lease
Agreement, dated as of August 7, 1998, Ground Lessor previously subleased to
Ground Lessee the Land upon the terms and subject to the conditions set forth
therein (the "Existing Ground Lease Agreement").
B. Ground Lessor has requested Ground Lessee and the parties which are
"Participants" under the Participation Agreement referred to in Recital C below
(such parties to be referred to collectively as the "Participants") to provide
to Ground Lessor a lease facility, as the same may be amended, restated,
renewed, replaced or otherwise modified from time to time, pursuant to which:
(1) Ground Lessee would (a) continue to sublease from Ground
Lessor the Land, (b) sublease back to Ground Lessor the Land and lease
to Ground Lessor certain improvements located on the Land owed by Ground
Lessee and (c) grant to Ground Lessor the right to purchase such
improvements; and
(2) The Participants would participate in such lease facility by
(a) funding the advances to be made by Ground Lessor and (b) acquiring
participation interests in the rental and certain other payments to be
made by Ground Lessor.
C. Pursuant to a Participation Agreement dated of even date herewith (as
amended, restated, renewed, replaced or otherwise modified from time to time,
the "Participation Agreement") among Ground Lessee, Ground Lessor, the
Participants and ABN AMRO Bank N.V., as agent for the Participants (in such
capacity, "Agent"), Ground Lessee and the Participants have agreed to provide
such lease facility upon the terms and subject to the conditions set forth
therein, including without limitation the execution and delivery of this
Agreement amending and restating the Existing Ground Lease and setting forth the
terms of the lease by Ground Lessor to Ground Lessee of the Land.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. INTERPRETATION.
1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Agreement or other document, instrument or
agreement referenced in such Schedule 1.01, in each case as each such term may
be amended, restated or otherwise modified from time to time or as such
document, instrument or agreement may be amended, restated, renewed, replaced or
otherwise modified from time to time.
1.02. Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Agreement
and the other Operative Documents.
SECTION 2. BASIC PROVISIONS.
2.01. Lease of the Property. For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Ground Lessor agrees
to lease to Ground Lessee and Ground Lessee agrees to lease from Ground Lessor
the following property (the "Ground Lease Property") to the extent of Ground
Lessor's estate, right, title and interest therein, thereto or thereunder:
(a) All lots, pieces, tracts and parcels of land described in
Exhibit A (the "Land");
(b) All Appurtenant Rights belonging, relating or pertaining to
the Land;
(c) All Related Permits and Related Agreements related to the
foregoing Land or Appurtenant Rights; and
(d) All accessions and accretions to and replacements and
substitutions for the foregoing.
This Agreement does not cover the Improvements or other property not described
above related to the Land. Ground Lessor and Ground Lessee agree that Ground
Lessee owns such Improvements and such other property and that Ground Lessor's
only interest in the Improvements and such other property is the leasehold
interest granted to Ground Lessor therein in the Facility 2 Lease Agreement.
2
2.02. Term. The original term of this Agreement shall commence on the
Closing Date (the "Ground Lease Commencement Date") and shall end on the first
Business Day of August 2032 (the "Ground Lease Scheduled Expiration Date"),
subject to the terms of Subparagraph 4.01(a) below.
2.03. Rent. On or before the Ground Lease Commencement Date, Ground
Lessee shall pay to Ground Lessor as rent hereunder for the entire term of this
Agreement the sum of Ten Dollars ($10.00); provided, however, that Ground Lessor
may, after the Expiration Date of the Facility 2 Lease Agreement and the
satisfaction in full of all Lessee Obligations, increase the rent payable by
Ground Lessee for the remaining term hereof to the "market rent," by delivering
to Ground Lessee not less than forty-five (45) days prior to the proposed date
of such increase, a written notice (a "Notice of Ground Lease Rent Increase").
The "market rent" for the remainder of the term shall be the rent that would be
agreed upon between a willing lessee, under no compulsion to lease, and a
willing lessor, under no compulsion to lease, for unimproved land comparable in
size and location to the Land, exclusive of any Improvements, at the time of
Ground Lessor's exercise of its rights under this Paragraph 2.03 and taking into
consideration, among other relevant factors, the condition of the Land and the
encumbrances affecting the title to the Land at the time of the exercise of such
rights and the obligations of the Ground Lessor under this Agreement, including
its obligation to pay taxes. If Ground Lessor and Ground Lessee cannot agree
upon such "market rent" within seven (7) days after the date Ground Lessor
delivers the Notice of Ground Lease Rent Increase (the "Rent Increase
Notification Date"), the "market rent" shall be determined as follows:
(a) Not later than fourteen (14) days after the Rent Increase
Notification Date, Ground Lessor and Ground Lessee each shall appoint a
real estate appraiser familiar with properties in the vicinity of the
Land and shall notify the other party of its appointment. If the two
appraisers agree upon the "market rent" within twenty-one (21) days
after the Rent Increase Notification Date, such rent will be binding
upon Ground Lessor and Ground Lessee. If the two appraisers cannot agree
upon the "market rent" within such time period, then, not later than
twenty-eight (28) days after the Rent Increase Notification Date, such
appraisers shall appoint a third real estate appraiser familiar with
properties in the vicinity of the Land. Immediately after such
appointment (and in no event later than thirty (30) days after the Rent
Increase Notification Date), each of the first two appraisers will
submit his/her best estimate of the "market rent", together with a
written report supporting such estimate, to the third appraiser. Not
later than thirty-five (35) days after the Rent Increase Notification
Date, the third appraiser will select the estimate of the "market rent"
he/she concludes to be the closest to the definition thereof set forth
above in this Paragraph 2.03 and shall notify Ground Lessor and Ground
Lessee of such selection. The estimate so selected by the third
appraiser will be binding upon Ground Lessor and Ground Lessee.
(b) If a third appraiser must be chosen pursuant to Subparagraph
2.03(a) and the first two appraisers cannot agree upon the third
appraiser within the prescribed time, either Ground Lessor or Ground
Lessee may require each of the first two appraisers immediately to
submit its choice for the third appraiser to the American Arbitration
Association ("AAA") in San Francisco, California for selection in
accordance with the
3
then rules of said association within thirty-five (35) days after the
Rent Increase Notification Date. If such a procedure is necessary to
appoint the third appraiser, then (i) the deadline for the two
appraisers to submit to the third appraiser their estimates of the
"market rent" and supporting report pursuant to Subparagraph 2.03(a)
shall be not later than thirty-seven (37) days (rather than thirty (30)
days) after the Rent Increase Notification Date and (ii) the deadline
for the third appraiser to select one of the two estimates pursuant to
Subparagraph 2.03(a) shall be not later than forty-two (42) days (rather
than thirty-five (35) days) after the Rent Increase Notification Date.
(c) If either party or its appraiser fails to comply with the
procedures (including deadlines) set forth above, then the other party's
appraiser will determine the "market rent".
(d) Ground Lessor and Ground Lessee each shall bear the expense
of the appraiser appointed by it, and the expenses of the third
appraiser and the AAA will be shared equally by Ground Lessor and Ground
Lessee.
(e) All appraisers selected for the appraisal process set out in
this Paragraph 2.03 will be disinterested, reputable, qualified real
estate appraisers with the designation of MAI or equivalent and with at
least five (5) years experience in appraising properties comparable to
the Land. If a third appraiser must be chosen pursuant to Subparagraph
2.03(a), such appraiser will be chosen on the basis of objectivity and
competence, not on the basis of such appraiser's relationship with the
other appraisers or the parties to this Agreement.
2.04. Use . Ground Lessee may use the Ground Lease Property for any
lawful purpose.
2.05. Title; Quiet Enjoyment.
(a) Title. Ground Lessor represents and warrants to Ground
Lessee that Ground Lessor has good and marketable title to the Ground
Lease Property, subject to the Permitted Property Liens. Ground Lessor
shall not sell, lease, transfer or otherwise dispose of its right, title
and interest in the Ground Lease Property or this Agreement prior to the
Expiration Date of the Facility 2 Lease Agreement and the satisfaction
in full of all Lessee Obligations (except as permitted under the
Facility 2 Lease Agreement).
(b) No Merger. The leasehold estate in the Ground Lease Property
created by this Agreement shall not be merged with the fee estate or any
other interest in the Ground Lease Property as a result of the same
Person acquiring, owning or holding, directly or indirectly, in whole or
in part, (i) the leasehold estate in the Ground Lease Property created
hereby or any interest in such leasehold estate and (ii) the fee estate
in the Ground Lease Property or any interest in such fee estate, unless
all parties with an interest in the Ground Lease Property that would be
adversely affected by any such merger specifically agree in writing that
such a merger shall occur.
4
(c) Quiet Enjoyment. Neither Ground Lessor nor any other Person
lawfully claiming any right or interest in the Ground Lease Property
shall, prior to the Ground Lease Expiration Date, disturb Ground
Lessee's peaceable and quiet enjoyment of the Ground Lease Property;
provided, however, that such enjoyment shall be subject to the terms of
this Agreement and to Permitted Property Liens.
SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.
