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PURCHASE AND MASTER LEASE AGREEMENT
Dated as of October 24, 1996
Among
THE LESSORS REFERRED TO HEREIN
(as Lessors),
NOVELLUS SYSTEMS, INC.
(as Lessee),
and
SUMITOMO BANK LEASING AND FINANCE, INC.
(as Agent for the Lessors)
(PROPERTY LOCATION:
CORNER OF 1ST ST. AND HEADQUARTERS DRIVE,
SAN JOSE, CALIFORNIA)
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THIS PURCHASE AND MASTER LEASE AGREEMENT IS NOT INTENDED TO
CONSTITUTE A TRUE LEASE FOR FEDERAL INCOME TAX PURPOSES.
TABLE OF CONTENTS**
SECTION 1. Definitions; Interpretation....................................... 1
SECTION 2. Representations and Warranties of Lessee..........................18
(a) Corporate Matters.................................................18
(b) Property Information Package......................................19
(c) Authorization; No Conflict........................................19
(d) Binding Agreement.................................................19
(e) Financial Statements..............................................19
(f) Litigation and Contingent Liabilities.............................19
(g) Title to Property.................................................20
(h) Liens.............................................................20
(i) Chief Executive Office............................................20
(j) ERISA.............................................................20
(k) Investment Company Act............................................21
(l) Public Utility Holding Company Act................................21
(m) Regulations G, T, U and X.........................................21
(n) Labor Controversies...............................................21
(o) Tax Status........................................................21
(p) No Default........................................................21
(q) Compliance with Applicable Laws...................................21
(r) Licenses, etc.....................................................21
(s) Intellectual Property.............................................22
(t) Subjection to Regulation..........................................22
(u) Impositions.......................................................22
(v) Insurance.........................................................22
(w) Brokers, etc......................................................22
(x) Security Interests................................................22
(y) Environmental.....................................................23
(z) No Burdensome Agreements..........................................23
(aa) Land Use Regulations..............................................24
(bb) Development Plans.................................................24
(cc) Utilities.........................................................24
(dd) Mechanics' Lien Claims............................................24
(ee) Permits and Licenses..............................................24
(ff) Defects...........................................................24
(gg) Notice From Insurance Carriers....................................24
(hh) Disclosure Generally..............................................25
(ii) Solvency..........................................................25
SECTION 3. Conditions to Closing.............................................25
SECTION 4. Purchase and Lease of Property....................................27
(a) Purchase by Lessor and Lease by Lessee............................27
(b) Each Lessor to Have an Undivided Interest.........................28
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**The Table of Contents does not form a part of this Agreement.
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(c) Funding to Agent..................................................28
(d) Funding by Agent..................................................28
(e) Acknowledgment by Lessee of Acceptance and Suitability of
Property.......................................................29
(f) Transfer to Lessee upon Failure to Fund...........................29
SECTION 5. Payment Absolute, No Warranties...................................29
SECTION 6. Lease Term........................................................32
SECTION 7. Rent..............................................................33
SECTION 8. Other Payments....................................................35
SECTION 9. Restricted Use; Compliance with Laws..............................37
SECTION 10. Maintenance, Improvement and Repair of the Property...............38
SECTION 11. Insurance.........................................................40
(a) Liability Insurance...............................................40
(b) Property Insurance................................................40
(c) Approved Policies.................................................40
(d) Use of Insurance Proceeds.........................................41
SECTION 12. General Indemnity.................................................42
SECTION 13. Taxes.............................................................44
SECTION 14. Purchase Option and Termination Option............................46
(a) Purchase Option of Lessee.........................................46
(b) Termination Option of Lessee......................................46
(c) Failure of Sale...................................................48
(d) Procedures for Purchases..........................................48
SECTION 15. End of Term Options...............................................49
SECTION 16. Amendments........................................................49
SECTION 17. Loss of or Damage to Property.....................................50
(a) Risk of Loss......................................................50
(b) Repair of Damage; Use of Proceeds.................................50
(c) Event of Loss; Property Not Repaired..............................51
(d) Event of Loss; Property Repaired..................................51
SECTION 18. Surrender of Property.............................................53
(a) Surrender Upon Termination........................................53
(b) No Voluntary Surrender............................................53
(c) Removal of Lessee Property by Lessee..............................53
(d) Removal of Lessee's Property by Agent.............................53
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(e) Agent's Property..................................................53
(f) Agent's Actions on Property.......................................54
(g) No Duty if Liabilities Paid.......................................54
SECTION 19. Certain Covenants.................................................54
(a) Reports, Certificates and Other Information.......................54
(b) Mergers, Consolidations, Sales....................................55
(c) Compliance with Applicable Laws...................................56
(d) ERISA.............................................................56
(e) Corporate Existence and Franchises................................57
(f) Payment of Taxes..................................................57
(g) Other Agreements..................................................57
(h) Regulations G, T, U and X.........................................57
(i) Maintenance of Tangible Property..................................57
(j) Maintenance of Intangible Property................................57
(k) Sale of Stock of Subsidiaries.....................................58
(l) Transfer of Assets................................................58
(m) Discontinuance or Change of Business..............................58
(n) Accounting Change. ...............................................58
(o) Financial Ratios. ................................................58
(p) Financial Covenants in Financings.................................58
(q) Environmental Compliance..........................................59
SECTION 20. Events of Default.................................................60
SECTION 21. Rights upon Default...............................................63
SECTION 22. Lease Assignment and Subletting...................................67
SECTION 23. Sale of Rents, Assignments, Permitted Lessor Liens................67
(a) Sale of Rents.....................................................67
(b) Assignments.......................................................68
(c) Lessor Liens......................................................69
(d) Prohibited Assignees..............................................69
SECTION 24. Taxes.............................................................69
SECTION 25. Operating Lease...................................................69
SECTION 26. Notices and Requests..............................................69
SECTION 27. Right to Perform for Lessee.......................................70
SECTION 28. The Agent.........................................................70
(a) Appointment and Authorization.....................................70
(b) Agent and Affiliates..............................................70
(c) Action by Agent...................................................71
(d) Consultation with Experts.........................................71
(e) Liability of Agent................................................71
(f) Indemnification...................................................71
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(g) Failure to Act....................................................71
(h) Credit Decision...................................................71
(i) Resignation and Removal...........................................72
(j) Distributions.....................................................72
(k) Lessee Rights.....................................................72
SECTION 29. Security Interest; Further Assurances.............................72
(a) Security Interest.................................................72
(b) Further Assurances................................................73
SECTION 30. Miscellaneous.....................................................73
SCHEDULE I- Commitments.......................................................77
SCHEDULE II- Legal Description of Land........................................78
[Exhibits Follow]
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PURCHASE AND MASTER LEASE AGREEMENT
(Corner of 1st St. and Headquarters Drive)
PURCHASE AND MASTER LEASE AGREEMENT (this "LEASE" or this
"AGREEMENT"), dated as of October 24, 1996, among each institution
executing the signature pages hereto as a lessor and/or receiving an
assignment of a lessor's interest from time to time pursuant to Section 23(b)
hereof, for so long as such institution shall hold a lessor's interest
hereunder (each, individually, a "LESSOR"; and, collectively, the "LESSORS"),
NOVELLUS SYSTEMS, INC., a California corporation (the "LESSEE"), and SUMITOMO
BANK LEASING AND FINANCE, INC., as agent for the Lessors (in its capacity as
such, the "AGENT").
BACKGROUND AND RECITALS OF FACT
1. Lessee desires to lease the Property from the Lessors.
2. On the Closing Date, the parties anticipate that, subject to
the terms of this Agreement, (i) the Agent on behalf of the Lessors shall
purchase from Zuken-Redac, Inc., a California corporation ("Seller") the
Property to be leased hereunder pursuant to the Real Property Purchase and
Sale Agreement and (ii) the Lessee shall lease such Property from the Lessors.
NOW THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
In each Lease Document, unless the context otherwise requires:
(a) any term defined below by reference to another instrument or
document shall continue to have the meaning ascribed thereto whether or not
such other instrument or document remains in effect;
(b) words importing the singular include the plural and vice versa;
(c) words importing a gender include any gender;
(d) a reference to a part, clause, party, section, article,
exhibit or schedule is a reference to a part and clause of, and a party,
section, article, exhibit and schedule to, such Lease Document;
(e) a reference to any statute, regulation, proclamation,
ordinance or law includes all statutes, regulations, proclamations,
ordinances or laws varying, consolidating or replacing them, and a reference
to a statute includes all regulations, proclamations and ordinances issued or
otherwise applicable under the statute;
(f) a reference to a document includes an amendment or supplement
to, or replacement or novation of, that document;
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(g) a reference to a party to a document includes that party's
successors and permitted assigns;
(h) where the character or amount of any asset or liability or
item of income or expense is required to be determined or any consolidation
or other accounting computation is required to be made for the purpose of
this Agreement, such determination or calculation shall, at any time and to
the extent applicable and except as otherwise specified in this Agreement, be
made in accordance with GAAP;
(i) All covenants, representations and Events of Default contained
herein shall be given independent effect, so that if any action or condition
would violate any of such covenants, would breach any of such representations
or would constitute any of such Event of Default, the fact that such action
or condition would not violate or breach another covenant or representation
or constitute another Event of Default shall not avoid the violation of such
covenant or representation or such Event of Default; and
(j) the following terms have the meanings set forth below:
"ACTIVE NEGLIGENCE" of an Indemnified Person means, and is limited
to, the negligent conduct of activities actually on or about the Property by
the Indemnified Person or its employees, agents or representatives in a
manner that proximately causes actual bodily injury or property damage to be
incurred. "Active Negligence" shall not include (1) any negligent failure of
Lessor to act when the duty to act would not have been imposed but for
Lessor's status as owner of the Property or as a party to the transactions
described in this Lease, (2) any negligent failure of any other Indemnified
Person to act when the duty to act would not have been imposed but for such
party's contractual or other relationship to Lessor or participation or
facilitation in any manner, directly or indirectly, of the transactions
described in this Lease, or (3) the exercise in a lawful manner by Lessor (or
any party claiming through or under Lessor) of any remedy provided herein, in
the Real Property Purchase and Sale Agreement or the Security Agreement, at
law, in equity or otherwise.
"ADDITIONAL BASE RENT" means all amounts payable by the Lessee to
the Agent for the account of the Lessors pursuant to Section 7(a)(ii) hereof.
"ADDITIONAL RENT" means all amounts owed by Lessee to any
Indemnified Person under any Lease Document, other than Base Rent and
Additional Base Rent.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to
control another Person if such first Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through ownership of voting
securities, by contract or otherwise.
"AFTER TAX BASIS" means in respect of an amount (the "base amount")
with respect to a Person, the base amount supplemented by a future payment,
if necessary, to such Person such that, after reduction for all Taxes, if
any, imposed on such Person in respect of the sum of the base amount and such
future payment, and after giving effect to all current deductions and
credits, if any, actually utilized by such Person with respect to the base
amount or the event or circumstance giving rise thereto, shall be equal to
the base amount.
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"AGENT'S REPRESENTATIONS" means, with respect to the Property being
transferred by the Agent to Lessee or a third Person: (i) the Agent has not
previously transferred title to such Property to any third Person; and (ii)
such Property is free of Lessor Liens.
"DEBT LESSOR COMMITMENT" means the amount set forth on Schedule I
as the Debt Lessor Commitment.
"EQUITY LESSOR COMMITMENT" means the amount set forth on Schedule I
as the Equity Lessor Commitment.
"APPLICABLE LAW" means all existing and future applicable laws,
rules, regulations (including Environmental Laws) statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authority; and applicable judgments, decrees,
injunctions, writs, orders or like action of any court, arbitrator or other
administrative, judicial or quasi-judicial tribunal or agency of competent
jurisdiction (including those pertaining to health, safety or the environment
(including, without limitation, wetlands); and those pertaining to the
construction, use or occupancy of the Property); and any restrictive covenant
or deed restriction or easement of record affecting the Property.
"APPRAISAL" means an appraisal, prepared by Appraiser, of the
Property which in the judgment of counsel to the Agent, complies with all of
the provisions of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended, the rules and regulations adopted pursuant thereto,
and all other Applicable Laws.
"APPRAISER" means an independent appraiser of recognized national
standing that is (i) selected by the Agent on behalf of the Lessors to
perform any appraisal provided for hereunder and (ii) whose selection is
consented to by Lessee (whose consent shall not be unreasonably withheld or
delayed).
"ASSIGNEE" has the meaning set forth in Section 23(b) hereof.
"ASSIGNMENT" has the meaning set forth in Section 23(b) hereof.
"ASSIGNMENT OF REAL PROPERTY PURCHASE AND SALE AGREEMENT" means an
assignment in substantially the form attached hereto as Exhibit Q.
"AUTHORIZED OFFICER" means, with respect to Lessee, the President,
the Chief Executive Officer, the Chief Financial Officer, the Treasurer or
any Assistant Treasurer thereof.
"BASE RATE" means, for any day, a rate per annum equal to the
higher of (i) the rate per annum established by Sumitomo Bank from time to
time as the reference rate for short-term commercial loans in Dollars to
domestic corporate borrowers (which Lessee acknowledges is not necessarily
Sumitomo Bank's lowest rate), and (ii) the sum of 0.50% plus the Federal
Funds Rate for such day.
"BASE RATE PORTION" has the meaning set forth in the definition of
Rent Period.
"BASE RENT" means all amounts payable by the Lessee to the Agent
for the account of the Lessors pursuant to Section 7(a)(i) hereof.
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"BUSINESS DAY" means any day other than a Saturday, a Sunday or
other day on which banking institutions in New York, New York are authorized
or required by law or regulation to close.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System database.
"CLOSING DATE" means October 24, 1996, or any other Business Day
not later than October 24, 1996, agreed upon by the Agent and Lessee, in
writing, to be the Closing Date.
"CLOSING DATE NOTICE" means a notice substantially in the form of
Exhibit C hereto, appropriately completed and signed by a Signing Officer of
Lessee.
"CLOSING FEE" means the fee payable to the Agent for the account of
the Lessors on the Closing Date pursuant to a separate written agreement
between Lessor and Lessee of even date herewith.
"CODE" means the U.S. Internal Revenue Code of 1986, as amended and
as in effect from time to time, and the regulations promulgated thereunder.
"COLLATERAL" means all of Lessee's right, title and interest in and
to each of the following, whether now existing or hereafter arising or
acquired, and wherever located:
(a) the Property;
(b) all reversions, remainders, rents, issues, profits and
other benefits arising or issuing from, and all leases of, all or any portion
of the Property;
(c) all awards, damages, payments and other compensation
(including but not limited to insurance proceeds) received by or payable to
Lessee, and all claims of Lessee therefor and rights of Lessee thereto, which
may result (i) from any Condemnation, (ii) from any damage, injury or
destruction in any manner caused to the Property, or (iii) from any change of
grade or vacation of any street abutting the Land;
(d) all certificates of occupancy, other governmental
permits, and all water stock appurtenant to the Land or any portion thereof;
(e) all insurance policies required to be maintained under
the terms of this Lease or any other Lease Document, or otherwise carried by
Lessee covering the Property or any portion thereof, together with all
unearned premiums paid thereon and all other benefits received or to be
received therefrom;
(h) all refunds of taxes, assessments, levies and other
charges related to the Real Property, whether governmental or
nongovernmental, and including but not limited to water and sewer rents and
assessments on appurtenant water stock;
(i) all contracts relating to the purchase, operation and
maintenance of the Personal Property, including all warranties;
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(j) any rebate (excluding sales or use tax refunds to
Lessee), offset or other similar rights under a purchase order, invoice or
purchase agreement with any manufacturer or vendor of any Person to the
extent such rebate relates to the Personal Property;
(k) all books, manuals, logs, records, writings, databases,
information and other property relating to, used or useful in connection
with, evidencing, embodying or incorporating any of the foregoing, but
specifically excluding the portions of any of the foregoing that constitute
(i) trade secrets,(ii) communications protected from disclosure by reason of
an evidentiary privilege or (iii) information that Lessee is prohibited from
disclosing by reason of a bona fide confidentiality agreement enforceable
against Lessee by a Person that is not an Affiliate of Lessee; and
(l) all products, accessions and proceeds of and from any and
all of the foregoing Collateral (including proceeds which constitute property
of the types described in clauses (a) through (k) above) and, to the extent
not otherwise included, all payments under insurance (whether or not the
Agent or any Lessor is the loss payee thereof), and any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral.
"COLLATERALIZATION" is defined in Section 19(r).
"COMMITMENT" means, with respect to each Lessor, the amount set
forth next to such Lessor's name on Schedule I hereto (as adjusted pursuant
to Section 23(b) hereof).
"COMMITMENT PERCENTAGE" means, with respect to each Lessor, the
quotient (expressed as a percentage) of such Lessor's Commitment divided by
the Total Commitment.
"CONDEMNATION" means any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, access, occupancy, easement
rights or title to the Property or any part thereof, wholly or partially
(temporarily or permanently), by or on account of any actual or threatened
eminent domain proceeding or other taking of action by any Person having the
power of eminent domain, including an action by a Governmental Authority to
change the grade of, or widen the streets adjacent to, the Property or alter
the pedestrian or vehicular traffic flow to the Property so as to result in
change in access to such Property, or by or on account of an eviction by
paramount title or any transfer made in lieu of any such proceeding or
action. A "Condemnation" shall be deemed to have occurred on the earliest of
the dates that use, occupancy or title vests in the condemning authority.
"CONSOLIDATED CURRENT ASSETS" shall mean all current assets of
Lessee and its Subsidiaries determined on a consolidated basis.
"CONSOLIDATED CURRENT LIABILITIES" shall mean all current
liabilities of Lessee and its Subsidiaries determined on a consolidated basis.
"CORPORATE TRANSACTION" has the meaning set forth in Section 19(b)
hereof.
"CUSTODIAN" has the meaning set forth in the Security Agreement.
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"DEBT" shall mean, with respect to any Person, without duplication,
(i) all items (excluding reserves for deferred income taxes) which in
accordance with GAAP would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person as of the date
on which Debt is to be determined, (ii) all indebtedness secured by any Lien
on any property or asset owned or held by such Person subject thereto,
whether or not the indebtedness secured thereby shall have been assumed,
(iii) all indebtedness of others with respect to which such Person has become
liable by way of a guarantee, and (iv) all outstanding letters of credit with
respect to which, if drawn upon, such Person would have any repayment or
reimbursement obligations other than Documentary Letters of Credit.
"DEBT LESSOR" means a Lessor identified as a "Debt Lessor" in
Schedule I.
"DEBT PORTION PROPERTY COST" means (a) the Property Cost times (b)
the Debt Lessor Commitment divided by the Commitment.
"DEBT SERVICE COVERAGE RATIO" means EBITDA divided by the sum of
(a) interest expense, (b) rent expense and (v) the current portion of Debt.
Lessee's obligations under this Lease shall not be included in the
computation of any component of Debt Service Coverage Ratio.
"DEED" means a grant deed with respect to the real property
comprising the Property, in conformity with Applicable Law and appropriate
for recording with the applicable Governmental Authorities, conveying fee
simple title to such real property to the Lessor, subject only to Permitted
Liens and substantially in the form of Exhibit O to this Lease.
"DEED OF TRUST" means a deed of trust with respect to the real
property comprising the Property, in conformity with Applicable Law and
appropriate for recording with the applicable Governmental Authorities,
conveying bare legal title to such real property to the trustee named therein
for the benefit of Agent (for the benefit of Lessors) as beneficiary
thereunder, subject only to Permitted Liens and substantially in the form of
Exhibit P to this Lease.
"DE MINIMIS AMOUNT" means a cumulative amount not in excess of
$100,000.
"DOCUMENTARY LETTER OF CREDIT" shall mean a letter of credit issued
for the account of Lessee or its Subsidiary in the ordinary course of
business of Lessee or its Subsidiary to secure the deferred purchase price of
goods.
"DOLLARS" and "$" means lawful money of the United States.
"EBITDA" shall mean, for any period, consolidated net income (or
net loss) PLUS the sum of (a) interest expense, (b) income and franchise tax
expense, (c) depreciation expense, (d) amortization expense, (e)
extraordinary or unusual losses or other losses not incurred in the ordinary
course of business included in the calculation of net income, (f) any
non-cash charge against net income required to be recognized in connection
with the issuance of capital stock to employees (whether upon lapse of
vesting restrictions, exercise of employee options or otherwise), and (g) any
non-cash charge against net income required to be recognized in connection
with employee pension plans, LESS extraordinary or unusual gains or other
gains not incurred in the ordinary course of business included in the
calculation of net income.
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"ENVIRONMENT" means all air, surface water, groundwater, or land,
including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
"ENVIRONMENTAL AUDIT" means a "Phase One" environmental site
assessment (the scope and performance of which meets or exceeds ASTM Standard
Practice E1527-93 Standard Practice for Environmental Site Assessments:
Phase One Environmental Site Assessment Process) of the Property, dated not
earlier than six months prior to the date of this Agreement.
"ENVIRONMENTAL CLAIMS" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, notices of violations,
investigations, complaints, requests for information, proceedings, or other
communication (written or oral), whether criminal or civil, (collectively
"Claims") pursuant to or relating to any applicable Environmental Law by any
person (including but not limited to any Governmental Authority and citizens'
group) based upon, alleging, asserting, or claiming any actual or potential
(i) violation of or liability under any Environmental Law, (ii) violation of
any Environmental Permit, or (iii) liability for investigatory costs, cleanup
costs, removal costs, remedial costs, response costs, natural resource
damages, property damage, personal injury, fines, or penalties arising out
of, based on, resulting from, or related to the presence, or Release into the
environment, of any Hazardous Materials at any location, including but not
limited to any off-site location to which Hazardous Materials or materials
containing Hazardous Materials were sent for handling, storage, treatment, or
disposal.
"ENVIRONMENTAL CLEANUP SITE" means any location which is listed or
proposed for listing on the National Priorities List, on CERCLIS, or on any
similar state list of sites requiring investigation or cleanup, or which is
the subject of any pending or threatened action, suit, proceeding, or
investigation related to or arising from any alleged violation of any
Environmental Law or the presence or Release of a Hazardous Material.
"ENVIRONMENTAL CONDITION" means the presence of a Hazardous
Material at any property or facility which has or may result in or form the
basis of an Environmental Claim.
"ENVIRONMENTAL LAW" means any and all federal, state, local, and
foreign laws, statutes, ordinances, orders, codes, rules, regulations,
policies, guidance documents, judgments, decrees, injunctions, or agreements
with any Governmental Authority, relating to the protection of health and the
Environment and/or governing the handling, use, generation, treatment,
storage, transportation, disposal, manufacture, distribution, formulation,
packaging, labeling, or Release of Hazardous Materials, whether now existing
or subsequently amended or enacted, including but not limited to: the Clean
Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C.
Section 9601 ET SEQ.; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 ET SEQ.; the Hazardous Material Transportation Act 49 U.S.C.
Section 1801 ET SEQ.; the Federal Insecticide, Fungicide and Rodenticide Act
7 U.S.C. Section 136 ET SEQ.; the Resource Conservation and Recovery Act of
1976 ("RCRA"), 42 U.S.C. Section 6901 ET SEQ.; the Toxic Substances Control
Act, 15 U.S.C. Section 2601 ET SEQ.; the Occupational Safety & Health Act of
1970, 29 U.S.C. Section 651 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C.
Section 2701 ET SEQ.; and the state analogies thereto, including but not
limited to the California Underground Storage of Hazardous Substances Act,
California Health & Safety Code Sections 25280 ET SEQ.; the California
Hazardous Substances Account Act California Health & Safety Code Sections
25300 ET SEQ.; the California Hazardous Waste Control Act, California Health
& Safety Code Sections 25100 ET SEQ.; the California Safe Drinking Water and
Toxic Enforcement Act, California Health & Safety Code Sections 24249.5 ET
SEQ.; the Porter-Cologne Water Quality Act California Water Code Sections
13000 ET SEQ., together with all administrative regulations promulgated under
any of the foregoing, all as amended from time to time; and any common law
doctrine, including but not limited to, negligence, nuisance, trespass,
personal injury, or property damage related to or arising out of the
presence, Release, or exposure to a Hazardous Material.
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"ENVIRONMENTAL PERMIT" means any federal, state or local, or
foreign permit, license or authorization issued under or in connection with
any Environmental Law.
"EQUITY LESSOR" means a Lessor identified as an "Equity Lessor" in
Schedule I.
"EQUITY PORTION PROPERTY COST" means (a) the Property Cost times
(b) the Equity Lessor Commitment divided by the Commitment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA AFFILIATE" means each "person" (as defined in Section 3(9)
of ERISA) which is under "common control" with the Lessee or any of its
Subsidiaries (within the meaning of Section 414(b), (c), (m) or (o) of the
Code).
"EUROCURRENCY LIABILITIES" has the meaning assigned thereto in
Regulation D.
"EUROCURRENCY RESERVE PERCENTAGE" means, with respect to any day, a
percentage (expressed as a decimal) equal to the percentage in effect on such
day as prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including,
without limitation, any marginal, supplemental or emergency reserve
requirement) applicable to "Eurocurrency Liabilities" pursuant to Regulation
D or any other then applicable regulation of said Board of Governors which
prescribes reserve requirements applicable to "Eurocurrency Liabilities" as
presently defined in Regulation D.
"EURO-DOLLAR BUSINESS DAY" means any Business Day on which dealings
in euro-dollar deposits are generally carried on the London interbank market.
"EURO-DOLLAR PORTION" has the meaning set forth in the definition
of Rent Period.
"EURO-DOLLAR RATE" means the mid-morning average of four banks'
(selected by Agent) one-, three- or six-month LIBOR Rate appearing on the
LIBO page published by Reuters Monitoring Systems (or Euro-Dollar Portion
thereof) (in each case rounded upwards, if necessary, to the next higher
1/16th of 1%) on the day two Euro-Dollar Business Days preceding the first
day of the term of that Rent Period (or Euro-Dollar Portion thereof);
PROVIDED that the selection of a three- or six-month LIBOR Rate shall remain
in effect as the Euro-Dollar Rate under this Lease until the expiration of
the last day of the last Rent Period in effect during such term of such LIBOR
Rate. In the event the Reuters quote is not available, the British Banker's
Association's Interest Settlement Rate shall be used. If there is no
published rate corresponding to a Rent Period (or Euro-Dollar Portion
thereof), the rate for such Rent Period (or Euro-Dollar Portion thereof)
shall be determined by interpolating on a straight-line basis from the
published rate corresponding to a period nearest to but less than such Rent
Period (or Euro-Dollar Portion thereof) and the published rate corresponding
to a period nearest to but greater than such Rent Period (or Euro-Dollar
Portion thereof).
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"EVENT OF DEFAULT" has the meaning set forth in Section 20 hereof.
"EVENT OF LOSS" as to any Property means that such Property has
been lost, stolen, destroyed, seized, Condemned, confiscated, eroded,
subsided, lost by avulsion, rendered unfit for use or damaged beyond repair
in the opinion of the Lessee or if the use of such Property by such Lessee in
its regular course of business is prevented by the act of any third Person or
Persons (including a governmental instrumentality) for a period exceeding 45
calendar days, or if any Property is attached and the attachment is not
removed within 45 calendar days.
"EXCLUDED TAXES" means Taxes which are either (i) imposed by the
jurisdiction in which an Indemnified Person is organized, a taxing authority
thereof or therein or by any other taxing authority as a result of such
Indemnified Person's doing business or maintaining an office in such
jurisdiction -- such as franchise taxes -- (other than any such taxes that
the Indemnified Person establishes would not have been imposed but for (A)
such Indemnified Person's having executed, or enforced, a Lease Document or
(B) any of the transactions to which Agent (on behalf of the Lessors) and
Lessee are parties (excluding documentary transfer taxes and any increase,
throughout the Lease Term only, in property taxes due to a "change in
ownership" as defined in the California Revenue & Tax Code), whether
contemplated herein or in the other Lease Documents) or (ii) imposed on,
based on or measured by net income, capital or net worth of such Indemnified
Person (other than Taxes that are, or are in the nature of, sales, use,
rental, property or value added or similar taxes).
"EXISTING SERVICE CONTRACT OBLIGATIONS" means the contractual
rights and obligations transferred by Seller pursuant to the "Assignment of
Service Contracts, Warranties and Guaranties and other Intangible Property"
in the form attached as Exhibit I to the Real Property Purchase and Sale
Agreement.
"FAIR MARKET SALES VALUE" means the amounts, which in any event
shall not be less than zero, that would be paid in cash in an arm's-length
transaction between an informed and willing purchaser and an informed and
willing seller, neither of whom is under any compulsion to purchase or sell,
respectively, for the ownership of all of the Property. The Fair Market
Sales Value of the Property shall be determined based on the assumption that,
except for purposes of Section 20 and Section 14(b) hereof, the Property is
in the condition and state of repair required under Section 10 hereof and the
Lessee is in compliance with the other requirements of the Lease Documents.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Board of Governors of the Federal Reserve
System (including any such successor, "H.15(519)") for that day opposite the
caption "Federal Funds (Effective)". If on any relevant day such rate is not
yet published in H.15(519), the rate for that day will be the rate set forth
in the daily statistical release designated as the Composite 3:30 P.M.
Quotations for U.S. Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including any such
successor, the "Composite 3:30 P.M. Quotations") for that day under the
caption "Federal Funds Effective Rate". If on any relevant day the
appropriate rate for such day is not yet published in either H.15(519) or the
Composite 3:30 P.M. Quotations, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m., New York time, on that day by each of three
leading brokers of Federal funds transactions in New York City, selected by
the Agent.
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"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means a fiscal year of 12 calendar months which
begins on January 1 and ends on December 31.
"FIXTURES" means all materials, supplies, fixtures, fittings,
appliances, apparatus, equipment, machinery, furnishings, furniture, carpets,
drapes, inventory, chattels and other articles of personal property of any
description, and replacements of any thereof, now or at any time hereafter
owned by Lessee and affixed to or attached to or used in construction upon or
used in any other way in connection with or located upon, under, within or
deemed part of the Real Property.
"FUNDED DEBT" shall mean (i) Indebtedness for Borrowed Money,
excluding Debt subordinated to the obligations of Lessee under the Lease
Documents in a manner satisfactory to the Agent; (ii) capital lease
obligations; (iii) all guarantees, direct or indirect, except (a) those that
guarantee financial obligations that would already be calculated in this
definition and (b) guarantees of obligations arising under Operating Leases;
(iv) standby letters of credit except those financial obligations that would
already be calculated in this definition; and (v) bankers' acceptances.
"FUNDING" has the meaning set forth in Section 4(c) hereof.
"FUNDING OFFICE" means, at any time with respect to any Lessor, the
office of such Lessor at which it is booking or funding its Outstanding
Investment, as set forth (i) opposite such Lessor's name in Schedule I to
this Lease, (ii) in Annex I to the Assignment pursuant to which such Lessor
became a Lessor, a copy of which has been delivered to the Lessee and the
Agent, or (iii) in a written notice from such Lessor to the Lessee and the
Agent advising each of a change in its Funding Office.
"GAAP" means the generally accepted accounting principles
consistently applied with the then effective principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors and
successors.
"GOVERNMENTAL AUTHORITY" means any federal, state, county,
municipal or other governmental or regulatory authority, agency, board, body,
commission, instrumentality, court or quasi-Governmental Authority.
"GOVERNMENT SECURITIES" is defined in Section 19(r).
"GROSS LEASE INVESTMENT BALANCE" means the Lease Investment Balance
plus all then accrued and unpaid Base Rent and Additional Base Rent and other
amounts then due under the Lease Documents.
"GUARANTEED RESIDUAL VALUE" means the Guaranteed Residual Value for
the Property set forth in the Lease Supplement.
"GUARANTY" means any instrument or document by which a Person has
directly or indirectly guaranteed (whether by discount or otherwise),
endorsed (other than for collection or deposit in the ordinary course of
business), discounted with recourse to such Person or with
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respect to which such Person is otherwise directly or indirectly liable for
the indebtedness or obligations of any other Persons, including, without
limitation, indebtedness in effect guaranteed by such Person through any
agreement (contingent or otherwise) to (i) purchase, repurchase or otherwise
acquire such indebtedness, (ii) provide funds for the payment or discharge of
such indebtedness or any other liability of the obligor of such indebtedness
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (iii) maintain the solvency or other financial
condition of the obligor of such indebtedness, or (iv) make payment for any
products, materials, supplies, transportation or services pursuant to an
agreement which requires such payment regardless of the non-delivery or
non-furnishing thereof, if in any such case the purpose or intent of such
agreement is to provide assurance that such indebtedness will be paid or
discharged or that any agreements relating thereto will be complied with or
that the holders of such indebtedness will be protected against loss in
respect thereof.
"HAZARDOUS MATERIAL" means petroleum and petroleum products,
petroleum by-products, radioactive materials, asbestos, gasoline, diesel
fuel, radon, urea formaldehyde, lead-containing materials, polychlorinated
biphenyls, and any other material, gas or substance known or suspected to be
toxic or hazardous which could cause a detriment to, or impair the beneficial
use of, the Property, or constitute a health, safety or environmental risk to
any occupant of the Real Property; and any other materials or substances
defined as or included in the definition of "hazardous substances,"
"hazardous materials," "hazardous wastes," "toxic substances," "toxic
pollutants," "pollutants," "regulated substances," "solid wastes," or
"contaminants" under any applicable Environmental Law.
"IMPROVEMENTS" means all buildings, structures, and other
improvements of every kind existing at any time and from time to time on or
under the Land, together with any and all appurtenances to such buildings,
structures or improvements, including sidewalks, utility pipes, conduits and
lines, parking areas and roadways, and including all Modifications and other
additions to or changes in the Improvements at any time.
"INDEBTEDNESS FOR BORROWED MONEY" means with respect to any Person,
as of the date of determination thereof, (i) any and all of such Person's
indebtedness for borrowed money (including, without limitation, indebtedness
for borrowed money which is subordinated), (ii) any and all of such Person's
conditional sale obligations, (iii) any and all indebtedness secured by any
Lien with respect to any property or asset owned by such Person, regardless
of whether the indebtedness secured thereby shall be of or shall have been
assumed by such Person, and (iv) any and all indebtedness or obligations of
any of the types described in the preceding clauses (i), (ii) and (iii) for
which such Person is liable, directly or indirectly, under a Guaranty;
PROVIDED, HOWEVER, that the obligations of a lessee under a true lease shall
not constitute Indebtedness for Borrowed Money and any indebtedness incurred
by such Person which by the terms of the related agreement is required to be
used to retire a payment obligation to a trade creditor arising from the
purchase by such Person of goods and services acquired for the purpose of
resale in the ordinary course of such Person's business shall not constitute
Indebtedness for Borrowed Money.
"INDEMNIFIED PERSON" means each of the Agent, each Lessor, each of
the respective Affiliates of the Agent and each Lessor and each of their
respective successors, assigns, officers, directors, employees, counsel,
servants, agents and other representatives.
"INSURANCE REQUIREMENTS" means (i) all terms of any insurance
policy covering or applicable to any item of Collateral, (ii) all
requirements of the issuer of any such policy and (iii)
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all requirements of Applicable Law related to insurance of any Governmental
Authority applicable to any item of Collateral, in each case where the
failure to comply with (i), (ii) or (iii) above, individually or in the
aggregate for all such failures, would be reasonably likely to result in a
Material Adverse Effect.
"INVESTMENT" in any Person shall mean:
(a) the acquisition (whether for cash, property, services or
securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of such
Person; and
(b) any deposit with, or advance, loan or other
extension of credit to, such Person (other than any such advance,
loan or extension of credit having a term not exceeding 120 days
in the case of unaffiliated Persons and one year in the case of
Lessee Affiliates representing the purchase price of inventory or
supplies purchased in the ordinary course of business) or
guarantee or assumption of, or other contingent obligation with
respect to, Indebtedness for Borrowed Money or other liability of
such Person; and
(c) (without duplication of the amounts included
in (a) and (b)) above any amount that may, pursuant to the
terms of such investment, be required to be paid, deposited,
advanced, loaned or extended to or guaranteed or assumed
on behalf of such Person.
"LAND" means the real property described on Schedule II hereto, and
all easements and appurtenances thereto.