3.01. Maintenance, Repair, Etc.
(a) General. Until the Expiration Date of the Facility 2 Lease
Agreement, Ground Lessor shall maintain the Ground Lease Property in
accordance with the terms and provisions of the Facility 2 Lease
Agreement. Following the Expiration Date of the Facility 2 Lease
Agreement and until the Ground Lease Expiration Date, Ground Lessor
shall maintain the Ground Lease Property on a basis consistent with the
operation and maintenance of commercial properties comparable in type
and location to the Ground Lease Property and in compliance with prudent
industry practice.
(b) Improvements. Ground Lessee, at its sole cost and expense,
may from time to time make alterations, renovations, additions and other
Improvements to the Ground Lease Property and substitutions and
replacements therefor; provided, however, that, unless an Event of
Default has occurred and is continuing under the Facility 2 Lease
Agreement, Ground Lessee shall not make any such alterations,
renovations, additions or other Improvements prior to the Expiration
Date of the Facility 2 Lease Agreement, except pursuant to the terms of
the Construction Agency Agreement. Unless purchased by Ground Lessor
pursuant to the Facility 2 Purchase Agreement, all Improvements to the
Ground Lease Property, whether constructed before or during the term of
this Agreement, shall be the property of Ground Lessee and may be
removed by Ground Lessee at any time at or prior to the termination of
this Agreement; provided, however, that Ground Lessee shall not remove
any such property prior to the Expiration Date of the Facility 2 Lease
Agreement unless an Event of Default has occurred and is continuing
under the Facility 2 Lease Agreement.
3.02. Risk of Loss. Until the Expiration Date of the Facility 2 Lease
Agreement, Ground Lessor assumes all risks of loss arising from any Casualty or
Condemnation and all liability for all personal injuries and deaths and damages
to property suffered by any Person or property on or in connection with the
Ground Lease Property in accordance with the terms and provisions of the
Facility 2 Lease Agreement. If (a) Ground Lessor exercises the Expiration Date
Purchase Option pursuant to the Facility 2 Purchase Agreement and (b) Ground
Lessee elects to retain the Property pursuant to Subparagraph 3.02(d) of the
Facility 2 Purchase Agreement, Ground Lessee assumes such risks of loss and such
liability arising after the Scheduled Expiration Date, except to the extent any
such loss or liability is primarily caused by the gross negligence or willful
misconduct of Ground Lessor or the breach by Ground Lessor of its obligations
under the Operative Documents.
5
3.03. Insurance. Until the Expiration Date of the Facility 2 Lease
Agreement, Ground Lessor shall carry and maintain liability insurance coverage
for the Ground Lease Property as provided in Paragraph 3.03 of the Facility 2
Lease Agreement for the Property upon the same terms as set forth therein and
otherwise shall comply with the provisions of such paragraph.
3.04. Casualty and Condemnation.
(a) Repair. Until the Expiration Date of the Facility 2 Lease
Agreement, Ground Lessor, at its sole cost and expense, shall diligently
proceed to repair and restore the Ground Lease Property in accordance
with the terms and provisions of the Facility 2 Lease Agreement. If any
Casualty or Condemnation affecting the Ground Lease Property (except for
any Casualty primarily caused by the gross negligence or willful
misconduct of Ground Lessor or the breach by Ground Lessor of its
obligations under the Operative Documents) shall occur after the
Scheduled Expiration Date, Ground Lessee, at its sole cost and expense,
shall diligently proceed to repair and restore the Ground Lease Property
as near as practically possible to the condition in which it existed
immediately prior to such Casualty or Condemnation and shall complete
all such repairs and restoration not later than six (6) months after the
occurrence of the Casualty or Condemnation.
(b) Prosecution of Claims for Casualty and Condemnation
Proceeds. Until the Expiration Date of the Facility 2 Lease Agreement,
Ground Lessor shall proceed promptly and diligently to prosecute in good
faith the settlement or compromise of any and all claims for Casualty
and Condemnation Proceeds in accordance with the terms and provisions of
the Facility 2 Lease Agreement. Following the Expiration Date of the
Facility 2 Lease Agreement and until the Ground Lease Expiration Date,
Ground Lessee shall proceed promptly and diligently to prosecute in good
faith the settlement or compromise of any and all claims for Casualty
and Condemnation Proceeds with respect to the Ground Lease Property and
Ground Lessee is hereby authorized, in its own name or in Ground
Lessor's name, to adjust any loss covered by insurance or any Casualty
or Condemnation claim or cause of action, and to settle or compromise
any claim or cause of action in connection therewith.
(c) Assignment of Casualty and Condemnation Proceeds. Ground
Lessor hereby absolutely and irrevocably assigns to Ground Lessee all
Casualty and Condemnation Proceeds and all claims relating thereto,
which Casualty and Condemnation Proceeds will be applied to repair and
restore the Ground Lease Property pursuant to Subparagraph 3.04(a) of
the Facility 2 Lease Agreement.
3.05. Taxes. Ground Lessor shall promptly pay when due all taxes and
other Governmental Charges imposed on or payable by Ground Lessee in connection
with the Ground Lease Property, this Agreement or any of the transactions
contemplated hereby or thereby. Upon request of Ground Lessee, as promptly as
possible after any such taxes or other Governmental Charges are payable by
Ground Lessor, Ground Lessor shall send to Ground Lessee a certified copy of an
original official receipt received by Ground Lessor showing payment thereof. If
Ground Lessor fails to pay any such taxes or other Governmental Charges when due
to the appropriate taxing authority or fails to remit to Ground Lessee the
required receipts or other
6
required documentary evidence, Ground Lessor shall indemnify Ground Lessee for
any incremental taxes, interest or penalties that may become payable by Ground
Lessee as a result of any such failure. The obligations of Ground Lessor under
this Paragraph 3.05 shall survive the termination of this Agreement.
3.06. Environmental Matters. Ground Lessee shall not cause or permit the
Ground Lease Property to be used as a site for the use, generation, manufacture,
storage, treatment, release, discharge, disposal or transportation of any
Hazardous Materials in a manner that would materially decrease the value of the
Ground Lease Property or that would constitute a material violation of any
Environmental Laws.
7
3.07. Liens, Easements, Etc.
(a) Ground Lessor's Covenants. Until the Expiration Date of the
Facility 2 Lease Agreement and the satisfaction in full of all Lessee
Obligations, Ground Lessor shall not create, incur, assume or permit to
exist any Lien or easement on or with respect to any of the Ground Lease
Property of any character, whether now owned or hereafter acquired,
except for Permitted Property Liens of the types described in
Subparagraph 3.07(a) of the Facility 2 Lease Agreement. Following the
Expiration Date of the Facility 2 Lease Agreement and for the remainder
of the term of this Agreement until the Ground Lease Expiration Date,
Ground Lessor agrees that Ground Lessee may, and Ground Lessor hereby
consents in each instance to the following actions by Ground Lessee for
the following purposes, provided the same are in compliance with the
Stanford Lease: (i) the granting of licenses and other rights and
privileges reasonably necessary or desirable for the use, repair, or
maintenance of the Ground Lease Property; (ii) the release of existing
easements or other rights in the nature of easements which are for the
benefit of the Ground Lease Property; (iii) the seeking of any zoning
variances or modifications to existing zoning; and (iv) the imposition
of and the execution of amendments to, or waivers or releases of any
covenants, easements, licenses, and restrictions affecting the Ground
Lease Property; provided, however that in each case (1) such grant,
release, dedication, transfer or amendment does not impair the value,
operation or remaining useful life of the Ground Lease Property or
materially and adversely affect Ground Lessee's ability to perform its
obligations hereunder, except such impairments which are not material,
(2) such grant, release, dedication, transfer or amendment is reasonably
necessary or desirable in connection with the use, maintenance,
alteration or improvement of the Ground Lease Property, (3) such grant,
release, dedication, transfer or amendment will not cause the Ground
Lease Property or any portion thereof to fail to comply with the
provisions of this Agreement or any other Operative Document or any
Governmental Rule (including all applicable zoning, planning, building
and subdivision ordinances, all applicable restrictive covenants and all
applicable architectural approval requirements), (4) all governmental
and other consents or approvals required prior to such grant, release,
dedication, transfer, annexation or amendment or other action have been
obtained, and all filings required prior to such action have been made,
(5) Ground Lessee shall remain obligated under this Agreement as though
such grant, release, dedication, transfer or amendment had not been
effected, and (6) Ground Lessee shall pay and perform, or caused to be
paid and performed, any obligations of Ground Lessor under such grant,
release, dedication, transfer or amendment. Ground Lessor shall, upon
the request of Ground Lessee, and at Ground Lessee's sole cost and
expense, execute and deliver any instruments necessary or appropriate to
confirm any such grant, release, dedication, transfer, annexation or
amendment to any Person permitted under this Paragraph 3.07.
(b) Ground Lessee's Covenants. Except for Leasehold Mortgages
permitted by Subparagraph 3.07(c) and subject to Paragraph 3.11 relating
to permitted contests, Ground Lessee shall not (i) transfer or assign to
any Person any of Ground Lessee's interests in the Ground Lease Property
in violation of any of the Operative Documents or (ii) create, incur,
assume or permit to exist any Lien in the Ground Lease Property arising
8
as a result of any claim against Ground Lessee by any Person unrelated
to any of the Operative Documents or the transactions contemplated
thereby.