"LEASE ASSIGNEE" is defined in Section 22.
"LEASE ASSIGNMENT" is defined in Section 22.
"LEASE DOCUMENTS" means, this Lease, the Deed, the Deed of Trust,
the Lessor Documents, and each financing statement and other document or
instrument delivered pursuant hereto or thereto.
"LEASE INVESTMENT BALANCE" means, at any time, the Property Cost of
such Property PLUS all fees and expenses of Lessee that Lessee elects to
capitalize (subject to Agent's prior written consent) MINUS amounts
previously paid to the Agent for the account of the Lessors in reduction
thereof pursuant to Section 7(a)(ii) hereof.
"LEASE SUPPLEMENT" means the form of "Lease Supplement" attached as
Exhibit A hereto.
"LEASE TERM" means the "Lease Term" as defined in Section 6.
"LESSOR DOCUMENTS" means the Rent Purchase Agreement and the
Security Agreement.
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"LESSOR LIENS" means Liens on any Property resulting from any act
of, or claim against, the Agent in its individual capacity or as agent for
the Lessors, not related to the transactions contemplated hereby, or arising
out of a Tax payable by Agent and not indemnified by Lessee under this Lease.
"LIABILITIES" means any and all of the Lessee's obligations to the
Agent and the Lessors, howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter existing, or due
or to become due, which arise out of or in connection with this Agreement or
any other Lease Document.
"LIEN" means any lien, mortgage, security interest, chattel
mortgage, pledge or other encumbrance (statutory or otherwise) of any kind
securing satisfaction of an obligation, including any agreement to give any
of the foregoing, any conditional sales or other title retention agreement,
any lease in the nature thereof, and the filing of or the agreement to give
any financing statement under the Uniform Commercial Code of any jurisdiction
or similar evidence of any encumbrance, whether within or outside the United
States.
"LITIGATION" means any litigation, proceeding (including, without
limitation, any governmental proceeding or arbitration proceeding), claim,
lawsuit and/or investigation (including, without limitation, any
environmental litigation, proceeding, claim, lawsuit and/or investigation)
pending or threatened against or involving Lessee or any Subsidiary or any of
its or their businesses or operations.
"MARGIN" shall mean thirty(30) basis points.
"MATERIAL ADVERSE EFFECT", with respect to any occurrence, failure,
act or omission of any nature, means, individually or in the aggregate, a
materially adverse effect on, or an effect which would materially impair, (i)
the ability of Lessee or any Subsidiary to conduct its business substantially
as now conducted, (ii) the consolidated business, operations, prospects or
financial condition of Lessee and its Subsidiaries, taken as a whole, (iii)
the ability of Lessee to perform any of its obligations (including, without
limitation, those under Section 15 hereof) under the Lease Documents, (iv)
the validity or enforceability of any of the Lease Documents, (v) the
priority or enforceability of any security interest, mortgage or deed of
trust created thereby and intended to be perfected thereunder, (vi) the value
or utility of the Property, or (vii) the ability of the Agent or the Lessors
to exercise any of their rights or remedies under the Lease Documents.
"MATERIAL LITIGATION" means any Litigation or development in any
Litigation which could individually or in the aggregate have a Material
Adverse Effect.
"MEMORANDUM OF LEASE" means the form of Memorandum of Lease
attached as Exhibit G hereto.
"MODIFICATIONS" has the meaning set forth in Section 10(d) hereof.
"MULTIEMPLOYER PLAN" shall mean any multiemployer plan (within the
meaning of section 3(37) of ERISA) to which either the Lessee, any
Subsidiary, or any ERISA Affiliate has an obligation to contribute.
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"NET WORTH" shall mean the aggregate amount, determined on a
consolidated basis for Lessee and its Subsidiaries, of (a) capital stock
(including paid-in capital but excluding any treasury stock, capital stock
subscribed and unissued and other contra-equity accounts) and (b) retained
earnings, less intangibles.
"NON-UNITED STATES PERSON" has the meaning set forth in Section
13(c) hereof.
"OPERATING LEASE" shall mean an operating lease as defined by GAAP.
"OUTSTANDING INVESTMENT" means, with respect to any Lessor as of
any date, the amount determined by multiplying (i) the Lease Investment
Balance at such time by (ii) such Lessor's Commitment Percentage. The
records of the Agent shall be conclusive in the absence of manifest error as
to the Outstanding Investment of each Lessor.
"OVERDUE RATE" shall mean, for any payment, a fluctuating rate per
annum for each day equal to 2% per annum above the rate from time to time
used to determine Base Rent pursuant to Section 7(a)(i), 7(b) or 7(c) hereof.
"PERMITTED CONTEST" means actions taken by a Person to contest in
good faith, by appropriate proceedings, the legality, validity or
applicability to any Property or any interest therein of any Person of (a)
any Lien; (b) any Tax; (c) any judgment, decree or order described in, but
subject to the terms of, Section 9(f); or (d) any Applicable Law; PROVIDED,
that the initiation of any such contest could not reasonably be expected to:
(i) result in, or materially increase the risk of, the imposition of any
civil or criminal liability on any Indemnified Person; or (ii) result in a
Material Adverse Effect; PROVIDED, FURTHER, that, in any event, adequate
reserves are maintained in accordance with GAAP against any adverse
determination of any such contest.
"PERMITTED LESSOR LIENS" means any Lien (i) in favor of the Agent
created by or arising under or in connection with this Lease or the other
Lease Documents, (ii) for Taxes payable by the Agent which are not yet
delinquent or are the subject of a Permitted Contest, (iii) of mechanics,
materialmen, laborers, employees or suppliers and similar liens arising by
operation of Applicable Law, incurred by the Agent in the ordinary course of
business for sums (not involving any Debt) which are not yet delinquent or
are the subject of a Permitted Contest, or (iv) arising out of any judgment
or award against the Agent which has been adequately bonded to protect the
Lessee's interests.
"PERMITTED LIENS" shall mean:
(a) any Liens for current Taxes not yet due and
payable or being contested by a Permitted Contest;
(b) Liens in favor of the Agent and created by or
arising under or in connection with this Lease or the other
Lease Documents;
(c) Liens of mechanics, materialmen, laborers,
employees or suppliers and similar liens arising by operation of
Applicable Law, incurred by the Lessee in the ordinary course
of business for sums (not involving any Debt) which are not yet
delinquent or are the subject of a Permitted Contest,
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(d) Liens arising out of any judgment or award against
the Lessee which have been adequately bonded to protect the
Agent's interests (on behalf of the Lessors); and
(e) All other Liens approved by Agent in writing.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability corporation or
partnership, joint venture, joint stock company, Governmental Authority or
other entity of any kind.
"PERSONAL PROPERTY" means:
(a) all currently owned or hereafter acquired personal
property necessarily incidental to the use or enjoyment of the Real Property
subject to this Lease, and all additions and accessions thereto and
replacements therefor;
(b) all accounts, contract rights, general intangibles,
warehouse receipts and other documents, instruments, and other rights to the
payment of money or performance of services, now existing or hereafter
arising, in any way relating to the acquisition, operation or sale of the
Real Property, Fixtures, or any part thereof that is subject to this Lease,
or the construction, sale, lease, operation or other disposition of any
Improvements subject to this Lease, including without limitation construction
and architects' contracts, plans and specifications, permits, licenses and
approvals, engineering, consulting and management contracts, purchase
agreements and deposits, and leases and lease deposits;
(c) all choses in action, rights, claims and causes of action
(accrued and hereafter accruing) against any Person to the extent the same
arise out of or relate to the Property subject to this Lease or Lessee's
rights in the Property subject to this Lease; and
(d) all contract rights, development rights, development
entitlements, the Existing Service Contract Obligations, and other general
intangibles arising out of or pertaining to the use, occupancy or ownership
of any of the Property subject to this Lease, including the right to use the
name, tradename and/or style of the Property subject to this Lease.
"PLAN" shall mean any employee benefit plan (within the meaning of
section 3(3) of ERISA) maintained or contributed to by the Lessee, any
Subsidiary, or any ERISA Affiliate, other than a Multiemployer Plan.
"PROCEEDS" has the meaning set forth in Section 14(b)(iii)(x)
hereof.
"PROPERTY" means the Land, the Improvements, the Fixtures and the
Personal Property.
"PROPERTY COST", with respect to any Property means the amount of
the acquisition cost of the Property as set forth in the Lease Supplement.
"PROPERTY INFORMATION PACKAGE" has the meaning set forth in Section
2(b) hereof.
"PURCHASE OPTION" has the meaning set forth in Section 15 hereof.
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"QUICK RATIO" means the sum of cash, short term investments, net
accounts receivable and Government Securities pledged in accordance with
Section 19(r), divided by current liabilities.
"REAL PROPERTY" means the Land, the Improvements and the Fixtures.
"REAL PROPERTY PURCHASE AND SALE AGREEMENT" means the Real Property
Purchase and Sale Agreement dated as of June 7, 1996, between Seller and
Lessee as "Purchaser", to be assigned to Lessor as of the Closing Date.
"RECEIVED REPORTS" means the written reports described on Exhibit U
attached hereto.
"RECONSTRUCTED PROPERTY" has the meaning set forth in Section 17(d)
hereof.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leachate, dumping or disposing of
a Hazardous Material into the Environment.
"RENT PAYMENT DATE" means the last day of each Rent Period.
"RENT PERIOD" means:
(1) to the extent that Property Cost is funded at the Euro-Dollar Rate
pursuant to Section 7(a)(i) hereof, the period commencing initially on the
Closing Date and ending at the end of the fifteenth day of the calendar month
in which the Closing Date occurs and thereafter each period commencing on the
day immediately succeeding the close of the immediately preceding Rent Period
and ending one month thereafter; PROVIDED, that:
(i) any Rent Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Rent Period shall end on the
next preceding Euro-Dollar Business Day; and
(ii) any Rent Period which begins on the last Euro-Dollar Business
Day of the calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Rent Period)
shall end on the last Euro-Dollar Business Day of a calendar month; and
(2) to the extent that during any Rent Period the Property Cost is
funded in whole or in part at the Base Rate pursuant to Section 7(b) or 7(c)
hereof, then the Rent Period (as determined by paragraph (1) above in this
definition of "Rent Period") shall consist of the following two portions,
namely, the "Base Rate Portion" (which shall be the period during such Rent
Period during which the provisions of Section 7(b) or 7(c) are applicable)
and the "EURO-DOLLAR PORTION" (which shall be the period during such Rent
Period during which the provisions of Section 7(b) or 7(c) are not
applicable).
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Notwithstanding the above, any Rent Period which would otherwise extend
beyond the Termination Date shall end on the Termination Date.
"RENT PURCHASE AGREEMENT" means the agreement substantially in the
form attached hereto as Exhibit S.
"RENT PURCHASER" has the meaning set forth in Section 23(a) hereof.
"REPORTABLE EVENT" shall mean, with respect to any Single Employer
Plan, an event described in section 4043(b) of ERISA, other than an event as
to which the notice requirement is waived under applicable Pension Benefit
Guaranty Corporation regulations.
"REQUIRED LESSORS" means, as of any date of determination, with
respect to any approval, action, waiver, direction or consent, Lessors whose
Outstanding Investments aggregate at least 51% of Lease Investment Balance as
of such date of determination.
"REQUIRED MODIFICATION" has the meaning set forth in Section 10(d).
"RISK AMOUNT" means, at any time in question, the result of
subtracting Guaranteed Residual Value from Lease Investment Balance.
"SALE NOTICE" has the meaning set forth in Section 14(b)(i) hereof.
"SECURITY AGREEMENT" means the agreement substantially in the form
attached hereto as Exhibit T.
"SELLER" has the meaning set forth in paragraph 2 of the Recitals.
"SELLER ANCILLARY TRANSFER DOCUMENTS" means, collectively, the
documents to be delivered by the Seller pursuant to Section 7 of the Real
Property Purchase and Sale Agreement.
"SIGNING CERTIFICATE" means a certificate in the form of Exhibit M
hereto executed by an Authorized Officer of Lessee and delivered to Agent at
least five Business Days prior to the date on which Lessee wants Agent to
rely thereon.
"SIGNING OFFICER" means an officer of Lessee designated in the most
recent Signing Certificate of Lessee.
"SINGLE EMPLOYER PLAN" shall mean any Plan that is subject to Title
IV of ERISA.
"SUBORDINATED DEBT" means indebtedness of Lessee which is
subordinated to the prior payment of the Liabilities on terms and conditions
acceptable to the Agent; PROVIDED, that any payments of principal which are
scheduled to occur prior to the last occurring Termination Date shall not
constitute Subordinated Debt.
"SUBSIDIARY" means a corporation of which Lessee and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares
as have more than 50% of the ordinary voting power for the election of such
corporation's directors.
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"SUMITOMO BANK" means The Sumitomo Bank, Limited.
"TANGIBLE NET WORTH" shall mean the aggregate amount of the capital
stock accounts (including paid-in-capital and excluding treasury shares) plus
(or minus in the case of a deficit) the retained earnings of the Lessee
determined on a consolidated basis, plus non-current financial obligations
subordinated to payment of the obligations of Lessee under the Lease
Documents in a manner satisfactory to the Agent.
"TAXES" has the meaning set forth in Section 13(a) hereof.
"TERMINATION DATE" means the date on which the lease of the
Property hereunder terminates.
"TERMINATION EVENT" shall mean (a) a Reportable Event, (b) the
withdrawal by the Lessee or any ERISA Affiliate from a Single Employer Plan
during a plan year in which it was a substantial employer (within the meaning
of section 4001(a)(2) or 4062(e) of ERISA, (c) the termination of a Single
Employer Plan, or the filing of a notice of intent to terminate a Single
Employer Plan under section 4041(c) of ERISA, (d) the institution of
proceedings to terminate, or the appointment of a trustee with respect to, a
Single Employer Plan by the PBGC, (e) any other event or condition which
could constitute grounds under section 4042(a) of ERISA for the termination
of, or the appointment of a trustee to administer, any Single Employer Plan,
or (f) the imposition of a Lien pursuant to section 412 of the Code or
section 302 of ERISA as to the Lessee or any ERISA Affiliate.
"TERMINATION OPTION" has the meaning set forth in Section 14(b)(i)
hereof.
"TITLE COMPANY" means First American Title Insurance Company.
"TOTAL CAPITALIZATION" shall mean Funded Debt plus Net Worth.
"TOTAL COMMITMENT" means the amount set forth as the Total
Commitment on Schedule I hereto.
"UCC" shall mean the Uniform Commercial Code, as in effect from
time to time in any applicable jurisdiction.
"UNMATURED EVENT OF DEFAULT" means any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF LESSEE.
The Lessee represents, warrants and covenants to the Lessors that,
except as expressly set forth in the Received Reports:
(a) CORPORATE MATTERS. Lessee and each Subsidiary (i) are duly
incorporated and validly existing corporations in good standing under the
laws of their state of incorporation, (ii) have full power, authority and
legal right to own and operate their properties and conduct their business as
currently conducted and, in the case of Lessee, to execute, deliver and
perform
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its obligations under the Lease Documents, (iii) are duly qualified to do
business as a foreign corporation in good standing in each jurisdiction in
which their ownership or leasing of properties or the conduct of their
business requires such qualification, except where the failure so to qualify
would not result in a Material Adverse Effect, and (iv) in the case of
Lessee, has obtained all necessary consents, licenses, authorizations or
approvals of, and exemptions by, such Governmental Authorities as may be
necessary to authorize the execution, delivery and performance of the Lease
Documents, except where the failure so to obtain the same would not result in
a Material Adverse Effect.
(b) PROPERTY INFORMATION PACKAGE. Lessee has furnished to the
Agent a schedule describing the Land and all existing Improvements thereon
and thereto to be purchased by the Lessors and leased by the Lessors to
Lessee pursuant to Section 4 hereof and specifically including all of the
items set forth on Exhibit N hereto (the "PROPERTY INFORMATION PACKAGE"); and
all information contained in the Property Information Package is true and
complete.
(c) AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance of the Lease Documents by Lessee (i) are within its corporate
powers, (ii) have been duly authorized by all necessary corporate action,
(iii) do not require any governmental approval, consent, filing, recording,
notice or other action which has not been previously obtained and remains in
full force and effect, (iv) do not and will not contravene or conflict with
any provision of Applicable Law or of Lessee's charter or by-laws, and (v) do
not and will not contravene or conflict with, or cause any Lien to arise
under, any provision of any agreement binding upon Lessee, any Subsidiary of
Lessee or any of their respective properties.
(d) BINDING AGREEMENT. This Agreement is a legal, valid and
binding obligation of Lessee, enforceable against Lessee in accordance with
its terms, except as such enforcement may be limited by the application of
bankruptcy, moratorium, reorganization or other similar laws affecting the
rights of creditors generally or by general principles of equity (whether or
not a proceeding is brought in a court of law or equity). Each of the other
Lease Documents to be executed by Lessee, when duly executed and delivered by
Lessee, will be a legal, valid and binding obligation of Lessee, enforceable
against Lessee in accordance with its terms, except as such enforcement may
be limited by the application of bankruptcy, moratorium, reorganization or
other similar laws affecting the rights of creditors generally or by general
principles of equity (whether or not a proceeding is brought in a court of
law or equity).
(e) FINANCIAL STATEMENTS. (i) Lessee has furnished to the Agent
true and correct copies of Lessee's audited consolidated financial statements
as at December 31, 1995 and unaudited consolidated financial statements as at
March 31, 1996 and June 30, 1996. Such financial statements have been
prepared in conformity with GAAP (subject to normal recurring accruals and
adjustments in the case of such unaudited consolidated financial statements,
and subject to the information set forth in the footnotes to such audited
consolidated financial statements), and fairly present the financial
condition of Lessee and its Subsidiaries as at such dates and the results of
their operations for the periods then ended.
(ii) Since the dates of the financial statements referred to
in Section 2(e)(i) hereof, there has been no Material Adverse Effect.
(f) LITIGATION AND CONTINGENT LIABILITIES. No Material Litigation
is pending or, to the knowledge of Lessee, threatened against Lessee or any
Subsidiary not provided for or
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disclosed in the financial statements referred to in Subsection (e) hereof.
Neither Lessee nor any of its Subsidiaries has any contingent liabilities
(other than any liability incident to such Material Litigation) not provided
for or disclosed in the financial statements referred to in Subsection (e)
hereof which could result in a Material Adverse Effect.
(g) TITLE TO PROPERTY.
(i) Effective as of the Closing Date, immediately prior to
the transfer to Lessor, Seller will own and hold marketable title to the
Property, free and clear of all liens (including, without limitation, Liens),
covenants, conditions, restrictions, rights of way, easements, and
encumbrances of any kind or character whatsoever, except for the Permitted
Liens. Without limiting the generality of the foregoing, there are no
unrecorded easements affecting the Real Property known to Lessee, no
encroachments on the Real Property by improvements on adjoining property, and
no encroachments by the Improvements on any adjoining property, easements or
public or private streets.
(ii) Excluding the Property and any other real property leased
from Agent, as agent, Lessee and its Subsidiaries own and hold good and
marketable title to all of their respective material property, including
their respective assets and property reflected in the financial statements
referred to in Section 2(e) hereof or acquired since such dates (other than
assets and property sold or disposed of in the ordinary course of business),
free and clear of any Lien except those referred to in Section 2(h) hereof.
(h) LIENS. Excluding the Property, none of the assets of Lessee
or any Subsidiary is subject to any Lien, except any Permitted Lien.
(i) CHIEF EXECUTIVE OFFICE. The location of the principal place
of business and chief executive office of Lessee is as follows: 3970 North
First Street, San Jose, California 95134.
(j) ERISA. (i) Each Plan has been maintained and operated in all
material respects in accordance with all applicable laws, including ERISA and
the Code, and each Plan intended to qualify under section 401(a) of the Code
so qualifies. No Reportable Event has occurred in the last five years, and
the present value of all benefits under all Single Employer Plans (based on
those assumptions used to fund such Single Employer Plans) did not, in the
aggregate, as of the last annual valuation date applicable thereto, exceed
the actuarial value of the assets of such Single Employer Plans allocable to
such benefits. No material liability has been, and no circumstances exist
pursuant to which any material liability could be, imposed upon the Lessee or
any ERISA Affiliate (i) under sections 4971 through 4980B of the Code,
sections 502(i) or 502(l) of ERISA, or under Title IV of ERISA with respect
to any Single Employer Plan or Multiemployer Plan, or with respect to any
plan heretofore maintained by the Lessee or any ERISA Affiliate, or any
entity that heretofore was an ERISA Affiliate, (ii) for the failure to
fulfill any obligation to contribute to any Multiemployer Plan, or (iii) with
respect to any Plan that provides post-retirement welfare coverage (other
than as required pursuant to Section 4980B of the Code). Neither the Lessee
nor any ERISA Affiliate has received any notification that any Multiemployer
Plan is in reorganization or has been terminated within the meaning of Title
IV of ERISA, and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated.
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(ii) The execution, delivery and performance of the Lease
Documents and the consummation of the transactions contemplated hereby and
thereby will not involve any "prohibited transaction" within the meaning of
ERISA or the Code.
(k) INVESTMENT COMPANY ACT. Neither Lessee nor any Subsidiary is
an "investment company" nor a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended.
(l) PUBLIC UTILITY HOLDING COMPANY ACT. Neither Lessee nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(m) REGULATIONS G, T, U AND X. Lessee is not engaged principally,
or as one of its important activities, in the business of extending credit
for the purpose of purchasing or carrying "margin stock" within the meaning
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System. None of Lessee or any Affiliate of Lessee or any Person acting on
their behalf has taken or will take action to cause the execution, delivery
or performance of this Agreement, the other Lease Documents, the transactions
contemplated hereby or the use of proceeds of the sale of the Property to the
Lessor to violate Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
(n) LABOR CONTROVERSIES. There are no labor controversies pending
or threatened against Lessee or any of its Subsidiaries which, if adversely
determined, could have a Material Adverse Effect.
(o) TAX STATUS. (i) All tax returns, reports and forms required to
be filed with any domestic or foreign taxing authority in connection with any
activities or assets of Lessee or any Subsidiary have been filed, except
where the failure to file any such return, report or form would not have any
Material Adverse Effect.
(ii) All Taxes required to be paid with respect to the
activities or assets of Lessee and its Subsidiaries have been duly paid or
provisions deemed appropriate were made by Lessee and its Subsidiaries, on
the books and records therefor, except such amounts (1) as are subject to a
Permitted Contest or (2) the non-payment of which would not have a Material
Adverse Effect.
(p) NO DEFAULT. No event has occurred and no condition exists
which, upon the execution and delivery of this Agreement or upon the
consummation of the transactions to occur on any Closing Date, will
constitute an Event of Default or Unmatured Event of Default.
(q) COMPLIANCE WITH APPLICABLE LAWS. Lessee and its Subsidiaries
are in compliance with the requirements of all Applicable Laws, a breach of
which might result in a Material Adverse Effect.
(r) LICENSES, ETC. Neither Lessee nor any of its Subsidiaries has
failed to obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its respective properties or to
the conduct of its respective business, which violation or failure to obtain
might result in a Material Adverse Effect.
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(s) INTELLECTUAL PROPERTY. There are no patents, patent rights,
trademarks, service marks, trade names, copyrights, licenses or other
intellectual property rights with respect to the Property, or proprietary,
patented or patentable modifications or parts used in connection with the
Property, the absence of which would have a Material Adverse Effect. Lessee
owns and uses the Property free from known conflicts with the rights of
others.
(t) SUBJECTION TO REGULATION. Neither the Agent nor any Lessor
will, solely by reason of entering into the Lease Documents or the
consummation and performance of the transactions contemplated thereby (other
than upon the exercise of remedies under the Lease and without regard to any
business in which the Agent or any Lessor may presently be engaged, including
the banking business), (i) become subject to ongoing regulation by any
Governmental Authority as a company engaged in the business of Lessee in any
jurisdiction or (ii) become subject to any other ongoing regulation of its
operations by any Governmental Authority (other than any taxing authority).
(u) IMPOSITIONS. No Tax (other than such payments contemplated by
Sections 7(a)(iii), 13, 14, 17, 19 and 29 hereof) shall result from the
transfer, delivery or leasing of any Property (or any interest therein) as
contemplated by the Lease Documents, except such Taxes that have been paid in
full on or prior to such Closing Date.
(v) INSURANCE. All insurance coverages required by Section 11 of
this Lease are in full force and effect and there are no past due premiums in
respect of any such insurance. Lessee and its Subsidiaries have at their own
cost and expense obtained in commercially reasonable kind and form and with
financially sound and reputable insurers, all risk of physical loss or damage
insurance covering the assets of Lessee and its Subsidiaries wherever the
same may be located, insuring against the risks of fire, explosion, theft and
such other risks as are prudently insured against by corporations engaged in
the same business and similarly situated with Lessee and its Subsidiaries
(and specifically including vandalism, malicious mischief coverage, loss
overboard and breakage), in an amount usually carried by corporations engaged
in the same business and similarly situated with Lessee and its Subsidiaries.
(w) BROKERS, ETC. Lessee has not engaged or authorized any
broker, finder, investment banker or other third party to act on its behalf,
directly or indirectly, as a broker, finder, investment banker, agent or in
any other like capacity in connection with any of the Lease Documents or the
transactions contemplated thereby, except for Lund Financial Corporation, for
whose commission Lessee shall be liable solely.
(x) SECURITY INTERESTS.
(i) Assuming the Memorandum of Lease and the Deed of Trust are
recorded in the office of the county recorder of the county in which the Land
is located, the Agent, on behalf of the Lessors, will have a first priority
perfected lien in Lessee's interest in the Real Property free and clear of
all Liens other than Permitted Liens.
(ii) Assuming the UCC-1 financing statements referred to in
Section ? hereof are filed in the offices of the California Secretary of
State, the Agent, on behalf of the Lessors, will have a first priority
perfected security interest in the Personal Property free and clear of all
Liens other than Permitted Liens.
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(y) ENVIRONMENTAL. (i) Lessee and its Subsidiaries are in
compliance with all applicable Environmental Laws and Environmental Permits,
and to Lessee's knowledge, no circumstances exist that would prevent or
interfere with such compliance during the term of the Lease, except to the
extent that any such non-compliance, individually or in the aggregate, would
not have a Material Adverse Effect;
(ii) Lessee and its Subsidiaries have obtained all
Environmental Permits required for the occupancy and operation of their
property, equipment, and facility, except to the extent that any such failure
to obtain such Environmental Permits, individually or in the aggregate, would
not have a Material Adverse Effect;
(iii) there are no past, pending, or threatened Environmental
Claims against Lessee or its Subsidiaries, and Lessee is not aware of any
facts or circumstances which could reasonably be expected to form the basis
for any Environmental Claim against Lessee or its Subsidiaries, except to the
extent that any such Environmental Claims if adversely decided, individually
or in the aggregate, would not have a Material Adverse Effect;
(iv) except as expressly set forth in the Environmental Audit
and on Exhibit R, no Hazardous Materials are present, no Releases of
Hazardous Materials have occurred at, from, in, on, under, to, or adjacent to
the Property during such time as Lessee has been in possession of the
Property, and to Lessee's knowledge, no Releases of Hazardous Materials have
ever occurred at, from, in, on, under, to, or adjacent to the Property;
(v) Lessee and its Subsidiaries have not transported, disposed
of, or arranged for the treatment, storage, handling or disposal of any
Hazardous Materials at any off-site location which is an Environmental
Cleanup Site;
(vi) No facility or property now owned, operated or leased by
Lessee or its Subsidiaries is or was previously an Environmental Cleanup
Site; and no facility or property previously owned, operated or leased by
Lessee or its Subsidiaries was an Environmental Cleanup Site during the time
of Lessee's ownership.
(vii) There are no Liens arising under or pursuant to
Environmental Law on any property, facility, or equipment currently owned,
operated or leased by Lessee or its Subsidiaries, and there are no facts,
circumstances or conditions that could reasonably be expected to result in
the imposition of such a Lien; and
(viii) Costs of compliance with applicable Environmental Laws
and Environmental Permits in connection with the Property or Lessee's or its
Subsidiaries' operations, are not expected to materially increase during the
term of this Lease.
(z) NO BURDENSOME AGREEMENTS. Neither Lessee nor any Subsidiary
is a party to or bound by any agreement or instrument or subject to any
corporate or other restriction, the performance or observance of which now
has or, as far as Lessee or any Subsidiary can reasonably foresee, may have a
Material Adverse Effect.
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(aa) LAND USE REGULATIONS. The present use and operation of the
Real Property is authorized under existing Applicable Laws and other land use
regulations applicable to the Real Property, and to Lessee's knowledge there
is no present plan, study or effort by any Governmental Authority or any
private party or entity which in any way adversely affects or would adversely
affect the continued authorization of the present use and operation of the
Real Property; there are no legal actions pending or to Lessee's knowledge
threatened against the Property, nor, to Lessee's knowledge are there any
violations of Applicable Laws, affecting or arising out of the use, operation
or occupancy of the Property by Persons other than Lessee or its Affiliates;
there are no legal actions pending or to Lessee's knowledge threatened
against the Lessee or any of its Affiliates, nor, are there any violations of
Applicable Laws, affecting or arising out of the use, operation or occupancy
of the Property by Lessee or any of its Affiliates;
(bb) DEVELOPMENT PLANS. There are no existing or, to Lessee's
knowledge, proposed or contemplated plans to widen, modify or realign any
street or highway, or any existing or, proposed or contemplated eminent
domain proceedings that would adversely affect the Property; and, there are
no intended public improvements which would result in any charge being levied
or assessed against, or in the creation of any lien upon, the Property.
(cc) UTILITIES. Water, sewage disposal, gas and electrical
facilities and utilities are available to or at the boundaries of the Land
adequate for the present and future anticipated use of the Land and that are
in accordance with all applicable laws, statutes, ordinances, rules, and
regulations of all public or quasi-public authorities having or claiming
jurisdiction over these utilities or facilities.
(dd) MECHANICS' LIEN CLAIMS. There are no claims for labor
performed for or materials furnished to or with respect to the Land that
could give rise to a mechanics' or materialmen's lien on the Land or any
portion thereof.
(ee) PERMITS AND LICENSES. Lessee holds all permits, governmental
approvals and licenses necessary to own, occupy and operate the Land as its
is currently being used. Lessee has not received any notice of revocation or
non-renewal of any such permits or licenses. Lessee shall not modify or
rescind any of the permits and licenses, and shall use its best efforts to
obtain any renewal or extension of such permits and licenses as may be
required by Applicable Law in the ordinary course of business. Lessee has
taken no action, and no condition presently exists arising out of the
Lessee's activities in connection with the operation of the Land, that would
preclude transfer and/or issuance of any such permits or licenses.
(ff) DEFECTS. To Lessee's knowledge there are no defects in the
Land that would require the expenditure of more than a De Minimis Amount to
repair or correct. Lessee has received no written notice from any
governmental authority, any insurance company or any board of fire
underwriters, or other body exercising similar functions with respect to the
need for any material repairs or corrections to the Land.
(gg) NOTICE FROM INSURANCE CARRIERS. Lessee has not received any
written notice from any insurance carrier which has issued a policy of
insurance with respect to the Land of any defects or deficiencies or
requesting the performance of any repairs, alterations or other work with
respect to the Land.
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(hh) DISCLOSURE GENERALLY. The representations and statements made by
or on behalf of Lessee in connection with this Lease, including
representations and statements in each of the Lease Documents, do not contain
any untrue statement of a material fact or omit to state a material fact or
any fact necessary to make the representations made not materially
misleading. No written information, exhibit, report or financial statement
furnished by Lessee to Agent or any Lessor in connection with this Lease, or
any Lease Document, contains any material misstatement of fact or omits to
state a material fact or any fact necessary to make the statements contained
therein not materially misleading.
(ii) SOLVENCY. Lessee is, and after giving effect to the transactions
contemplated hereby, will be, Solvent. "Solvent" means that the aggregate
present fair saleable value of Lessee's assets is in excess of the total
amount of its probable liability on its existing debts as they become
absolute and matured, Lessee has not incurred debts beyond its foreseeable
ability to pay such debts as they mature, and Lessee has capital adequate to
conduct the business it is presently engaged in or is about to engage in.
SECTION 3. CONDITIONS TO CLOSING. The obligation of the Lessors to
acquire the Property to be purchased and leased on the Closing Date is
subject to: (I) receipt of a Closing Date Notice for the Closing Date at
least five Euro-Dollar Business Days prior to the Closing Date; (II)
performance by the Lessee of all of its obligations under this Lease required
to be performed on and as of the Closing Date; (III) the fact that no Event
of Loss has occurred with respect to any of the Property to be purchased and
leased on the Closing Date; and (IV) the satisfaction of the following
further conditions:
(a) receipt by the Agent on behalf of the Lessors of
the Assignment of Real Property Purchase and Sale Agreement duly
executed by the Lessee;
(b) receipt by the Agent on behalf of the Lessors of
the Deed and the Seller Ancillary Transfer Documents duly executed
(and notarized, where applicable) by the Seller;
(c) on and as of the Closing Date no Event of Default
or Unmatured Event of Default shall have occurred and be continuing;
(d) the representations and warranties contained in
this Lease and the other Lease Documents which have then been
executed and delivered by the Lessee shall be true on and as of the
Closing Date as though made on and as of the Closing Date, the
Lessors shall have good and marketable title to the Property to be
purchased and leased on the Closing Date, free and clear of any and
all Liens other than Permitted Liens;
(e) receipt by the Agent on behalf of the Lessors of
certified copies of all corporate action taken by the Lessee to
authorize the execution, delivery and performance of this Lease and
the other Lease Documents delivered on the Closing Date, good
standing certificates of the Lessee in its state of incorporation
and in states where Lessee is required to qualify to do business,
together with a certificate of the Secretary or Assistant Secretary
of Lessee as to the charter, by-laws of Lessee and such other
corporate documents and other papers as the Agent may reasonably
request;
25
(f) on the Closing Date the filing for recording of the
Memorandum of Lease in the office of the county recorder of the
county in which the Land is located shall have duly occurred, or
the same shall have been delivered to Title Company with recording
instructions satisfactory to the Agent;
(g) on the Closing Date the filing for recording of the
Deed of Trust in the office of the county recorder of the county in
which the Land is located shall have duly occurred, or the same
shall have been delivered to Title Company with recording
instructions satisfactory to the Agent;
(h) on the Closing Date all filings or recordings
necessary or advisable, in the opinion of the Agent (including, but
not limited to, filings of UCC-1 financing statements in the office
of the California Secretary of State) to perfect the right, title
and interest of the Agent on behalf of the Lessors in and to the
Personal Property purchased and leased on the Closing Date shall
have been duly made (or duly executed and appropriately completed
UCC-1 financing statements shall have been delivered to a filing
service satisfactory to the Agent with filing instructions
satisfactory to the Agent);
(i) receipt by the Agent on behalf of the Lessors of
opinion of Morrison & Foerster LLP, special counsel for the Lessee,
dated the Closing Date, and substantially in the form included in
Exhibit F hereto (the Lessee hereby instructing such counsel so to
deliver such opinion to the Agent);
(j) receipt by the Agent on behalf of the Lessors of
the evidence of insurance referred to in Section 11(e) hereof;
(k) receipt by the Agent on behalf of the Lessors of a
certificate, dated the Closing Date, of a duly Authorized Officer
of Lessee as to the incumbency, and setting forth a specimen
signature, of each of the persons (i) who has signed this Lease on
behalf of Lessee; (ii) who will sign the other applicable Lease
Documents on behalf of Lessee; and (iii) who will, until replaced
by other persons duly authorized for that purpose, act as the
representatives of Lessee for the purpose of signing documents in
connection with the Lease Documents and the transactions
contemplated hereby;
(l) receipt by the Agent on behalf of the Lessors of a
certificate, dated the Closing Date, of an Authorized Officer of
Lessee stating that the representations and warranties contained in
Section 2 hereof are true and correct on and as of the Closing Date
as though made on and as of the Closing Date;
(m) receipt by the Agent on behalf of the Lessors of
such other documents and information with respect to the matters
contemplated hereby as the Agent or any Lessor may reasonably
request;
(n) on the Closing Date, the Lessee shall have paid to
the Agent for the account of the Lessors (pro rata according to
their respective Commitment Percentages) a fee equal to 0.45% of
the Commitment on the Closing Date;
(o) on the Closing Date, the Lessee shall have paid, or
reimbursed the Agent, for all costs and expenses (including without
limitation the fees of counsel in the
26
amount of $50,000, and disbursements of counsel) incurred by it in
connection with the negotiation, execution and delivery hereof and of the
other Lease Documents on the transactions occurring on the Closing Date;
provided, however, at Lessee's option (to be elected in writing prior to
the Closing Date), the same may be capitalized and added to the Lease
Investment Balance;
(p) Agent shall have received on behalf of the Lessors
an Appraisal in form and substance satisfactory to Agent, as to the
Fair Market Sales Value of the Property as of the Closing Date and
as of the end of the Lease Term;
(q) Agent shall have received on behalf of the Lessors
an Environmental Audit of the Real Property in form and substance
acceptable to Agent in its sole and absolute discretion; Agent
acknowledges receipt and approval of both the Phase I Environmental
Site Assessment Report dated July 23, 1996, the Environmental Audit
titled Limited Site Assessment and dated August 22, 1996, both
prepared by SECOR International, Inc., and based thereon, Agent
acknowledges that this condition 3(q) has been satisfied;
(r) Agent shall have received a Signing Certificate
from Lessee;
(s) Lessee shall be satisfied in its sole and absolute
discretion as to the accounting treatment that will be applied to
the transaction contemplated by this Agreement and the other Lease
Documents; and
(t) No occurrence, failure, act or omission of any
nature shall have occurred that results in a Material Adverse
Effect.
SECTION 4. PURCHASE AND LEASE OF PROPERTY.
(a) PURCHASE BY LESSOR AND LEASE BY LESSEE. On the Closing Date,
upon satisfaction or waiver of each of the conditions set forth in Section 3
hereof:
(i) pursuant to the Deed and Assignment, the
Seller Ancillary Transfer Documents and the Real Property Purchase
and Sale Agreement, Lessee shall cause the Seller to transfer to
the Agent on behalf and for the benefit of the Lessors, and the
Agent shall purchase the Property on behalf and for the benefit of
the Lessors;
(ii) in consideration therefor, the Agent, on
behalf and for the benefit of the Lessors, shall pay to the Seller
the amount provided for in Section 4(d) hereof; and
(iii) the Agent, on behalf of the Lessors, shall
lease to Lessee the Property so purchased by the Agent (on behalf
of the Lessors) from Seller on such Closing Date, and Lessee shall
accept delivery of, and lease from the Lessors such Property
pursuant to this Lease.
27
(b) EACH LESSOR TO HAVE AN UNDIVIDED INTEREST. Each
Lessor shall hold an undivided interest in the Property purchased
from Seller and leased to Lessee such interest being equal to such
Lessor's Commitment Percentage of the Property Cost.
(c) FUNDING TO AGENT. On the Closing Date, subject to
the terms and conditions hereof, and in reliance on the
representations and warranties contained herein or made pursuant
hereto, each Lessor agrees severally to transfer to the Agent on
such Closing Date an amount equal to the product of (i) Property
Cost specified in the Closing Date Notice with respect thereto,
MULTIPLIED by (ii) such Lessor's Commitment Percentage (each such
transfer being referred to herein as a "FUNDING"). Remittances
pursuant to this Section 4 shall be made in immediately available
federal funds by wire transfer to the account of the Agent set
forth below (or as otherwise specified by the Agent to each Lessor
from time to time not less than three calendar days prior to the
date of the requested Funding) and must be received by the Agent by
11:00 a.m., New York time on the Closing Date:
Morgan Guaranty Trust Company of New York
ABA Routing No. 021 000 238
For credit to: The Sumitomo Bank Limited, New York Branch
Acct. No.: 631-28-256
Further Credit to: Sumitomo Bank Leasing and Finance, Inc.
Acct. No.: 283 572
In no event shall any Lessor be required to provide funds under
this Agreement in an aggregate amount exceeding such Lessor's
Commitment. In no event shall the Lessors be obligated to acquire
Property hereunder in excess of an Property Cost that is greater
than the Total Commitment.
(d) FUNDING BY AGENT. On the Closing Date, upon
satisfaction or waiver of each of the conditions set forth in
Section 3 hereof, in consideration of the acquisition of Property
by the Agent on behalf of the Lessors, the Agent, on behalf and for
the benefit of the Lessors, shall pay to the escrow holder under
the Real Property Purchase and Sale Agreement, in accordance with
the instructions set forth below, an amount equal to the Property
Cost. Such payment shall be in immediately available federal funds
remitted by wire transfer to the account of Lessee specified below
or to such other account (at a commercial bank in the continental
United States) of Lessee as may be specified by it in the Closing
Date Notice with respect to the Closing Date.
28
ESCROW HOLDER ACCOUNT:
Bank: Union Bank -- Los Angeles
for Office No. 715
1800 Harrison Street
Oakland, California 94612
ABA Routing #: 1220 00 496
Account #: 715 00 820 26
Payee: First American Title Guaranty Company
Reference: Office No. 282-05
Escrow No. 510875
Escrow Officer: Susan Melton
(e) ACKNOWLEDGMENT BY LESSEE OF ACCEPTANCE AND
SUITABILITY OF PROPERTY. On the Closing Date, execution and
delivery by Lessee of the Lease Supplement shall constitute: (i)
acknowledgment by Lessee that the Property has been delivered to
Lessee in good condition and has been accepted for lease hereunder
by Lessee as of such Closing Date and (ii) acknowledgement by
Lessee that the Property is subject to all of the covenants, terms
and conditions of this Lease, such Lease Supplement and any other
applicable Lease Documents.
(f) TRANSFER TO LESSEE UPON FAILURE TO FUND. If on the
Closing Date Seller shall have failed to receive the Property Cost
for the Property to be paid for on the Closing Date pursuant to
Section 4(d) hereof, then upon request of Lessee, the Agent, on
behalf of the Lessors, shall transfer to Lessee, on an "as-is"
"where-is" basis and without any representation or warranty of any
kind, express or implied, whatever title to the Property it may
have by quitclaim deed (except that the Agent shall make the
Agent's Representations outside of the delivery of such deed) and
the Agent shall execute and deliver such UCC termination statements
and other documents with respect to the Property reasonably
requested by Lessee to terminate the liens and security interests
in the Property granted pursuant to this Lease. Concurrently with
such transfer, Lessee shall refund to the Agent any amounts of
Property Cost actually paid to Lessee for the Property.
SECTION 5. PAYMENT ABSOLUTE, NO WARRANTIES.
(a) Each payment of Base Rent, Additional Base Rent,
Additional Rent and any other amount due hereunder or under any
other Lease Document made by Lessee shall be final (absent manifest
error).
(b) LESSEE HAS SELECTED OR SHALL SELECT THE PROPERTY
LEASED HEREUNDER ON THE BASIS OF ITS OWN JUDGMENT. NEITHER THE
AGENT NOR ANY LESSOR NOR ANY AFFILIATE OF EITHER MAKES ANY
REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION, AS TO THE SAFETY, TITLE,
CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY,
CONFORMITY TO SPECIFICATION, OR ANY OTHER CHARACTERISTIC, OF ANY
ITEM OF THE PROPERTY, OR AS TO WHETHER THE PROPERTY OR THE
29
OWNERSHIP, USE OR POSSESSION THEREOF COMPLIES WITH ANY LAWS, RULES,
REGULATIONS OR REQUIREMENTS OF ANY KIND. AS BETWEEN THE LESSEE ON THE
ONE HAND, AND THE LESSORS, THE AGENT OR ANY INDEMNIFIED PERSON ON THE
OTHER HAND, LESSEE ASSUMES ALL RISKS ARISING FROM THE PROPERTY.
(c) This Lease is a net lease and the obligations of
the Lessee to pay all amounts payable (including specifically and
without limitation amounts payable pursuant to this Lease under
Sections 7, 8, 12 and 13 hereof) shall be absolute and
unconditional under any and all circumstances of any kind or
description, and such amounts shall be paid without, and Lessee
hereby waives, any notice, demand, defense, set-off, deduction or
counterclaim and without abatement, suspension, deferment,
diminution or reduction arising from any matter whatsoever, and any
present or future law to the contrary notwithstanding, this Lease
shall not terminate, nor shall the obligations of the Lessee
hereunder be affected by reason of, including without limitation:
(i) ANY DEFECT IN THE CONDITION, MERCHANTABILITY,
DESIGN, CONSTRUCTION, QUALITY OR FITNESS FOR USE OF THE PROPERTY OR
ANY PART THEREOF, OR THE FAILURE OF THE PROPERTY TO COMPLY WITH ALL
REQUIREMENTS OF LAW, INCLUDING ANY INABILITY TO OCCUPY OR USE THE
PROPERTY BY REASON OF SUCH NON-COMPLIANCE;
(ii) ANY DAMAGE TO OR DESTRUCTION OF, REMOVAL,
ABANDONMENT, SALVAGE, LOSS, FAILURE OR DELAY IN DELIVERY, THEFT,
CESSATION OF THE USE OR POSSESSION OF ANY ITEM OF PROPERTY BY
LESSEE FOR ANY REASON WHATSOEVER AND OF WHATEVER DURATION, OR ANY
CONDEMNATION, CONFISCATION, REQUISITION, SEIZURE, PURCHASE, TAKING
OR FORFEITURE OF ANY ITEM OF PROPERTY, IN WHOLE OR IN PART, OR ANY
CONTAMINATION OF OR RELEASE FROM, THE PROPERTY OR ANY PART THEREOF;
(iii) ANY RESTRICTION, PREVENTION OR CURTAILMENT OF
OR INTERFERENCE WITH ANY USE OF THE PROPERTY OR ANY PART THEREOF
INCLUDING EVICTION;
(iv) ANY DEFECT IN TITLE TO OR RIGHTS TO THE
PROPERTY OR ANY LIEN ON SUCH TITLE OR RIGHTS OR ON THE PROPERTY
(OTHER THAN LESSOR LIENS);
(v) ANY CHANGE, WAIVER, EXTENSION, INDULGENCE OR
OTHER ACTION OR OMISSION OR BREACH IN RESPECT OF ANY OBLIGATION OR
LIABILITY OF OR BY THE LESSOR;
(vi) ANY BANKRUPTCY, INSOLVENCY, REORGANIZATION,
COMPOSITION, ADJUSTMENT, DISSOLUTION, LIQUIDATION OR OTHER LIKE
PROCEEDINGS RELATING TO THE LESSEE OR ANY OTHER PERSON, OR ANY
ACTION TAKEN WITH RESPECT TO THIS LEASE BY ANY TRUSTEE OR RECEIVER
OF THE LESSEE OR ANY OTHER PERSON, OR BY ANY COURT, IN ANY SUCH
PROCEEDING;
30
(vii) ANY CLAIM THAT THE LESSEE HAS OR MIGHT HAVE
AGAINST ANY PERSON, INCLUDING WITHOUT LIMITATION THE LESSOR AND ANY
VENDOR, MANUFACTURER, CONTRACTOR OR ARCHITECT OF OR FOR ANY PORTION
OF THE PROPERTY;
(viii) ANY FAILURE ON THE PART OF THE LESSOR TO
PERFORM OR COMPLY WITH ANY OF THE TERMS OF THIS LEASE (OTHER THAN
PERFORMANCE BY LESSOR OF ITS OBLIGATIONS SET FORTH IN SECTION 4(d)
HEREOF), OF ANY OTHER LEASE DOCUMENT OR OF ANY OTHER AGREEMENT;
(ix) ANY INVALIDITY OR UNENFORCEABILITY OR
ILLEGALITY OR DISAFFIRMANCE OF THIS LEASE AGAINST OR BY THE LESSEE
OR ANY PROVISION HEREOF OR ANY OF THE OTHER LEASE DOCUMENTS OR ANY
PROVISION THEREOF;
(x) THE IMPOSSIBILITY OR ILLEGALITY OF
PERFORMANCE BY THE LESSEE, THE LESSOR OR BOTH, OR ANY FAILURE TO
OBTAIN, OR THE EXPIRATION, SUSPENSION OR OTHER TERMINATION OF, OR
INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(xi) ANY ACTION BY ANY COURT, ADMINISTRATIVE
AGENCY OR OTHER GOVERNMENTAL AUTHORITY;
(xii) THE INVALIDITY OR UNENFORCEABILITY OF THIS
LEASE OR ANY OTHER LEASE DOCUMENT AS AGAINST THE AGENT OR ANY
LESSOR OR ANY LACK OF POWER OR AUTHORITY OF LESSEE TO ENTER INTO
THIS AGREEMENT OR ANY OTHER LEASE DOCUMENT;
(xiii) THE FAILURE OF LESSOR TO DISCLOSE TO LESSEE
THE PRESENCE OF HAZARDOUS MATERIALS ON, ABOUT OR UNDER THE
PROPERTY, IT BEING ACKNOWLEDGED THAT LESSOR HAS NOT EVER BEEN IN
POSSESSION OF THE PROPERTY AND IS RELYING ENTIRELY UPON THE
REPRESENTATIONS OF LESSEE AS TO THE PRESENCE OF HAZARDOUS MATERIALS
ON, ABOUT OR UNDER THE PROPERTY;
(xiv) ANY RESTRICTION, PREVENTION OR CURTAILMENT OF
OR INTERFERENCE WITH ANY CONSTRUCTION ON OR ANY USE OF THE PROPERTY
OR ANY PART THEREOF; OR
(xv) ANY OTHER CIRCUMSTANCES OR HAPPENING
WHATSOEVER, WHETHER OR NOT SIMILAR TO ANY OF THE FOREGOING, WHETHER
OR NOT THE LESSEE SHALL HAVE NOTICE OR KNOWLEDGE OF ANY OF THE
FOREGOING.
The parties intend that the obligations of the Lessee hereunder
shall be covenants and agreements that are separate and independent from any
obligations of the Lessor hereunder or under any other Lease Documents and
the obligations of the Lessee shall continue unaffected
31
unless such obligations shall have been modified or terminated in accordance
with an express provision of this Lease.
THE LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY BE
CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT,
RESCIND OR SURRENDER THIS LEASE EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS
HEREOF.
WITHOUT LIMITING THE GENERALITY OF THE PRECEDING PARAGRAPH, LESSEE
SPECIFICALLY WAIVES:
(xvi) ANY RIGHT IT MAY HAVE TO TERMINATE THIS LEASE AS A
RESULT OF ANY STATUTORY PROVISION NOW OR HEREAFTER IN EFFECT PERTAINING TO
THE DAMAGE AND DESTRUCTION OF THE PROPERTY, AND LESSEE EXPRESSLY WAIVES THE
PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1932(2), CALIFORNIA CIVIL CODE
SECTION 1933(4), AND CALIFORNIA UNIFORM COMMERCIAL CODE SECTION 10221 WITH
RESPECT TO ANY DESTRUCTION OF THE PROPERTY; AND
(xvii) ANY RIGHT IT MAY HAVE TO MAKE REPAIRS AT LESSOR'S
EXPENSE UNDER SECTIONS 1941 AND 1942 OF THE CALIFORNIA CIVIL CODE OR UNDER
ANY SIMILAR LAW, STATUTE, OR ORDINANCE NOW OR HEREAFTER IN EFFECT.
(d) Notwithstanding any other provision contained in this Lease
or any other Lease Document, it is specifically understood and agreed that,
except as set forth in Sections 24 and 25 of this Lease, none of the Agent,
nor any Lessor nor any other Indemnified Person, nor anyone acting on behalf
of any of them makes any warranties or representations or has any
responsibility to disclose any relevant information or has any other
responsibility or duty regarding, nor has any of the Agent, any Lessor or any
other Indemnified Person, or anyone acting on behalf of any of them, made any
covenants or undertakings as to, the accounting treatment to be accorded the
Lessee or the U.S. Federal or any state income or any other tax consequences,
if any, to the Lessee as a result of or by virtue of the transactions
contemplated by this Lease and the other Lease Documents.
(e) Without in any way limiting (or otherwise affecting) the
Lessee's agreements in this Section 5, the Lessors hereby agree that payments
hereunder by Lessee shall not be deemed a waiver of Lessee's right to assert
(by separate suit) a claim for damages by reason of the breach by any Lessor
of any of its obligations hereunder.
SECTION 6. LEASE TERM. The "LEASE TERM" shall commence on the Closing
Date, and shall continue until October 24, 2006, unless sooner terminated in
accordance with the provisions of this Lease.
32
SECTION 7. RENT.
(a) Lessee hereby agrees to pay the Agent for the account of the
Lessors (pro rata in accordance with their respective Outstanding
Investments) rent as follows:
(i) on each Rent Payment Date:
(x) unless the provisions of Section
7(b) or Section 7(c) hereof are applicable, for each day
during such Rent Period an amount equal to the product of (A)
the Lease Investment Balance MULTIPLIED by (B) the sum of the
Euro-Dollar Rate for the Rent Period PLUS the Margin,
MULTIPLIED by(C) 1/360;
PROVIDED, HOWEVER, that
(y) to the extent that for any portion
of a Rent Period the provisions of Section 7(b) or 7(c) become
applicable then (I) for each day during the Base Rate Portion
of such Rent Period, rent pursuant to this Section 7(a)(i)
shall be determined as an amount equal to the product of (A)
the Lease Investment Balance, MULTIPLIED by (B) the Base Rate
then in effect, MULTIPLIED by (C) 1/365 (or 1/366 as
applicable), and (II) for each day during the Euro-Dollar
Portion of such Rent Period, rent pursuant to this Section
7(a)(i) shall be determined as an amount equal to the product
of (A) the Lease Investment Balance, MULTIPLIED by (B) the sum
of the Euro-Dollar Rate for such Euro-Dollar Portion plus the
Margin, MULTIPLIED by (C) 1/360; and
(z) as to each Rent Period, the amount
payable under this Section 7(a)(i) shall in each case be
reduced by any amount of Base Rent previously paid in respect
of such Rent Period pursuant to Section 14, 17 or 29 hereof.
(ii) on each Rent Payment Date set forth on Schedule 3
to the Lease Supplement, the amounts of Additional Base Rent set forth
opposite such date; and
(iii) on each Rent Payment Date an amount equal to the
amount of lease or use Taxes payable by the Agent in respect of the Rent
Period ending on such Rent Payment Date.
(b) If, with respect to any Rent Period, any Lessor determines
that: (i) deposits in Dollars (in the applicable amount) are not being
offered to such Lessor in the relevant market for such Rent Period; or (ii)
the Euro-Dollar Rate will not adequately and fairly reflect the cost to such
Lessor of maintaining or funding its Outstanding Investment for such Rent
Period; or (iii) by reason of circumstances affecting the London interbank
eurodollar market, adequate and reasonable means do not exist for
ascertaining the applicable Euro-Dollar Rate; then such Lessor shall
forthwith give notice thereof to the Agent, and Agent shall forthwith give
notice thereof to Lessee, whereupon Base Rent of Lessee payable to Agent on
behalf of such Lessor shall be determined pursuant to Section 7(a)(i)(y)
hereof, until such Lessor notifies the Agent (who shall notify Lessee) that
the circumstances giving rise to such previous notification have ceased.
33
(c) If, after the date of this Agreement, the adoption of any
Applicable Law, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lessor with
any request or directive (whether or not having the force of law) of any such
Governmental Authority shall (i) make it unlawful or impossible for any
Lessor to make, maintain or fund its Outstanding Investment in the
euro-dollar market or (ii) make the continued ownership and leasing of the
Property by such Lessor otherwise impracticable and, in either case, such
Lessor shall so notify the Lessee (with a copy to the Agent), whereupon Base
Rent of Lessee payable to Agent on behalf of such Lessor shall be determined
pursuant to Section 7(a)(i)(y) hereof, until Lessor notifies Lessee (with a
copy to the Agent) that the circumstances giving rise to such previous
notification have ceased.
(d) If (i) Lessee makes, or the Agent or any Lessor otherwise
receives, any payment (as purchase price, insurance proceeds, sales proceeds
or in any other manner whatsoever) of or with respect to Lease Investment
Balance or the provisions of Section 7(b) or Section 7(c) hereof become
applicable on any day other than the last day of a Rent Period or (ii) the
Closing Date fails for any reason to occur on the date notified by the Lessee
to the Agent, the Lessee shall reimburse each Lessor (other than, in the case
of clause (ii) only, any defaulting Lessor) on demand for any resulting loss
or expense incurred by it including (without limitation) any net loss (or
expense) incurred in obtaining, liquidating or employing deposits or swaps or
comparable instruments from third parties.
(e) Base Rent shall accrue from and including the first day of
each Rent Period to, but excluding the last day of such Rent Period.
(f) The Agent shall determine the Base Rent payable from time to
time under Sections 7(a), 7(b) and 7(c) hereof, and the affected Lessor(s)
shall determine amounts payable under Section 7(d) hereof, each of which
determinations shall be conclusive and binding in the absence of manifest
error. Agent shall supply Lessee with such bank account information as Lessee
shall require to enable payment of Base Rent and Additional Rent by wire
transfer of Federal funds to the account described in Section 4(c). Payment
of Base Rent and Additional Rent shall be payable monthly in arrears on the
fifteenth (15th) day of each calendar month (the "INVOICE DUE DATE"), except
that the last installment of Base Rent and Additional Rent hereunder shall be
due and payable on the last day of the Lease Term. No sooner than ten (10)
days prior to the due date for any installment of Base Rent or Additional
Rent under this Lease, Agent shall deliver to Lessee a written notice
containing the exact dollar amount of the Base Rent and the Additional Base
Rent that is due on such Invoice Due Date (the "Invoice"). If Agent fails to
send the Invoice, Lessee shall pay the amount shown on the previous month's
Invoice, and any shortfall or overpayment shall be charged or credited to
Lessee on the following month's Invoice. All payments by Lessee to Agent
shall be made as follows:
Sumitomo Bank of California
For credit to: The Sumitomo Bank, Limited,
San Francisco Branch
ABA Routing No. 121 002 042
Reference: Novellus Systems, Inc.
Notify: Mr. David Kubiak (415) 616-3008
34
(g) Provided that no Event of Default has occurred and is
continuing, the undersigned may elect the Base Rate or a Euro-Dollar Rate by
giving Agent telephonic notice (contact: Lease Administrator at (212)
224-5219) of such election not later than 12:00 noon New York time three
Business Days prior to the commencement of the Rent Period to which the Base
Rate or such Euro-Dollar Rate shall apply, followed by written confirmation
of such notice received by Agent on the same day, it being understood,
however, that failure of Agent to receive or the undersigned to give such
written confirmation shall in no way affect the effectiveness of any action
taken by Agent pursuant to such telephonic notice or the effectiveness of the
Base Rate or any Euro-Dollar Rate placed in effect as a result thereof.
Agent shall have the absolute right to rely upon any such telephonic notice
purporting to come from the Lessee, whether or not such telephonic notice is
actually from the Lessee. Such election shall remain in effect for all
subsequent Rent Periods until a new election is made in accordance with this
Section 7(g).
SECTION 8. OTHER PAYMENTS.
(a) If, as a result of changes in Regulation D occurring after
the Closing Date, Regulation D shall require reserves actually to be
maintained in connection with any Outstanding Investment or any Eurocurrency
Liabilities with respect thereto of any Lessor, such Lessor may require
Lessee to pay (and Lessee hereby agrees to pay) to the Agent for the account
of such Lessor an amount in addition to Base Rent with respect to such
Outstanding Investment equal to the amount by which the maintenance of such
reserves reduces the return which would otherwise be realized by such Lessor
on its Outstanding Investment in respect of the current Rent Period. Any
Lessor wishing to require such payment with respect to its Outstanding
Investment or any Eurocurrency Liabilities with respect thereto shall give
notice thereof to Lessee (with a copy to the Agent) at least five (5)
Business Days prior to the last day of the Rent Period in respect of which
such payment is sought and the Lessee shall pay the additional amount as so
notified on the last day of such Rent Period. Once given, each such notice
by a Lessor shall be deemed automatically to continue in effect and apply to
the full amount of such Lessor's Outstanding Investment until such Lessor
revokes such notice. At such time, if any, as such Lessor shall not be
required so to maintain reserves, such Lessor agrees so to notify Lessee
(with a copy to the Agent).
(b) If after the date hereof, the adoption of any Applicable Law,
or any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof or compliance by any Lessor or its Funding Office with
any request or directive, whether or not having the force of law, of any such
Governmental Authority:
(1) shall subject such Lessor to any Tax with respect to its
Outstanding Investment, or shall change the basis of taxation of
payments to such Lessor in respect of any portion of its Outstanding
Investment or in respect of any other amounts due under this Lease
(except for changes in the rate of Tax on the overall net income of such
Lessor imposed by the jurisdiction in which such Lessor's principal
executive office or its Funding Office is located); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding any included in an applicable
Reserve Percentage), special deposit or similar
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requirement against assets of, deposits with or for the account of, or
credit extended by, such Lessor or such Lessor's Funding Office or shall
impose on such Lessor or its Funding Office or on the London interbank
market any other condition affecting its Outstanding Investment;
and the result of any of the foregoing is to increase the cost to such Lessor
of making or maintaining Outstanding Investment, or to reduce the amount of
any sum received or receivable by such Lessor under this Lease, then, within
15 days after written demand (which demand shall be accompanied by a
statement setting forth the basis for such demand) delivered to the Lessee by
such Lessor (with a copy to the Agent), the Lessee agrees to pay to the Agent
for the account of such Lessor, on an After-Tax Basis, such additional amount
or amounts as will compensate such Lessor for such increased cost or
reduction.
(c) If, after the date hereof, any Lessor shall have reasonably
determined that the adoption after the date hereof of any Applicable Law
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy, whether or not having the force of law,
of any such Governmental Authority, has or would have the effect of reducing
the rate of return on the capital of such Lessor (or its parent) as a
consequence of its obligations hereunder to a level below that which such
Lessor (or its parent) could have achieved but for such adoption, change or
compliance (taking into consideration such Lessor's (or its parent's)
policies with respect to capital adequacy), then from time to time, within 15
days after written demand (which demand shall be accompanied by a statement
setting forth the basis for such demand) delivered to the Lessee by such
Lessor (with a copy to the Agent) by such Lessor (with a copy to the Agent),
the Lessee will pay to the Agent for the account of such Lessor such
additional amount or amounts as will compensate such Lessor (or its parent)
for such reduction.
(d) Each Lessor promptly shall notify Lessee of any event of which
it has actual knowledge, occurring after the date of this Agreement which
will entitle such Lessor to compensation pursuant to Section 8(a), 8(b) or
8(c) and will designate a different Funding Office if such designation will
avoid the need for, or reduce the amount of such compensation and will not,
in such Lessor's sole judgment, be otherwise disadvantageous to such Lessor;
provided, however, that each Lessor shall be barred from claiming
compensation under Sections 8(a), 8(b) or 8(c) for such matters arising as a
result of actions or omissions of such Lessor occurring prior to the
forty-five (45) day period preceding the date of the notice if such Lessor
failed to previously claim such compensation when such Lessor had actual
written notice of the action or omission entitling it to compensation, the
amount of the compensation was computed and undisputed, and the Lessor
nevertheless failed to previously claim it. A certificate of any Lessor
claiming compensation under Section 8(a), 8(b) or 8(c) hereof and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount,
such Lessor may use any averaging and attribution methods deemed reasonable
by such Lessor.
(e) [intentionally omitted]
(f) Without prejudice to the full exercise by the Agent and the
Lessors of rights under Sections 20 and 21 hereof and other remedies of the
Agent and the Lessors, the Lessee shall pay to the Agent for the account of
the Lessors (pro rata in accordance with their
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respective Outstanding Investments or, in the case of amounts payable for the
account of a particular Lessor, for the account of such Lessor) from time to
time, on demand, an amount equal to (i) any amount not paid by the Lessee to
the Agent or the Lessors as provided in the Lease Documents on or before the
date such payments are due, MULTIPLIED by (ii) the Overdue Rate, and by (iii)
a fraction having a numerator equal to the number of days in the period from
and including such due date to but excluding the date of payment thereof and
a denominator of 365. The Lessee shall also pay to the Agent and the Lessors
an amount equal to any costs or expenses incurred by any and all of them in
collecting such unpaid sums or any other amounts due and unpaid under the
Lease Documents; such payment shall be made on demand after written notice by
the Agent or the applicable Lessor to the Lessee of such costs or expenses.
(g) Base Rent, Additional Base Rent, Additional Rent and any other
amount payable by the Lessee to the Agent or the Lessors shall be paid in
immediately available funds by 1:00 p.m. New York time, on the date due, to
the Agent to the account specified in Section 4(c) hereof or to such other
account as may be specified in writing by the Agent. For all purposes of
this Agreement any payment received by the Agent after 1:00 p.m. New York
time on a Business Day shall be deemed received on the next Business Day.
(h) The Lessee's obligations under Sections 8, 12 and 13 hereof
are independent, but are not intended to result in duplicative payments being
made by the Lessee.
SECTION 9. RESTRICTED USE; COMPLIANCE WITH LAWS.
(a) So long as no Event of Default shall have occurred and be
continuing, Lessee may use the Property in any manner which is in compliance
with Applicable Law and is consistent with the purpose for which it was
designed. Lessee shall comply and shall cause all Persons operating or using
Property to comply with all Insurance Requirements and Applicable Law
regarding the Property. Lessee will not do or permit any act or thing which
is contrary to any Applicable Law or Insurance Requirement or which is
reasonably likely to materially impair the value, residual value, utility or
condition of the Property; provided, however that the foregoing clause shall
not be construed to limit Lessee's right to maintain a Permitted Contest.
Lessee shall cause to be obtained and maintained all licenses, consents,
approvals and authorizations of, and filings and registrations with, any
Governmental Authority or other Person necessary for the performance by the
Lessee of its obligations under the Lease Documents or any agreement or
instrument required thereunder. During the Lease Term and so long as no
Event of Default or Unmatured Event of Default shall have occurred and be
continuing, the Lessors each covenant and agree that the Lessee shall have
the right to peaceful, quiet and uninterrupted use and enjoyment of the
Property subject to the other terms and conditions provided in the Lease
Documents without any interference, hindrance, ejection or molestation by or
from the Agent or the Lessors.
(b) Lessee shall, at its own sole cost and expense, promptly and
duly execute, deliver, file and record all such documents, statements,
filings and registrations, and take such further actions as the Agent or any
Lessor shall from time to time reasonably request in order to establish,
perfect and maintain the Agent's title to and interest in this Lease and in
the Property (on the behalf of the Lessors) as against Lessee or any third
party in any applicable jurisdiction. Lessee shall not, without the prior
written consent of the Agent, which shall not be unreasonably withheld,
remove any item of Personal Property or any Fixture from the Real Property;
provided, that Lessee shall have the right to remove any property which (i)
ceases to be Personal Property
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or Fixtures leased hereunder pursuant to the provisions of Section 14, 15, 17
or 29 hereof or (ii) has been removed temporarily so that Lessee may perform
its obligations under Section 10 hereof. Notwithstanding the foregoing,
Lessee may not: (I) change its name or the location of its principal place of
business or chief executive office (as specified in Section 2(i) hereof) or
(II) change the location of any item of Personal Property or Fixtures (as so
specified), in the case of clause (I) or (II), without first taking
appropriate measures to maintain the perfection and priority of the security
interest therein granted pursuant to Section 29 hereof.
(c) Lessee shall use reasonable precautions to prevent loss or
damage to the Property and to prevent injury to third Persons (and, in any
event, at least (i) in accordance with manufacturers' recommendations and
industry standards; and (ii) in a manner consistent with the stricter of
Insurance Requirements or Applicable Laws). Lessee shall cooperate fully
with the reasonable requests of the Agent and the Lessors and all insurance
companies providing insurance pursuant to Section 11 hereof in the
investigation and defense of any claims or suits arising from the use,
occupancy, construction, installation, repair, maintenance or replacement of
Property, PROVIDED that nothing contained in this Section 9(c) shall be
construed as imposing on the Agent or any Lessor any duty to investigate or
defend any such claims or suits or as a waiver of any of the Lessee's rights
with respect thereto.
(d) Lessee shall keep according to its customary practice accurate
and current records of the ownership and operation of the Property. The
Agent and the Lessors or any of their authorized representatives, upon
reasonable advance written notice to the Lessee, may inspect the Property and
Lessee's records applicable thereto during reasonable business hours from
time to time, any such inspection to be at the expense of the Lessee if it is
conducted at a time when an Event of Default has occurred and is continuing.
(e) The Lessee shall not without prior written consent of the
Agent permit, or suffer to exist, any Lien on the Property other than
Permitted Liens.
(f) The Lessee shall not suffer to exist any judgment, decree or
order of any court or other Governmental Authority (including, without
limitation, any Federal, state or local Tax Lien, other than a Permitted
Lien), (i) on any Property or (ii) which is reasonably likely to interfere
with the due and timely payment by Lessee of any sum payable or the exercise
of any of its rights or the performance of any of its duties or
responsibilities (including without limitation under Section 17 hereof) under
this Lease or the other Lease Documents unless such judgment, decree or order
(I) is not reasonably likely to result in a Material Adverse Effect or (II)
is the subject of a Permitted Contest. The Lessee shall, on receipt of
notice from the Agent or any Lessor to the effect that any such judgment,
decree or order exists, promptly take such action as may be reasonably
necessary to prevent or terminate such judgment, decree or order.
SECTION 10. MAINTENANCE, IMPROVEMENT AND REPAIR OF THE PROPERTY.
(a) The Lessee shall pay all costs, expenses, fees and charges
incurred in connection with the use, occupancy, construction, installation,
repair, maintenance or replacement of Property during the Lease Term. The
Lessee, at its sole cost and expense, shall maintain the Property in good
condition (ordinary wear and tear excepted) and make all necessary repairs
thereto, of every kind and nature whatsoever, whether interior or exterior,
ordinary or extraordinary, structural or nonstructural or foreseen or
unforeseen, in each case as required by Applicable Law and Insurance
Requirements and on a basis consistent with the operation and
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maintenance of properties comparable in type and location to the Property and
in no event less than the standards applied by the Lessee in the operation
and maintenance of other comparable properties owned or leased by the Lessee
or its Affiliates.
(b) The Lessor shall under no circumstances be required to build
any improvements on the Land, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease or maintain the Property in any way.
The Lessor shall not be required to maintain, repair or rebuild all or any
part of the Property, and the Lessee waives any right to (i) require the
Lessor to maintain, repair, or rebuild all or any part of the Property, or
(ii) make repairs at the expense of the Lessor pursuant to any Applicable
Law, Insurance Requirement, contract, agreement, or covenant, condition or
restriction in effect at any time during the Lease Term.
(c) The Lessee shall, upon the expiration or earlier termination
of this Lease, vacate and surrender such Property, to the Lessor in the
condition in which Lessee is required to maintain the Property pursuant to
this Lease, unless the Lessee has purchased the Property from the Lessor as
provided herein.