(c) Leasehold Mortgages.
(i) Ground Lessor hereby consents to the Assignment of
Lease, the Lessor Deed of Trust and the Lessor Security
Agreement; the Liens granted to Agent therein; and all other
Liens granted to Agent in any of the Operative Documents and the
Property to secure the Lessor Obligations. After the Expiration
Date of the Facility 2 Lease Agreement, Ground Lessee may, as
security for any indebtedness of Ground Lessee, grant to any
holder of such indebtedness a Lien in its leasehold interest in
the Ground Lease Property (any such Liens, together with the
Liens granted to Agent pursuant to the Operative Documents, to
be referred to herein as "Leasehold Mortgages") in compliance
with the applicable provisions of the Stanford Lease.
(ii) Subject to the terms of the Stanford Lease, any
Person may become the legal owner and holder of the leasehold
interest in the Ground Lease Property created by this Agreement
by foreclosure of a Leasehold Mortgage or as a result of an
assignment or conveyance in lieu of such foreclosure and, upon
becoming such an owner, shall become the Ground Lessee hereunder
with the rights and obligations thereof.
(iii) Ground Lessor shall notify each holder of a
Leasehold Mortgage (a "Leasehold Mortgagee") of any default by
Ground Lessee hereunder. No notice of a default by Ground Lessee
shall be deemed effective until so served. Any Leasehold
Mortgagee shall have the right to correct or cure any such
default within the same period of time after receipt of such
notice as is given to Ground Lessee under this Agreement to
correct or cure defaults, plus an additional period of thirty
(30) days thereafter. Ground Lessor will accept performance by
any Leasehold Mortgagee of any covenant, condition or agreement
on Ground Lessee's part to be performed hereunder with the same
force and effect as though performed by Ground Lessee.
(iv) If this Agreement should terminate by reason of a
disaffirmance or rejection of this Agreement by Ground Lessee or
any receiver, liquidator or trustee for the property of Ground
Lessee, or by any Governmental Authority that has taken
possession of the business or property of Ground Lessee by
reason of the insolvency or alleged insolvency of Ground Lessee,
then:
(A) Ground Lessor shall give notice thereof to
each Leasehold Mortgagee and, upon request of any
Leasehold Mortgagee made within sixty (60) days after
Ground Lessor has given such notice, Ground Lessor shall
enter into a new ground lease of the Ground Lease
Property with such Leasehold Mortgagee for the remainder
of the term hereof on the same terms and conditions as
contained in this Agreement. (If more than
9
one Leasehold Mortgagee shall request Ground Lessor to
enter into a new ground lease, Ground Lessor shall enter
into such a new ground lease with the requesting
Leasehold Mortgagee holding the highest priority
Leasehold Mortgage. If two or more requesting Leasehold
Mortgagees share the highest priority, the new ground
lease shall name all such Leasehold Mortgagees as
co-tenants thereunder.)
(B) The estate of any Leasehold Mortgagee, as
lessee under such a new ground lease, shall have the
same priority as the estate of Ground Lessee created
under this Agreement. If the Facility 2 Lease Agreement
or Facility 2 Purchase Agreement are in effect at the
time of execution of such new ground lease, such new
ground lease shall be made subject to the Facility 2
Lease Agreement and the Facility 2 Purchase Agreement.
(v) No modification or early termination of this
Agreement shall be effective without the consent of a Leasehold
Mortgagee if (A) Ground Lessee has agreed with such Leasehold
Mortgagee that such Leasehold Mortgagee's consent will be
required for any such modification or early termination and (B)
Ground Lessor has been notified of such agreement.
(vi) No Leasehold Mortgagee will assume any liability
under this Ground Lease either by virtue of its Leasehold
Mortgage or by any subsequent receipt or collection of rents or
profits generated from the Ground Lease Property, unless and
until the Leasehold Mortgagee acquires Ground Lessee's leasehold
interest in the Ground Lease Property at foreclosure or by deed
in lieu of foreclosure.
3.08. Assignments and Subletting.
(a) Permitted Assignments and Subleases. Subject to the terms of
the Stanford Lease, Ground Lessee may:
(i) Prior to the Expiration Date of the Facility 2 Lease
Agreement, sublease the Ground Lease Property to Ground Lessor
pursuant to the Facility 2 Lease Agreement and Ground Lessor may
sublease the improvements on the Land to Cooley Godward, LLP
under the Cooley Lease and in accordance with the subleases
permitted under the Facility 2 Lease Agreement; and
(ii) On or after the Expiration Date of the Facility 2
Lease Agreement, unless Ground Lessor purchases the Property on
the Expiration Date pursuant to the Term Purchase Option or the
Expiration Date Purchase Option in the Facility 2 Purchase
Agreement and satisfies in full all Lessee Obligations, sublease
the Ground Lease Property to any Person pursuant to a lease
agreement that is subject to the terms of this Agreement or sell
or assign this Agreement to any Person.
10
Ground Lessee shall notify Ground Lessor in writing of any such
sublease, sale or assignment on or after the Expiration Date of
the Facility 2 Lease Agreement.
Except as permitted by clause (i) or (ii) above or by Subparagraph
2.11(b) or Subparagraph 7.05(d) of the Participation Agreement, Ground
Lessee shall not sell or assign this Agreement or sublease the Ground
Lease Property.
(b) Assumption of Ground Lessee Obligation. All obligations of
Ground Lessee under this Agreement shall be assumed by (i) Ground Lessor
during the Term of the Facility 2 Lease Agreement and while Ground
Lessor is in possession of the Ground Lease Property, (ii) each other
Person to whom Ground Lessee subleases the Ground Lease Property
pursuant to Subparagraph 3.08(a) during the term of such sublease and
while such Person is in possession of the Ground Lease Property and
(iii) by any Person to whom Ground Lessee sells or assigns this
Agreement pursuant to Subparagraph 3.08(a) at all times after such sale
or assignment, and each such Person shall be deemed so to have assumed
such obligations by entering into such sublease or by purchasing or
taking assignment of this Agreement. Ground Lessor agrees that Ground
Lessee shall have no duty to perform any of its obligations under this
Agreement and shall be fully released from all such obligations during
the periods when such obligations are so assumed by other Persons
pursuant to clauses (i) and (ii) of the first sentence of this
Subparagraph 3.08(b) and at all times after any sale or assignment of
this Agreement.
3.09. Utility Charges. Ground Lessor shall pay all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service and all
other utilities and services to, on or in connection with the Ground Lease
Property during the term of this Agreement.
3.10. Removal of Property. Subject to the terms of the Stanford Lease
and the terms of Permitted Property Liens, unless purchased by Ground Lessor
pursuant to the Term Purchase Option or the Expiration Date Purchase Option in
the Facility 2 Purchase Agreement, all Improvements to the Ground Lease Property
and all other Property (other than the Land) may be removed by Ground Lessee at
any time at or prior to the termination of this Agreement; provided, however,
that Ground Lessee shall not remove any such property prior to the Expiration
Date of the Facility 2 Lease Agreement unless an Event of Default has occurred
and is continuing under the Facility 2 Lease Agreement.
3.11. Permitted Contests. Ground Lessee may contest any alleged Lien on
any of the Ground Lease Property in violation of Subparagraph 3.07(b), provided
that any such contest is completed and such Lien is discharged (either pursuant
to such proceedings or otherwise) not later than the Ground Lease Expiration
Date.
3.12. Estoppel Certificates. Each party shall, within ten (10) Business
Days after receipt of a written request from the other party, deliver a written
statement to the requesting party stating the date to which the rent and other
charges have been paid, whether the Ground Lease is unmodified and in full force
and effect, and any other matters that may reasonably be requested.
11
3.13. Recordation of Agreement. Neither Ground Lessor nor Ground Lessee
shall file or record this Agreement without the prior written consent of the
other party, but the parties will execute a good and sufficient memorandum of
lease for purposes of recording. Upon the expiration or earlier termination of
this Agreement, Ground Lessee shall promptly execute, acknowledge and deliver to
Ground Lessor any quitclaim deed or other document required by Ground Lessor or
a title company to evidence the termination of Ground Lessee's interests in the
Ground Lease Property.
3.14. Stanford Lease.
(a) With respect to the Stanford Lease, Ground Lessor agrees:
(i) To keep and perform each and every material
covenant, agreement and obligation of the lessee set forth in
the Stanford Lease and any statute, ordinance, rule or
regulation relating thereto, and not to commit, suffer or permit
any breach thereof. If Ground Lessor shall default under the
Stanford Lease, Ground Lessee may, at its option but without any
obligation to do so, take any action necessary or desirable to
cure any default by Ground Lessor in the performance of any of
the terms, covenants and conditions of the Stanford Lease,
Ground Lessee being authorized to enter upon the Land for such
purposes. Ground Lessor shall, immediately on demand, pay to
Ground Lessee all costs of Ground Lessee reasonably incurred in
curing any such default, together with interest on such costs
from the date of expenditure.
(ii) To furnish to Ground Lessee all information that it
may reasonably request concerning the performance by Ground
Lessor of the covenants of the Stanford Lease and to give prompt
notice to Ground Lessee (A) of any material default or event of
default by any party under the Stanford Lease or notice thereof
within Ground Lessor's knowledge; (B) of the receipt by it of
any notice of default from the lessor under the Stanford Lease;
and (C) of its irrevocable election to cure any default under
the Stanford Lease within five (5) days of its receipt from
Stanford of any notice of default pursuant to Section 18.1(a) of
the Stanford Lease and within fifteen (15) days of Ground
Lessor's receipt from Stanford of any notice of notice of
default pursuant to Sections 18.1(b), (c) or (d) of the Stanford
Lease.
(iii) That the provisions hereof shall be deemed to be
obligations of Ground Lessor in addition to Ground Lessor's
obligations as lessee with respect to similar matters contained
in the Stanford Lease; provided, however, the inclusion herein
of any covenants and agreements relating to similar matters as
to which Ground Lessor is obligated under the Stanford Lease
shall not restrict or limit Ground Lessor's duties and
obligations to keep and perform promptly all of its covenants,
agreements and obligations as lessee under the Stanford Lease,
and nothing in this Agreement shall be construed as requiring
Ground Lessor or Ground Lessee to take or omit to take any
action which would cause a default under the Stanford Lease.
12
(iv) That, so long as this Agreement is in effect, no
surrender (except a surrender upon the expiration of the term of
the Stanford Lease) by Ground Lessor as lessee under the
Stanford Lease to Stanford thereunder, or of any portion thereof
or any interest therein shall be valid or effective. The terms
of the Stanford Lease may not be amended, modified, changed,
surrendered or cancelled, or subordinated to any mortgage, lease
or other interest, either orally or in writing, without the
prior written consent of Ground Lessee.
(v) That if the Stanford Lease is for any reason
whatsoever terminated prior to the expiration of its term and,
if pursuant to any provision of the Stanford Lease or otherwise,
Ground Lessee or its designee shall acquire from Stanford a new
lease or other agreement for the use of the Land, Ground Lessor
shall have no right, title or interest in or to such new lease
or other agreement or the estate created thereby.
(b) Ground Lessor warrants that the Stanford Lease is in all
respects valid and subsisting, that Ground Lessor and Stanford have duly
performed all of their respective obligations thereunder, that neither
Ground Lessor nor, to Ground Lessor's knowledge, Stanford is in material
default under any of the terms or provisions of the Stanford Lease, and
that neither Ground Lessor nor Stanford has made any claim of such
default.
3.15. Stanford's Bankruptcy.
(a) Ground Lessor acknowledges that pursuant to Section 365 of
the Bankruptcy Reform Act of 1978 (as the same may be amended from time
to time, the "Bankruptcy Act") it is possible that a trustee in
bankruptcy of Stanford or Stanford as a debtor-in-possession could
reject the Stanford Lease, in which case Ground Lessor, as lessee, would
have the election described in Section 365(h) of the Bankruptcy Act
(which election, as the same may be amended from time to time, and
together with any comparable right under any other state or federal law
relating to bankruptcy, reorganization or other relief for debtors,
whether now or hereafter in effect, is herein called the "Election") to
treat the Stanford Lease as terminated by such rejection or, in the
alternative, to remain in possession for the balance of the term of the
Stanford Lease and any renewal or extension thereof that is enforceable
by the lessee under applicable nonbankruptcy law. Ground Lessor
covenants that it will not suffer or permit the termination of the
Stanford Lease by exercise of the Election or otherwise without the
prior written consent of Ground Lessee.
(b) In order to secure the covenant made in this Section 3.15
and as security for the obligations secured hereby as described above,
Ground Lessor assigns the Election and all rights related thereto to
Ground Lessee. Ground Lessor acknowledges and agrees that the foregoing
assignment of the Election and related rights is one of the rights which
Ground Lessee may use at any time in order to protect and preserve the
other rights and interests of Ground Lessee under this Agreement, since
exercise of the Election in favor of terminating the Stanford Lease
would constitute waste hereunder. Ground Lessor acknowledges and agrees
that the Election is in the nature of a remedy and is not a property
interest which Ground Lessor can separate from the Stanford Lease.
Therefore,
13
Ground Lessor agrees that exercise of the Election in favor of
preserving the right to possession under the Stanford Lease shall not be
deemed to constitute a taking or sale of the Property by Ground Lessee
and shall not entitle Ground Lessor to any credit against the
obligations secured by this Agreement.
(c) Ground Lessor acknowledges and agrees that in the event the
Election is exercised in favor of Ground Lessor remaining in possession,
Ground Lessor's resulting rights under the Stanford Lease, as adjusted
by the effect of Section 365 of the Bankruptcy Act, shall then be part
of the Ground Lease Property and shall be subject to this Agreement.
3.16. Ground Lessor's Bankruptcy.
(a) If there shall be filed by or against Ground Lessor a
petition under the Bankruptcy Act, and Ground Lessor, as the lessee
under the Stanford Lease, shall determine to reject the Stanford Lease
pursuant to Section 365(a) of the Bankruptcy Act, then Ground Lessor
shall give Ground Lessee not less than ten (10) days' prior notice of
the date on which Ground Lessor shall apply to the bankruptcy court for
authority to reject the Stanford Lease. Ground Lessee shall have the
right, but not the obligation, to serve upon Ground Lessor within such
10-day period a notice stating that (i) Ground Lessee demands that
Ground Lessor assume and assign the Stanford Lease to Ground Lessee
pursuant to Section 365 of the Bankruptcy Act and (ii) Ground Lessee
covenants to cure or provide adequate assurance of prompt cure of all
defaults and provide adequate assurance of future performance under the
Stanford Lease. If Ground Lessee serves upon Ground Lessor the notice
described in the preceding sentence, Ground Lessor shall not seek to
reject the Stanford Lease and shall comply with the demand provided for
in clause (i) of the preceding sentence within thirty (30) days after
the notice shall have been given, subject to the performance by Ground
Lessee of the covenant provided for in clause (ii) of the preceding
sentence.
(b) Effective upon the entry of an order for relief in respect
of Ground Lessor under the Bankruptcy Act, Ground Lessor hereby assigns
and transfers to Ground Lessee a non-exclusive right to apply to the
Bankruptcy Act under Section 365(d)(4) of the Bankruptcy Act for an
order extending the period during which the Stanford Lease may be
rejected or assumed.
SECTION 4. TERMINATION.
4.01. Termination Date.
(a) Early Termination. This Agreement shall continue in full
force and effect until the Ground Lease Scheduled Expiration Date except
as follows:
(i) This Agreement may be terminated by Ground Lessee at
any time upon one (1) month's prior written notice to Ground
Lessor; provided, however, in no event shall Ground Lessee
exercise the right of termination prior to the
14
Expiration Date of the Facility 2 Lease Agreement unless an
Event of Default has occurred and is continuing under the
Facility 2 Lease Agreement and Ground Lessor's right as Lessee
thereunder to remain in possession is terminated.
(ii) This Agreement may be terminated by Ground Lessor
on the Expiration Date of the Facility 2 Lease Agreement upon
one (1) month's prior written notice to Ground Lessee if Ground
Lessor purchases the Property on such date pursuant to the Term
Purchase Option or the Expiration Date Purchase Option in the
Facility 2 Purchase Agreement and satisfies in full all Lessee
Obligations on or prior to such date; provided, however, that,
if this Agreement is so terminated on the Expiration Date but
any amounts paid by Ground Lessor are thereafter recovered,
Ground Lessor shall, at the request of Ground Lessee, enter a
new Ground Lease in the form of this Agreement for the remaining
term of this Agreement.
(b) No Other Early Termination Date. Except as provided in
Subparagraph 4.01(a), this Agreement shall not terminate prior to the
Ground Lease Scheduled Expiration Date for any reason including, without
limitation, (i) any Casualty to or Condemnation of all or any part of
the Ground Lease Property, (ii) the occurrence of any Ground Lease Event
of Default or any other default by Ground Lessee under this Agreement or
(iii) any other cause whether similar or dissimilar to the foregoing,
any existing or future law to the contrary notwithstanding; provided,
however, that this Subparagraph 4.01(b) shall not abrogate any right
Ground Lessor may have to recover damages or seek an injunction pursuant
to Paragraph 5.02. It is the intention of the parties hereto that the
obligations of Ground Lessor hereunder shall be separate and independent
of the covenants and agreements of Ground Lessee.
4.02. Surrender of Ground Lease Property. Ground Lessee shall vacate and
surrender the Ground Lease Property to Ground Lessor in its then-current
condition on the date (the "Ground Lease Expiration Date") that is the earlier
of (a) the Ground Lease Scheduled Expiration Date and (b) any earlier date on
which this Agreement is terminated pursuant to Subparagraph 4.01(a).
SECTION 5. DEFAULT.