(d) The Lessee, at its sole cost and expense, may at any time and
from time to time make alterations, renovations, improvements and additions
to the Property or any part thereof and substitutions and replacements
therefor (collectively, "MODIFICATIONS"); PROVIDED, HOWEVER, that: (i)
except for any Modification required to be made pursuant to Applicable Law (a
"REQUIRED MODIFICATION"), no Modification shall impair the value or residual
value (other than to a De Minimis Amount), utility, or useful life of the
Property or any part thereof from that which existed immediately prior to
such Modification; (ii) the Modification shall be completed expeditiously and
in a good and workmanlike manner; (iii) the Lessee shall comply with all
Applicable Laws (including all Environmental Laws) and Insurance Requirements
applicable to the Modification, including the obtaining of all permits and
certificates of occupancy, and the structural integrity of the Property shall
not be adversely affected; (iv) subject to Permitted Contests, the Lessee
shall pay all costs and expenses and shall discharge (or cause to be insured
or bonded over) within sixty (60) days after the same shall be filed (or
otherwise become effective) any Liens arising with respect to the
Modification; (v) such Modifications shall comply with Sections 9(a) and
10(a); and (vi) the Lessee shall be required to obtain the prior written
approval of the Agent, which approval shall not be unreasonably withheld,
with respect to any alterations (other than Required Modifications) that
shall (A) Materially affect any structural element of the Improvements or
major building system therein, or (B) cost in excess of $250,000 or (C)
materially change the nature of the Improvements or the amount of usable area
therein or the utility or residual value thereof as of the date hereof. All
Modifications shall remain part of the Real Property and shall be subject to
this Lease and title thereto shall immediately vest in the Lessor; PROVIDED,
HOWEVER, that Modifications that meet each of the following conditions shall
not be subject to this Lease: (x) such Modifications are not Required
Modifications, (y) such Modifications were not financed by the Lessors and
(z) such Modifications are readily removable without impairing the value, or
residual value (other than to a De Minimis Amount) or remaining useful life
of the Property. So long as no Unmatured Event of Default has occurred and
is continuing, the Lessee may place upon the Property any trade fixtures,
machinery, equipment or other property belonging to the Lessee or third
parties and may remove the same at any time during the Lease Term, subject,
however, to the terms of Section 10(a), provided that the removal of such
trade fixtures, machinery, equipment or other property does not damage or
materially impair the value or residual value (other than to a De Minimis
Amount), utility, or remaining
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useful life of the Property. Any Modification not complying with the
foregoing clauses (x), (y) or (z) shall (i) be free and clear of all Liens
(other than Permitted Liens) and, without necessity of further act, shall be
owned by Agent (on behalf of the Lessors) and become Property for all
purposes of this Lease, and (ii) be reported to Agent upon the completion
thereof by the delivery of a Lease Supplement to Agent.
SECTION 11. INSURANCE.
(a) LIABILITY INSURANCE. The Lessee shall, at its own cost and
expense, procure or cause to be procured and maintain or cause to be
maintained comprehensive general liability insurance with respect to the
Property covering both bodily injury (as to all Persons, including employees
of the Lessee, the Agent or the Lessors) and damage to property. Policies
covering bodily injury and property damage shall provide for coverage in
scope and amount consistent with both industry standards applicable to
similarly situated companies and the insurance Lessee carries for similar
property owned by Lessee or any of its Affiliates. If liability insurance is
carried on a claims-made basis at any time during the last three years before
the termination of this Lease, Lessee shall deliver to Lessor a "tail"
insurance policy covering claims made or to be made within a period of not
less than three years after the termination of this Lease; this covenant
shall survive the termination of this Lease. The Lessee shall cause the
Agent, the Lessors and their respective affiliates, officers, directors,
employees and agents (the "ADDITIONAL INSUREDS") to be named as Additional
Insureds in all insurance policies described in this Section 11(a) with
respect to the Property.
(b) PROPERTY INSURANCE. At such time as Lessee commences the
construction of any Improvements on the Real Property, the Lessee shall, at
its own cost and expense, procure or cause to be procured and maintain or
cause to be maintained all-risk physical damage insurance on the Property
(including flood coverage); PROVIDED, that, the amount of such insurance at
any time shall be no less than the greater of (i) the then Lease Investment
Balance plus the amount of one Base Rent Payment and (ii) 100% of the
replacement cost of the Property. The policy shall contain an agreed value
endorsement in an amount acceptable to Agent in its sole and absolute
discretion. The Agent (on behalf of the Lessors) shall be named as an
additional insured, as its interests may appear, and shall be the sole loss
payee in all insurance policies covering physical damage carried with respect
to the Property.
(c) APPROVED POLICIES. All insurance required by Sections 11(a)
and 11(b) hereof shall either be approved by Agent or shall be with companies
as to which A.M. Best Company (or any nationally recognized successor
thereto) has a current general policyholder rating of at least "A" and a
financial rating of at least XIII. All such policies (A) shall provide for
at least 30 days' prior written notice to the Agent of any cancellation,
lapse for non-payment of premium, non-renewal or material adverse alteration
of such policies, (B) shall provide that in respect of the respective
interests of the Additional Insureds in such policies the insurance shall not
be invalidated by any action or inaction of the Lessee, any Person having
possession with permission of the Lessee or any other Additional Insured
(other than the Additional Insured claiming coverage) and shall insure the
Additional Insured's interests, as they appear, regardless of any breach or
violation of any warranty, declaration or condition contained in such
policies by the Lessee, any such Person having possession or any other
Additional Insured (other than the Additional Insured claiming coverage), (C)
shall provide that there shall be no recourse against any Additional Insured
for the payment of premiums, commissions, assessments or advances, (D)
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shall be primary without right of contribution from any other insurance that
is carried by any Additional Insured or any other Person, (E) shall, in the
case of liability policies, expressly provide that all the provisions
thereof, except the limits of liability, shall operate in the same manner as
if there were a separate policy covering each insured and Additional Insured,
(F) shall waive any right of the insurers to any setoff, counterclaim or
other deduction, whether by attachment or otherwise, in respect of any
liability of any Additional Insured to the extent of any moneys due such
Person and (G) shall waive any rights of the insurers to subrogation against
any Additional Insured.
(d) USE OF INSURANCE PROCEEDS. As between the Agent and the
Lessee, all insurance payments under Section 11(b) shall be paid to, or
retained by, the Agent, as security for the Lessee's obligations hereunder
and shall be applied as follows: so much of such payments remaining after
reimbursement of the Agent for costs and expenses incurred in connection with
the damage or loss of the Property shall be applied against the amounts
required to be paid by the Lessee pursuant to Section 17 hereof (plus any
other amounts then due and payable under the Lease Documents), if not already
paid by the Lessee, or, if already paid by the Lessee, shall be applied to
reimburse the Lessee for its payment of such amounts and the balance, if any,
of such payment remaining thereafter shall be paid over to, or retained by,
the Lessee. Any amount referred to in the preceding sentence that is payable
to the Lessee shall not be paid to the Lessee if at the time of such payment
an Unmatured Event of Default or an Event of Default shall have occurred and
be continuing, but shall be held by the Agent as security for the obligations
of the Lessee under this Lease and, at such time as there shall not be
continuing any Unmatured Event of Default or any Event of Default, such
amount shall, to the extent not applied to satisfy the obligations of the
Lessee, be paid to the Lessee.
The insurance required by this Section 11 may be subject to such
reasonable deductible amounts, and the Lessee may self-insure such portions
of the required coverage, as is customary for companies similarly situated so
to self-insure provided that the aggregate self-insurance and deductibles for
the insurance required by Section 11(a) or 11(b) shall be not greater than
ten percent (10%) of the face amount of the respective policy.
(e) The Lessee shall furnish to the Agent ACORD evidences of
insurance for property insurance (to the extent Lessee is required by Section
11(b) to obtain such insurance), and a certificate of insurance for liability
insurance, evidencing compliance by the Lessee with the provisions of
Sections 11(a)-(c) hereof as of the Closing Date and, thereafter, annually
prior to each anniversary of the Closing Date, but the Agent shall be under
no duty to examine such certificates or to advise Lessee in the event its
insurance is not in compliance herewith.
(f) The Lessee covenants that it will not use, occupy or permit
others to use or occupy the Property at any time when the insurance required
by this Section 11 is not in force with respect to the Property.
(g) If Lessee shall fail to acquire and maintain any insurance
required hereby or if any required insurance shall for any cause become void,
the Agent may (but without any obligation so to do and without prejudice to
the Agent's or the Lessors' other rights and remedies hereunder) acquire and
maintain such insurance at the cost of Lessee and Lessee will forthwith upon
demand repay to the Agent all premiums and other reasonable moneys from time
to time paid or payable by the Agent and the Lessors in respect of such
insurance (which amount shall be
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certified in writing by the Agent), together with interest thereon accrued
daily at the Overdue Rate.
(h) Pro forma copies of the insurance policies, as amended and
endorsed, required under this Section 11 with respect to the insurance
required under this Section 11 shall be made available to Agent for
inspection, upon reasonable prior notice to the Lessee.
SECTION 12. GENERAL INDEMNITY.
(a) The Lessee shall indemnify, defend, protect and hold harmless,
on an After Tax Basis, each Indemnified Person (whether or not such
Indemnified Person is a party to any legal proceeding) from and against all
liabilities, losses, obligations, claims, damages, penalties, causes of
action, suits or other legal proceedings (actual or threatened, judicial,
administrative or arbitral), reasonable costs and expenses (including,
without limitation, reasonable attorneys' and accountants' fees and expenses)
or judgments (including, without limitation, strict liability in tort)
(collectively "LOSSES") of any nature, directly or indirectly, arising out
of, or relating to:
(i) this Lease or any of the other Lease
Documents; or any of the transactions contemplated hereby or
thereby;
(ii) the use, occupancy, construction,
installation, repair, maintenance, replacement, sale or other
disposition of Property or any interest therein;
(iii) the invalidation of any of Lessee's insurance
policies required to be maintained under this Lease;
(iv) any accident, injury or death of any person or
loss of or damage to any property related to the Property;
(v) the assertion of any claim or demand based
upon any infringement or alleged infringement of any patent,
trademark, license or other right, by or in respect of any item of
Property;
(vi) the inaccuracy, or alleged inaccuracy, as at
any time made or in any of the Lease Documents deemed made, of any
representation or warranty of Lessee contained herein; or any
violation, or alleged violation, of any provision of this Lease or
any other Lease Document by Lessee or of any contract or agreement
to which Lessee is bound or of any Applicable Laws of any
Governmental Authority or of any Insurance Requirements;
(vii) any breach of environmental representations
and warranties set forth herein, any Environmental Claim relating
to the Property, or any existing or future Release of Hazardous
Materials at, on, in, under, about, to or from the Property or any
off-site location to which Hazardous Materials generated by Lessee
or its Subsidiaries were sent for handling, treatment, storage, or
disposal; or
(viii)any breach of the covenants of Lessee with
respect to obligations under the Existing Service Contract
Obligations.
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(b) Notwithstanding any provisions of this Section 12 to the
contrary, the Lessee shall not indemnify and hold harmless any Indemnified
Person under this Section 12 against any Loss: (i) to the extent arising from
the Active Negligence, gross negligence or willful misconduct of such
Indemnified Person; (ii) for any Tax whatsoever whether or not covered by the
indemnity in Section 13 hereof (which Section 13 shall exclusively govern the
availability of any indemnification for Taxes), except to the extent
necessary to make payments on an After-Tax Basis; or (iii) for Losses arising
from acts or conditions arising after the end of the term of this Lease
except while an Event of Default is continuing, or (iv) for Losses arising in
connection with any Lessor Liens. Except as set forth in the immediately
preceding sentence, the indemnification provided in this Section 12 shall
apply to Losses whenever arising, including without limitation, Losses
arising from events or conditions occurring prior to the date hereof.
(c) Any Indemnified Person shall notify the Lessee, promptly
after such Indemnified Person's receipt of notice, or such Indemnified Person
otherwise becoming aware, of any third party claim with respect to which
indemnification may be sought under this Section 12 but the failure to so
notify shall not, except to the extent such failure prejudices the ability of
the Lessee to defend such third party claim, relieve the Lessee from any of
its obligations under this Section 12 or otherwise. The Indemnified Person
shall proceed to resist and dispose of such claim as it deems appropriate;
PROVIDED, that, so long as no Event of Default is continuing, the Lessee may,
by sending written notice to the Indemnified Person acknowledging the
Lessee's indemnification obligations hereunder with respect to such claim in
full, have the right to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Person. If the Lessee so elects to assume
the defense of such claim, any one or more of the Indemnified Persons shall
have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person or Indemnified Persons,
unless (i) the employment of such counsel has been specifically authorized in
writing by the Lessee or (ii) the representation of both the Lessee and such
Indemnified Person or Indemnified Persons by the same counsel would be
inappropriate due to actual or potential differing interests between them.
Unless an Event of Default is continuing, the Lessee shall not be liable for
any settlement of any such action effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff in any such action with or without consent, the Lessee agrees to
indemnify and hold harmless the Indemnified Persons from and against any loss
or liability by reason of such settlement or final judgment. If the Lessee
elects not to participate in a third party claim, all legal and other
expenses incurred by the Indemnified Person with respect to such third party
claim shall be for the account of the Lessee.
(d) The parties hereto agree that the provisions of this Section
shall not be applied to indemnify any Indemnified Person for any Loss which
the Lessee proves arose solely, immediately and directly from the application
(in strict compliance with the provisions therefor) of the Risk Amount
limitations contained in clause (y) or (z) of Section 14(b)(iii) hereof in
connection with the exercise by the Lessee of the Termination Option, which
exercise is permitted by, and has been consummated in strict conformity with,
all limitations specified in Section 14 hereof or elsewhere herein or in any
other Lease Document.
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SECTION 13. TAXES.
(a) The Lessee agrees promptly to pay when due, and to indemnify,
defend, protect and hold each Indemnified Person, harmless from, all license
and registration fees and all income, gross receipts, rental, franchise,
excise, occupational, capital, value added, sales, use, ad valorem (real and
personal), property (real and personal) and excise taxes, fees, levies,
imposts, charges or withholdings of any nature whatsoever, together with any
assessments, penalties, fines, additions to tax and interest thereon
(individually, a "TAX," and collectively called "TAXES"), howsoever imposed
(whether imposed upon any Indemnified Person, all or any part of the Property
or otherwise), by any federal, state or local government or taxing authority
in the United States or by any foreign government, foreign governmental
subdivision or other foreign or international taxing authority, upon or with
respect to, based upon or measured by:
(i) the Property or any item thereof or the
receipts, earnings, gains or revenues arising therefrom or from any
application or disposition thereof or any item thereof or interest
therein;
(ii) the construction, acquisition, purchase,
financing, mortgaging, ownership, acceptance, rejection, delivery,
leasing, subleasing, insuring, inspection, registration,
possession, use, operation, presence, repair, transfer of title,
modification, rebuilding, imposition of any Lien, sale or other
disposition of the Property or any item thereof or interest therein;
(iii) the payment of Base Rent, Additional Base
Rent, Additional Rent, Lease Investment Balance and other sums
payable under the Lease Documents, the rentals, receipts or
earnings arising from the purchase, financing, ownership, delivery,
leasing, possession, use, operation, return, storage, transfer of
title, sale or other disposition of the Property or any item
thereof or any other interest therein;
(iv) the Lease Documents, and any other documents
or agreements executed and delivered in connection with the
purchase, leasing, sale or other disposition of the Property or any
item thereof or interest therein; or
(v) otherwise in connection with any transaction
contemplated by the Lease Documents.
Notwithstanding anything to the contrary contained in this Section 13(a), the
application of the indemnity set forth in this Section 13(a) with respect to
Taxes imposed by a state shall apply only if the state imposing the Taxes
asserts jurisdiction to impose such Taxes solely by reason of the parties'
having entered into this Lease. Notwithstanding the provisions of Section 12
or 13, the Lessee shall not be required to indemnify any Indemnified Person
in respect of any Excluded Taxes.
(b) The indemnity amounts payable under Subsection (a) above
shall be computed on an After-Tax Basis.
(c) Each Lessor which is a non-United States person for U.S.
federal tax purposes (a "NON-UNITED STATES PERSON") agrees (to the extent it
is permitted to do so under the laws and any applicable double taxation
treaty of the jurisdiction of its incorporation and the
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jurisdiction in which its Funding Office is located) to execute and deliver
to the Agent for delivery to the Lessee, before the first scheduled payment
date hereunder in each calendar year, either (i) two United States Internal
Revenue Service Forms 1001 or (ii) two United States Internal Revenue Service
Forms 4224 together with two United States Internal Revenue Service Forms
W-9, or any successor forms, or certificates or identifications, as
appropriate, properly completed and claiming complete or partial, as the case
may be, exemption from withholding and deduction of United States Federal
Taxes. Each Lessor which is a Non-United States Person represents and
warrants to the Lessee that, at the date it first became a Lessor hereunder,
(x) its Funding Office is entitled to receive payments of interest hereunder
without deduction or withholding for or on account of any Taxes imposed by
the United States or any political subdivision thereof and (y) it is
permitted to take the actions described in the preceding sentence under the
laws and any applicable double taxation treaties of the jurisdictions
specified in the preceding sentence.
(d) With respect to all Taxes with respect to which
indemnification may be sought above, where legally permissible, the Lessee
shall prepare and timely file all reports and returns under each relevant
taxing authority (and to send a copy thereof to the Agent). In all other
cases, the Lessee shall notify the Agent at least 60 days prior to the due
date for such reports or returns and shall prepare them on behalf of, and in
a manner satisfactory to, the Agent. The Lessee shall pay all such Taxes
reflected as being due on such reports or returns directly to the relevant
taxing authority. The provisions of this Section 13(d) shall not limit the
Lessee's obligations under Section 13(a).
(e) Each Lessor promptly shall notify Lessee, in accordance with
Section 13(h) hereof, of any event of which it has knowledge, occurring after
the date of this Agreement which will entitle such Lessor to compensation
pursuant to this Section 13 and will designate a different Funding Office if
such designation will avoid the need for, or reduce the amount of such
compensation and will not, in such Lessor's sole judgment, be otherwise
disadvantageous to such Lessor.
(f) Lessee shall not be obligated under this Agreement to make any
greater payment to any Lessor which changes any Funding Office than such
Lessor would have been entitled to receive if such Funding Office had not
been changed, unless such Funding Office was changed (i) with Lessee's prior
written consent, (ii) at Lessee's request, (iii) to mitigate or avoid the
suspension of such Lessor's obligations or the requirement of payment of
increased costs in the circumstances contemplated by Section 8(a), 8(b), 8(c)
or 13 hereof, but in such event only to the extent of such increase, and in
no event in an amount greater than if the Funding Office had not been
changed, or (iv) at a time when the circumstances giving rise to such greater
payment did not exist.
(g) The Agent agrees that it will from time to time file with the
appropriate authorities all tax returns required to be filed in connection
with the lease to or use by the Lessee of the Property hereunder, it being
understood, however, that the Agent may from time to time demand in writing
that the Lessee pay to the Agent such amounts as the Agent shall require to
indemnify the Agent and the Lessors from any Taxes payable by the Agent or
the Lessors in connection with such returns. In no event shall Lessee be
responsible for the payment of any interest or penalties (other than
Additional Rent pursuant to Section 8(f) hereof or any such payment of
interest or penalty primarily due to the direct fault of Lessee) with respect
to any amounts payable under any such tax returns required to be filed by the
Agent. Agent will consult
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with Lessee prior to filing any business property return required to be filed
by the tax assessor in which the Property is located.
(h) Any demand by the Agent or the Lessors for indemnification
pursuant to this Section 13 shall be accompanied by a statement setting forth
the basis of such demand and a calculation of the amounts payable by the
Lessee in connection with such demand, and no such amount shall be payable by
the Lessee until 30 days after receipt by the Lessee of the demand for such
amount. Each of the Agent and each Lessor agrees that within 30 days of first
obtaining knowledge by it of any amounts owing by the Lessee under this
Section 13 it will notify the Lessee thereof and of the amount so owed. If
any amount paid by either Lessee to the Agent pursuant to this Section 13
exceeds the amount actually owed by Lessee under this Section 13, then upon
learning of such excess the Agent shall promptly advise such Lessee thereof
and remit such amount to Lessee upon demand by such Lessee.
SECTION 14. PURCHASE OPTION AND TERMINATION OPTION.
(a) PURCHASE OPTION OF LESSEE. During the term of this Lease,
the Lessee may, on a Rent Payment Date and upon 30 days' prior written notice
substantially in the form included in Exhibit H hereto appropriately
completed (a "LESSEE PURCHASE NOTICE") to the Agent by an Authorized Officer
of Lessee, elect to purchase all (but not less than all) of the Property
leased hereunder. Any such purchase shall be effected pursuant to the
provisions of Section 14(d) hereof; PROVIDED that the Lessee Purchase Notice
may be delivered as little as one day in advance if the purchase is to take
place on the last day of the Lease Term and the Lessee had previously elected
the Termination Option. Any election by the Lessee made pursuant to this
Section 14(a) shall be irrevocable; except that Lessee shall have a one-time
right to extend the closing date for the purchase of the Property, provided
that (i) Lessee so notifies Agent in writing not fewer than ten (10) days
prior to the date completed by Lessee in paragraph 3 of Exhibit "H" and (ii)
the extended date is a specific date not later than one (1) Business Day
prior to the expiration of the Term. The option of the Lessee provided in
this Section 14(a) may be assigned without the prior consent of Lessors;
provided that no assignment shall be binding upon Lessors unless Lessee shall
have notified Lessors in writing of the name, address and telephone number of
the assignee, and the effective date of the assignment.
(b) TERMINATION OPTION OF LESSEE. (i)The Lessee shall have the
right, upon 180 days' prior written notice in substantially the form of
Exhibit J hereto appropriately completed and executed by an Authorized
Officer of Lessee (the "SALE NOTICE") to the Agent, to terminate the Lease at
the end of the Lease Term, so long as no Event of Default or Unmatured Event
of Default has occurred and is continuing, by electing (and thereafter Lessee
shall be obligated to consummate) an all-cash sale to one or more Persons not
Affiliates of Lessee of all (but not less than all) of the Property (the
"TERMINATION OPTION") as provided in Section 14(b)(ii) hereof; PROVIDED that
Lessee shall not be obligated to consummate such sale if it elects and
consummates a purchase of the Property pursuant to Section 14(a) hereof.
Upon receipt by the Agent on behalf of the Lessors of all Proceeds to be paid
to it in connection with the Termination Option and the Base Rent and
Additional Base Rent due on such date and all other amounts then due and
owing under the Lease Documents (including, without limitation, (A) any
indemnity payments and (B) any Taxes (other than Excluded Taxes) resulting
from the exercise of the Termination Option, provided that the Agent shall
have furnished to the Lessee the information necessary to compute the Taxes
resulting from the exercise of the Termination Option and the
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Lessee shall have not furnished the Agent (for the benefit of the Lessors) a
certificate evidencing an exemption available to the Agent from such Taxes),
the Agent on behalf of the Lessors shall transfer to such Person or Persons
on an as-is, where-is basis, without any representation or warranty of any
kind, express or implied, whatever title to the Property it may have (except
that the Agent shall warrant the Agent Representations); and the Agent (on
behalf of the Lessors) shall at Lessee's expense execute and deliver such
quitclaim deeds, requests for full reconveyance and UCC termination
statements and other documents reasonably requested by the Lessee to
terminate the lien and security interests granted pursuant to this Lease.
(ii) In the event the Lessee elects the Termination Option,
Lessee shall use its best efforts to obtain the highest all cash purchase
price for the Property. Neither the Agent nor any Lessor shall have any
responsibility for procuring any purchaser. If, nevertheless, the Agent or a
Lessor undertakes any sales efforts, the Lessee shall promptly reimburse the
Agent or such Lessor for any charges, costs and expenses incurred in such
effort, including any allocated time charges, reasonable costs and expenses
of internal counsel or other reasonable attorneys' fees and expenses. The
Lessee must accept the highest such offer received by it (which may be
composed of a combination of offers from several buyers of different items of
Property) if such offer is in excess of the Lease Investment Balance at the
end of the Lease Term. The Agent shall determine whether to accept the
highest all cash offer for the Property if not in excess of the Lease
Investment Balance and in the case of such an all cash offer which was
obtained, and is otherwise, in strict compliance with the provisions of this
Section 14, if the offer is rejected by the Agent, the Lessee shall (subject
to Lessee's rights under Section 14(a), and assuming no Event of Default or
Unmatured Event of Default has occurred) surrender the Property (in strict
compliance with Section 18 hereof) and pay the Agent the sum of (I) the
Guaranteed Residual Value plus (II) all then accrued and unpaid Base Rent and
Additional Base Rent PLUS (III) all other amounts then due under the Lease
Documents.
(iii) In the event Lessee elects the Termination Option and
Agent accepts such offer:
(x) if the net proceeds of sale received by
Agent (which shall mean the gross proceeds received by Agent less
all costs paid to non-Affiliates of Lessee and related to such sale
and delivery (which Agent hereby agrees to pay, but only out of
such proceeds), including, without limitation (to the extent not
previously paid pursuant to Section 14(b)(ii)), the cost of
brokerage commissions, advertising costs, appraisal fees,
preparation of the Property for marketing, delivery of documents
and Property, certification and testing of the Property in any
location chosen by the buyer or prospective buyer, legal costs,
costs of notices, or other information and any repairs or
modifications desired by a buyer or prospective buyer, without
regard to whether such costs were initially incurred by the Agent,
the Lessors, the Lessee or any potentially qualified buyer (the
"PROCEEDS")) are greater than the Gross Lease Investment Balance,
the Agent, for the account of the Lessors, shall pay to the Lessee
the amount by which such Proceeds exceed the Gross Lease Investment
Balance;
(y) if the Proceeds are less than the
Gross Lease Investment Balance, the Lessee shall pay to the Agent
for the account of the Lessors an amount equal to the sum of (A)
the lesser of (I) Lease Investment Balance less the Proceeds and
(II) the Guaranteed Residual Value, plus (B) all then accrued and
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unpaid Base Rent and Additional Base Rent and all other amounts
then due under the Lease Documents; and
(z) if the Proceeds are less than the
excess of (I) the Gross Lease Investment Balance over (II) the
Guaranteed Residual Value on such date, the Lessee shall pay to the
Agent for the account of the Lessors, in addition to the amounts
required to be paid by the Lessee pursuant to clause (y) above, an
amount (which, together with the other amounts referred to in this
clause (z), shall not exceed the Gross Lease Investment Balance)
equal to the amount (as determined if requested in the sole
discretion of the Agent, at the sole expense of the Lessee, by an
Appraiser) by which the residual value of the Property has been
reduced by waste, extraordinary use, failure to maintain or
replace, failure to use, improper workmanship or any other cause or
condition within the power of Lessee to control or affect.
All payments referred to in this clause (iii) shall be made on the date the
Proceeds are due and payable to the Agent. The Agent shall have no obligation
to make any payment required of it under Section 14(b)(iii)(x) hereof until the
Agent on behalf of the Lessors shall have received the Proceeds, Base Rent,
Additional Base Rent and all other amounts then due and owing under the Lease
Documents (including, without limitation, any indemnity payments).
(c) FAILURE OF SALE. If the Termination Option is elected and a
sale of the Property is not effected prior to the end of the Lease Term other
than as a result of Agent's failure to accept an offer as provided in Section
14(b)(ii), the Lessee shall (x) pay on the last day of the Lease Term the
amounts described in the last sentence of Section 14(b)(ii), and (y)
immediately quit possession of the Property and tender the same to Agent in
compliance with Lessee's obligations under this Lease.
(d) PROCEDURES FOR PURCHASES. The following procedures shall
apply to any purchase by Lessee of the Property subject to this Lease
pursuant to any provision of this Lease:
(i) the Lessee shall pay to the Agent for the
account of the Lessors by wire transfer of immediately available
funds an amount equal to (I) the Lease Investment Balance and all
other amounts then due under the Lease Documents (including,
without limitation, any Taxes resulting from such purchase,
provided that the Lessee shall have not first furnished the Agent
(for the benefit of the Lessors) a certificate evidencing an
exemption available to the Agent from such Taxes), plus (II) any
Base Rent and Additional Base Rent accrued and unpaid, plus (III)
any other amounts due under the Lease Documents, MINUS (IV) if, at
such time any insurance proceeds are being held by the Agent with
respect to any Property pursuant to Section 17 hereof, the amount
of such insurance proceeds then held by the Agent (including the
net earnings thereon), which insurance proceeds (and net earnings)
a) shall (but not in excess of the total of the amounts referred to
in clauses (I) and (II) of this paragraph) no longer be subject to
the provisions of Section 17 hereof and shall be deemed to be part
of the purchase price paid by the Lessee, and b) to the extent any
such insurance proceeds remain in the possession of Agent after
being applied to part of the purchase price as described in the
preceding clause "a)", the excess shall be forthwith delivered to
Lessee; and MINUS (V) any Taxes that Lessee has paid to the Agent
that Agent has not duly delivered to the Governmental Authority
entitled thereto in accordance with Section 13(g),
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(ii) the Agent, on behalf of the Lessors, shall
transfer to Lessee, on an as-is, where-is basis, without any
representation or warranty of any kind, express or implied,
whatever title to the Property it may have (except that the Agent
shall warrant the Agent's Representations) and
(iii) Lessee shall be subrogated to the Agent's and
the Lessors' rights with respect to the Property and the Agent (on
behalf of the Lessors) shall, at Lessee's expense, execute and
deliver (I) such assignments and instruments of further assurance
as may be reasonably necessary to enable Lessee to collect any
unpaid insurance proceeds relating to the Property and otherwise to
receive the benefits of such rights and (II) such quitclaim deeds,
requests for full reconveyance, UCC termination statements and
other documents reasonably requested by the Lessee to terminate the
lien and security interests granted pursuant to this Lease. Upon
such transfer, the lease of the Property under this Agreement shall
terminate.
(e) RIGHT TO PURCHASE OR SELL AFTER EVENT OF DEFAULT. If an
Event of Default has occurred but Agent (on behalf of the Lessors) has not
previously terminated the Lease, Lessee may exercise the Purchase Option or
the Termination Option, and the 30 days advance notice requirement in Section
14(a), and the 180 days advance notice requirement in Section 14(b), shall be
reduced to five days in each case; provided that nothing in this Section
14(e) shall limit or impair any right or remedy of Agent (on behalf of the
Lessors) under this Lease, except that Agent (on behalf of the Lessors) shall
not exercise its right to terminate the Lease during the five day period
beginning on the date that Lessee delivers the written notice required by the
first sentences, respectively, of Sections 14(a) and 14(b).
SECTION 15. END OF TERM OPTIONS. In connection with the expiration of
the Lease Term, the Lessee shall be obligated to (i) exercise the Termination
Option or (ii) purchase the Property subject to this Lease pursuant to
Section 14(a) hereof (the "PURCHASE OPTION"). In the event that by the 74th
day prior to the expiration of the Lease Term the Lessee has not elected
either of the options in clauses (i) or (ii), the Lessee shall be required to
exercise the Purchase Option at the end of the Lease Term, except that the
notice described in the first sentence of Section 14(a) need not be given,
and Lessee shall not have the right to extend the closing date for the
purchase of the Property as described in Section 14(a). If Lessee fails to
consummate the Termination Option, then Lessee shall be deemed to have
elected the Purchase Option.
SECTION 16. AMENDMENTS.
(i) This Lease and each of the other Lease Documents shall be
changed, waived, discharged or terminated with respect to Lessee, the Agent
and each Lessor upon the ratification in writing of such change, waiver,
discharge or termination by Lessee, the Agent and the Required Lessors, in
which case such change, waiver, discharge or termination shall be effective
as to each Lessor, Lessee and the Agent; PROVIDED, that no such change,
waiver, discharge, or termination shall, without the written ratification of
each Lessor:
(A) modify, amend, waive or supplement any of the provisions
of this Section 16 or Section 3 hereof, change the definitions of "LEASE
INVESTMENT BALANCE", "LEASE
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INVESTMENT BALANCE", "CLOSING FEE", "COMMITMENT", "COMMITMENT PERCENTAGE",
"EXCLUDED TAXES" "INDEMNIFIED PERSON", "OUTSTANDING INVESTMENT", "PROPERTY
COST", "PROPERTY COST", "REQUIRED LESSORS", "GUARANTEED RESIDUAL VALUE", or
"TAXES", or release any Collateral (except as otherwise specifically provided
in any Lease Document);
(B) modify, amend, waive or supplement any of the provisions
of Section 4, 12 or 13 hereof (except as otherwise expressly provided in this
Section 16); PROVIDED that the Required Lessors may waive an Event of Default
other than an Event of Default under Section 20(a) hereof;
(C) reduce, modify, amend or waive any indemnities in favor
of the Agent or any Lessor pursuant to Section 12 or 13 hereof (except that
any Person may consent to any reduction, modification, amendment or waiver of
any indemnity payable to it);
(D) modify, postpone, reduce or forgive, in whole or in part,
any payment of Base Rent or Additional Base Rent (other than pursuant to the
terms of any Lease Document) or any other amount payable under this Lease or
any other Lease Document, or modify the definition or method of calculation
of any payment of Base Rent or Additional Base Rent (other than pursuant to
the terms of any Lease Document) or any other amount payable hereunder or
thereunder;
(E) consent to any assignment of this Lease releasing Lessee
from its obligations in respect of the payments due pursuant to the Lease
Documents or changing the absolute and unconditional character of such
obligations; or
(F) except as contemplated in the Lease Documents, permit the
creation of any Lien on the Collateral or any part thereof or deprive the
Agent or any Lessor of the benefit of the security interest in the Collateral
granted by Lessee.
(ii) Without the prior written consent of the Agent, no amendment
of, supplement to, or waiver or modification of, any Lease Document shall
adversely affect Agent's rights or immunities or modify or increase the
duties or obligations of Agent with respect to any Lease Document.
SECTION 17. LOSS OF OR DAMAGE TO PROPERTY.
(a) RISK OF LOSS. The Lessee hereby assumes all risk of loss of
or damage to the Property, however caused. No loss of or damage to the
Property or any item thereof shall impair any obligation of the Lessee under
this Lease, which shall continue in full force and effect with respect to any
lost or damaged Property.
(b) REPAIR OF DAMAGE; USE OF PROCEEDS. In the event of damage of
any kind whatsoever (other than ordinary wear and tear as contemplated by
Section 10 hereof) to any item or items of Property (unless such Property is,
as a consequence thereof, subject to an Event of Loss) the Lessee, at its own
cost and expense, shall (i) if the portion of the Lease Investment Balance
attributable to such item or items plus all other items previously so damaged
since the previous notice pursuant to this clause (i) shall exceed $50,000,
immediately notify the Agent in writing of the damage to such item or items
and the Lease Investment Balance thereof and of any
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material facts with respect thereto and (ii) take all necessary action to
place the same in good operating order, repair, condition and appearance.
If the insurance proceeds, if any, received by the Agent on behalf of the
Lessors for damage to such Property upon the occurrence of a single event or
series of related events of damage are not greater than $250,000, the Agent
shall pay said insurance proceeds to Lessee promptly upon receipt. Upon the
completion of the repairs, Lessee shall deliver a certificate to Agent
certifying that the Property has been repaired to the standards required
under this Lease. If the insurance proceeds, if any, received by the Agent
on behalf of the Lessors for damage to the Property upon the occurrence of a
single event or series of related events of damage are greater than $250,000,
the Agent shall deposit said proceeds in a separate interest bearing account
in the name of the Agent on behalf of the Lessors (and Lessee shall reimburse
the Agent upon demand for any bank charges and other expenses incurred by the
Agent with respect to such account). Upon the receipt of a certificate from
an Authorized Officer of Lessee (i) requesting and authorizing payment to a
contractor for the repair of such damaged Property, (ii) stating the payment
is due under the repair contract with such contractor, (iii) attaching a copy
of an invoice or other evidence showing that payment is due under such repair
contract and (iv) certifying the then estimated total cost to repair such
damaged Property and if such estimated cost is greater than said insurance
proceeds, certifying that Lessee has paid from its own funds an amount of
such repair costs at least equal to such excess, the Agent shall pay to
Lessee from such separate account (to the extent of funds therein, including
net earnings thereon) an amount equal to such requested payment. The balance
of such account, if any, shall be paid to Lessors (PRO RATA in accordance
with their respective Outstanding Investments), by the Agent to reduce the
Lease Investment Balance.
(c) EVENT OF LOSS; PROPERTY NOT REPAIRED. If an Event of Loss
occurs as to any item or items of Property and such Property is not repaired
or replaced pursuant to paragraph (d) below, then in any such event, (i)
Lessee shall promptly notify the Agent in writing of such event, (ii) Lessee
shall pay to the Agent (for the account of the Lessors PRO RATA in accordance
with their respective Outstanding Investments) within 10 calendar days an
amount equal to (x) the Lease Investment Balance of such Property, PLUS (y)
any Base Rent accrued and unpaid on such Property to and including the date
of such payment, PLUS (z) any other amounts owing under the Lease Documents
(including, without limitation, any Taxes resulting from such transfer and
any amounts due under Section 7(d) hereof) MINUS any insurance proceeds
received and retained by Agent on behalf of the Lessors, (iii) the Agent, on
behalf of the Lessors, shall transfer title to such Property to Lessee, on an
as-is, where-is, basis, without any warranty of any kind by, or any recourse
of any kind to, the Agent or any Lessor (except that the Agent shall make the
Agent's Representations), (iv) Lessee shall be subrogated to the Lessors'
rights in the affected transaction and (v) the Agent (on behalf of the
Lessors) shall at Lessee's expense execute and deliver (I) such assignments
and instruments of further assurance as may be reasonably necessary to enable
Lessee to collect any unpaid insurance proceeds and (II) such quitclaim
deeds, requests for full reconveyance, UCC termination statements and other
documents reasonably requested by the Lessee to terminate the security
interest in such Property created hereunder. Upon such transfer, the lease
of such Property under this Agreement shall terminate and such Property shall
cease to be Property hereunder.