5.01. Ground Lease Events of Default. The occurrence or existence of any
one or more of the following shall constitute a "Ground Lease Event of Default"
hereunder:
(a) Non-Payment. Ground Lessee shall fail to pay any installment
of rent payable hereunder within sixty (60) days after such installment
is due; or
(b) Other Defaults. Ground Lessee shall fail to observe or
perform any other covenant, obligation, condition or agreement contained
in this Agreement or the Stanford Lease and such failure shall continue
for a period of sixty (60) days after written notice thereof from Ground
Lessor; provided, however, that in the event that such failure cannot
15
reasonably be cured within such sixty (60) day period, such failure
shall not constitute an Event of Default hereunder so long as Ground
Lessee shall have commenced to cure such failure within such sixty (60)
day period and shall thereafter diligently pursue such cure to
completion, provided further that such failure shall in all events be
cured by the earlier of (i) the Ground Lease Scheduled Expiration Date
and (ii) one hundred and eighty days (180) days after Ground Lessor's
notice thereof.
5.02. Remedies. Upon the occurrence or existence of any Ground Lease
Event of Default and at any time thereafter unless such Ground Lease Event of
Default is waived, Ground Lessor may sue Ground Lessee for the collection of any
amount due under this Agreement or to enjoin the continuation of the Ground
Lease Event of Default; provided, however, that such remedies are the sole and
exclusive remedies of Ground Lessor hereunder. Ground Lessor may not terminate
this Agreement or Ground Lessee's right to possession under this Agreement
except as expressly provided herein.
5.03. Limited Recourse. Neither a Ground Lessee that is a Lessor Party
nor any of its Affiliates or any of their respective directors, officers,
employees, agents, attorneys and advisors shall have any personal liability for
the payment of or performance of any obligations of Ground Lessee under this
Agreement. Any judgment which Ground Lessor may obtain against a Ground Lessee
that is a Lessor Party for amounts due under this Agreement may be collected
only through resort to a judgment lien against Ground Lessee's interest in the
Ground Lease Property.
SECTION 6. PURCHASE OPTION.
6.01. Grant of Option. Ground Lessor hereby grants to Ground Lessee the
right to purchase the Ground Lease Property on the Expiration Date of the
Facility 2 Lease Agreement or any Business Day thereafter upon the terms and
subject to the conditions set forth in this Section 6 (the "Ground Lease
Purchase Option"); provided, however, that the Ground Lease Purchase Option
shall terminate on the Expiration Date of the Facility 2 Lease Agreement, and
shall not be exercisable by Ground Lessee, if Ground Lessor purchases the
Property on such date pursuant to the Term Purchase Option or the Expiration
Date Purchase Option in the Facility 2 Purchase Agreement and satisfies in full
all Lessee Obligations on or prior to such date. Ground Lessee shall notify
Ground Lessor of Ground Lessee's election to exercise the Ground Lease Purchase
Option by delivering to Ground Lessor, not less than one (1) month prior to the
date selected by Ground Lessee for its purchase of the Ground Lease Property
(the "Ground Lease Purchase Option Date"), a written notice (a "Notice of Ground
Lease Purchase Option Exercise") stating that Ground Lessee intends to exercise
the Ground Lease Purchase Option and specifying the Ground Lease Purchase Option
Date (the date such notice is delivered to be referred to as the "Option
Exercise Notification Date").
6.02. Option Purchase Price The purchase price for the purchase of the
Ground Lease Property pursuant to the Ground Lease Purchase Option (the "Ground
Lease Option Price") shall be the price that would be agreed upon between a
willing buyer, under no compulsion to buy and a willing seller, under no
compulsion to sell, for unimproved land comparable in size and location to the
Land, exclusive of any Improvements, at the time of Ground Lessee's exercise of
16
the Ground Lease Purchase Option and taking into consideration, among other
relevant factors, the condition of the Land and the encumbrances affecting the
title to the Land at the time of the exercise of the Option. If Ground Lessor
and Ground Lessee cannot agree upon such price within seven (7) days after the
Option Exercise Notification Date, the Ground Lease Option Price shall be
determined as follows:
(a) Not later than fourteen (14) days after the Option Exercise
Notification Date, Ground Lessor and Ground Lessee each shall appoint a
real estate appraiser familiar with properties in the vicinity of the
Land and shall notify the other party of its appointment. If the two
appraisers agree upon the Ground Lease Option Price within twenty-one
(21) days after the Option Exercise Notification Date, such price will
be binding upon Ground Lessor and Ground Lessee. If the two appraisers
cannot agree upon the Ground Lease Option Price within such time period,
then, not later than twenty-eight (28) days after the Option Exercise
Notification Date, such appraisers shall appoint a third real estate
appraiser familiar with properties in the vicinity of the Land.
Immediately after such appointment (and in no event later than thirty
(30) days after the Option Exercise Notification Date), each of the
first two appraisers will submit his/her best estimate of the Ground
Lease Option Price, together with a written report supporting such
estimate, to the third appraiser. Not later than thirty-five (35) days
after the Option Exercise Notification Date, the third appraiser will
select the estimate of the Ground Lease Option Price he/she concludes to
be the closest to the definition thereof set forth in the first sentence
of this Paragraph 6.02 and shall notify Ground Lessor and Ground Lessee
of such selection. The estimate so selected by the third appraiser will
be binding upon Ground Lessor and Ground Lessee.
(b) If a third appraiser must be chosen pursuant to Subparagraph
6.02(a) and the first two appraisers cannot agree upon the third
appraiser within the prescribed time, either Ground Lessor or Ground
Lessee may require each of the first two appraisers immediately to
submit its choice for the third appraiser to the American Arbitration
Association ("AAA") in San Francisco, California for selection in
accordance with the then rules of said association within thirty-five
(35) days after the Option Exercise Notification Date. If such a
procedure is necessary to appoint the third appraiser, then (i) the
deadline for the two appraisers to submit to the third appraiser their
estimates of the Ground Lease Option Price and supporting report
pursuant to Subparagraph 6.02(a) shall be not later than thirty-seven
(37) days (rather than thirty (30) days) after the Option Exercise
Notification Date and (ii) the deadline for the third appraiser to
select one of the two estimates pursuant to Subparagraph 6.02(a) shall
be not later than forty-two (42) days (rather than thirty-five (35)
days) after the Option Exercise Notification Date.
(c) If either party or its appraiser fails to comply with the
procedures (including deadlines) set forth above, then the other party's
appraiser will determine the Ground Lease Option Price.
(d) Ground Lessor and Ground Lessee each shall bear the expense
of the appraiser appointed by it, and the expenses of the third
appraiser and the AAA will be shared equally by Ground Lessor and Ground
Lessee.
17
(e) All appraisers selected for the appraisal process set out in
this Paragraph 6.02 will be disinterested, reputable, qualified real
estate appraisers with the designation of MAI or equivalent and with at
least five (5) years experience in appraising properties comparable to
the Land. If a third appraiser must be chosen pursuant to Subparagraph
6.02(a), such appraiser will be chosen on the basis of objectivity and
competence, not on the basis of such appraiser's relationship with the
other appraisers or the parties to this Agreement.
6.03. Other Terms
(a) Upon Ground Lessee's tender of the Ground Lease Option Price
to Ground Lessor, Ground Lessor will convey and assign good and
marketable title to the leasehold estate under the Stanford Lease in the
Ground Lease Property to Ground Lessee subject only to the Permitted
Property Liens of the types described in clauses (i), (ii) and (iii) of
Subparagraph 3.07(a) of the Facility 2 Lease Agreement.
(b) Ground Lessee's obligation to close the purchase shall be
subject to the following terms and conditions, all of which are for the
benefit of Ground Lessee:
(i) Ground Lessee shall have been furnished with
evidence satisfactory to Ground Lessee that Ground Lessor can
convey title as required by the preceding subparagraph.
(ii) Nothing shall have occurred or been discovered
after Ground Lessee exercised the Ground Lease Purchase Option
that could adversely affect the title to or value of the Ground
Lease Property or the Ground Lessee's use thereof.
(iii) Ground Lessee shall have tendered the instruments
and other documents which are described in this Section 6 as
documents to be delivered to Ground Lessee at the closing of
Ground Lessee's purchase.
SECTION 7. MISCELLANEOUS.
7.01. Notices. Except as otherwise specified herein, (a) all notices,
requests, demands, consents, instructions or other communications to or upon
Ground Lessee or Ground Lessor under this Agreement given on or prior to the
Expiration Date of the Facility 2 Lease Agreement shall be given as provided in
Subparagraph 2.02(c) and Paragraph 7.01 of the Participation Agreement and (b)
all notices, requests, demands, consents, instructions or other communications
to or upon Ground Lessee or Ground Lessor under this Agreement given after the
Expiration Date of the Facility 2 Lease Agreement shall be in writing and faxed,
mailed or delivered to its respective facsimile number or address set forth in
Paragraph 7.01 of the Participation Agreement (or to such other facsimile number
or address for either party as indicated in any notice given by that party to
the other party). All such notices and communications shall be effective (i)
when sent by Federal Express or other overnight service of
18
recognized standing, on the Business Day following the deposit with such
service; (ii) when mailed, first class postage prepaid and addressed as
aforesaid through the United States Postal Service, upon receipt; (iii) when
delivered by hand, upon delivery; and (iv) when faxed, upon confirmation of
receipt.
7.02. Waivers; Amendments. Until the Expiration Date of the Facility 2
Lease Agreement and the satisfaction in full of all Lessee Obligations or, if
earlier, the date on which Ground Lessee sells or assigns this Agreement, any
term, covenant, agreement or condition of this Agreement may be amended or
waived only as provided in the Participation Agreement. Thereafter, any term,
covenant, agreement or condition of this Agreement may be amended or waived if
such amendment or waiver is in writing and is signed by Ground Lessor and Ground
Lessee. No failure or delay by either party in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in any such waiver or consent,
a waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
7.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Ground Lessor and Ground Lessee and their permitted
successors and assigns; provided, however, that Ground Lessor and Ground Lessee
shall not sell, assign or delegate their respective rights and obligations
hereunder except as provided in this Agreement or the Participation Agreement.
7.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than Ground Lessor, Ground Lessee , the Lessor Parties, Lessee and each of
their permitted successors and assigns, any benefit or legal or equitable right,
remedy or claim under or by virtue of this Agreement or under or by virtue of
any provision herein.
7.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
7.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules.
7.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.
[The signature page follows.]
19
IN WITNESS WHEREOF, Ground Lessee and Ground Lessor have caused this
Agreement to be executed as of the day and year first above written.
GROUND LESSOR: NOVELLUS SYSTEMS, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
GROUND LESSEE: ABN AMRO LEASING, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
20
EXHIBIT A
LEGAL DESCRIPTION
A-1
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Thomas Y. Coleman, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROUND LEASE AGREEMENT
BETWEEN
NOVELLUS SYSTEMS, INC.
AND
ABN AMRO LEASING, INC.
SEPTEMBER 21, 2001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
SECTION 1. INTERPRETATION.........................................2
1.01. Definitions............................................2
1.02. Rules of Construction..................................2
SECTION 2. BASIC PROVISIONS.......................................2
2.01. Lease of the Property..................................2
2.02. Term...................................................3
2.03. Rent...................................................3
2.04. Use....................................................4
2.05. Title; Quiet Enjoyment.................................4
SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.........5
3.01. Maintenance, Repair, Etc...............................5
3.02. Risk of Loss...........................................5
3.03. Insurance..............................................6
3.04. Casualty and Condemnation..............................6
3.05. Taxes..................................................6
3.06. Environmental Matters..................................7
3.07. Liens, Easements, Etc..................................8
3.08. Assignments and Subletting............................10
3.09. Utility Charges.......................................11
3.10. Removal of Property...................................11
3.11. Permitted Contests....................................11
3.12. Estoppel Certificates.................................11
3.13. Recordation of Agreement..............................12
3.14. Stanford Lease........................................12
3.15. Stanford's Bankruptcy.................................13
3.16. Ground Lessor's Bankruptcy............................14
SECTION 4. TERMINATION...........................................14
4.01. Termination Date......................................14
4.02. Surrender of Ground Lease Property....................15
SECTION 5. DEFAULT...............................................15
5.01. Ground Lease Events of Default........................15
5.02. Remedies..............................................16
5.03. Limited Recourse......................................16
SECTION 6. PURCHASE OPTION.......................................16
6.01. Grant of Option.......................................16
-i-
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
6.02. Option Purchase Price...........................16
6.03. Other Terms.....................................18
SECTION 7. MISCELLANEOUS.........................................18
7.01. Notices.........................................18
7.02. Waivers; Amendments.............................19
7.03. Successors and Assigns..........................19
7.04. No Third Party Rights...........................19
7.05. Partial Invalidity..............................19
7.06. Governing Law...................................19
7.07. Counterparts....................................19
-ii-
================================================================================
AN EXTRA SECTION BREAK HAS BEEN INSERTED ABOVE THIS PARAGRAPH. DO NOT DELETE
THIS SECTION BREAK IF YOU PLAN TO ADD TEXT AFTER THE TABLE OF
CONTENTS/AUTHORITIES. DELETING THIS BREAK WILL CAUSE TABLE OF
CONTENTS/AUTHORITIES HEADERS AND FOOTERS TO APPEAR ON ANY PAGES FOLLOWING THE
TABLE OF CONTENTS/AUTHORITIES.
================================================================================
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
THIS FIRST AMENDMENT TO PARTICIPATION AGREEMENT (this "Amendment"),
dated as of September 21, 2001, is entered into by and among:
(1) NOVELLUS SYSTEMS, INC., a California corporation ("Lessee");
(2) ABN AMRO LEASING, INC., an Illinois corporation ("Lessor");
(3) Each of the financial institutions listed in Schedule I to
the Participation Agreement referred to in Recital A below
(collectively, the "Participants"); and
(4) ABN AMRO BANK, N.V., acting through its San Francisco
International Branch, as agent for the Participants (in such capacity,
"Agent").
RECITALS
A. Lessee, Lessor, the Participants and Agent are parties to a
Participation Agreement dated as of April 18, 2001 (the "Participation
Agreement").
B. Lessee has recently approached Lessor, the Participants and Agent and
requested that Lessor, the Participants and Agent amend the Participation
Agreement in order to conform certain provisions contained therein with certain
provisions contained in that certain Participation Agreement, dated as of
September 21, 2001, among Lessor, Lessee, the Persons parties thereto as
"Participants", and Agent (the "Novellus VI Participation Agreement").
C. Lessor, the Participants and Agent are willing so to amend the
Participation Agreement upon the terms and subject to the conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Lessee, Lessor, the Participants and Agent hereby agree as
follows:
1. DEFINITIONS, INTERPRETATION. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Participation Agreement, as
amended by this Amendment. The rules of construction set forth in Schedule 1.02
to the Participation Agreement shall, to the extent not inconsistent with the
terms of this Amendment, apply to this Amendment and are hereby incorporated by
reference.
2. AMENDMENT TO PARTICIPATION AGREEMENT. Subject to the satisfaction of
the conditions set forth in Paragraph 4 below, the Participation Agreement is
hereby amended as follows:
1
(a) Subparagraph 2.08(a) is amended to read in its entirety as follows:
(a) Reduction or Cancellation of Commitments. Lessee may, at any
time prior to the Commitment Termination Date, upon five (5) Business
Days written notice to Lessor, permanently reduce the Total Facility 3
Commitment by an amount as so designated in writing by Lessee to Agent
or cancel the Total Facility 3 Commitment in its entirety.
(b) Subparagraph 2.10(a) is amended to read in its entirety as follows:
(a) Tax Treatment. For purposes of all federal, state and local
taxes, Lessee and Lessor Parties intend that the transactions evidenced
by the Operative Documents shall be treated as loans by the Participants
(through Lessor) to Lessee secured by the Property, with Lessee as owner
of the Property. Lessee and the Lessor Parties may only take deductions,
credits, allowances and other reporting positions on their respective
returns, reports and statements which are consistent with such
treatment, unless required to do otherwise by an appropriate taxing
authority or after a clearly applicable change in applicable
Governmental Rules; provided, however, that if an appropriate taxing
authority or a clearly applicable change in applicable Governmental
Rules requires any Lessor Party to take such an inconsistent position,
such Lessor Party shall promptly notify Lessee.
(c) Subparagraph 4.01(g) is amended to read in its entirety as follows:
(g) Litigation. Except as set forth in the most recent Form
10-Q, 10-K and 8-K reports filed by Lessee with the Securities and
Exchange Commission or in Schedule 4.01(g), no actions (including,
without limitation, derivative actions), suits, proceedings or
investigations are pending or, to the knowledge of Lessee, threatened
against Lessee or any of its Subsidiaries at law or in equity in any
court or before any other Governmental Authority which (i) is reasonably
likely (alone or in the aggregate) to have a Material Adverse Effect or
(ii) seeks to enjoin, either directly or indirectly, the execution,
delivery or performance by Lessee of the Operative Documents or the
transactions contemplated thereby.
(d) Subparagraph 4.01(h) is amended to read in its entirety as follows:
(h) Title; Possession Under Leases. Except as set forth in the
most recent Form 10-Q, 10-K and 8-K reports filed by Lessee with the
Securities and Exchange Commission or in Schedule 4.01(h), Lessee and
its Subsidiaries own and have good and marketable title, or a valid
leasehold interest in, all their respective properties and assets as
reflected in the most recent Financial Statements delivered to Agent
(except those assets and properties disposed of in the ordinary course
of business or otherwise in compliance with this Agreement since the
date of such Financial Statements) and all respective assets and
properties acquired by Lessee and its Subsidiaries since such date
(except those disposed of in the ordinary course of business or
otherwise in compliance with
2
this Agreement), except in any case where the failure so to own or to
have such title is not reasonably likely to have a Material Adverse
Effect. Such assets and properties are subject to no Lien, except for
Permitted Liens. Each of Lessee and its Subsidiaries has complied with
all material obligations under all material leases to which it is a
party and all such leases are in full force and effect. Each of Lessee
and its Subsidiaries enjoys peaceful and undisturbed possession under
such leases.