(d) EVENT OF LOSS; PROPERTY REPAIRED. If an Event of Loss shall
have occurred with respect to one or more items of Property, the Lessee may
elect not more than 30 days after such event to replace such Property by
reconstructing or repairing it with labor and materials (in either case, the
"RECONSTRUCTED PROPERTY") that restore the Property to the condition required
to be maintained under this Lease such that the value, utility, Guaranteed
Residual Value or
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remaining useful life of the Reconstructed Property has not been impaired
(compared to the Property immediately before the Event of Loss) other than to
a De Minimis Amount, to have such Reconstructed Property constitute
"Property" for the purposes of this Lease and to have this Lease continue in
full force and effect by delivery to the Agent of a certificate of an
Authorized Officer stating (i) that Lessee will replace such item or items
with Reconstructed Property, (ii) specifying and describing in reasonable
detail such Reconstructed Property and (iii) stating that Lessee will comply
with the provisions of the second and third sentences of this paragraph (d).
Any such Reconstructed Property that is Personal Property or a Fixture shall
(i) have a fair market value (as determined by an Appraiser if such
Reconstructed Property is not new and has a claimed value in excess of
$100,000 or as determined by the invoice for such Reconstructed Property if
such Reconstructed Property is new) not less than the Lease Investment
Balance allocable by Agent to the item of Personal Property replaced, (ii)
have a useful life, utility and residual value at least as great as the
Personal Property or Fixture being replaced and (iii) be free of all Liens
(except Permitted Liens) as provided in Section 9 hereof. All other
Reconstructed Property shall (i) consist of new, first class quality
materials of like kind, quality and style as those damaged, shall cause the
item of Property so restored to have a useful life and residual value not
less than the Lease Investment Balance (as determined by and allocable by
Agent to the item of Property restored in Agent's sole and absolute
discretion), (ii) be free of all Liens (except Permitted Liens), and shall
result in the Property so restored to be free of Liens (except Permitted
Liens), as provided in Section 9 hereof, and (iii) be constructed using first
class workmanship. Lessee shall as soon as practicable transfer title to the
Reconstructed Property to the Agent on behalf of the Lessors and execute all
instruments reasonably requested by the Agent to so transfer title to the
Agent (and to subject the Reconstructed Property to this Lease and to the
security interest of the Agent on behalf of the Lessors), including, without
limitation, a Lease Supplement and appropriate UCC financing statements, if
any, with respect thereto. If the insurance proceeds, if any, received by
the Agent for Property to be replaced upon the occurrence of a single Event
of Loss are not greater than US $250,000, the Agent shall pay to such Lessee
said insurance proceeds promptly upon receipt. If the insurance proceeds
received by the Agent for Property to be replaced upon the occurrence of a
single Event of Loss are greater than $250,000, the Agent shall deposit said
proceeds in a separate interest bearing account in the name of the Agent on
behalf of the Lessors (Lessee shall reimburse the Agent for bank charges and
other expenses incurred by the Agent with respect to such account). Upon
receipt of a certificate of an Authorized Officer of Lessee (i) requesting
and authorizing payment to the vendor of an item of Reconstructed Property,
(ii) stating the payment is due under the purchase order or contract for such
item, (iii) attaching a copy of an invoice or other evidence showing that
payment is due under such purchase order or contract and (iv) certifying the
then estimated total cost of the Reconstructed Property and if such estimated
cost is greater than said insurance proceeds, certifying that Lessee has paid
from its own funds to vendors of Reconstructed Property an amount at least
equal to such excess, the Agent shall pay to Lessee from such separate
account (to the extent of funds therein including net earnings thereon) an
amount equal to such requested payment. The balance of such account, if any,
shall be paid to Lessors, PRO RATA in accordance with their respective
Outstanding Investments, by the Agent to reduce the Lease Investment Balance.
(e) For the purposes of this Agreement, all fees and expenses of
any Appraiser retained pursuant to the provisions hereof shall be paid by
Lessee.
(f) In the event that, with respect to any event or series of
related events referred to above in this Section 17, the Lessee shall, in
advance of receipt of insurance proceeds,
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pay (or apply) its own funds in the amounts and otherwise in the same manner
as such insurance proceeds are required to be paid and/or applied as provided
above, then the Agent shall, to the extent it subsequently receives such
insurance proceeds, pay the same to the Lessee.
SECTION 18. SURRENDER OF PROPERTY.
(a) SURRENDER UPON TERMINATION. Subject to the provisions of
Sections 13, 14, 15 and 19 hereof, upon termination of the Lease, the Lessee
shall, at its sole cost and expense, and subject further to the provisions of
this Section 18, quit and surrender possession of the Property to Agent (on
behalf of Lessors) in as good order and condition as when Lessee took
possession and as thereafter improved by Agent (on behalf of Lessors) and/or
Lessee, reasonable wear and tear excepted. Upon such surrender Lessee shall
deliver to the Agent (on behalf of the Lessors) and any and all keys to areas
within and outside of the Property. Lessee shall also deliver to Agent any
and all records and manuals pertaining to the operation, maintenance, repair,
use and occupancy of the Property.
(b) NO VOLUNTARY SURRENDER. No act or thing done by Agent or any
agent or employee of Agent during the Lease Term shall be deemed to
constitute an acceptance by Agent of a surrender of the Property unless such
intent is specifically acknowledged in a writing signed by Agent. The
delivery of keys to the Property to Agent shall not constitute a surrender of
the Property or effect a termination of this Lease, whether or not the keys
are thereafter retained by Agent, and notwithstanding such delivery Lessee
shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary
or other surrender of this Lease by Lessee, whether accepted by Agent or not,
or a mutual termination hereof, shall not work a merger, and at the option of
Agent shall operate as an assignment to Agent of all subleases or
subtenancies affecting the Property.
(c) REMOVAL OF LESSEE PROPERTY BY LESSEE. Upon the expiration or
termination of the Lease, Lessee shall remove or cause to be removed, at its
sole expense, from the Property all debris and rubbish, and such items of
furniture, equipment, free-standing cabinet work, and other articles of
personal property owned by Lessee or installed or placed by Lessee at its
expense in the Property, and such similar articles of any other persons
claiming under Lessee, as Agent may, in its sole discretion, require to be
removed, and Lessee shall repair at its own expense all damage to the
Property resulting from such removal.
(d) REMOVAL OF LESSEE'S PROPERTY BY AGENT. Whenever Agent shall
re-enter the Property as provided in this Lease, any personal property of
Lessee not leased under this Lease and not removed by Lessee upon the
expiration of the Lease Term, or within forty-eight (48) hours after a
termination by reason of Lessee's default as provided in this Lease, shall be
deemed abandoned by Lessee and may be disposed of by Agent in accordance with
Sections 1980 through 1991 of the California Civil Code and Section 1174 of
the California Code of Civil Procedure, or in accordance with any laws or
judicial decisions which may supplement or supplant those provisions from
time to time.
(e) AGENT'S PROPERTY. All fixtures, alterations, additions,
repairs, improvements and/or appurtenances attached to or built into, on, or
about the Real Property prior to or during the Lease Term, whether by Agent
at its expense or whether at the expense of Lessee, or by Lessee at its
expense, or by previous occupants of the Property, shall be and remain part
of the
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Property and shall not be removed by Lessee at the end of the Lease Term
unless otherwise expressly provided for in this Lease. Such fixtures,
alterations, additions, repairs, improvements and/or appurtenances shall
include, without limitation, floor coverings, drapes, paneling, molding,
doors, kitchen and dishwashing fixtures and equipment, plumbing systems,
electrical systems, lighting systems, security systems, communication
systems, computer network cabling and appurtenances, all fixtures and outlets
for the systems mentioned above and for all telephone, television, radio,
telegraph, facsimile, electronic data, satellite transmission and reception,
cellular and microcellular telephony, and television purposes, and any
special flooring or ceiling installations.
(f) AGENT'S ACTIONS ON PROPERTY. Lessee hereby waives all claims
for damages or other liability in connection with Agent's reentering and
taking possession of the Property or removing, retaining, storing or selling
the property of Lessee not leased under this Lease, as herein provided, and
Lessee shall indemnify, defend, protect and hold Agent harmless from any such
claims, damages or other liability, and no such re-entry shall be considered
or construed to be a forcible entry, nor shall Agent be guilty of forcible
entry or forcible detainer.
(g) NO DUTY IF LIABILITIES PAID. Notwithstanding the foregoing,
the provisions of this Section 18 shall not apply if at the time that Lessee
would otherwise be required to surrender the Property each Lessor has
recovered the full amount of its Outstanding Investment and all of the
Liabilities have been paid.
SECTION 19. CERTAIN COVENANTS.
From the date hereof until the later of (I) the Termination Date
and (II) the payment in full of all amounts due or to become due under the
Lease Documents:
(a) REPORTS, CERTIFICATES AND OTHER INFORMATION. Lessee shall
furnish or cause to be furnished to the Agent and each Lessor:
(i) AUDIT REPORT. Within 90 days after each
Fiscal Year, a copy of an annual audit report of Lessee and its
respective Subsidiaries prepared on a consolidated basis and in
conformity with GAAP duly certified by independent certified public
accountants of recognized standing selected by Lessee, together
with a letter from such accountants stating that, based on the
results of their audit report, no Event of Default has occurred
under this Lease as of the date of the audit report.
(ii) INTERIM REPORTS. Within 45 days after each
Fiscal Quarter (except the last Fiscal Quarter in a Fiscal Year), a
copy of the unaudited consolidated financial statements of Lessee
and its respective Subsidiaries prepared in accordance with GAAP
(subject to normal recurring accruals and adjustments) consisting
of at least a balance sheet as at the close of such Fiscal Quarter,
statements of earnings for such Fiscal Quarter and for the period
from the beginning of such Fiscal Year to the close of such Fiscal
Quarter, and a statement of changes in cash flow from the beginning
of such Fiscal Year to the close of such Fiscal Quarter.
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(iii) OFFICER'S CERTIFICATE. Contemporaneously with the
furnishing of a copy of each annual audit report and of each set of
quarterly statements provided for in this Section 19(a), a certificate
in the form of Exhibit E hereto duly completed, dated the date of such
annual report or such quarterly statements and signed by an Authorized
Officer on behalf of Lessee and containing the computations and other
information provided for therein.
(iv) REPORTS TO SEC AND TO SHAREHOLDERS. Within 15 days of the
filing or making thereof, copies of each filing and report made by the
Lessee or its respective Subsidiaries with or to the SEC or any other
securities exchange, and, if Lessee shall have registered under the
Securities Exchange Act of 1934, as amended, as to any of Lessee's
equity securities, copies of each communication from Lessee to
shareholders generally.
(v) NOTICE OF DEFAULT. Forthwith upon learning of the occurrence
of an Event of Default or Unmatured Event of Default, written notice
thereof describing the same and the steps (if any) being taken by
Lessee and its Subsidiaries with respect thereto.
(vi) NOTICE OF CERTAIN LITIGATION. Written notice of the
institution of any Litigation or the occurrence of any development
with respect to any Litigation, together with a description thereof
and the steps being taken by Lessee and its Subsidiaries with respect
thereto, all to such extent and at such time as Lessee would be
required to make such disclosure if Lessee were a public reporting
company under the Securities Exchange Act of 1934, as amended (it
being understood that to the extent such disclosures are contained in
the reports filed by Lessee with the SEC, then the disclosure
hereunder required to be made by Lessee to the Lessor may be made by
furnishing to the Lessor a copy of such reports as filed with the
SEC).
(vii) ENVIRONMENTAL. Promptly upon becoming aware of any of the
following conditions or occurrences, Lessee shall provide Agent with
written notice thereof, including the details surrounding the
occurrence or condition and any action taken or proposed to be taken
by the Lessee in connection therewith: (a) any actual, pending or
threatened Environmental Claim against Lessee or its Subsidiaries and
(b) any Environmental Condition at the property where the Property is
located.
(viii) OTHER INFORMATION. From time to time such other
information concerning Lessee and its Subsidiaries as the Agent or any
Lessor may reasonably request.
(b) MERGERS, CONSOLIDATIONS, SALES. Lessee will not permit any
consolidation of Lessee with or merger of Lessee into any other corporation or
corporations or successive consolidations in which Lessee or its successor or
successors shall be a party or parties or any sale or conveyance of the property
of Lessee as an entirety or substantially as an entirety, to any other Person
authorized to acquire and operate the same (any such consolidation, merger, sale
or conveyance is referred to herein as a "CORPORATE TRANSACTION") unless each of
the following conditions is met:
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(i) upon the occurrence of any such Corporate Transaction all the
obligations of Lessee under this Agreement shall be expressly assumed
in writing by the corporation formed by such consolidation, or into
which Lessee shall have been merged, or by the corporation which shall
have acquired such property (in each such case, the "SURVIVING
ENTITY"), such assumption to be accompanied by an opinion of counsel
for the surviving entity to the effect that such assumption has been
duly authorized, executed and delivered by, and is the legal, valid
and binding obligation of, the surviving entity;
(ii) immediately after giving effect to such Corporate
Transaction and to the retirement of any Debt to be retired
substantially concurrently therewith, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing, and Lessee
shall deliver a certificate signed by an Authorized Officer of Lessee
to such effect;
(iii) the surviving entity shall be domiciled in the United
States; and
(iv) Lessee shall have given at least 30 days' prior written
notice of such Corporate Transaction to the Agent.
Upon consummation of the Corporate Transaction with respect to Lessee and the
assumption of Lessee's obligations under this Agreement and the other Lease
Documents by the surviving entity, such surviving entity shall succeed to and be
substituted for Lessee, with the same effect as if it were an original party to
this Agreement and the other Lease Documents and, in the event of any such sale
or conveyance, Lessee shall be released from its obligations under this
Agreement and the other Lease Documents. Except for the merger of any
Subsidiary into Lessee or another Subsidiary, Lessee shall not permit any
Subsidiary to be a party to any Corporate Transaction if before or after giving
effect thereto an Event of Default or Unmatured Event of Default shall exist.
(c) COMPLIANCE WITH APPLICABLE LAWS. The Lessee will not, and will
not permit any of its Subsidiaries to, knowingly violate in any material respect
any of the requirements of Applicable Laws.
(d) ERISA. (i) The Lessee will give notice to Agent promptly after
it learns (other than by notice from all of such holders) that (A) any
Reportable Event has occurred;(B) any "accumulated funding deficiency" (within
the meaning of Section 412(a) of the Code) has been incurred with respect to any
Plan or that an application may be or has been made to the Secretary of the
Treasury of a waiver or modification of the minimum funding standard (including
any required installment payments) or an extension of any amortization period
under Section 412 of the Code, in each case with respect to any Plan;(C) any
Single Employer Plan or Multiemployer Plan has been terminated, reorganized,
petitioned or declared insolvent under Title IV of ERISA;(D) any Single Employer
Plan has a under current liability giving rise to a Lien under ERISA or the
Code;(E) any proceeding has been instituted pursuant to Section 515 of ERISA to
collect a delinquent contribution to any Plan;(F) the Lessee or any of its ERISA
Affiliates will or may incur any liability (including any contingent or
secondary liability) to or on account of the termination or withdrawal from any
Single Employer Plan under Section 4062, 4063, 4064 or 4975 of the Code or
Section 409 or 502(i) or ERISA;(G) any "prohibited transaction" (as such term is
defined in Section 406 of ERISA and Section 4975 of the Code) has
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occurred inconnection with any Plan;(H) Lessee or any ERISA Affiliate has
received any notice from the PBGC relating to the intention of the PBGC to
terminate one or more Single Employer Plans or to appoint a trustee to
administer any Single Employer Plan;(I) Lessee or any ERISA Affiliate has
received from the sponsor of a Multiemployer Plan of any notice concerning
(1) the imposition on the Lessee or an ERISA Affiliate of withdrawal
liability or (2) a determination that a Multiemployer Plan is, or is expected
to be, terminated or in reorganization, in each case within the meaning of
Title IV of ERISA;(J) Lessee or any ERISA Affiliate has received any notice
from the PBGC or the Internal Revenue Service which sets forth or proposes
any material adverse determination or action with respect to a Plan; or (K)
assessment of any excise taxes has been levied against the Lessee or any
ERISA Affiliate by the Internal Revenue Service with respect to a Plan.
(ii) The Lessee shall, and shall cause each ERISA Affiliate to,
comply in all material respects with ERISA. If any event occurs pursuant to
which the Lessee is required to give notice pursuant to Section 19(d)(i), the
Lessee shall furnish to Agent a written notice specifying what action the Lessee
or any of its ERISA Affiliates, the Internal Revenue Service, the Pension
Benefit Guaranty Corporation, or any other relevant party is taking or proposes
to take with respect thereto.
(e) CORPORATE EXISTENCE AND FRANCHISES. The Lessee will, and will
cause each Subsidiary to, except as otherwise expressly permitted in Section
19(b) hereof, maintain in full force and effect its separate existence and all
material rights, licenses, leases and franchises used in the conduct of its
business.
(f) PAYMENT OF TAXES. The Lessee will promptly pay, and cause each
Subsidiary to pay, when due all taxes, assessments or other charges owing by
Lessee and each Subsidiary except taxes, assessments and other charges which
shall be subject to a Permitted Contest.
(g) OTHER AGREEMENTS. The Lessee will not (a) enter into any
agreement containing any provision which would be violated or breached by the
performance of its obligations under any Lease Document or under any instrument
or document delivered or to be delivered by it under any Lease Document or in
connection therewith, or (b) permit any Subsidiary to enter into any agreement
which prohibits in any material respect such Subsidiary from declaring or paying
dividends or making advances to Lessee.
(h) REGULATIONS G, T, U AND X. The Lessee will not use or permit any
proceeds of the sale pursuant to this Agreement of the Property to the Lessors
to be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying "margin stock" within the
meaning of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
(i) MAINTENANCE OF TANGIBLE PROPERTY. Lessee will maintain, and
cause each of its Subsidiaries to maintain, in all material respects all of the
real property, inventory and equipment owned, leased or used by such entity in
good condition and repair, and prevent any waste or unusual or unreasonable
depreciation thereof.
(j) MAINTENANCE OF INTANGIBLE PROPERTY. Lessee will protect,
preserve and maintain, and cause each of its Subsidiaries to protect, preserve
and maintain, in all material
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respects all of its trademarks and trade names infull force and effect, by,
without limitation, defending against and/or prosecuting at its own expense any
and all suits claiming infringement or dilution of any thereof or injury to the
goodwill associated with any thereof and by filing any applications and doing
any and all other things which may from time to time be necessary or advisable
for the renewal or registration of each thereof.
(k) SALE OF STOCK OF SUBSIDIARIES. Lessee shall not sell, assign,
pledge or otherwise dispose of any shares of stock or other equity interests in
(or warrants, rights or options to acquire stock of or equity interests in) any
Subsidiary, PROVIDED that all of the equity securities and Debt of a Subsidiary
may be sold as an entirety if all the assets of such Subsidiary could be sold
pursuant to Section 19(l) and Lessee shall not permit any Subsidiary to issue or
sell any shares of its stock or other equity interests in itself (or warrants,
rights or options to acquire, or securities convertible into, such stock or
other equity interests) to any Person other than Lessee or another of its
Subsidiaries.
(l) TRANSFER OF ASSETS. Except as otherwise provided in this
Agreement, neither Lessee nor any Subsidiary shall sell, transfer, pledge,
assign or otherwise dispose of any assets of Lessee or any Subsidiary unless
such sale or disposition shall be in the ordinary course of Lessee's or such
Subsidiary's business; provided, however, that no such sale transfer, pledge,
assignment or disposition shall include any of the Property.
(m) DISCONTINUANCE OR CHANGE OF BUSINESS. Except as otherwise
provided in this Agreement, neither Lessee nor any Subsidiary shall discontinue
any substantial part of their existing businesses taken as a whole or change the
nature of their existing businesses or otherwise change the legal form of their
businesses.
(n) ACCOUNTING CHANGE. Lessee shall not make or permit any change in
financial accounting policies or financial reporting practices, except as
required by GAAP or regulations of the Securities and Exchange Commission.
(o) FINANCIAL RATIOS. Lessee shall not permit on a consolidated
basis, at the end of any fiscal quarter:
(1) Lessee's Quick Ratio to be less than 1.5;
(2) Lessee's Tangible Net Worth to be less than $220,000,000.
The calculation required by the preceding sentence shall be
determined in accordance with GAAP without deduction for any
losses;
(3) Lessee's Debt divided by Tangible Net Worth to exceed 0.50;
(4) Lessee to permit working capital to be in an aggregate
amount less than $50,000,000.
(p) FINANCIAL COVENANTS IN FINANCINGS. Lessee shall not agree with
any holder of any of Lessee's Debt (whether such Debt exists now or in the
future) (i) that entering into this Lease or any of Lessee's, Agent's or any
Lessor's actions taken hereunder or pursuant hereto, or in respect of any
Liabilities, shall constitute a default, event of default (without reference to
any cross-default condition under such Debt), material adverse change or
occurrences of similar
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meaning or result, under the terms of such Debt, nor (ii)to maintain financial
ratios or undertake any obligation imposing stricter limitations upon the
business operations or financial obligations of Lessee than contained in this
Lease.
(q) ENVIRONMENTAL COMPLIANCE. Lessee shall:
(i) not use, handle, store, transport, generate, release, or
dispose of any Hazardous Materials on, under, or about the Property, except that
Lessee may use (i) small quantities of common chemicals such as adhesives,
lubricants, and cleaning fluids in order to conduct business at the Leased
Premises, (ii) other Hazardous Materials that are necessary for the operation of
Lessee's business and (iii) the Hazardous Materials set forth on Exhibit R.
Lessee shall on the first day of each calendar quarter disclose in writing to
Agent all Hazardous Materials that are being used by Lessee on the Property, the
nature of the use, and the manner of storage and disposal. At any time during
the term of this Lease, Lessee shall, within ten (10) days after written request
from Lessor, disclose in writing all Hazardous Materials that are being used by
Lessee on the Property, the nature of the use, and the manner of storage and
disposal;
(ii) Cause any and all handling, transportation, storage,
treatment, disposal, or use of Hazardous Materials by Lessee in or about the
Property to strictly comply with all applicable Environmental Laws;
(iii)If the presence of Hazardous Materials on the Property
caused or permitted by Lessee results in the contamination or deterioration of
the Property or any water or soil beneath the Property, promptly take all action
necessary to investigate and remedy that contamination; at any time and upon
prior written notice to Lessee, Agent may require testing wells to be drilled on
the Property and may require the ground water to be tested to detect the
presence of Hazardous Materials by the use of any tests that are then
customarily used for those purposes; Lessor shall supply Lessee with copies of
the test results; the cost of these tests and of the installation, maintenance,
repair, and replacement of the wells shall be paid by Lessee if the tests
disclose the existence of facts that may give rise to liability of Lessee
pursuant to this Section 19;
(iv) Promptly notify Lessor of any communication received from
any Governmental Authority concerning Hazardous Materials or the violation of
Environmental Laws that relate to the Property; without limiting the generality
of the foregoing, Lessee shall comply with its disclosure obligations to Lessor
under California Health and Safety Code Section 25359.7(b);
(v) Take all actions as are appropriate to ensure that its and
its Subsidiaries' property, equipment, facility, and operations are and remain
in compliance in all material respects with applicable Environmental Laws and
Environmental Permits, including but not limited to, employing engineering
practices and technology to maintain such compliance;
(vi) Take all actions as are appropriate to ensure that there are
no Releases of Hazardous Materials at, on, in, under, about, to, or from its and
its Subsidiaries' property, facility, or the Property;
(vii) Promptly respond in accordance with applicable
Environmental Laws to any Release or threatened Release of any Hazardous
Material at, on, in, under, about, to, or from its and its Subsidiaries'
property, facility, or the Property;
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(viii) In connection with the off-site treatment, storage,
handling, transportation, or disposal of Hazardous Materials or materials
containing Hazardous Materials: (i) conduct such activities only at facilities
and with carriers maintaining valid Environmental Permits and otherwise
operating in accordance with Environmental Law, and (ii) obtain certificates of
destruction or disposal from all off-site disposal facilities to which Hazardous
Materials are sent for treatment, storage, handling or disposal; and
(ix) If the Improvements were initially completed prior to 1979,
disclose in writing to all employees working in the Improvements the presence of
asbestos or asbestos-containing materials, if the presence of such materials is
known to Lessee.
(r) COLLATERALIZATION. As used in this Agreement, the term
"COLLATERALIZATION" means the pledge of Government Securities in accordance
with the terms of this Section 19(r). Lessee shall pledge, and shall cause to
be pledged at all times during the Lease Term (for the benefit of the Agent
on behalf of the Lessors), debt securities issued by the U.S. government with
a maturity of three years or less (the "GOVERNMENT SECURITIES") in an amount
equal to 102% of the Guaranteed Residual Value, to Agent as security for
Lessee's obligations under this Lease in accordance with the terms of this
Lease, the Security Agreement and the Custodian Agreement. The Government
Securities shall be held by a third-party agent (the "Custodian") acceptable
to Agent and Lessee. The Custodian shall review the value of the Government
Securities daily, and shall report the aggregate value thereof to Agent daily
by facsimile notice. In the event that the aggregate value (as determined by
Custodian pursuant to the Security Agreement) of the Government Securities
decreases below 102% of the Guaranteed Residual Value, then Lessee shall,
within two Business Days after notice by Custodian or Agent, deposit
sufficient Government Securities with Custodian to cause the aggregate value
(as determined by Custodian pursuant to the Security Agreement) of the
Government Securities to equal 102% of the Guaranteed Residual Value. In the
event that the aggregate value (as determined by Custodian pursuant to the
Security Agreement) of the Government Securities increases above 102% of the
Guaranteed Residual Value, Agent or Custodian shall notify Lessee of such
event, and upon Lessee's written request, Agent shall, within two Business
Days thereafter, instruct the Custodian to release sufficient accrued
interest (first) and Government Securities (next) to Lessee to cause the
aggregate value (as determined by Agent in its sole and absolute discretion)
of the Government Securities to equal 102% of the Guaranteed Residual Value.
SECTION 20. EVENTS OF DEFAULT
Any of the following shall constitute an "Event of Default" (whether
any such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any Governmental
Authority):
(a)(i) Default, and continuance thereof, for five Business Days in the
payment when due of any amount of Base Rent or Additional Base Rent or (ii)
default, and continuance thereof, for ten Business Days after notice thereof to
Lessee by the Agent, in the payment when due of any Additional Rent; or
(b) Failure to comply with any covenant contained in Section 19(d) or
19(o); or
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(c) Failure in the performance of any other obligation or covenant of
Lessee pursuant to any Lease Document (excluding any obligation or covenant of
Lessee contained in or referred to in Sections 20(l), 20(n) and 20(o) of this
Lease) and the continuance of such default (i) for 30 days after written notice
to the Lessee by the Agent if such failure can be cured with diligence within
such 30-day period or can be cured by the payment of money or (ii) for 60 days
after written notice to the Lessee by the Agent if such failure cannot be cured
within such 30-day period and cannot be cured by the payment of money; or
(d) Any representation or warranty made (or deemed made) by Lessee
herein or in any other Lease Document or any document contemplated thereby
proves to be false or inaccurate in any material respect as of the date when
made (or deemed made); or
(e) Default in the payment when due (subject to any applicable grace
period), whether by acceleration or otherwise, of any Indebtedness for Borrowed
Money of Lessee or any Subsidiary or default in the performance or observance of
any obligation or condition (subject to any applicable grace period) with
respect to any such Indebtedness for Borrowed Money if (i) the effect of such
default is to accelerate, or permit the acceleration of, the maturity of any
such Indebtedness for Borrowed Money or cause any such Indebtedness for Borrowed
Money to be prepaid, purchased or redeemed or (ii) the holder or holders
thereof, or any trustee or agent for such holders, (x) causes, or have the right
to cause, such Indebtedness for Borrowed Money to become due and payable prior
to its expressed maturity or to be prepaid, purchased or redeemed or (y)
receives any payment (other than any payment which was scheduled to be made
prior to the occurrence of such default), guarantee or security or other
concession from or on behalf of any Lessee or any Subsidiary; PROVIDED, HOWEVER,
that no such default under this clause (e) shall constitute an Event of Default
unless the amount of Indebtedness for Borrowed Money so affected is at least
$5,000,000; or
(f) The occurrence of any of the following events: (i) Lessee or any
Subsidiary becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or (ii) Lessee or any
Subsidiary applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for Lessee or such Subsidiary or any
property thereof, or makes a general assignment for the benefit of creditors; or
(iii) in the absence of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for Lessee or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 60
days; or (iv) any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution, not under any
bankruptcy or insolvency law, of a Subsidiary) is commenced in respect of Lessee
or any Subsidiary, and if such case or proceeding is not commenced by Lessee or
such Subsidiary, it is consented to or acquiesced in by Lessee or such
Subsidiary or remains for 60 days undismissed; or (v) Lessee or any Subsidiary
takes any corporate action to authorize, or in furtherance of, any of the
foregoing; or
(g) Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $1,000,000 in the
aggregate shall be rendered against Lessee or any of its Subsidiaries and the
same shall not be (i) fully covered by insurance or (ii) vacated, stayed,
bonded, paid or discharged for a period of 30 days; or
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(h) Any Lease Document or the security interest granted pursuant to
this Lease shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective (or, in the case of such security interest,
shall, for any reason except solely as a result of the failure by the Agent (as
a result of circumstances entirely within the Agent's control) to file a
continuation statement, cease to constitute a first and prior perfected Lien on
the Collateral) or cease to be the legally valid, binding and enforceable
obligation of Lessee, or Lessee or any Affiliate of Lessee shall, directly or
indirectly, contest in any manner in any court the effectiveness, validity,
binding nature or enforceability (or the first and prior perfected status)
thereof; or
(i) the Lessee or any ERISA Affiliate fails to make any contributions
required to be made to a Single Employer Plan or Multiemployer Plan, any
accumulated funding deficiency (within the meaning of Section 4971 of the Code)
occurs or exists with respect to any Single Employer Plan (whether or not
waived), the present value of all benefits under all Single Employer Plans
(based on those assumptions used to fund such Single Employer Plans) exceeds, in
the aggregate, as of the last annual valuation date applicable thereto, the
actuarial value of the assets of such Single Employer Plans allocable to such
benefits by more than $1,000,000, or a Termination Event occurs; or
(j) (A) the Lessee or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to
such Multiemployer Plan, (B) the Lessee or such ERISA Affiliate does not have
reasonable grounds for contesting such withdrawal liability or is not in fact
contesting such withdrawal liability in a timely and appropriate manner and (C)
the amount of the withdrawal liability specified in such notice, when aggregated
with all other amounts required to be paid to Multiemployer Plans in connection
with withdrawal liabilities (determined as of the date or dates of such
notification), exceeds $1,000,000 or requires payments exceeding $1,000,000 in
any year;
(k) the Lessee or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if solely as a result of such reorganization or termination, the aggregate
annual contributions of the Lessee and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or have been or are being terminated have
been or will be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an amount
exceeding $250,000;
(l) failure of the Lessee to maintain any insurance required to be
maintained under this Lease;
(m) failure of Lessee to pay the cost of repair or replacement of any
of the Property following any damage thereto pursuant to this Lease;
(n) any breach of the Security Agreement that is not cured within any
applicable grace period; or
(o) failure of Lessee to maintain Collateralization when required to
be maintained under this Lease.
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IN CONNECTION WITH THE DECLARATION OF ANY EVENT OF DEFAULT UNDER THIS
LEASE, LESSEE HEREBY WAIVES ANY REQUIREMENT THAT A NOTICE FROM LESSOR NOT BECOME
EFFECTIVE UNTIL A PERIOD OF DAYS HAVE ELAPSED, AND LESSEE SPECIFICALLY WAIVES
ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1946.
SECTION 21. RIGHTS UPON DEFAULT.
Upon the occurrence and continuation of any Event of Default, the
Agent may in its discretion, and upon the direction of the Lessors shall, by
written notice to the Lessee, declare this Lease to be in default, and (except
in the case of an Event of Default under Section 20(f), in which case the
remedies in paragraphs (a), (e) and (f) below shall become available and
effective immediately and automatically, without notice, presentment, demand,
protest or other action of any kind all of which are hereby expressly waived by
Lessee) do any one or more of the following as the Agent in its sole discretion
shall determine, without limiting any other right or remedy the Agent may have
on account of such Event of Default:
(a) The Agent may, by notice to the Lessee, rescind or terminate
this Lease as of the date specified in such notice, at which time the Lease
Investment Balance (together with all accrued and unpaid Base Rent,
Additional Base Rent and Additional Rent and all other amounts to which
Agent (on behalf of the Lessors) is entitled at law, in equity or
otherwise) shall be immediately accelerated, due and payable; however, (i)
no reletting, reentry or taking of possession of the Property (or any
portion thereof) by the Agent will be construed as an election on the
Agent's part to terminate this Lease unless a written notice of such
intention is given to the Lessee, (ii) notwithstanding any reletting,
reentry or taking of possession, the Agent may at any time thereafter elect
to terminate this Lease for a continuing Event of Default and (iii) no act
or thing done by the Agent or any of its agents, representatives or
employees and no agreement accepting a surrender of the Property shall be
valid unless the same be made in writing and executed by the Agent.
(b) The Agent may (i) demand that the Lessee, and the Lessee
shall upon the written demand of the Agent, return possession of the
Property promptly to the Agent in the manner and condition required by, and
otherwise in accordance with all of the provisions of, Section 10 and
Section 18 hereof as if the Property were being returned at the end of the
Lease Term, and the Agent shall not be liable for the reimbursement of the
Lessee for any costs and expenses incurred by the Lessee in connection
therewith and (ii) without prejudice to any other remedy which the Agent
may have for possession of the Property, and to the extent and in the
manner permitted by Applicable Law, enter upon the Property and take
immediate possession of (to the exclusion of the Lessee) the Property or
any part thereof and expel or remove the Lessee and any other Person who
may be occupying the Property, by summary proceedings or otherwise, all
without liability to the Lessee for or by reason of such entry or taking of
possession, whether for the restoration of damage to property caused by
such taking or otherwise and, in addition to the Agent's other damages, the
Lessee shall be responsible for all costs and expenses incurred by the
Agent in connection with any reletting, including, without limitation,
reasonable brokers' fees and all costs of any alterations or repairs made
by the Agent.
(c) The Agent may
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(i) sell all or any part of the Property at public sale
free and clear of any rights of the Lessee and without any duty to account
to the Lessee with respect to such action or inaction with respect thereto
(except to the extent required by clause (ii) below if the Agent shall
elect to exercise its rights thereunder) in which event the Lessee's
obligation to pay Base Rent and Additional Base Rent hereunder for periods
commencing after the date of such sale shall be terminated or
proportionately reduced, as the case may be; and
(ii) if the Agent shall so elect, demand that the Lessee pay
to the Agent, and the Lessee shall pay to the Agent, on the date of such
sale, as liquidated damages for loss of a bargain and not as a penalty (THE
PARTIES AGREEING THAT THE AGENT'S ACTUAL DAMAGES WOULD BE DIFFICULT TO
PREDICT, BUT THE AFOREMENTIONED LIQUIDATED DAMAGES REPRESENT A REASONABLE
APPROXIMATION OF SUCH AMOUNT) (in lieu of Base Rent or Additional Base Rent
due for periods commencing on or after the Rent Payment Date coinciding
with such date of sale (or, if the sale date is not a Rent Payment Date,
the Rent Payment Date next preceding the date of such sale)), an amount
equal to (A) the excess, if any, of (1) the Lease Investment Balance
calculated as of such Rent Payment Date (together with all Base Rent and
Additional Rent due and unpaid to and including such Rent Payment Date),
over (2) the net proceeds of such sale (that is, after deducting all costs
and expenses incurred by the Agent incident to such conveyance, including,
without limitation, repossession costs, brokerage commissions, prorations,
transfer taxes, fees and expenses for counsel, title insurance fees, survey
costs, recording fees, and any repair costs); plus (B) interest at the
Overdue Rate on the foregoing amount from such Rent Payment Date until the
date of payment.
(d) The Agent may, at its option, elect not to terminate this
Lease and continue to collect all Base Rent, Additional Base Rent, and all
other amounts due the Agent and the Lessors (together with all costs of
collection) and enforce the Lessee's obligations under this Lease as and
when the same become due, or are to be performed, and at the option of the
Agent, upon any abandonment of the Property by the Lessee or re-entry of
same by the Agent, the Agent may, in its sole and absolute discretion,
elect not to terminate this Lease and may make the necessary repairs in
order to relet the Property, and relet the Property or any part thereof for
such term or terms (which may be for a long term extending beyond the Lease
Term) and at such rental or rentals and upon such other terms and
conditions as the Agent in its reasonable discretion may deem advisable;
and upon each such reletting all rentals actually received by the Agent
from such reletting shall be applied to the Lessee's obligations hereunder
and the other Lease Documents in such order, proportion and priority as the
Agent may elect in the Agent's sole and absolute discretion. If such
rentals received from such reletting during any period are less than the
Base Rent and Additional Base Rent with respect to such Property to be paid
during that period by the Lessee hereunder, the Lessee shall pay any
deficiency, as calculated by the Agent, to the Agent on the next Rent
Payment Date.
(e) Unless the Property has been sold, the Agent may, whether or
not the Agent shall have exercised or shall thereafter at any time exercise
any of its rights under paragraph (b), (c) or (d) of this Section 21 with
respect to the Property or portions thereof, demand, by written notice to
the Lessee specifying a date (a "TERMINATION DATE") not earlier than 10
Business Days after the date of such notice, that the Lessee purchase,
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on such Termination Date, the Property (or the remaining portion thereof)
in accordance with the provisions of Section 14(d); provided, however, that
no such written notice shall be required upon the occurrence of any Event
of Default in clause (f) of Section 20.
(f) Separate suits may be brought to collect any such damages
for any period(s), and such suits shall not in any manner prejudice the
Agent's right to collect any such damages for any subsequent period(s), or
the Agent may defer any such suit until after the expiration of the Lease
Term, in which event such suit shall be deemed not to have accrued until
the expiration of the Lease Term. In connection with the foregoing, the
Agent (on behalf of the Lessors) is hereby granted the remedy specified in
California Civil Code Section 1951.4 (Agent, on behalf of Lessors, may
continue Lease in effect after Lessee's breach and abandonment and recover
rent as it becomes due, if Lessee has the right to sublet or assign,
subject only to reasonable limitations).
(g) The Agent may retain and apply against the Agent's damages
all sums which the Agent would, absent such Event of Default, be required
to pay to, or turn over to, the Lessee pursuant to the terms of this Lease.
(h) The Agent, as a matter of right and without notice to the
Lessee, and without regard to the value of the Property or the solvency of
the Lessee, shall have the right to apply to any court having jurisdiction
to appoint a receiver or receivers of the Property, and the Lessee hereby
irrevocably consents to any such appointment. Any such receiver(s) shall
have all of the usual powers and duties of receivers in like or similar
cases and all of the powers and duties of the Agent in case of entry, and
shall continue as such and exercise such powers until the date of
confirmation of the sale of the Property unless such receivership is sooner
terminated.
To the maximum extent permitted by law, the Lessee hereby waives the
benefit of any appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of marshalling in the
event of any sale of the Property or any interest therein.
The Agent shall be entitled to enforce payment of the indebtedness and
performance of the obligations secured hereby and to exercise all rights and
powers under this instrument or under any of the other Lease Documents or other
agreement or any laws now or hereafter in force, notwithstanding some or all of
the obligations secured hereby may now or hereafter be otherwise secured,
whether by mortgage, deed of trust, security agreement, pledge, lien, assignment
or otherwise. Neither the acceptance of this instrument nor its enforcement,
shall prejudice or in any manner affect the Agent's right to realize upon or
enforce any other security now or hereafter held by the Agent, it being agreed
that the Agent shall be entitled to enforce this instrument and any other
security now or hereafter held by the Agent in such order and manner as the
Agent may determine in its absolute discretion. No remedy herein conferred upon
or reserved to the Agent is intended to be exclusive of any other remedy herein
or by law provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the Lease
Documents to the Agent or to which it may otherwise be entitled, may be
exercised, concurrently or independently, from time to time and as often as may
be deemed expedient by the Agent and the exercise in whole or in part by the
Agent or any Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by the Agent or any
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Lessor of any or all suchother remedies. In no event shall the Agent, in the
exercise of the remedies provided in this instrument (including, without
limitation, in connection with the assignment of rents to Agent, or the
appointment of a receiver and the entry of such receiver on to all or any part
of the Property), be deemed a "mortgagee in possession," and the Agent shall not
in any way be made liable for any act, either of commission or omission, in
connection with the exercise of such remedies.
An action of mortgage foreclosure or trustee's sale as now provided or
hereafter prescribed by law, may forthwith be commenced and prosecuted to
judgment, execution and sale, for the collection of the whole amount of the
Lease Investment Balance, together with all fees, costs and expenses of such
proceedings, including a reasonable attorney's fees. And all errors in such
proceedings, together with any stays of or exemptions from execution, or
extensions of time of payment, which may be given by any Applicable Law now in
force, or which may be enacted hereafter, are hereby forever waived and
released.
If, pursuant to the exercise by the Lessor of its remedies pursuant to
this Section 21, the Lease Investment Balance and all other amounts due and
owing from the Lessee under this Lease and the other Lease Documents have been
paid in full, then the Agent shall (a) remit to the Lessee any excess amounts
received by the Agent; and (b) convey the Property by quitclaim deed to Lessee
on an "as-is, where is" basis, without any representation or warranty of any
kind, express or implied, whatever title to the Property it may have (except
that the Agent shall warrant the Agent Representations).
WAIVER OF CERTAIN RIGHTS. IF THIS LEASE SHALL BE TERMINATED PURSUANT TO
THIS SECTION 21, THE LESSEE WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, (A)
ANY NOTICE OF RE-ENTRY OR THE INSTITUTION OF LEGAL PROCEEDINGS TO OBTAIN
RE-ENTRY OR POSSESSION; (B) ANY RIGHT OF REDEMPTION, RE-ENTRY OR REPOSSESSION;
(C) THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM
LIABILITY FOR RENT OR FOR DEBT OR LIMITING THE AGENT WITH RESPECT TO THE
ELECTION OF REMEDIES; AND (D) ANY OTHER RIGHTS WHICH MIGHT OTHERWISE LIMIT OR
MODIFY ANY OF THE AGENT'S RIGHTS OR REMEDIES UNDER THIS SECTION 21.
IN CONNECTION WITH THE EXERCISE OF ANY REMEDY OF AGENT UNDER THIS LEASE,
LESSEE HEREBY WAIVES ANY REQUIREMENT THAT A NOTICE FROM AGENT NOT BECOME
EFFECTIVE UNTIL A PERIOD OF DAYS HAVE ELAPSED, AND LESSEE SPECIFICALLY WAIVES
ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1946.
No waiver of any Event of Default or Unmatured Event of Default hereunder
shall in any way be, or be construed to be, a waiver of any future or subsequent
Event of Default or Unmatured Event of Default.
If Agent shall become entitled to exercise a remedy under this Section 21
due solely to a breach of Lessee's obligations under Sections 19(o) or 19(p),
then Agent (on behalf of the Lessors) shall not be entitled to recover a
monetary amount from Lessee in excess of the Guaranteed Residual Value (as
determined at the time of recovery), plus all then accrued and unpaid Base Rent
and Additional Base Rent and other amounts then due under the Lease Documents
(excluding the Lease Investment Balance); except that nothing in this paragraph
shall
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limit the exercise of the remedies of nonjudicial and judicial foreclosure
of the Deed of Trust and the right of Agent (on behalf of the Lessors) to
recover a deficiency judgment from Lessee, although the monetary amount of such
deficiency judgment shall not exceed the Guaranteed Residual Value (as
determined at the time of recovery) plus all then accrued and unpaid Base Rent
and Additional Base Rent and other amounts then due under the Lease Documents
(excluding the Lease Investment Balance).
WITHOUT LIMITING THE GENERALITY AND AVAILABILITY OF ALL OF THE RIGHTS AND
REMEDIES AVAILABLE TO AGENT (ON BEHALF OF LESSORS) UNDER THIS AGREEMENT, IN THE
EVENT OF ANY INCONSISTENCY BETWEEN THE RIGHTS AND REMEDIES UNDER THIS AGREEMENT
AND THE DEED OF TRUST, THE DEED OF TRUST SHALL CONTROL.
SECTION 22. LEASE ASSIGNMENT AND SUBLETTING.
(a) Lessee may sublease all or any portion of the Property, or assign its
rights in this Lease, without Agent's or Lessor's approval; PROVIDED, that
nothing herein shall be construed to release or reduce Lessee's obligations
under this Lease, nor shall Lessee ever be deemed to be a guarantor of the
obligations of any sublessee or assignee, but instead shall remain primarily
liable for the obligations under this Lease. Lessee shall notify Agent in
writing of the date of such sublease or assignment, and the name, business
address and telephone number(s) of every sublessee or assignee within ten
Business Days after the date of such sublease or assignment.
(b) Without limiting Lessor's or Lessee's rights under Section 22(a)
hereof, Lessee hereby grants to Agent (on behalf of Lessors) a security interest
in and to all revenues, contract rights, claims, choses in action, and all other
rights of Lessee arising out of any sublease or assignment of Lessee's rights in
this Lease, as collateral for Lessee's obligations under this Lease. Lessee
shall, within ten Business Days after request by Agent, execute, acknowledge and
deliver to Agent (on behalf of the Lessors) such financing statements, deeds of
trust, mortgages and other security documents as Agent may deem necessary to
further perfect the grant of such security interest.
(c) During the continuation of any Event of Default, in addition to all of
Lessor's other rights and remedies under this Lease, at law, in equity or
otherwise, Agent (on behalf of the Lessors) may deal directly with any sublessee
or assignee of Lessee under this Lease as though such sublessee or assignee were
the Lessee under this Lease, and Agent (on behalf of the Lessors) may accept
rents and any other sums due pursuant to such sublease or assignment, and may
retain the same and apply the same to any obligations (accrued or thereafter
accruing) of Lessee under this Lease.
SECTION 23. SALE OF RENTS, ASSIGNMENTS, PERMITTED LESSOR LIENS.
(a) SALE OF RENTS. Subject to the provisions of this Section 23, any
Lessor may at any time without Lessee's consent or approval, but with prior
notice to Lessee, in accordance with applicable law, sell to one or more
Affiliates and/or major financial institutions (collectively, "RENT PURCHASERS")
rights in the interest of such Lessor to receive rents from the Property and/or
this Lease, pursuant to a Rent Purchase Agreement. In the event of any such
sale to a Rent Purchaser, upon request by Lessee the selling Lessor shall give
written notice to Lessee stating the Rent Purchaser's name and address and the
amount of the interest purchased, but Lessee and
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the Agent shall continue to deal solely and directly with such Lessor in
connection with such Lessor's rights and obligations under this Agreement. No
sale of rents contemplated in this Section 23 shall relieve any Lessor either
from its Commitment hereunder or from any of its other obligations hereunder and
such Lessor shall remain solely responsible for the performance thereof. Any
Rent Purchaser shall have the same rights under Sections 7(b), 7(c), 8, 12, 13
hereof as any Lessor.
(b) ASSIGNMENTS; LIENS. Subject to the provisions of this Section
23(b), any Lessor may, without Lessee's approval, execute an assignment and
acceptance substantially in the form of Exhibit D, with appropriate insertions
(herein individually called an "ASSIGNMENT" and collectively called the
"ASSIGNMENTS"), whereby such Lessor shall assign to one or more Persons (herein
individually called an "ASSIGNEE" and collectively called the "ASSIGNEES") all
or any part of such Lessor's rights and benefits, and delegate all or any part
of such Lessor's obligations, under this Agreement. No Lessor may make an
Assignment before the Closing Date.
Upon execution, delivery and acceptance of each Assignment, from and
after the effective date specified therein, which effective date shall be at
least five (5) Business Days after the execution thereof, Lessee, the Agent and
the Lessors agree that, to the extent of any such Assignment,
(x) the Assignee thereunder shall, in addition to any rights,
benefits and obligations hereunder held by it immediately prior to such
effective date, have the rights, benefits and obligations of a Lessor under
this Agreement as it would have if it were a Lessor hereunder to the extent
that the same have been assigned and delegated to it pursuant to such
Assignment, and
(y) the assignor Lessor shall, to the extent that rights, benefits
and obligations hereunder have been assigned and delegated by it pursuant
to such Assignment, relinquish its rights and benefits and be released from
its obligations under this Agreement (and, in the case of an Assignment
covering all or the remaining portion of an assignor Lessor's rights,
benefits and obligations under this Agreement, such Lessor shall cease to
be a party hereto or a Lessor hereunder), except that in all cases the
assignor Lessor shall remain entitled to the rights and benefits arising
under Sections 8, 12 and 13 hereof with respect to any period of time prior
to the effective date of any such Assignment;
PROVIDED, that:
(i) the Agent and each Lessor shall be entitled to continue to
deal solely and directly with the assignor Lessor in connection with
the interests so assigned and delegated to the Assignee until written
notice of such Assignment, together with addresses and related
information with respect to the Assignee, shall have been given to the
Agent and each Lessor by the assignor Lessor and the Assignee, and
(ii) if the Assignee is a non-United States Person for U.S.
federal income tax purposes, it shall deliver to Lessee and the
documentation referred to in Section 13(c) hereof.
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Upon its receipt of an Assignment executed by an assignor, Lessor and an
Assignee, together with a fixed charge (payable by the assigning and/or
transferee Lessor) of $2,500, the Agent shall, if such Assignment has been
completed and is in substantially the form of Exhibit D, accept such Assignment
and forward a copy thereof to the Lessee, and the Agent shall revise Schedule I
hereof to reflect such assignment.
(c) LESSOR LIENS. The Agent agrees that it will (i) not directly
create, incur, assume or suffer to exist any Lessor Liens other than Permitted
Lessor Liens, (ii) at its own cost and expense, as promptly as practicable, take
such action as reasonably may be necessary to discharge any Lessor Liens created
by it on the Property, other than Permitted Lessor Liens or (iii) not, except in
compliance with the Lease Documents, sell, transfer or otherwise dispose of all
or any part of the Property.
(d) PROHIBITED ASSIGNEES. In no event shall a Lessor transfer any
interest or rights under this Lease to any Person that constitutes a "special
purpose entity" (as defined in the Emerging Issues Task Force Bulletin No. 90-15
or in any subsequent publications of the Financial Accounting Standards Board).
SECTION 24. TAXES.
The Lessors and Lessee agree that, notwithstanding any provision of
any Lease Document purporting to transfer true ownership of any or all of the
Property, for all U.S. Federal, state and local tax purposes, the Lessee, and
not the Lessors, shall, to the extent permitted by Applicable Law, treat itself
as the owner of the Property; and this Lease shall be treated by the Lessors and
the Lessee as an evidence of indebtedness. The Agent and the Lessors each
severally agree that, to the extent permitted by Applicable Law, they will not
file any U.S. Federal, state or local income tax returns during the Lease Term
that are inconsistent with the treatment of the Lessee as owner of the Property
for U.S. Federal, state and local income tax purposes.
SECTION 25. OPERATING LEASE.
Notwithstanding the provisions of Section 29 hereof, each of the
Lessors and the Lessee severally hereby declare that it is their mutual intent
that for accounting purposes: (i) this Lease be an operating lease (for
purposes of Financial Accounting Standards Board Statement Number 13) and not an
instrument or evidence of indebtedness, and (ii) the relationship under this
Lease between the Agent and the Lessors on the one hand and the Lessee on the
other hand shall always be that of lessor and lessee only.
SECTION 26. NOTICES AND REQUESTS.
(a) Except as otherwise expressly provided in this Agreement, any
notice hereunder to Lessee, the Agent or any Lessor shall be in writing.
Notices given by telegram, telecopier or personal delivery shall be deemed to
have been given and received when sent and notices given by mail shall be deemed
to have been given and received four Business Days after the date when sent by
registered or certified mail, postage prepaid, and addressed to Lessee, the
Agent, or such Lessor at its address shown below its signature hereto, or at
such other address as any such Person may, by written notice received by such
other Persons, have designated as its address for such purpose. The Agent or
any Lessor giving any waiver, consent or notice to, or
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making any request upon, Lessee hereunder shall promptly notify each Lessor and
the Agent thereof.
(b) The Agent and each Lessor shall be entitled to rely upon all
telephonic notices without awaiting receipt of written versions of such notices
and Lessee shall hold the Agent, and each Lessor harmless from, and shall
indemnify, defend, protect and hold the Agent and each Lessor harmless against,
any loss, cost or expense ensuing from any such reliance. Any such notices
shall be directed as follows:
If to the Agent or a Lessor:
Sumitomo Bank Leasing and Finance, Inc.
277 Park Avenue
New York, New York 10172
Attn: Chief Credit Officer
If to the Lessee, to Lessee at:
Novellus Systems, Inc.
3950 North First Street
San Jose, California 95125
Attn: Mr. John Root
SECTION 27. RIGHT TO PERFORM FOR LESSEE.
If Lessee fails to perform or comply with any of its covenants or
agreements contained in this Lease or any Lease Document, the Agent may, upon
notice to Lessee but without waiving or releasing any obligations or default,
itself perform or comply with such covenant or agreement, and the amount of the
reasonable expenses of the Agent (including without limitation reasonable fees
and disbursements of counsel) incurred in connection with such performance or
compliance, shall be payable, or reimbursed by Lessee, on demand by Agent, plus
interest at the Overdue Rate from the date when incurred by Agent to the date
when reimbursed by Lessee.
SECTION 28. THE AGENT.
(a) APPOINTMENT AND AUTHORIZATION. Each Lessor irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Lease as are delegated to the Agent by the terms
hereof, and to determine whether and how to enforce any obligations of Lessee in
all cases together with all such powers as are reasonably incidental thereto
(including, without limitation, the execution and delivery of the various
documents, conveyances, terminations, assignments and instruments contemplated
herein to be delivered by the Agent on behalf of the Lessors). No Lessor shall
have any right to enforce any such obligations.
(b) AGENT AND AFFILIATES. Sumitomo Bank Leasing and Finance, Inc.
shall have the same rights and powers under this Agreement as any other Lessor
and may exercise or refrain
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from exercising the same as though it were not the Agent, and Sumitomo Bank
Leasing and Finance, Inc. and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with Lessee or any
Subsidiary or Affiliate of Lessee as if it were not the Agent hereunder.
(c) ACTION BY AGENT. The obligations of the Agent hereunder are only
those expressly set forth herein and therein. Without limiting the generality
of the foregoing, the Agent shall not be required to take any action with
respect to any Event of Default or Unmatured Event of Default, except as
expressly provided herein.
(d) CONSULTATION WITH EXPERTS. The Agent may consult with legal
counsel (who may be counsel for Lessee, a Lessor or Agent or any Affiliate of
any of them), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
(e) LIABILITY OF AGENT. Neither the Agent nor any of its Affiliates
nor any of their respective directors, officers, agents, employees, counsel or
other representatives shall be liable for any action taken or not taken by it in
connection with the Lease Documents (i) with the consent or at the request of
the Required Lessors or (ii) in the absence of its own gross negligence or
willful misconduct. Neither the Agent nor any of its Affiliates, directors,
officers, agent or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (a) any statement, warranty or representation
made in connection with the Lease Documents; (b) the performance or observance
of any of the covenants or agreements of Lessee; (c) the satisfaction of any
condition specified in Section 3 hereof; or (d) the validity, effectiveness or
genuineness of any of the Lease Documents or any other instrument or writing
furnished in connection herewith or therewith. The Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
believed by it to be genuine or to be signed by the proper party or parties. As
to any matters not expressly provided for by this Lease, the Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Required Lessors, and such
instructions of the Required Lessors and any action taken or failure to act
pursuant thereto shall be binding on all of the Lessors.
(f) INDEMNIFICATION. Each Lessor shall, ratably in proportion to the
amount of its Outstanding Investment, indemnify, defend, protect and hold the
Agent harmless (to the extent not reimbursed by the Lessee) against any cost,
expense (including counsel fees and disbursements), claim, demand, action, loss
or liability (except to the extent resulting from the Agent's gross negligence
or willful misconduct) that the Agent may suffer or incur in connection with the
Lease Documents or any action taken or omitted by the Agent hereunder.
(g) FAILURE TO ACT. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Lessors against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
(h) CREDIT DECISION. Each Lessor acknowledges that it has,
independently and without reliance upon the Agent or any other Lessor, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into
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this Lease (pursuant to Section 23 hereof or otherwise). Each Lessor also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lessor, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Lease.
(i) RESIGNATION AND REMOVAL. The Agent may resign as such at any
time upon at least 30 days' prior notice to Lessee and the Lessors, and may be
removed as such at any time by vote of the Required Lessors and notice to the
retiring Agent and Lessee. In the event of any such resignation or removal, the
Required Lessors shall as promptly as practicable (but with five Business Days'
prior written notice being given to Lessee) appoint a successor Agent, provided
that such successor Agent shall, unless an Event of Default is continuing, be
approved by Lessee which approval shall not be unreasonably withheld and, if
Lessee has not responded within such five Business Day period, Lessee shall be
deemed to have approved such new Agent. If no successor Agent shall have been
so appointed and shall have accepted such appointment within 30 days after
either the retiring Agent's giving of notice of resignation or the Required
Lessors' vote to remove the retiring Agent, then the retiring Agent may, on
behalf of the Lessors, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any State
thereof or under the laws of another country that is doing business in the
United States and having a combined capital, surplus and undivided profits of at
least $100,000,000, or a wholly owned subsidiary of such bank. Upon its
acceptance of its appointment, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from all further
duties and obligations as Agent under this Agreement. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Agreement shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. No
resignation or renewal of the Agent may become effective until a successor Agent
has been appointed as provided above.
(j) DISTRIBUTIONS. The Agent shall, as promptly as practicable,
distribute to each Lessor its appropriate portion, if any, of payments received
(in good, collected funds) by the Agent from the Lessee for the account of the
Lessors or of any such payments so received for the account of such Lessor.
(k) LESSEE RIGHTS. Except where Lessee is expressly referenced in
this Section 28, (x) this Section 28 is for the benefit of the Agent and Lessors
only, (y) Lessee shall have no right to enforce any part of this Section 28 and
(z) this Section 28 may be amended by the approval of Agent and the Required
Lessors, without any need to obtain Lessee's approval. Agent shall send Lessee
a copy of any such amendments.
SECTION 29. SECURITY INTEREST; FURTHER ASSURANCES.
(a) SECURITY INTEREST. The Lessee hereby grants, as security for the
due payment and performance of all Liabilities of Lessee, to the Agent for the
benefit of the Lessors, a security interest in and to all its right, title and
interest, whether now or hereafter existing or acquired, in the Collateral. At
the expense of the Lessee, the Agent (on behalf of the Lessors) and the Lessee
each agree to cooperate and to execute, deliver and file such further documents,
instruments and certificates as may be deemed reasonably necessary to preserve,
perfect and protect the title and interests of the Agent on behalf of the
Lessors hereunder, including, but not
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limited to, the execution by the Agent (on behalf of the Lessors) and the Lessee
and the filing of financing statements pursuant to the UCC.
(b) FURTHER ASSURANCES. Lessee shall, at its expense, do any further
act and execute, acknowledge, deliver, file, register and record any further
documents which the Agent may reasonably request in order to protect its title
to and first priority perfected security interest in the Collateral, subject to
no Liens other than Permitted Liens, and Agent's rights and benefits under this
Lease and the other Lease Documents. Lessee shall promptly and duly execute and
deliver to Agent such documents and assurances and take such further action as
Agent may from time to time reasonably request in order to carry out more
effectively the intent and purpose of this Lease and the other Lease Documents,
to establish and protect the rights and remedies created or intended to be
created in favor of Agent hereunder and thereunder, and to establish, perfect
and maintain the right, title and interest of Agent, for the benefit of the
Lessors, in and to the Collateral, subject to no Lien other than Permitted
Liens.
SECTION 30. MISCELLANEOUS.
(a) All indemnities contained in this Lease shall survive the
expiration or other termination hereof.
(b) This Lease, the other Lease Documents and the instruments,
documents or agreements referred to herein constitute the entire agreement
between the parties and no representations, warranties, promises, guarantees or
agreements, oral or written, express or implied, have been made by any party
hereto with respect to the Lease Documents or the Property, except as provided
herein or therein.
(c) This Lease and each Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. Only the counterpart of this Lease
and each Lease Supplement containing the receipt therefor executed by the Agent
at the foot thereof shall evidence the monetary obligations of the Lessee
hereunder and thereunder, and to the extent, if any, that this Lease constitutes
chattel paper (as such term is defined in the UCC), no security interest in this
Lease or the other Lease Documents may be created by the transfer or possession
of any counterpart hereof other than such counterpart.
(d) The captions in this Lease are for convenience of reference only
and shall not be deemed to affect the meaning or construction of any of the
provisions hereof. References to a "Section", "Schedule" or "Exhibit" are,
unless otherwise specified, to the appropriate Section, Schedule or Exhibit
annexed to this Agreement, each of which is deemed to be a part hereof. Any
provision of this Lease which is prohibited by Applicable Law or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and the parties hereto shall negotiate in good faith
appropriate modifications to reflect such changes as may be required by
Applicable Law, and, as nearly as possible, to produce the same economic effects
as the provision which is prohibited or unenforceable; and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by Applicable Law, the Lessee hereby waives any provision of Applicable Law
which renders any provision hereof prohibited or unenforceable in any respect.
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(e) THIS LEASE HAS BEEN DELIVERED IN THE STATE OF CALIFORNIA AND
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF CALIFORNIA, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. LESSEE IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT HAVING A SITUS LOCATED WITHIN THE BOUNDARIES OF THE
NORTHERN JUDICIAL DISTRICT OF THE UNITED STATES DISTRICT COURT FOR STATE OF
CALIFORNIA OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF, OR RELATING TO,
THIS LEASE AND HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING AS WELL AS ANY OBJECTION WITH RESPECT THERETO OF
INCONVENIENT FORUM.
LESSEE HEREBY FURTHER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING IN CONNECTION WITH THIS LEASE OR ANY TRANSACTION RELATING
HERETO. THE FOREGOING WAIVER OF JURY TRIAL IS MADE KNOWINGLY AND INTENTIONALLY,
AFTER CONSULTATION WITH COUNSEL, OR AFTER HAVING HAD THE OPPORTUNITY TO CONSULT
WITH COUNSEL OF LESSEE'S OWN SELECTION.
(f) Lessee waives any rights or remedies provided to it by Sections
2A-508 through 522 of the UCC (except to the extent any of the foregoing relate
solely to a Lessor's or Agent's repudiation of this Lease or breach of an
express obligation under this Lease).
(g) Whether or not the Closing Date occurs hereunder, the Lessee
shall reimburse the Agent and the Lessors for all reasonable costs and expenses
(including fees and expenses of counsel), incurred by them in connection with
the preparation, negotiation, execution, completion and registration of this
Lease, each Lease Document and all agreements and instruments required hereunder
or thereunder. The Lessee shall bear the cost of all stamp duties (if any)
payable as a result of the execution and delivery hereof or thereof. The Lessee
shall reimburse the Agent and the Lessors for the reasonable costs and expenses
(other than costs and expenses referred to in the first sentence of this
paragraph (g)) incurred by the Agent in connection with the enforcement,
amendment, modification or supplement of this Lease, the Lease Supplements or
any of the documents defined or referred to herein (including, without
limitation, reasonable fees and disbursements of counsel).
(h) If any party hereto fails to perform any of its obligations under
this Agreement or if a dispute arises between or among the parties hereto
concerning the meaning or interpretation of any provision of this Agreement,
then the defaulting party or parties or the parties not prevailing in such
dispute shall pay any and all costs and expenses incurred by the other party on
account of such default and/or in enforcing or establishing its rights
hereunder, including, without limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by a party
in enforcing a judgment in its favor under this Agreement shall be recoverable
separately from and in addition to any other amount included in such judgment,
and such attorneys' fees obligation is intended to be severable from the other
provisions of this Agreement and to survive and not be merged into any such
judgment.
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IN WITNESS WHEREOF, the Agent, the Lessors and the Lessee have caused
this Lease to be executed and delivered by their duly authorized officers as of
the day and year first above written.
LESSOR: SUMITOMO BANK LEASING
AND FINANCE, INC.
By: /s/ William M. Ginn
---------------------------
Title: President
------------------------
277 Park Avenue
New York, New York 10172
LESSEE: NOVELLUS SYSTEMS, INC.,
a California corporation
By: /s/ Robert H. Smith
---------------------------
Title: Chief Financial Officer
------------------------
3950 North First Street
San Jose, California 95125
AGENT: SUMITOMO BANK LEASING
AND FINANCE, INC.
By: /s/ William M. Ginn
---------------------------
Title: President
------------------------
277 Park Avenue
New York, New York 10172
For purposes of Section 2A-208(2) of the UCC, this Lease may not be modified or
rescinded except by a writing signed by the parties required by Section 16
hereof.
AGENT (ON BEHALF OF
THE LESSORS): SUMITOMO BANK LEASING AND FINANCE, INC.
By: /s/ William M. Ginn
--------------------------------
Title: President
-----------------------------
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LESSEE: NOVELLUS SYSTEMS, INC.,
a California corporation
By: /s/ Robert H. Smith
--------------------------------
Title: Chief Financial Officer
-----------------------------
Receipt of this original counterpart of this Agreement is hereby
acknowledged this __________ day of ______, 199_:
SUMITOMO BANK LEASING
AND FINANCE, INC., as Agent
By:________________________________
Title:_____________________________
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SCHEDULE I - Commitments
The following Persons are collectively the "Lessors" under this Lease:
EQUITY LESSOR FUNDING OFFICE COMMITMENT
Sumitomo Bank Leasing New York 3%
and Finance, Inc.
================ ===============
Equity Lessor
Commitment = $165,000.00
DEBT LESSOR FUNDING OFFICE COMMITMENT
Sumitomo Bank Leasing New York 97%
and Finance, Inc.
================ ===============
Debt Lessor
Commitment = $5,335,000.00
______________
TOTAL COMMITMENT...................................................$5,500,000.00
SCHEDULE II - Legal Description of Land
ALL OF PARCEL 4, AS SHOWN UPON THAT PARCEL MAP WHICH WAS FILED FOR
RECORD ON THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA,
STATE OF CALIFORNIA, ON JULY 13, 1984, IN BOOK 531 OF MAPS, AT PAGES
41 AND 42.
EXHIBIT A
TO
LEASE AGREEMENT
[FORM OF LEASE SUPPLEMENT]
LEASE SUPPLEMENT, dated as of October ____, 1996, to PURCHASE AND
MASTER LEASE AGREEMENT dated as of October ___, 1996 (the "Lease Agreement"),
among the lessors referred to therein (the "Lessors") and Novellus Systems,
Inc., a California corporation ("Lessee"), and Sumitomo Bank Leasing and
Finance, Inc., as agent for the Lessors (in its capacity as such, the "Agent").
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned thereto in the Lease Agreement.
2. The date of this Lease Supplement is October ____, 1996 (the
"Closing Date") and the Lessors hereby lease to Lessee under the Lease
Agreement, and the Lessee hereby leases from the Lessors under the Lease
Agreement, the Property described in Part I of Schedule 1 to this Lease
Supplement and said items of Property are subject to all of the covenants, terms
and conditions of the Lease Agreement and this Lease Supplement.
3. The Lease Term for the Property described in Part I of Schedule 1
to this Lease Supplement commences as of the date hereof and continues to and
including October ____, 2006, unless extended or earlier terminated as provided
in the Lease Agreement.
4. Lessee hereby acknowledges and confirms that it has inspected and
approved the Property set forth on Part I of Schedule 1 hereto for all purposes
of the Lease Agreement and the other Lease Documents and, as between the Lessors
and the Lessee, such Property is in first class condition and appearance, and
without defect therein with respect to grading, compaction, soils stability and
fitness for use or in any other respect, and all utilities available to or at
the boundaries thereof and other Personal Property located thereat is in good
working order, whether or not any of the foregoing is discoverable by Lessee as
of the date hereof and are accepted for lease under the Lease Agreement as of
the date specified above.
5. Lessee hereby represents and warrants that no event which would
constitute an Event of Loss under the Lease Agreement has occurred with respect
to the Property set forth on Part I of Schedule 1 hereto as of the date hereof.
Lessee hereby reaffirms each of the representations and warranties set forth in
Section 2 of the Lease Agreement as if made on the date hereof, including that
the Property set forth on Schedule 1 hereto is free and clear of all Liens other
than Permitted Liens.
6. The Property Cost for the Property described in Part I of
Schedule 1 to this Lease Supplement is $________.
A-1
7. The respective percentages of the Property Cost for the Property
described in Part I of Schedule 1 to this Lease Supplement are correctly
indicated Part II of Schedule 1 of this Lease Supplement.
8. The Guaranteed Residual Value for the Property described in Part
I of Schedule 1 to this Lease Supplement is $_________.
9. The location(s) (address, county and state) for the Property
described in Schedule 1 to this Supplement is set forth on Schedule 1 to this
Lease Supplement.
10. Initially, and until changed pursuant to the Lease Agreement,
Base Rent will be based on the Euro-Dollar Rate.
11. The Memorandum of Lease and the Deed of Trust have been recorded
in the office of the county recorder, and the UCC-1 Filings have been made in
the office of the California Secretary of State, as shown on Schedule 2 to this
Supplement and Additional Base Rent for the Property described herein is as set
forth in Schedule 3 to this Supplement.
12. Any and all notices, requests, certificates and other instruments
executed and delivered concurrently with or after the execution and delivery of
the Lease Supplement may refer to the "Purchase and Master Lease Agreement,
dated as of October ___, 1996", or may identify the Lease Agreement in any other
respect without making specific reference to this Lease Supplement, but
nevertheless all such references shall be deemed to include this Lease
Supplement, unless the context shall otherwise require.
13. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument. This Lease Supplement shall be construed
in connection with and as part of the Lease Agreement, and all terms, conditions
and covenants contained in the Lease Agreement, as supplemented by this Lease
Supplement, shall be and remain in full force and effect and shall govern the
Property described on Part I of Schedule 1 hereto.
14. This Lease Supplement has been delivered in the State of
California and shall in all respects be governed by, and construed in accordance
with, the laws of the State of California, including all matters of
construction, validity and performance.
IN WITNESS WHEREOF, Agent, on behalf of the Lessors, and the Lessee
have caused this Lease Supplement to be executed and delivered by their duly
authorized officers as of the day and year first above written.
AGENT (ON BEHALF OF
THE LESSORS): SUMITOMO BANK LEASING AND FINANCE, INC.
By:______________________________________
Title:___________________________________
A-2
LESSEE: NOVELLUS SYSTEMS, INC.,
a California corporation
By:______________________________________
Title:___________________________________
Receipt of this original counterpart of this Lease Supplement is
hereby acknowledged this __________ day of ______, 199_:
SUMITOMO BANK LEASING
AND FINANCE, INC., as Agent
By:______________________________________
Title:___________________________________
A-3
SCHEDULE 1
TO
LEASE SUPPLEMENT
PART I - DESCRIPTION AND LOCATION OF PROPERTY
ALL OF PARCEl 4, AS SHOWN UPON THAT PARCEL MAP WHICH WAS FILED FOR
RECORD ON THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA,
STATE OF CALIFORNIA, ON JULY 13, 1984, IN BOOK 531 OF MAPS, AT PAGES
41 AND 42.
PART II - PROPERTY COST
$__________________
A-4
SCHEDULE 2
TO
LEASE SUPPLEMENT
Recording and
UCC-1 Filing Schedule
(California)
MEMORANDUM OF LEASE
RECORDING DATE COUNTY INSTRUMENT NO.