(e) Subparagraph 4.01(i) is amended by changing clause (A) thereof to
read in its entirety as follows:
(A) in the audited Financial Statements of Lessee dated December 31,
2000, or the 10-Q reports filed by Lessee with the Securities and
Exchange Commission for the quarters ended March 31, 2001 and June 30,
2001 or the 8-K report filed by Lessee with the Securities and Exchange
Commission on June 1, 2001, furnished by Lessee to Agent prior to the
date hereof, or
(f) Subparagraph 4.01(k) is amended to read in its entirety as follows:
4.01(k) [Reserved].
(g) Subparagraph 4.01(n) is amended to read in its entirety as follows:
(n) Patent and Other Rights. Except as set forth in the most
recent Form 10-Q, 10-K and 8-K reports filed by Lessee with the
Securities and Exchange Commission or in Schedule 4.01(g), Lessee and
its Subsidiaries own, license or otherwise have the right to use, under
validly existing agreements, all patents, licenses, trademarks, trade
names, trade secrets, service marks, copyrights and all rights with
respect thereto, which are required to conduct their businesses as now
conducted, except where the failure to have any such rights, either
individually or collectively, is not reasonably likely to have a
Material Adverse Effect.
(h) Subparagraph 5.01(a) is amended by changing clause (v) thereof to
read in its entirety as follows:
(v) As soon as available and in no event later than five (5)
Business Days after they are sent, made available or filed, copies of
(A) all registration statements and reports filed by Lessee or any of
its Subsidiaries with any securities exchange or the Securities and
Exchange Commission (including, without limitation, all 10-Q, 10-K, 8-Q
and 8-K reports); (B) all reports, proxy statements and financial
statements sent or made available by Lessee or any of its Subsidiaries
to its security holders; and (C) all press releases and other similar
public concerning any material developments in the business of Lessee or
any of its Subsidiaries made available by Lessee or any of its
Subsidiaries to the public generally; and
3
(i) Subparagraph 5.01(a) is further amended by deleting clauses
(vi) and (vii) thereof and renumbering existing clause (viii) thereof as
"(vi)".
(j) Subparagraph 5.01(h) is deleted.
(k) Paragraph 5.02 is amended to read in its entirety as set
forth on Attachment A hereto.
(l) Paragraph 5.03 is amended to read in its entirety as set
forth on Attachment B hereto.
(m) Schedule 1.01 is amended by deleting the following
definitions:
"Adjusted Net Income;"
"Cash Balances;"
"Debt Service Coverage Ratio;"
"Economically Defeased Portion of Synthetic Lease Obligation;"
"Funded Indebtedness;"
"Funded Indebtedness/Capital Ratio;"
"Interest Expenses;"
"Investment;"
"Permitted Indebtedness;"
"Related Credit Agreement;"
"Related Credit Documents;" and
"Related Credit Obligations."
(n) Schedule 1.01 is further amended by changing the definition
of "Indemnified Taxes" set forth therein to read in its entirety as
follows."
"Indemnified Taxes" shall mean all income taxes, stamp
taxes, sales taxes, use taxes, rental taxes, gross receipts
taxes, property (tangible and intangible) taxes, franchise
taxes, excise taxes, value added taxes, turnover taxes,
withholding taxes and other taxes and Governmental Charges,
together with any and all assessments, penalties, fines,
additions and interest thereon, except:
(a) Net income taxes imposed on an Indemnitee by
the U.S. federal government (other than those imposed by
means of withholding at source) or net income taxes and
franchise taxes in lieu of net income taxes imposed on
any Lessor Party by its jurisdiction of incorporation
or, in the case of any Participant, the jurisdiction in
which its Applicable Participating Office is located, or
a jurisdiction in which such Indemnitee is otherwise
subject to tax other than as a result of transactions
contemplated by the Operative Documents (provided,
however, that this definition shall not be construed to
prevent a payment from being made on an after-tax
basis);
4
(b) Taxes and other Governmental Charges imposed
on an Indemnitee by a foreign Governmental Authority,
taxing authority or taxing jurisdiction, unless such
Taxes are imposed by reason of (i) the payment by Lessee
or any Affiliate of any amount pursuant to the Operative
Documents from, or the booking by Lessee or any
Affiliate of some or all of the transactions
contemplated by the Operative Agreements in, such
foreign jurisdiction, (ii) the location of the Property
in such jurisdiction or (iii) activities of the Lessee
or an Affiliate of the Lessee in such jurisdiction;
(c) Any tax or other Governmental Charge that
has not become a Lien on any of the Property and that
Lessee is contesting pursuant to Paragraph 3.12 of any
Lease Agreement (but only while Lessee is so contesting
such tax or Governmental Charge); or
(d) Any tax or other Governmental Charge that is
imposed upon an Indemnitee primarily as a result of the
gross negligence or willful misconduct of such
Indemnitee itself (as opposed to gross negligence or
willful misconduct imputed to such Indemnitee), but not
taxes or other Governmental Charges imposed as a result
of ordinary negligence of such Indemnitee.
(o) Schedule 1.01 is further amended by changing the phrase
"Lessee Obligations" set forth in the definition of "Economically
Defeased Portion of Synthetic Lease Obligation" to "its obligations."
(p) Schedule 1.01 is further amended by adding thereto in the
appropriate alphabetical order the term "First Amendment Effective Date"
to read in its entirety as follows:
"First Amendment Effective Date" shall mean September 24, 2001.
(q) Schedule 1.01 is further amended by changing the definition
of "Quick Ratio" set forth therein to read in its entirety as follows:
"Quick Ratio" shall mean, with respect to Lessee at any
time, the ratio, determined on a consolidated basis in
accordance with GAAP, of:
(a) The remainder of (i) the sum (without
duplication) of all cash, Cash Equivalents, short-term
investments and net accounts receivable of Lessee and
its Subsidiaries at such time, minus (ii) the sum
(without duplication) of all such cash, Cash
Equivalents, short-term investments and net accounts
receivable that are subject to a Lien or are otherwise
restricted;
to
5
(b) The remainder of (i) all current liabilities
of Lessee and its Subsidiaries at such time, minus (ii)
all such current liabilities that are secured by Liens
in cash, Cash Equivalents, short-term investments and
net accounts receivable and included in the calculation
of clause (a)(i) of this definition above.
(In calculating the Quick Ratio, Cash Equivalents and short-term
investments shall be marked to market quarterly.)
(r) Schedule 5.01(b) is amended to refer to "Schedule 5.01(a)"
and is amended to read in its entirety as set forth on Attachment C
hereto.
3. REPRESENTATIONS AND WARRANTIES. Lessee hereby represents and warrants
to Agent and the Participants that the following are true and correct on the
date of this Amendment and that, after giving effect to the amendment set forth
in Paragraph 2 above, the following will be true and correct on the Effective
Date (as defined below):
(a) The representations and warranties of Lessee set forth in
Paragraph 4.01 of the Participation Agreement (as amended by this
Amendment) and in the other Operative Documents are true and correct in
all material respects as if made on such date (except for
representations and warranties expressly made as of a specified date,
which shall be true as of such date);
(b) No Default has occurred and is continuing; and
(c) All of the Operative Documents are in full force and effect.
(Without limiting the scope of the term "Operative Documents," Lessee expressly
acknowledges in making the representations and warranties set forth in this
Paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)
4. EFFECTIVE DATE. The amendment effected by Paragraph 2 above shall
become effective upon the date (the "Effective Date") that (a) Lessor, Agent and
the Participants receives this Amendment, duly executed by Lessor, Lessee, each
Participant and Agent, (b) the Novellus VI Participation Agreement becomes
effective in accordance with its terms and (c) receipt by Agent from Lessee of a
non-refundable amendment fee in the amount of $150,000.
5. EFFECT OF THIS AMENDMENT. On and after the Effective Date, each
reference in the Participation Agreement and the other Operative Documents to
the Participation Agreement shall mean the Participation Agreement as amended
hereby. Except as specifically amended above, (a) the Participation Agreement
and the other Operative Documents shall remain in full force and effect and are
hereby ratified and affirmed, and (b) the execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power, or remedy of the Participants or Agent, nor
constitute a waiver of any provision of the Participation Agreement or any other
Operative Document.
6
6. MISCELLANEOUS.
(a) Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Amendment are for convenience of
reference only and are not part of the substance hereof.
(c) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules.
[Signature pages follow]
7
IN WITNESS WHEREOF, Lessee, Lessor, Agent and the Participants have
caused this Amendment to be executed as of the day and year first above written.
LESSEE: NOVELLUS SYSTEMS, INC.
By: _____________________________________
Name: _______________________________
Title: ______________________________
LESSOR: ABN AMRO LEASING, INC.
By: _____________________________________
Name: _______________________________
Title: ______________________________
AGENT: ABN AMRO BANK, N.V.
By: _____________________________________
Name: _______________________________
Title: ______________________________
By: _____________________________________
Name: _______________________________
Title: ______________________________
PARTICIPANT: ABN AMRO BANK, N.V.