Santa Clara
DEED OF TRUST
RECORDING DATE COUNTY INSTRUMENT NO.
Santa Clara
UCC-1 FILINGS
FILING DATE FILE NO.
A-5
SCHEDULE 3
TO
LEASE SUPPLEMENT
Additional Base Rent
RENT PAYMENT DATE ADDITIONAL BASE RENT
A-6
EXHIBIT B
TO
LEASE AGREEMENT
[Reserved]
B-1
EXHIBIT C
TO
LEASE AGREEMENT
[FORM OF CLOSING DATE NOTICE]
CLOSING DATE NOTICE
DATE:
TO: Sumitomo Bank Leasing and Finance, Inc., not individually, but
solely as Agent (the "Agent"), under that certain Purchase and
Master Lease Agreement, dated as of October ____, 1996, (the
"Lease Agreement") among Novellus Systems, Inc., a California
corporation ("Lessee"), the Agent, and the Lessors identified
therein (all capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Lease
Agreement, unless the context otherwise requires).
FROM: The Lessee
REGARDING: Closing Date
1. The Closing Date under the Lease Agreement is scheduled for 10:00
a.m. local time on October ____, 1996 at the offices of First American Title
Insurance Company located at ________________________, San Jose, California.
2. The Property Information Package is complete, and there have been
no changes thereto [except as follows: ______________________________, true and
complete copies of which are attached hereto.]
3. The Property Cost of the Closing Date is $ to be funded
by each Lessor ratably in accordance with its Commitment Percentage.
4. The Property Cost as of the Closing Date shall be sent by wire
transfer of immediately available funds to Lessee at the following account:
Bank: Union Bank -- Los Angeles
for Office No. 715
1800 Harrison Street
Oakland, California 94612
B-2
ABA Routing #: 1220 00 496
Account #: 715 00 820 26
Payee: First American Title Guaranty Company
Reference: Office No. 282-05
Escrow No._____________
Escrow Officer: Susan Melton
IN WITNESS WHEREOF, the Lessee has caused this Closing Date Notice to
be executed and delivered by its duly authorized officer as of the day and year
first above written.
NOVELLUS SYSTEMS, INC.,
a California corporation
By:_____________________
Title:__________________
B-3
EXHIBIT D
TO
LEASE AGREEMENT
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
Reference is made to the Purchase and Master Lease Agreement described in
Item 2 of Annex I annexed hereto (the "Lease Agreement"). Terms defined in the
Lease Agreement are used herein with the meanings assigned thereto in the Lease
Agreement.
________________(the "Assignor") and________________(the "Assignee")
hereby agree as follows:
1. The Assignor hereby sells and assigns and delegates to the Assignee,
without recourse, representation or warranty except as specifically set forth in
paragraph 2 below, and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights, benefits and
obligations under the Lease Agreement as of the date hereof which represents the
percentage interest specified in Item 4 of Annex I of all outstanding Lessors'
rights and obligations under the Lease Agreement, including, without limitation,
such interest in the Assignor's Commitment (if applicable) and the Base Rent,
Additional Base Rent and Guaranteed Residual Value owing to the Assignor
relating to such Commitment. After giving effect to such sale and assignment,
the Assignee's Commitment will be as set forth in Item 4 of Annex I.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any lien or adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Lease Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Lease Agreement or any other instrument
or document furnished pursuant thereto; and (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Lessee or the performance or observance by the Lessee of any
of its obligations under the Lease Agreement or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Lease
Agreement, together with copies of the financial statements referred to therein
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment Agreement;
(ii) agrees that it will, independently and without reliance on Assignor, as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Lease Agreement; (iii) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Lease Agreement as are delegated to Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (iv)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Lease Agreement are required to be
performed by it as a Lessor, [and (v) attaches the forms prescribed by the
Internal Revenue Service of the United
D-1
States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments
to be made to the Assignee under the Lease Agreement or such other documents
as are necessary to indicate that all such payments are subject to such rates
at a rate reduced by the applicable tax treaty].(1)
4. Following the execution of this Assignment Agreement by the Assignor
and Assignee, it will be delivered to the Agent for registration by the Agent.
The effective date of this Assignment Agreement shall be the date of execution
hereof by the Assignor and the Assignee, unless otherwise specified on Item 6 of
Annex I hereto (the "Settlement Date").
5. Upon such acceptance and registration by the Agent, as of the
Settlement Date, (i) the Assignee shall be a party to the Lease Agreement and,
to the extent provided in this Assignment Agreement, have the rights and
obligations of a Lessor thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment Agreement, relinquish its rights and be released
from its obligations under the Lease Agreement.
6. Upon such acceptance and registration by the Agent, from and after the
Settlement Date, the Agent shall make all payments under the Lease Agreement in
respect of the interest assigned hereby (including, without limitation, all
payments of Base Rent, Additional Base Rent and fees (if applicable) with
respect thereto) to the Assignee. [Upon the Settlement Date, the Assignee shall
pay to the Assignor outstanding Additional Base Rent under the Lease
Agreement](2) The Assignor and Assignee shall make all appropriate adjustments
in payments under the Lease Agreement for periods prior to the
Settlement Date directly between themselves on the Settlement Date.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
[NAME OF ASSIGNOR]
as Assignor
By:
Title:
- --------------
(1) If the Assignee is organized under the laws of a jurisdiction outside the
United States.
(2) To be adjusted as is appropriate.
D-2
[NAME OF ASSIGNEE]
as Assignee
By:____________________
Title:_________________
Accepted this ____ day
of___________, 19__
SUMITOMO BANK LEASING AND FINANCE, INC.
as Agent
By:_____________________
Title:__________________
D-3
ANNEX I
1. Lessee: Novellus Systems, Inc.
2. Name and Date of Lease Agreement: Purchase and Master Lease Agreement dated
as of ________________, 1996 by and among the Lessors named therein (the
"Lessors"), Novellus Systems, Inc., a California corporation ("Lessee"),
and Sumitomo Bank Leasing and Finance, Inc., as agent for the Lessors (in
its capacity as such, the "Agent") (as such Lease Agreement may from time
to time be amended, supplemented or otherwise modified).
3. Date of Assignment Agreement: ________________, 19__.
4. Amounts (as of Date of Item #3 above):
- --------------------------------------------
a. Total Lease
Agreement
/Commitment $__________
b. Assigned
Commitment __________%
c. Amount of Assigned
Commitment $__________
- --------------------------------------------
5. Assignee's Funded
Commitment: $
6. Settlement Date(1):
7. Notice and Payment
Instructions: PAYMENT
ASSIGNEE: __________
__________
__________
Attention:
Reference:
Telecopier:
Reference:
- --------------
(1) This date should be no earlier than the date of acceptance by the
Agent.
D-4
NOTICE
__________
__________
__________
Attention:
Reference:
8. Assignee's Funding
Office: ____________
D-5
EXHIBIT E
TO
LEASE AGREEMENT
[FORM OF OFFICER'S CERTIFICATE]
OFFICER'S CERTIFICATE
(Pursuant to Section 19(a)(iii) of the
Lease Agreement referred to below)
This Certificate is furnished pursuant to SECTION 19(a)(III) of the
Purchase and Master Lease Agreement, dated as of ________, 199_ (the "Lease
Agreement") among the lessors named therein (the "Lessors"), Novellus Systems,
Inc., a California corporation ("Lessee"), and Sumitomo Bank Leasing and
Finance, Inc., as agent for the Lessors (in its capacity as such, the "Agent").
Capitalized terms used herein but not otherwise defined herein shall have the
same meanings as those assigned to them in the Lease Agreement.
The Lessee hereby certifies to Agent as follows:
1. Since ________________, 19__, the undersigned has been the
duly qualified and acting ____________of Lessee, and is familiar with the
financial statements and financial affairs of Lessee. The undersigned is
authorized to execute this Certificate on behalf of Lessee.
2. A true and correct copy of the [annual audit report] [quarterly
unaudited consolidated financial statement] of Lessee and its Subsidiaries for
the [Fiscal Year] [Fiscal Quarter] ended on _____________, 19__, is attached
hereto as ANNEX A.
3. As of the date of this Certificate, no Event of Default or
Unmatured Event of Default has occurred and is continuing (except as follows:
[include description of any such event and the steps being taken, if any, with
respect thereto]].
4. Attached hereto as Annex B is a true and correct computation as
of the dates referred to therein of the financial ratios and/or financial
restrictions contained in Section 19 of the Lease Agreement.
5. Attached hereto as Annex C is a complete description (to the
extent such disclosure would be required to be made by Lessee if Lessee were a
public reporting company under the Securities Exchange Act of 1934, as amended)
as of the date of this Certificate of any Material Litigation which has been
instituted or which has occurred since the date of the most recent Officer's
Certificate of Lessee [or, in the case of the first Officer's Certificate, since
the date of the Lease Agreement.]
E-1
IN WITNESS WHEREOF, the Lessee has caused its duly authorized
officer(s) to set his hand this _____day of ____________, 19__ .(1)
NOVELLUS SYSTEMS, INC.,
a California corporation(2)
By:__________________
Name:________________
Title:_______________
- --------------
(1) Such date shall be the date of the annual report or the quarterly
statement that is attached as ANNEX A.
(2) To be executed by an Authorized Officer.
E-2
ANNEX A TO
EXHIBIT E
TO OFFICER'S CERTIFICATE DATED AS OF _______________, 19__
[Attach copy of annual audit report or quarterly unaudited consolidated
financial statement, as appropriate]
E-3
ANNEX B TO
EXHIBIT E
TO OFFICER'S CERTIFICATE DATED AS OF ______________, 19__
[Computation of financial ratios and/or financial restrictions]
E-4
ANNEX C TO
EXHIBIT E
TO OFFICER'S CERTIFICATE DATED AS OF _______________,19__
[Description of any Material Litigation to the extent such disclosure
would be required to be made by Lessee if Lessee were a reporting company under
the Securities Exchange Act of 1934.]
E-5
EXHIBIT F
TO
LEASE AGREEMENT
[FORM OF OPINION OF LESSEE COUNSEL]
[Follows this page]
F-1
EXHIBIT G
TO LEASE
FORM OF
MEMORANDUM
OF LEASE
Recording requested by:
When recorded, mail to:
MORGAN, LEWIS & BOCKIUS LLP
801 South Grand Avenue
Twenty-Second Floor
Los Angeles, California 90017
Attn: William D. Ellis, Esq.
DOCUMENTARY TRANSFER TAX:
The undersigned declares that the
Documentary Transfer Tax is $-0-,
and that the term of the Lease, including
any and all unexercised extension options
is less than 35 years.
MEMORANDUM OF LEASE
By this Memorandum of Lease, made October ____, 1996, concurrently with
that certain PURCHASE AND MASTER LEASE AGREEMENT (the "Lease") dated as of
October ____, 1996, between the same parties covering the same property (the
"Lease"), Sumitomo Bank Leasing and Finance, Inc., as agent for the Lessors
named in the Lease ("Lessor") and Novellus Systems, Inc., a California
corporation ("Lessee") agree as follows:
Lessor leases the property described in Exhibit "A" attached hereto and
incorporated herein by this reference (the "Property") to Lessee upon the terms
and conditions set forth in the Lease.
AGENT FOR LESSORS: SUMITOMO BANK LEASING AND FINANCE, INC.
By:___________
Title:________
LESSEE: NOVELLUS SYSTEMS, INC.,
a California corporation
By:___________
Title:________
G-1
Exhibit "A" to Memorandum of Lease
LEGAL DESCRIPTION
All of Parcel 4, as shown upon that Parcel Map which was filed for
record on the Office of the Recorder of the County of Santa Clara,
State of California, on July 13, 1984, in Book 531 of Maps, at pages
41 and 42.
G-2
STATE OF ______________ )
) ss.
COUNTY OF _____________ )
On ________________, 19__, before me, a notary public, personally
appeared _______________________________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that ___he executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal. (seal)
_________________________________
Notary public
STATE OF ______________ )
) ss.
COUNTY OF _____________ )
On ________________, 19__, before me, a notary public, personally
appeared _______________________________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that ___he executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal. (seal)
_________________________________
Notary public
G-3
EXHIBIT H
TO LEASE
[FORM OF NOTICE OF PURCHASE]
_____________, 19__(1)
Sumitomo Bank Leasing and Finance, Inc.
277 Park Avenue
New York, New York 10172
Attn: Chief Financial Officer
1. Reference is made to that certain Purchase and Master Lease
Agreement dated as of October ____, 1996 (the "LEASE AGREEMENT"), among the
lessors referred to therein (the "LESSORS"), Novellus Systems, Inc., a
California corporation ("LESSEE"), and Sumitomo Bank Leasing and Finance, Inc.,
as Agent for the Lessors ("AGENT"). Capitalized terms used herein but not
otherwise defined herein shall have the same meanings as those assigned to them
in the Lease Agreement.
2. Pursuant to Section 14(a) of the Lease Agreement, notice is
hereby given that Lessee elects to purchase the Property currently leased
pursuant to the terms of the Lease Agreement. Such purchase shall be effected
pursuant to the provisions of Section 14(d) of the Lease Agreement.
3. The date on which the Property will be purchased is
_________________.
- --------------
(1) 30 days' prior written notice
H-1
IN WITNESS WHEREOF, Lessee has executed this Notice of Purchase on the
date set forth above.
NOVELLUS SYSTEMS, INC.,
a California corporation
By______________________________
Name:_________________________
Title: Authorized Officer
H-2
EXHIBIT I
TO LEASE
FORM OF ASSIGNMENT OF SERVICE CONTRACTS
[Reserved]
I-1
EXHIBIT J
TO LEASE
[FORM OF SALE NOTICE]
_______________, 19__
Sumitomo Bank Leasing and Finance, Inc.
277 Park Avenue
New York, New York 10172
Attn: Chief Financial Officer
1. Reference is made to that certain Purchase and Master Lease
Agreement dated as of October ____, 1996 (the "LEASE AGREEMENT"), among the
lessors referred to therein (the "LESSORS"), Novellus Systems, Inc., a
California corporation ("LESSEE"), and Sumitomo Bank Leasing and Finance, Inc.,
as Agent for the Lessors ("AGENT"). Capitalized terms used herein but not
otherwise defined herein shall have the same meanings as those assigned to them
in the Lease Agreement.
2. Pursuant to Section 14(b)(i) of the Lease Agreement, notice is
hereby given that Lessee shall terminate the lease of all of the Property at the
end of the Lease Term by electing and thereafter consummating a sale to third
parties of all but not less than all of the Property as provided in Section
14(b) of the Lease Agreement.
IN WITNESS WHEREOF, Lessee has executed this Sale Notice on the date
set forth above.
NOVELLUS SYSTEMS, INC.,
a California corporation
By:_____________________________
Name:________________________
Title: Authorized Officer
- --------------
(1) At least 180 days prior to the end of the Lease Term
I-2
EXHIBIT K
TO LEASE
[Reserved]
K-1
EXHIBIT M
TO LEASE
[Form of Signing Certificate]
SIGNING CERTIFICATE
Novellus Systems, Inc., a California corporation ("Lessee"), does hereby
certify to Sumitomo Bank Leasing and Finance, Inc., as Agent (the "Agent") for
certain Lessors under the Purchase and Master Lease Agreement (the "Lease"),
dated as of __________ , 199____ that the following persons are authorized to
execute and deliver to the Agent Closing Date Notices referenced in the Lease
and that any such Notices shall bind Lessee to the contents thereof and the
Agent may rely thereon without further inquiry of the Lessee as to the
authorization or capacity of such persons. Also set forth below is a sample of
the signatures of such persons.
Name Title Signature
_____________ _____________ __________________
IN WITNESS WHEREOF the Lessee has caused this Certificate to have been
duly executed by its duly authorized officer as of this ___ day of
_____________, 199___.
NOVELLUS SYSTEMS, INC.,
a California corporation
By:_______________________
Title: Authorized Officer
M-1
EXHIBIT N
TO LEASE
CONTENTS OF PROPERTY INFORMATION PACKAGE
(1) TITLE MATTERS
(A) Legal description of the Land.
(B) Preliminary title report regarding the Land.
(C) Legible and reproducible copies of all recorded
documents relating to the Land.
(D) Survey of the Real Property prepared in compliance
ALTA/ACSM Minimum Standard Detail Requirements (1992),
and dated not earlier than six (6) months prior to the
date of this Agreement.
(E) Certified search of UCC records at California Secretary
of State's office and certified copies of all filed
financing statements, amendment and releases relating
to Lessee, dated not earlier than one month prior to
the date of this Agreement.
(2) PROPERTY USE.
(A) Evidence of
(i) compliance of the Land with the California
Subdivision Map Act;
(ii) whether the Real Property is located within a
special flood zone area as indicated on any Flood
Hazard Boundary Maps published by the Federal Emergency
Management Agency; and
(iii) whether the Real Property is located in an
earthquake fault zone (as defined in the California
Alquist-Priolo Earthquake Fault Zone Act), or in a
seismic hazard zone (as defined in California Public
Resources Code Section 2694).
(B) Copy of any Environmental Impact Report or Negative
Declaration pertaining to the Land.
(C) Evidence that all necessary approvals, licenses and
permits relating to the use and occupancy of the Real
Property are in full force and effect and copies
thereof.
(D) Site plan and soils report.
(E) A report of the physical condition of the Land.
(F) The Environmental Audit.
(G) If any portion of the Property is leased or rented to
third parties or Affiliates: a rent roll, copies of all
existing leases and an estoppel certificate from each
tenant thereunder in form satisfactory to Lessor
N-1
EXHIBIT O
TO LEASE
FORM OF DEED
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
MORGAN, LEWIS & BOCKIUS LLP
801 South Grand Avenue
Twenty-Second Floor
Los Angeles, California 90017
Attention: William D. Ellis, Esq.
MAIL TAX STATEMENTS TO:
Novellus Systems, Inc.
3950 North First Street
San Jose, California 95125
Attention:_____________________
Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.
_______________________________________________
GRANT DEED
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
ZUKEN-REDAC, INC., a California corporation, hereby grants to SUMITOMO BANK
LEASING AND FINANCE, INC., as agent, the real property located in the City of
San Jose, County of Santa Clara, State of California, described on EXHIBIT A
attached hereto and made a part hereof.
Executed as of this _______ day of_____________________, 1996.
Zuken-Redac, Inc., a California corporation
By:_________________________
Name:______________________
Title:_______________________
MAIL TAX STATEMENTS AS DIRECTED ABOVE
O-1
EXHIBIT A TO GRANT DEED
Legal Description
All of Parcel 4, as shown upon that Parcel Map which was filed for
record on the Office of the Recorder of the County of Santa Clara,
State of California, on July 13, 1984, in Book 531 of Maps, at pages
41 and 42.
O-2
State of California
County of____________
On ___________________, 1996, before me,___________________________,
personally appeared ___________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature:_______________________________(Seal)
Notary Public
O-3
_______________, 1996
Santa Clara County Recorder
County Government Center
70 West Hedding Street, East Wing
San Jose, California 95110
Re: Request That Statement of
Documentary Transfer Tax Not be
Recorded
--------------------------------
Dear Sir or Madam:
Request is hereby made in accordance with Section 11932 of the Revenue
and Taxation Code that this statement of tax due not be recorded with the
attached deed but be affixed to the deed after recordation and before return as
directed in the deed.
The attached deed names ZUKEN-REDAC, INC., a California corporation,
as grantor, and SUMITOMO BANK LEASING AND FINANCE, INC., as agent, as grantee.
The Property being transferred and described in the attached deed is
located in the City of San Jose, County of Santa Clara, State of California.
The amount of Documentary Transfer Tax due on the attached deed is
$__________computed on full value of the property conveyed.
Zuken-Redac, Inc., a California corporation
By:________________________
Name:______________________
Title:_____________________
O-4
EXHIBIT P
TO LEASE
FORM OF DEED OF TRUST
Recording requested by:
When recorded, mail to:
MORGAN, LEWIS & BOCKIUS LLP
801 South Grand Avenue
Twenty-Second Floor
Los Angeles, California 90017
Attn: William D. Ellis, Esq.
DEED OF TRUST AND ASSIGNMENT OF RENTS
THIS DEED OF TRUST AND ASSIGNMENT OF RENTS, dated as of _________________,
199__ (this "Deed of Trust"), between SUMITOMO BANK LEASING AND FINANCE, INC.,
as the beneficiary (the "Beneficiary") as agent for the "Lessors" as defined
below, having address at 277 Park Avenue, New York, New York 10172 and NOVELLUS
SYSTEMS, INC., a California corporation, as the trustor (the "Trustor"), having
an address at 3950 First Street, San Jose, California 95125, and First American
Title Insurance Company, a California corporation, as trustee ("Trustee"), is
made, executed and delivered with reference to the following recitals of fact:
WHEREAS, the Beneficiary is the owner in fee simple of the land described
on Exhibit "A" hereto (the "Land") and the improvements, buildings and other
structures now or hereafter located thereon (collective, the "Improvements"; the
Land and the Improvements being collectively called the "Property");
WHEREAS, the Beneficiary has leased the Property to the Trustor pursuant to
that certain Purchase and Master Lease Agreement dated as of October ___, 1996
between Beneficiary as Agent for certain lessors named therein, and as the same
may change from time to time (the "Lessors") and Trustor as "Lessee" (the
"Lease"); and
WHEREAS, the Trustor desires to encumber the Property, and all of Trustor's
right, title and interest therein, to Beneficiary, to secure, among other
things, Trustor's obligations to Beneficiary under the Lease.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS; INTERPRETATION. For purposes of this Deed of
Trust, capitalized terms used herein and not otherwise defined herein shall have
the respective meanings ascribed to in the Lease (as the same may be amended,
restated, supplemented or otherwise modified from
P-1
time to time), and the rules of interpretation set forth in the Lease shall
apply to this Deed of Trust.
SECTION 2. THE PROPERTY. Attached hereto as Exhibit "A" is description of
the Land.
SECTION 3. OWNERSHIP OF THE PROPERTY; CONVEYANCE OF DEED OF TRUST LIEN AND
GRANT OF SECURITY AGREEMENT; REMEDIES.
(a) It is intent of the parties hereto that for financial accounting uses
the Lease constitutes an "operating lease" pursuant to Statement of Financial
Accounting Standards No. 13, as amended, and that for purposes of commercial,
real estate, bankruptcy and federal, state and local income tax law, the
transaction contemplated by the Lease and hereby is a financing arrangement and
preserves ownership of the Property in the Trustor.
(b) It is the intent of the parties hereto that (i) the obligations of the
Trustor under the Lease to pay Base Rent, Additional Rent, and the Lease
Investment Balance in connection with the purchase of the Property pursuant to
the Lease shall be treated as payments of interest on and principal of,
respectively, loans from the Beneficiary to the Trustor, and (ii) the Lease
grants to the Beneficiary a security interest in and lien upon, and hereby
grants to the Trustee, in trust, with power of sale, the portions of the
Property which constitute interests in real property, and a security interest
and lien on the portions of the Property which do not constitute interests in
real property, in each case to secure the Trustor's performance hereunder, and
under and payment of all amounts under the Lease and the other Lease Documents.
(c) Specifically, without limiting the generality of SUBSECTION (b), the
Beneficiary and the Trustor intend and agree that with respect to the nature of
the transactions evidenced by the Lease in the context of the exercise of
remedies under the Lease Documents, including, without limitation, in the case
of any insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or statute of the
United States of America or any State or Commonwealth thereof affecting the
Trustor and the Beneficiary, or any enforcement or collection actions, the
transactions evidenced by the Lease are loans made by the Beneficiary as
unrelated third party lender to the Trustor secured by the Property (it being
understood that the Trustor hereby mortgages, grants, bargains, sells, releases,
confirms, conveys, assigns, transfers and sets over to the Beneficiary, and
grants a security interest in, the Property which is not real property, and
Trustor hereby grants to Trustee, in trust with power of sale, all right title
and interest of the Trustor in and to the Property that constitutes real
property (consisting of a fee deed of trust with respect to all right, title and
interest of the Trustor in and to the fee title to, and reversionary interest
in, the Land and Improvements) and a leasehold deed of trust on the Trustor's
leasehold estate under the Lease, all to secure such loans, effective on the
date hereof, to have and to hold such interests in the Property unto the
Beneficiary and its successors and assigns, forever.
(d) As additional security for the Base Rent, Additional Rent and the
Lease Investment Balance and all other sums owed to the Beneficiary by the
Trustor under the Lease, the Trustor does hereby grant, bargain, sell, transfer
and convey unto Trustee, in trust with power of sale, all of the Trustor's
right, title interest in and to the Property and the Fixtures, including,
without limitation, all buildings, structures and other improvements, and all
fixtures and other property now or hereafter attached to or affixed to any such
buildings, structures or other improvements, and any additions and alterations
thereto or replacements thereof, now or hereafter built,
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constructed or located upon the Property, and immediately, irrevocably and
absolutely, all rents, additional rents, issues, income, revenues,
distributions, royalties and profits now or in the future payable in respect
of the Property, together with all of the right, power and authority of the
Trustor to alter, modify or change the terms, conditions and provisions of
the Lease and any other lease pertaining to the Property, to consent to any
request made by a tenant or landlord pursuant thereto, or to surrender,
cancel or terminate the same or to accept any surrender, cancellation or
termination of the same, together with all of the options, rights, powers and
privileges of the Trustor under any lease or sublease pertaining to the
Property, whether heretofore or hereafter existing, including, without
limitation, the rights and options to purchase the Property contained in the
Lease, and all present and future right, title and interest of the Trustor in
and to (i) all refunds, tax abatement agreements, rebates, reserves, deferred
payments, deposits, cost savings, awards and payments of any kind due from or
payable by (a) any Governmental Authority, or (b) any insurance or utility
company, in each case under clause (a) or (b) above in respect of the
Property, and (ii) all refunds, rebates and payments of any kind due from or
payable by any Governmental Authority for any taxes, assessments, or
governmental or quasi-governmental charges or levies imposed upon the Trustor
in respect of the Property, and all plans and specifications, designs,
drawings and other information, materials and matters heretofore or hereafter
prepared relating to the Property or any construction on the Property, all
proceeds (including claims and demands therefor) of the conversion, voluntary
or involuntary, of any of the foregoing into cash or liquidated claims,
including without limitations the proceeds of insurance and condemnation
awards in respect of the Property or any portion thereof, all additional
estates, rights and interests hereafter acquired by the Trustor in the
Property, or any portion thereof, together with all proceeds of the
conversion, whether voluntary or involuntary, of any of the Property into
cash or other liquid claims, including without limitation, all awards,
payments or proceeds, including interest thereof, and the right to receive
the same, which may be made as a result of any casualty, any exercise of the
right of eminent domain or deed in lieu thereof, any injury to the Property
and any defect in title in the Property or other matter insured under any
policy of title insurance, together with attorney's fees, costs and
disbursements incurred by the Beneficiary in connection with the collection
of such awards, payments and proceeds, and the Trustor further grants to the
Beneficiary, pursuant to the California Uniform Commercial Code (the "UCC"),
a security interest in all present and future right, title and interest of
the Trustor in and to any portion of the foregoing property for which a
security interest may be created under the UCC.
(e) Specifically, but without limiting the generality of SUBSECTION (b),
the Beneficiary and the Trustor further intend and agree that, with respect to
that portion of the Property constituting personal property, for the purpose of
securing the Trustor's obligations for the repayment of the above-described
obligations from the Trustor to the Beneficiary, (i) the Lease shall also be
deemed to be a security agreement and financing statement within the meaning of
Article 9 of the UCC; (ii) the conveyance provided for hereby shall be deemed to
be a grant by the Trustor to the Beneficiary of a lien and security interest in
all of the Trustor's present and future right, title and interest in and to such
portion of the Property, including but not limited to the Trustor's leasehold
estate therein and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, investments, securities or other property, whether in
the form of cash, investments, securities or other property to secure such
obligations, effective on the date hereof, to have and to hold such interests in
the Property unto the Beneficiary and its successors and assigns, forever,
provided always that these presents are upon the express condition that, if all
amounts due under the Lease shall have been paid and satisfied in full, then, as
to such personal property, this instrument and the estate hereby granted shall
cease; (iii) the possession by the
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Beneficiary of notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to
be "possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the UCC; and (iv) notifications to
Persons holding such personal property, and acknowledgments, receipts or
confirmations from financial intermediaries, bankers or agents (as
applicable) of the Trustor shall be deemed to have been given for the purpose
of perfecting such security interest under Applicable Law. The Beneficiary
and the Trustor shall, to the extent consistent with this Deed of Trust, take
such actions and execute, deliver, file and record such other documents,
financing statements, mortgages and deeds of trust as may be necessary to
ensure that, if the Lease were deemed to create a security interest in the
Property, such security interest would be deemed to be a perfected security
interest with priority over all Liens other than Permitted Liens, under
Applicable Law and will be maintained as such throughout the Lease Term.
TO HAVE AND TO HOLD the same whether now owned or held or hereafter
acquired unto the Trustee, forever, in trust, however, to secure to the
Beneficiary the payment of the Base Rent, Additional Rent, the Lease Investment
Balance and all other sums owing to the Beneficiary under the Lease and the
performance and observance of the terms, covenants, warranties, conditions,
agreements and obligations under the Lease. If the Trustor shall pay all sums
due under the Lease when due according to the terms thereof and shall otherwise
fully and properly perform and comply with all of the obligations, agreements,
terms and conditions of the Lease, then Beneficiary shall instruct the Trustee
to reconvey this Deed of Trust to the party entitled thereto, without
representation or warranty.
Upon the occurrence of any Event of Default, the Beneficiary may, in
addition to any other remedies set forth in the Lease or the other Lease
Documents, exercise any one or more of the following rights and remedies as it,
in its sole discretion, may deem necessary or appropriate:
(1) collect the Lease Investment Balance, together with all unpaid
Base Rent, Additional Base Rent and Additional Rent, all at the Overdue Rate;
(2) either in person or by agent, with or without bringing any
action or proceeding, or by a receiver appointed by a court, and without
regard to the adequacy of security, enter upon and take possession of the
Property, or any part thereof, in its own name or in the name of Trustor, and
do any acts which it deems necessary or desirable to preserve the value,
marketability or rentability of the Property, or any part thereof or interest
therein, to increase the income therefrom or to protect the security hereof
and, with or without taking possession of the Property, to sue for or
otherwise to collect the rents, issues and profits thereof, including,
without limitation, those past due and unpaid, and to apply the same, less
costs and expenses of operation and collection, including, without
limitation, attorneys' fees, upon any obligations secured hereby, all in such
order as the Beneficiary may determine. The entering upon and taking
possession of the Property, and the collection of such rents, issues and
profits and the application thereof as aforesaid, shall not cure or waive any
Event of Default or notice of default hereunder or invalidate any act done in
response to such Event of Default or pursuant to such notice of default and,
notwithstanding the continuance in possession of the Beneficiary or the
collection, receipt and application of rents, issues or profits by the
Beneficiary, Trustee or the Beneficiary shall be entitled to exercise every
right provided for in any of the Lease Documents or by law upon occurrence of
any Event of Default, including, without limitation, the right to exercise
the power of sale;
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(3) should the Event of Default include the failure of Trustor
to perform any of Trustor's obligations under the Lease Documents, including,
without limitation, the obligation to pay any amount due to any person,
corporation, partnership or other entity or any governmental agency when
required, either the Beneficiary or Trustee may, but shall not be obligated to,
perform the same without notice to or demand upon Trustor, without regard to the
adequacy of its security and without prejudice to its right to declare a default
hereunder. Any amounts so paid and all costs and expenses incurred by the
Beneficiary or Trustee in connection with such payment or performance,
including, without limitation, attorneys' fees, and any other amounts for which
Trustor is specifically obligated to reimburse the Beneficiary or Trustee, or
which Trustee or the Beneficiary is authorized to advance, pursuant to
provisions hereof, shall be payable by Trustor to the Beneficiary or Trustee on
demand with interest at the Overdue Rate from the date paid by the Beneficiary
or Trustee, and shall be secured by this Lease. The payment by the Beneficiary
or Trustee of any tax, assessment or governmental charge for which no receipt is
provided by Trustor as required hereunder, or any lien or encumbrance which the
Beneficiary believes has not been paid, shall be conclusive between the parties
as to the legality and amount of the payment. The Beneficiary or Trustee, as
the case may be, shall be subrogated to all rights, equities and liens
discharged by any such expenditure;
(4) exercise the power of sale described above;
(5) in lieu of sale pursuant to the power of sale conferred
hereby, foreclose upon the lien created herein and hereby in the manner provided
by law for the foreclosure of mortgages on real property, except that nothing
herein shall preclude the commencement of such an action prior to the
consummation of the Trustee's sale of the Property under said power of sale;
(6) declare immediately due and payable without notice or
demand, all monies advanced under the Lease Documents which are then unpaid,
with all interest and sums accrued, and all other obligations of Trustor to
Beneficiary, and accelerate payment thereof notwithstanding contrary terms of
payment stated therein, and exercise all rights and remedies available under any
Lease Document, at law, in equity or otherwise;
(7) as a matter of right, and without notice to Trustor or
anyone claiming under Trustor and without regard to the adequacy of its security
or the then value of the Property or the interest of Trustor therein, apply to
any court having jurisdiction to appoint a receiver or receivers of the Property
and Trustor 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 and all the powers
of the Beneficiary provided for hereinabove, and shall continue as a receiver
and exercise all such powers until the date of confirmation of sale of the
Property unless such receivership is sooner terminated by the Beneficiary in its
sole discretion.
Trustee and the Beneficiary shall be entitled to enforce payment and
performance of any obligations secured hereby and to exercise all rights and
powers under any Lease Document or any laws now or hereafter in force,
notwithstanding that some or all of said obligations secured hereby may now or
hereafter be otherwise secured, whether by mortgage, deed of trust, pledge,
lien, assignment or otherwise. Neither the acceptance of this Lease nor the
enforcement of any remedy hereunder, whether by court action or pursuant to the
power of sale or other powers herein contained, shall prejudice or in any manner
affect Trustee's or the
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Beneficiary's right to realize upon or enforce any other security interests
now or hereafter held by Trustee or the Beneficiary, it being agreed that
Trustee and the Beneficiary, and each of them, shall be entitled to enforce
this Lease and any other security interests now or hereafter held by the
Beneficiary or Trustee in such order and manner as they or either of them may
in their absolute discretion determine. No remedy conferred upon or reserved
to Trustee or the Beneficiary by this Lease or any other Lease Document is
intended to be exclusive of any other remedy, but each shall be cumulative
and shall be in addition to every other remedy given by this Lease or any
other Lease Document or now or hereafter existing at law or in equity or by
statute. Every power or remedy given by any of the Lease Documents to
Trustee or the Beneficiary or to which either of them may be otherwise
entitled, may be exercised, concurrently or independently, from time to time
and as often as may be deemed expedient by Trustee or the Beneficiary, and
either or both of them may pursue inconsistent remedies.
SECTION 4. GOVERNING LAW. THIS DEED OF TRUST SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
SECTION 5. COUNTERPART EXECUTION. This Deed of Trust 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.
SECTION 6. FUTURE ADVANCES; REVOLVING CREDIT. In the event a court of
competent jurisdiction rules that the Lease constitutes a mortgage, deed of
trust or other secured financing, then this instrument will be deemed given to
secure not only existing financing, but also future advances made pursuant to or
as provided in the Lease, whether such advances are obligatory or to be made at
the option of the Beneficiary, or otherwise, to the same extent as if such
future advances were made on the date of execution of this instrument, although
there may be no advance made at the time of execution hereof, and although there
may be no financing outstanding at the time any advance is made. To the fullest
extent permitted by law, the lien of this instrument shall be valid as to all
such amounts, including all future advances, from the time this instrument is
recorded. Notwithstanding anything in this instrument to the contrary, although
the amount of the financing secured by this instrument may increase or decrease
from time to time, the maximum principal amount of the financing secured by this
instrument at any one time shall not exceed Five Million Five Hundred Thousand
Dollars ($5,500,000) , which amount shall be payable as set forth in the Lease,
plus all costs of enforcement and collection of this instrument, the Lease and
the other Lease Documents, plus the total amount of any advances made pursuant
thereto to protect the collateral and the security interest and lien created
hereby, together with interest and other sums accruing on all of the foregoing
as provided in the Lease Documents.