By: _____________________________________
Name: _______________________________
Title: ______________________________
By: _____________________________________
Name: _______________________________
Title: ______________________________
8
ABN AMRO LEASING, INC.
By: _____________________________________
Name: _______________________________
Title: ______________________________
9
ATTACHMENT A
Amended Paragraph 5.02
5.02 Lessee's Negative Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee Obligations,
Lessee will comply, and will cause compliance, with the following negative
covenants, unless Lessor and Required Participants shall otherwise consent in
writing:
(a) Liens. Neither Lessee nor any of its Subsidiaries shall
create, incur, assume or permit to exist any Lien on or with respect to
any of its assets or property of any character, whether now owned or
hereafter acquired, except for the following ("Permitted Liens"):
(i) Liens in favor of Lessor, Agent or any Participant
securing the Lessee Obligations;
(ii) Liens securing Economically Defeased Synthetic
Lease Obligations;
(iii) Liens listed in Schedule 5.02(a) and existing on
the First Amendment Effective Date;
(iv) Liens for taxes or other Governmental Charges not
at the time delinquent or thereafter payable without penalty or
being contested in good faith, provided that adequate reserves
for the payment thereof as required by GAAP have been
established;
(v) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords and other similar Liens
imposed by law incurred in the ordinary course of business for
sums not overdue or being contested in good faith, provided that
adequate reserves for the payment thereof as required by GAAP
have been established;
(vi) Deposits under workers' compensation, unemployment
insurance and social security laws or to secure the performance
of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, or to secure statutory obligations of
surety or appeal bonds or to secure indemnity, performance or
other similar bonds in the ordinary course of business;
(vii) Zoning restrictions, easements, rights-of-way,
title irregularities and other similar encumbrances, which alone
or in the aggregate are not substantial in amount and do not
materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business
of Lessee or any of its Subsidiaries;
(viii) Banker's Liens and similar Liens (including
set-off rights) in respect of bank deposits;
A-1
(ix) Liens on property or assets of any corporation
which becomes a Subsidiary of Lessee or on any property or
assets acquired by Lessee or any of its Subsidiaries after the
date of this Agreement, provided that (A) such Liens exist at
the time the stock of such corporation or such assets or
property is or are acquired by Lessee and (B) such Liens were
not created in contemplation of such acquisition by Lessee;
(x) Judgement Liens, provided that such Liens do not
have a value in excess of $10,000,000 or such Liens are
released, stayed, vacated or otherwise dismissed within twenty
(20) days after issue or levy and, if so stayed, such stay is
not thereafter removed;
(xi) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
and in connection with the importation of goods in the ordinary
course of Lessee's and its Subsidiaries' businesses;
(xii) Liens securing Indebtedness of Lessee and its
Subsidiaries under purchase money loans, Capital Leases,
conditional sale agreements or other title retention agreements
that (A) is incurred by Lessee or any of its Subsidiaries to
finance the acquisition by such Person of real property,
fixtures or equipment, (B) is incurred by such Person at the
time of, or not later than thirty (30) days after, the
acquisition by such Person of the property so financed, and (C)
does not exceed the purchase price of the property so financed,
provided that (1) no Default has occurred and is continuing or
will occur at the time each such Lien is granted and (2) in each
case, such Lien (I) covers only those assets, the acquisition of
which was financed by such Indebtedness, and (II) secures only
such Indebtedness;
(xiii) Liens on the property or assets of any Subsidiary
of Lessee in favor of Lessee or any other Subsidiary of Lessee;
(xiv) [Reserved];
(xv) Liens on insurance proceeds in favor of insurance
companies with respect to the financing of insurance premiums;
(xvi) Permitted Property Liens in the Property; and
(xvii) Other Liens on the property of Lessee and its
Subsidiaries, provided that the aggregate principal amount of
all Indebtedness secured by such other Liens does not exceed at
any time fifteen percent (15%) of the consolidated total assets
of Lessee and its Subsidiaries at such time;
Provided, however, that the foregoing exceptions shall not be construed
to permit any Liens, except for Permitted Property Liens, in any of the
Property.
A-2
(b) Mergers, Acquisitions, Etc. Neither Lessee nor any of its
Subsidiaries shall consolidate with or merge into any other Person or
permit any other Person to merge into it, establish any new Subsidiary,
acquire any Person as a new Subsidiary or acquire all or substantially
all of the assets of any other Person, except for the following:
(i) Any Subsidiary of Lessee may merge or consolidate
with any other Subsidiary of Lessee;
(ii) Any Subsidiary of Lessee may merge or consolidate
with Lessee, provided that Lessee is the surviving corporation;
and
(iii) Lessee may merge or consolidate with any other
corporation, establish a new Subsidiary, acquire any Person as a
new Subsidiary or acquire all or substantially all of the assets
of any other Person, provided that:
(A) In the case of any merger or consolidation,
either (1) Lessee is the surviving corporation or (2)
the surviving corporation (x) is a Solvent United States
corporation, (y) assumes in writing all of the Lessee
Obligations and (x) immediately after giving effect to
such merger or consolidation, is in compliance with the
financial covenants contained in Paragraph 5.03; and
(B) No Default has occurred and is continuing at
the time of such merger, consolidation, establishment or
acquisition or will occur after giving effect to such
merger, consolidation or acquisition.
(c) Change in Business. Neither Lessee nor any of its
Subsidiaries shall engage, either directly or indirectly through
Affiliates, in any material line of business other than the
semiconductor capital equipment business and other businesses incidental
or reasonably related thereto.
(d) ERISA. Neither Lessee nor any ERISA Affiliate shall (i)
adopt or institute any Employee Benefit Plan that is an employee pension
benefit plan within the meaning of Section 3(2) of ERISA, (ii) take any
action which will result in the partial or complete withdrawal, within
the meanings of sections 4203 and 4205 of ERISA, from a Multiemployer
Plan, (iii) engage or permit any Person to engage in any transaction
prohibited by section 406 of ERISA or section 4975 of the IRC involving
any Employee Benefit Plan or Multiemployer Plan which would subject
either Lessee or any ERISA Affiliate to any tax, penalty or other
liability including a liability to indemnify, (iv) incur or allow to
exist any accumulated funding deficiency (within the meaning of section
412 of the IRC or section 302 of ERISA), (v) fail to make full payment
when due of all amounts due as contributions to any Employee Benefit
Plan or Multiemployer Plan, (vi) fail to comply with the requirements of
section 4980B of the IRC or Part 6 of Title I(B) of ERISA, or (vii)
adopt any amendment to any Employee Benefit Plan which would require the
posting of security pursuant to section 401(a)(29) of the IRC, where
singly or cumulatively, the above would have a Material Adverse Effect.
A-3
(e) Accounting Changes. Neither Lessee nor any of its
Subsidiaries shall change (i) its fiscal year (currently January 1
through December 31) or (ii) its accounting practices except as
permitted by GAAP.
A-4
ATTACHMENT B
Amended Paragraph 5.03
5.03 Lessee's Financial Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee Obligations,
Lessee will comply, and will cause compliance, with the following financial
covenants, unless Lessor and Required Participants shall otherwise consent in
writing:
(a) Quick Ratio. Lessee shall not permit its Quick Ratio on any
day set forth below to be less than the ratio set forth opposite such
day below:
The last day of any
fiscal quarter 1.35 to 1.00.
(b) Tangible Net Worth. Commencing on June 30, 2001, Lessee
shall not permit its Tangible Net Worth on the last day of any fiscal
quarter (such date to be referred to herein as a "determination date")
to be less than the sum on such determination date of the following:
(i) $1,300,000,000;
plus
(ii) Fifty percent (50%) of the sum of Lessee's
consolidated quarterly net income (ignoring any quarterly
losses) for each fiscal quarter ending after June 30, 2001
through and including the fiscal quarter ending on the
determination date;
plus
(iii) Seventy-five percent (75%) of the Net Proceeds of
all Equity Securities issued by Lessee and its Subsidiaries (to
Persons other than Lessee or its Subsidiaries) during the period
commencing on July 1, 2001 and ending on the determination date;
plus
(iv) Seventy-five percent (75%) of the principal amount
of all debt securities of Lessee and its Subsidiaries converted
into Equity Securities of Lessee and its Subsidiaries during the
period commencing on July 1, 2001 and ending on the
determination date.
B-1
ATTACHMENT C
Amended Schedule 5.02(a)
SCHEDULE 5.02(a)
EXISTING LIENS
The Lien encumbering certain proceeds from the issuance by Lessee of
$880,000,000 in Liquid Yield Option(TM) Notes ("LYONS") due 2031 (Zero Coupon --
Subordinated) which have been pledged to secure Lessee's obligations under the
LYONS until July 26, 2002, including Lessee's performance with respect to a
holder's option to require Lessee to purchase some or all of their LYONS on July
26, 2002 for cash, pursuant to a Pledge Agreement, dated as of July, 2001,
between Lessee and Union Bank of California, N.A., together with any permitted
investments thereof under such Pledge Agreement and the proceeds thereof.
C-1