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IN WITNESS WHEREOF, the undersigned Trustor has caused this Deed of Trust
to be duly executed by an officer thereunto duly authorized as of the date and
year first above written.
NOVELLUS SYSTEMS, INC.,
a California corporation
as the Trustor
By:__________________________
Name:__________________
Title:_________________
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Exhibit "A" to Deed of Trust
LEGAL DESCRIPTION
All of Parcel 4, as shown upon that Parcel Map which was filed for
record on the Office of the Recorder of the County of Santa Clara,
State of California, on July 13, 1984, in Book 531 of Maps, at pages
41 and 42.
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STATE OF ______________ )
) ss.
COUNTY OF _____________ )
On ________________, 19__, before me, a notary public, personally
appeared _______________________________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that ___he executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal. (seal)
_________________________________
Notary public
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EXHIBIT Q
TO LEASE
FORM OF ASSIGNMENT
OF REAL PROPERTY
PURCHASE AND SALE AGREEMENT
ASSIGNMENT
OF
OF REAL PROPERTY
PURCHASE AND SALE AGREEMENT
THIS ASSIGNMENT is made as of _________________, 1996, by and between
NOVELLUS SYSTEMS, INC., a California corporation ("Assignor"), and SUMITOMO BANK
LEASING AND FINANCE, INC., as agent for the Lessors ("Assignee").
A. Assignor (as lessee) and Assignee (as lessor) have concurrently
herewith entered into the Purchase and Master Lease Agreement (the "Lease").
B. Assignor has agreed to assign Assignor's rights under the Purchase
Agreement to Assignee, and Assignee has agreed to accept the assignment of
Assignee's entire interest in the Purchase Agreement.
C. The undersigned Seller has consented to the assignment of the Purchase
Agreement to Assignee, and acknowledges that Assignee shall have all of the
rights of Assignor under the Purchase Agreement.
IN CONSIDERATION OF the mutual covenants and conditions set forth
hereinbelow, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee (together,
the "Parties" and each sometimes a "Party") do hereby act and agree as follows:
1. ASSIGNMENT OF PURCHASE AGREEMENT. Assignor hereby sells, assigns,
sets over and transfers to Assignee, all of Assignor's right, title and interest
as the Purchaser under, in and to the Real Property Purchase and Sale Agreement
dated June 7, 1996, as amended, between Zuken-Redac, Inc., a California
corporation ("Seller"), and Assignor (the "Purchase Agreement").
2. WARRANTIES AND REPRESENTATIONS. Assignor hereby warrants and
represents to Assignee that:
(a) Assignor has made no other assignment, pledge, hypothecation
or other transfer of any of its rights, title and interest as the Purchaser
under the Purchase Agreement.
(b) Assignor is fully empowered and duly authorized to make the
assignment set forth herein and such assignment does not breach or conflict
with any of the articles of incorporation, bylaws, resolutions, agreements,
indentures, judgments, orders or decrees to which Assignor is a party or
otherwise subject.
Q-1
(c) Assignor is not in default of any of its obligations under
the Purchase Agreement and no event or condition exists which, by notice or
passage of time, will become such a default.
3. INDEMNIFICATION. Assignor shall hold harmless, indemnify and
defend Assignee against any claim, liability, loss or damages, and all expenses
related thereto, which such Assignee incurs by reason of any of Assignor's
warranties and representations herein proving to be untrue in any material
respect.
4. ASSIGNMENT OF DEPOSIT. Assignor represents and warrants to
Assignee that (a) pursuant to paragraph 4.1 of the Purchase Agreement, Assignor
has deposited $50,000 (together, with interest earned in escrow, the "Deposit")
with First American Title Company, a California corporation, as escrow holder;
and (b) the Deposit is to be applied to payment of the purchase price under the
Purchase Agreement at the Closing (as defined in the Purchase Agreement) or, if
the Purchaser in breach of its obligations under the Purchase Agreement fails to
close, the Deposit is due to the Seller as liquidated damages for such default.
Assignor hereby assigns to Assignee all of its rights to and interest in the
Deposit.
5. DEFINITIONS. Terms defined in any other part of this Assignment
shall have the defined meanings wherever capitalized herein. Capitalized terms
not otherwise defined in this Assignment shall have the meaning ascribed to them
in the Lease. As used in this Assignment, the terms "herein," "hereof" and
"hereunder" refer to this Assignment in its entirety and are not limited to any
specific sections; and the term "person" means any natural person, other legal
entity or combination of natural persons and/or other legal entities. Wherever
appropriate in this Assignment, the singular shall be deemed to refer to the
plural and the plural to the singular, and pronouns of certain genders shall be
deemed to comprehend either or both of the other genders.
6. CAPTIONS. Paragraph headings used herein are for convenience of
reference only and shall not affect the construction of any provision of this
Assignment.
7. COUNTERPARTS. This Assignment, and any amendment hereto, may be
executed in any number of counterparts and by each Party on separate
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute but one and the same
instrument.
8. GOVERNING LAW. This Assignment shall be deemed to be an agreement
made under the laws of the State of California and for all purposes shall be
governed by and construed in accordance with such laws.
9. NOTICE OF ASSIGNMENT. A copy of this Assignment shall be
sufficient notice to all persons of the assignments contained herein and may be
relied upon by any third party.
IN WITNESS WHEREOF, the Parties have each caused this Assignment to be
duly executed and delivered, by their representative(s) authorized thereunto, as
of the date first above-written.
ASSIGNOR:
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NOVELLUS SYSTEMS, INC.,
a California corporation
By:___________________________
Title:________________________
ASSIGNEE:
SUMITOMO BANK LEASING AND FINANCE, INC.
By:___________________________
Title:________________________
THE UNDERSIGNED SELLER CONSENTS AND AGREES TO THE FOREGOING.
Zuken-Redac, Inc., a California corporation
By:___________________________
Name:_________________________
Title:________________________
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EXHIBIT R
TO LEASE
HAZARDOUS MATERIALS
PERMITTED BY LESSOR
[To be completed]
R-1
EXHIBIT S
TO LEASE
RENT PURCHASE AGREEMENT
[RENT PURCHASE AGREEMENT]
S-1
RENT PURCHASE AGREEMENT
Rent Purchase Agreement, dated as of October 24, 1996 (the
"Agreement") between SUMITOMO BANK LEASING AND FINANCE, INC. (the "Seller") and
THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH (the "Purchaser").
WHEREAS, Seller as "Lessor" has entered into a Purchase and Master
Lease Agreement, dated as of October 24, 1996 (the "Lease"), with Novellus
Systems, Inc. (the "Lessee");
WHEREAS, capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the Lease;
WHEREAS, pursuant to the Lease (i) Seller has agreed to purchase one
or more parcels of Land and one or more Improvements on the Land and to lease
such Land and such Improvements to Lessee and (ii) Lessee has agreed to lease
such Land and such Improvements from Seller; and
WHEREAS, the Seller desires to sell certain interests in the rents and
certain other proceeds received under the Lease, and the Purchaser is willing to
purchase such interests under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and confessed, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth in this Section 1:
"Acquisition Price" for a Funding with respect to the Property shall
mean an amount equal to the Acquisition Percentage of the Property Cost of the
Property being purchased on the related Closing Date.
"Applicable Percentage" with respect to the Property shall have the
meaning set forth in the Supplement hereto for such Property.
"Acquisition Percentage" with respect to the Property shall have the
meaning set forth in the Supplement hereto for such Property.
"Base Rent Interest" with respect to the Property means the Seller's
right to receive, in the order of priority set forth in Section 3 hereof, the
sum of (A) so much of (x) each installment of Base Rent with respect to such
Property payable by the Lessee under the Lease that does not exceed (1) the
Acquisition Price paid by Purchaser with respect to such Property,
times (2) the LIBOR Rate plus the number of basis points set forth in the
related Supplement (or, to the extent Section 7(a)(y)(I) of the Lease is
applicable, the Base Rate) times (3) a fraction, the numerator of which is
the number of days elapsed in the period for which such Base Rent was paid
and the denominator of which is 360 plus (y) the same portion of each payment
of interest paid by Lessee at the Overdue Rate on Base Rent with respect to
such Property plus (B) so much of (x) each installment of Additional Base
Rent with respect to such Property payable by Lessee under the Lease that
does not exceed the Applicable Percentage thereof plus (y) the same portion
of each payment of interest paid by Lessee at the Overdue Rate on Additional
Base Rent with respect to such Property.
"Default Amounts" with respect to the Property shall mean all amounts
received by Seller in respect of such Property as a result of the exercise of
remedies under Section 21 of the Lease or otherwise during the continuance of an
Event of Default under the Lease.
"Interests" with respect to the Property means the Base Rent Interest,
the Purchase Price Interest and the Termination Option Interest with respect to
such Property.
"Other Base Rent Interests" with respect to the Property means the
rights to receive amounts with respect to such Property, comparable to the Base
Rent Interest, which have been sold by the Seller pursuant to Other Rent
Purchase Agreements.
"Other Interests" with respect to the Property means the Other Base
Rent Interests, the Other Purchase Price Interests and the Other Termination
Option Interests.
"Other Purchase Price Interests" with respect to the Property, or an
item thereof, means the rights to receive amounts with respect to such Property,
or item, comparable to the Purchase Price Interest, which have been sold by the
Seller pursuant to Other Rent Purchase Agreements.
"Other Rent Purchase Agreements" shall mean one or more Master Rent
Purchase Agreements substantially in the form of this Agreement, providing for
the sale of interests (other than the Interests) in the payments due under the
Lease as provided for herein.
"Other Termination Option Interests" with respect to the Property
means the rights to receive amounts with respect to such Property comparable to
the Termination Option Interest, which have been sold by the Seller pursuant to
Other Rent Purchase Agreements.
"Property" means the parcel of Land and/or one the Improvements, plus
related Fixtures and Personal Property, described in a single Lease Supplement
or, if the context indicates otherwise, described in all Lease Supplements.
"Purchase Price Interest" with respect to the Property (or, in the
case of a payment pursuant to Section 17(c) of the Lease, an item of Property)
means the Seller's right to receive, in
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the order of priority set forth in Section 3 hereof, so much of (x) the Lease
Investment Balance with respect to such Property (or item) payable by the
Lessee to Landlord pursuant to an election under Section 14(a) of the Lease,
or pursuant to Section 17(c) of the Lease, that does not exceed the
Purchaser's Applicable Percentage of the Guaranteed Residual Value with
respect to such Property (or item) plus (y) the same portion of each payment
of interest paid by Lessee at the Overdue Rate on the amounts described in
the preceding clause (x).
"Retained Base Rent Interest" means all rights to receive and retain,
in the order of priority set forth in Section 3 hereof, so much of the Base Rent
and interest due thereon at the Overdue Rate payable by the Lessee under the
Lease that exceeds the Base Rent Interest and the Other Base Rent Interests.
"Retained Interests" means the Retained Base Rent Interest, the
Retained Purchase Price Interest, the Seller's rights to receive and retain the
Risk Amount (and interest due thereon at the Overdue Rate payable by the Lessee
under the Lease) and the Retained Termination Option Interest.
"Retained Purchase Price Interest" means all rights to receive and
retain, in the order of priority set forth in Section 3 hereof, so much of the
Lease Investment Balance payable by the Lessee under the Section 14(a) or 17(c)
of the Lease that exceeds the Purchase Price Interest and the Other Purchase
Price Interests.
"Retained Residual Interests" means all of the Seller's rights, title
and interest in and to the Lease that are not included in the Interests, the
Other Interests or the Retained Interests, including, without limitation, the
rights of Seller under Section 12 and 13 of the Lease and all costs and expenses
(including counsel fees) incurred by Seller in connection with an Event of
Default.
"Retained Termination Option Interest" means all rights to receive and
retain, in the order of priority set forth in Section 3 hereof, so much of the
Termination Amount that exceeds the Termination Option Interest and the Other
Termination Option Interests.
"Security" means the Collateral and the "Collateral" as defined in the
Security Agreement.
"Termination Amount" with respect to the Property means the amount
payable by Lessee under the Lease upon exercise of the Termination Option, being
either the Proceeds with respect to such Property or amounts paid by the Lessee
under the Lease pursuant to Sections 14(c)(iii)(y)(A) and 14(c)(iii)(z), or
Section 14(d), of the Lease with respect to such Property.
"Termination Option Interest" with respect to the Property means the
Seller's right to receive with respect to such Property, in the order of
priority set forth in Section 3 hereof, so much of (x) the Termination Amount
that does not exceed the Applicable Percentage of the
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Guaranteed Residual Value for such Property plus (y) the same portion of each
payment of interest paid by Lessee at the Overdue Rate on the Termination Amount
with respect to such Property.
SECTION 2. PURCHASE AND SALE OF INTERESTS
2.1. AGREEMENT TO PURCHASE AND SELL
Subject to the satisfaction or waiver by the Purchaser of the
conditions set forth in Section 2.2, the Purchaser agrees hereby to purchase the
Interests with respect to the Property by paying the Acquisition Price for each
Funding for such Property on the terms and conditions set forth herein;
PROVIDED, HOWEVER, that in no event shall the Acquisition Price exceed
$5,199,094.31.
Subject to the payment of the Acquisition Price, Seller does hereby
ABSOLUTELY SELL, ASSIGN, TRANSFER and CONVEY unto the Purchaser all Seller's
right, title and interest in and to the Interests with respect to the Property;
provided that this sale is without recourse to Seller (except to the extent of
the representations expressly set forth herein).
The sale of the Interests herein is a presently effective, absolute
and unconditional assignment and transfer of the Interests.
As a further inducement to the Purchaser, Seller covenants and agrees
not to assert any claim or cause of action against the Purchaser or seek to
recover the Interests on the grounds that this Agreement is a collateral
assignment or is given as security for indebtedness rather than as an absolute
present assignment.
2.2. CONDITIONS PRECEDENT TO SALE
The obligations of the Purchaser to purchase the Interests with
respect to the Property on a Closing Date and the Seller to sell the Interests
with respect to such Property on such Closing Date are subject to the prior
fulfillment to the satisfaction of, or the waiver by, the Seller and the
Purchaser, of the following conditions precedent:
(i) this Agreement and the Lease Documents with respect to such
Property shall have been duly authorized, executed and delivered by the
respective party or parties thereto, and executed counterparts or certified
copies thereof shall have been delivered to the Purchaser.
(ii) The Purchaser shall have received from the Seller copies of the
following, in each case in form and substance satisfactory to it:
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(1) a copy of the charter documents and by-laws of Lessee and
of resolutions of the board of directors of Lessee (or other evidence of
authorization), certified by the Secretary or an Assistant Secretary of Lessee,
duly authorizing the lease by Lessee of such Property under the Lease and the
execution, delivery and performance by Lessee of the Lease Documents; and
(2) an incumbency certificate of Lessee regarding the persons
who executed the Lease Documents with respect to such Property on behalf of
Lessee.
(iii) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency to set aside, restrain, enjoin or prevent the
completion and consummation of this Agreement or the transactions contemplated
hereby.
(iv) The Purchaser shall have received the notice referred to in
Section 2.3 hereof with respect to such Property and Closing Date.
(v) Each representation and warranty of Lessee contained in the Lease
or in any other Lease Document shall be true and correct as of such Closing
Date.
(vi) No change shall have occurred after the Business Day immediately
prior to the date of execution of this Agreement in any applicable laws or
regulations that, in the opinion of the Purchaser, the Seller or their
respective counsel, would make it illegal for the Purchaser or Seller to
participate in the transactions contemplated by this Agreement with respect to
such Property.
(vii) The Purchaser shall have received a copy of the appraisal
obtained by the Seller with respect to such Property.
2.3. PROCEDURES FOR PURCHASE AND SALE
The Seller agrees to give the Purchaser three Business Days' notice of
each proposed Closing Date. Any such notice shall specify (i) the Property to
be financed on such date, (ii) the Closing Date and (iii) the Acquisition Price
for the related Funding.
On the Closing Date, the Purchaser shall make a payment in respect of
its purchase of the Interests being funded on such Closing Date by making the
Acquisition Price for such Closing available to the Seller prior to 12:00 noon
New York time by wire transfer in immediately available funds at the account of
the Seller at The Sumitomo Bank, Limited, New York Branch, or at such other
account that Seller shall notify Purchaser in writing. In the event that
Purchaser shall fail to make available to the Seller the full amount of such
Acquisition Price by 12:00 noon New York time, the Seller may, but shall have no
obligation to, fund such
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Acquisition Price, and the amount of the Acquisition Price so funded shall be
for the account of the Purchaser. In the event that the Seller shall advance
any such amount, the Purchaser shall pay to the Seller on demand the amount
of such advance with interest thereon at a rate equal to the average federal
funds rate for the period from the Closing Date to the date on which the
Purchaser makes such advance available to the Seller in immediately available
funds at the account referenced above. If the Purchaser does not make such
advance available to the Seller within three Business Days after the Closing
Date, the Seller shall be entitled to recover such advance with interest
thereon at the Overdue Rate, on demand, from the Purchaser.
2.4. UCC FILING
Upon request of Purchaser, Seller agrees that it will cause a Uniform
Commercial Code financing statement or statements covering all the Interests
sold pursuant to this Agreement to be executed and delivered by the Seller, as
debtor, and by the Purchaser, as secured party, and such financing statement or
statements will be duly filed in all places necessary to perfect the sale of the
Interests pursuant to this Agreement, and any additional Uniform Commercial Code
financing statements deemed advisable by the Purchaser, and all filing and
recordation fees payable in connection therewith will be paid by Purchaser.
Such financing statements shall state that they are being filed to perfect a
sale of the Interests, and that no inference that a security interest has been
granted to the Purchaser shall be made as a result of such filing.
SECTION 3. DISTRIBUTIONS
3.1 GENERAL
The Seller shall promptly upon the receipt in collected funds of any
amount constituting a part of the Interests, the Other Interests or the Retained
Interests distribute the same in the order of priority set forth in this Section
3. Distributions to the Purchaser shall be made by wire transfer in immediately
available funds to the Purchaser's account at Sumitomo Bank of California, ABA
No. 121002042, or such other account in the United States as the Purchaser shall
notify the Seller in writing at least five Business Days before the date of such
distribution. The Seller shall in no event be held accountable for any amount
in excess of the amounts actually collected by the Seller under the Lease and
the Lease Documents.
If the Seller receives any amount to be distributed pursuant to this
Section 3 prior to 11:00 a.m. New York time, it shall distribute any amount
distributable to the Purchaser by 2:00 p.m. New York time. If the Seller
receives any such amount after 11:00 a.m. New York time it shall distribute such
amount to the Purchaser on the next Business day. In the event that the Seller
shall fail to make any such distribution by the time specified, the Seller shall
pay to Purchaser on demand the amount of such distribution with interest thereon
at a rate equal to the average federal funds rate for the period from the
required date of distribution to the date on which the Seller makes such
distribution available to the Purchaser in immediately available
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funds at the account referenced above. If the Seller does not make such
distribution available to the Purchaser within three Business Days after the
required date of distribution, the Purchaser shall be entitled to recover
such distribution with interest thereon at the Overdue Rate, on demand, from
the Seller.
3.2. PRIORITY
3.2.1. RETAINED RESIDUAL INTERESTS
All amounts received by the Seller constituting a part of the
Interests, the Other Interests or the Retained Interests shall be distributed
FIRST, to the Seller for application by the Seller to any unpaid amounts due to
the Seller in respect of the Retained Residual Interests, and SECOND, as
provided in Sections 3.2.2 to 3.2.5 below; PROVIDED, that if the Seller shall
receive from the Lessee at any time after the Seller shall have made a
distribution in respect of clause FIRST of this Section 3.2.1 an amount (a
"Reimbursed Amount") in respect of the amount so distributed, the Seller shall
distribute such Reimbursed Amount as provided in clause SECOND of this Section
3.2.1.
3.2.2. BASE RENT
So much of the amount of any payment of Base Rent with respect
to the Property or interest on any overdue installment of such Base Rent
remaining after application of clause FIRST of Section 3.2.1 shall be
distributed by the Seller pro rata among the Purchaser, the Other Purchasers,
if any, and the Seller, in proportion to their respective Base Rent Interest,
Retained Base Rent Interest and Other Base Rent Interests with respect to such
Property.
3.2.3. PURCHASE PRICE
So much of the amount of any payment of Purchase Price with
respect to the Property remaining after the application of clause FIRST of
Section 3.2.1 shall be distributed by the Seller in the following order of
priority:
FIRST: so much of such amount remaining that does not
exceed the Risk Amount with respect to such Property shall be paid to the
Seller;
SECOND: so much of such amount remaining after
application pursuant to clause FIRST, that does not exceed the Guaranteed
Residual Value, shall be paid pro rata to the Seller, the Purchaser and the
Other Purchasers in proportion to their respective Retained Purchase Price
Interest, Purchase Price Interest and Other Purchase Price Interests; and
THIRD: the balance, if any, shall be retained by
the Seller.
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3.2 TERMINATION OPTION
So much of the Termination Amount payable by the Lessee with respect
to the Property remaining after application of clause FIRST of Section 3.2.1
shall be distributed by the Seller in the following order of priority:
FIRST: so much of such amount remaining that does
not exceed the Guaranteed Residual Value for such Property shall be paid
pro rata to the Seller, the Purchaser and the Other Purchasers in
proportion to their respective Retained Termination Option Interest,
Termination Option Interest and Other Termination Option Interests; and
SECOND: the balance, if any, shall be retained by the
Seller.
3.2.5 DEFAULT
So much of the amount of any payment of Default Amounts with respect
to the Property remaining after application of clause FIRST of Section 3.2.1
shall be distributed by the Seller in the following order of priority in the
case of Default Amounts arising from the exercise by Seller of remedies against
the Collateral:
FIRST: so much of such amount remaining that does
not exceed an amount equal to the Risk Amount for such Property shall be
paid to the Seller;
SECOND: so much of such amount remaining after
application of clause FIRST that does not exceed the amount of accrued and
unpaid Base Rent for such Property and interest on any overdue Base Rent
for such Property shall be distributed as provided in Section 3.2.2;
THIRD: so much of such amount remaining after
application pursuant to clause SECOND, that does not exceed the Guaranteed
Residual Value for such Property shall be paid pro rata to the Seller, the
Purchaser and the Other Purchasers in proportion to their respective
Retained Purchase Price Interest, Purchase Price Interest and Other
Purchase Price Interests; and
FOURTH: the balance, if any, shall be retained by
the Seller.
In the event more than one Property is sold as a unit as a result of
the exercise of remedies under the Lease, the portion of the proceeds from such
sale allocable to each Property shall be finally determined by mutual agreement
of the Seller and the Purchaser and, failing such agreement within 10 days after
either requests agreement of the other, by an independent appraiser selected by
Seller and reasonably acceptable to Purchaser.
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So much of the amount of any payment of Default Amounts with respect
to the Property remaining after application of clause FIRST of Section 3.2.1
shall be distributed by the Seller in the following order of priority in the
case of Default Amounts arising from the collection by Seller of amounts from
the Lessee or from the Collateral (as defined in the Security Agreement):
FIRST: so much of such amount remaining that does
not exceed the Guaranteed Residual Value for such Property shall be paid
pro rata to the Seller, the Purchaser and the Other Purchasers in
proportion to their respective Retained Purchase Price Interest, Purchase
Price Interest and Other Purchase Price Interests; and
SECOND: so much of such amount remaining after
application of clause FIRST that does not exceed the amount of accrued and
unpaid Base Rent for such Property and interest on any overdue Base Rent
for such Property shall be distributed to the Purchaser and the Other
Purchasers in proportion to the Base Rent Interest and the Other Base Rent
Interests;
THIRD: the balance, if any, shall be retained by
the Seller.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1. REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to the Purchaser on the date hereof
and on each Closing Date as follows:
(i) the Seller is organized and validly existing in good standing
under the laws of its jurisdiction of incorporation, and has the corporate
power and authority to enter into and perform its obligations under this
Agreement;
(ii) this Agreement has been duly authorized by all necessary
corporate action on the part of the Seller and the execution, delivery and
performance hereof by the Seller do not require the consent or approval of,
the giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal, state or foreign governmental authority
or agency by Seller, except as contemplated by Section 2.4 and such as have
been duly obtained and are in full force and effect and do not require any
approval of stockholders of the Seller or any approval or consent of any
trustee or holders of any indebtedness or obligations of the Seller, and
has been duly executed and delivered by the Seller, and neither the
execution and delivery hereof, nor the consummation of the transactions
contemplated hereby, nor compliance by the Seller with any of the terms and
provisions hereof will contravene any law of the country and state of
incorporation of the Seller or any judgment, governmental rule, regulation
or order applicable to or binding on
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the Seller or contravene or result in any breach of or constitute any
default under, or result in the creation of any Lien upon any property
of the Seller under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, charter,
by-law or other agreement or instrument to which the Seller is a party or
by which it or its properties may be bound or affected;
(iii) this Agreement constitutes a legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance with
the terms hereof; and
(iv) there are no suits or proceedings pending, or, to the best
knowledge of the Seller, threatened, against or affecting the Seller before
any court, governmental agency or arbitrator, which in the good faith
opinion of the Seller after consultation with counsel, would if adversely
determined have a material adverse effect on the Interests or the financial
condition of the Seller or which would purport to affect the legality,
validity or enforceability of this Agreement; and
(v) Seller acknowledges receiving a copy of the Lease Documents.
The Seller shall, by accepting each Acquisition Price as provided in
this Agreement on any Closing Date, be deemed to have reaffirmed the
representations and warranties made by it in this Agreement on such Closing
Date.
4.2. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Seller on the date hereof
and on each Closing Date as follows:
(i) the Purchaser is organized and validly existing in good standing
under the laws of the its jurisdiction of incorporation, and has the
corporate power and authority to enter into and perform its obligations
under this Agreement;
(ii) this Agreement has been duly authorized by all necessary
corporate action on the part of the Purchaser and the execution, delivery
and performance hereof by the Purchaser do not require the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of, any Federal, state or foreign
governmental authority or agency by Purchaser, except such as have been
duly obtained and are in full force and effect and do not require any
approval of stockholders of the Purchaser or any approval or consent of any
trustee or holders of any indebtedness or obligations of the Purchaser, and
has been duly executed and delivered by the Purchaser, and neither the
execution and delivery hereof, nor the consummation of the transactions
contemplated hereby, nor compliance by the Purchaser with any of the terms
and provisions hereof will contravene any law of the country and state of
incorporation of the Purchaser or any judgment, governmental rule,
regulation or order applicable to or
- 10 -
binding on the Purchaser or contravene or result in any breach of or
constitute any default under, or result in the creation of any Lien upon
any property of the Purchaser under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or credit
agreement, charter, by-law or other agreement or instrument to which the
Purchaser is a party or by which it or its properties may be bound or
affected;
(iii) this Agreement constitutes a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance
with the terms hereof; and
(iv) there are no suits or proceedings pending, or, to the best
knowledge of the Purchaser, threatened, against or affecting the Purchaser
before any court, governmental agency or arbitrator, which in the good
faith opinion of the Purchaser after consultation with counsel, would if
adversely determined have a material adverse effect on or the financial
condition of the Purchaser or which would purport to affect the legality,
validity or enforceability of this Agreement.
The Purchaser shall, by making the Acquisition Price available as
provided in this Agreement on any Closing Date, be deemed to have reaffirmed the
representations and warranties made by it in this Agreement on such Closing
Date.
4.3. COVENANTS
4.3.1 PERFORMANCE OF LESSOR'S OBLIGATIONS
Purchaser is not hereby obligated to perform or discharge any
obligation or duty of the Seller or the Agent under the Lease, and this
Agreement shall not be deemed to impose upon Purchaser or Seller any liability
or responsibility of any nature for, or pertaining to, the control, maintenance,
management, or repair of any Property.
4.3.2. EXERCISE OF RIGHTS UNDER LEASE
The Purchaser acknowledges and agrees that (i) all rights of the
Seller to exercise any remedy (including remedies against the Security),
election or option, or make any decision or determination, or give any notice,
consent, waiver or approval under or in respect of, the Lease or any other Lease
Document, (ii) all rights of the Seller to receive and to enforce the payment of
the full amount of any damages (whether or not an Event of Default under the
Lease has occurred), each installment of Base Rent, Additional Base Rent and all
other amounts payable under the Lease and any other Lease Documents, all amounts
payable on account of any actual or constructive loss or damage to any Property
or any part thereof, all payments of or on account of Termination Amount or
purchase price and all insurance proceeds, condemnation or requisition payments
or other payments of any kind for or with respect to any Property or any part
thereof have been expressly retained by the Seller as part of the Retained
Residual Interests and that the Seller may exercise such rights in its sole
discretion. Notwithstanding the foregoing,
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the Seller agrees that, so long as no Event of Default under the Lease
exists, it will not amend or modify the Lease Documents or grant any waiver
or exercise any election or option, if the effect thereof would be to change
the amount or timing of payment of any amount comprising a part of the
Interests (other than Default Amounts) or to discharge Agent's Lien on the
Security.
Without limiting the foregoing, the Purchaser agrees that, if an Event
of Default under the Lease occurs and is continuing, the Seller shall have the
sole right to enforce the payment of all amounts (including amounts comprising
the Interests) due under the Lease Documents and that in enforcing such payment
(including by realizing against the Security), the Seller may enter into any
compromise or settlement with the Lessee or may exercise any remedy available to
the Seller under the Lease Documents and as a result of such compromise,
settlement or exercise of remedies, the Lessee's obligation to pay any amount
comprising a part of the Interests may be satisfied or waived. The Seller may
enter into any compromise or settlement (whether or not by satisfaction and
accord) or exercise any remedy in its sole discretion, without regard to any
consequences to the Purchaser and the Seller shall have no duty (fiduciary or
other) to consider such consequences in dealing with the Lessee.
Seller can take any of the actions described in the preceding two
paragraphs directly, or indirectly through the Agent.
For avoidance of doubt and without limiting the foregoing, the Seller
may exercise any of its rights with respect to the sale or reletting of any
Property in its own self interest without regard to the interests of the
Purchaser and the Seller shall have no obligation to seek any amount in excess
of the amounts distributable to Seller pursuant to Section 3.2.5 hereof or to
increase or maximize such excess by any means whatsoever.
4.3.3. SALE OF OTHER INTERESTS
The Purchaser acknowledges that the Seller has sold or may sell a
part, but not all, of the Retained Interests to Other Purchasers pursuant to
Other Rent Purchase Agreements. The Purchaser agrees that the rights of such
Other Purchasers in each element comprising the Other Interests shall rank PARI
PASSU with the rights of the Purchaser in the corresponding elements of the
Interests. In the event that the Purchaser shall receive any amount pursuant to
a distribution under Section 3 hereof that is greater than its pro rata share
(based on the relative percentage interests comprising the Interests and the
Other Interests with respect to a particular Property) of such amount, the
Purchaser shall pay over to the Other Purchasers of which it has received notice
so much of such distribution as is necessary to make the distribution (after
such payment) pro rata. The Seller agrees that it will not enter into an Other
Rent Purchase Agreement unless such Other Rent Purchase Agreement contains a
provision identical of this Section 4.3.3.
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4.3.4. RETURN OF DISTRIBUTION
In the event that the Seller shall be required, as the result of any
bankruptcy or insolvency proceeding of the Lessee or otherwise, to return to the
Lessee or pay over to any court or other entity an amount (a "Returned Amount")
that was distributed pursuant to Section 3 hereof, the Purchaser shall on demand
from the Seller pay to the Seller so much of the Returned Amount that was
distributed to the Purchaser. On such payment, the Purchaser's right to receive
such payment shall be reinstated as if no distribution of the Returned Amount
has been made.
4.3.5. THIRD PARTY BENEFICIARY
Seller acknowledges that Purchaser is a third party beneficiary of
certain of Lessee's obligations as provided in the last sentence of Section
23(a) of the Lease and that Purchaser may enforce directly against Lessee (but
not the Security) any obligations of Lessee to Purchaser under Sections 8, 12 or
13 of the Lease.
SECTION 5. MISCELLANEOUS
5.1 COUNTERPARTS
This Agreement may be executed by the parties hereto in multiple
counterparts and each counterpart, when so executed, shall be deemed an
original, but all of which shall be considered as one agreement. Further, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
5.2 SURVIVAL
The representations, warranties, indemnities and agreements of the
Seller and Purchaser provided for in this Agreement, shall survive the purchase
of the Interests by the Purchaser.
5.3 MODIFICATION, BINDING EFFECT, ETC.
Neither this Agreement nor any of the terms hereof may be terminated,
amended, supplemented, waived or modified, except by an instrument in writing
signed by the party against which the enforcement of the termination, amendment,
supplement, waiver or modification is sought. The terms of this Agreement shall
be binding upon, and inure to the benefit of, the Purchaser and its successors
and permitted assigns and the Seller and its successors and the permitted
assigns. This Agreement shall in all respects be governed by, and construed in
accordance with, the laws of the State of New York, including all matters of
construction, validity and performance.
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5.4. ASSIGNMENT
Purchaser may not assign any of its rights or obligations hereto (by
participation or otherwise) without the prior written consent of Seller. Seller
may assign its rights and obligations hereunder to any successor "Lessor" under
the Lease without consent from Purchaser.
5.5. LIABILITY
Neither the Seller nor any of its Affiliates, directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (a) any statement, warranty or representation made in
connection with the Lease Documents; (b) the performance or observance of any of
the covenants or agreements of Lessee; (c) the satisfaction of any condition
specified in Section 3 of the Lease; or (d) the validity, effectiveness or
genuineness of any of the Lease Documents or any other instrument or writing
furnished in connection herewith or therewith.
Purchaser acknowledges that it has, independently and without reliance
upon the Seller, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Purchaser also acknowledges that it will, independently and without
reliance upon the Seller, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
5.6. AGENT
The parties agree that Seller is not a party hereto in its capacity as
Agent under the Lease and Seller is not assigning, and Purchaser is not
obtaining, any of the rights or obligations whatsoever of Agent under the Lease
Documents.
5.7. NOTICES
Any notice hereunder shall be in writing. Notices given by telegram,
telecopier or personal delivery shall be deemed to have been given and received
when sent and notices given by mail shall be deemed to have been given and
received four Business Days after the date when sent by registered or certified
mail, postage prepaid, and addressed to Seller or Purchaser at its address shown
below its signature hereto, or at such other address as Seller or Purchaser may,
by written notice received by the other, have designated as its address for such
purpose.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
SUMITOMO BANK LEASING AND FINANCE, INC.
277 Park Avenue
New York, New York 10172
Attention: Chief Credit Officer
By:_______________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED, San Francisco Branch
555 California Street
Suite 3350
San Francisco, California 94104
By:_______________________________
Name:
Title:
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EXHIBIT A
Supplement No. 1 to Rent Purchase Agreement
1. The parties hereto agree that this is Supplement No. 1 to Rent
Purchase Agreement, dated as of October ____, 1996, between the parties hereto.
2. The Supplement relates to the following Property:
all of the Property referenced in the Purchase and Master Lease Agreement, dated
as of October ____, 1996 between Novellus Systems, Inc. and Sumitomo Bank
Leasing and Finance, Inc.
3. The Acquisition Percentage is ______________.
4. The number of basis points applicable to the definition of Base
Rent is ____ basis points.
5. The Applicable Percentage is ____%.
IN WITNESS WHEREOF the parties have caused this Supplement to be duly
executed and delivered this _____ day of October, 1996.
SUMITOMO BANK LEASING
AND FINANCE, INC.
By:_______________________________
Title:
THE SUMITOMO BANK, LIMITED, San
Francisco Branch
By:_______________________________
Title:
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of October 24, 1996, from Novellus
Systems, Inc., a California corporation ("Lessee"), to Sumitomo Bank Leasing and
Finance, Inc., as Agent under the Lease referenced below ("Secured Party"),
recites and provides as follows:
W I T N E S S E T H:
WHEREAS, Lessee and Secured Party have entered into a Purchase and
Master Lease Agreement dated as of October 24, 1996 (the "Lease"), pursuant to
which Lessee has leased from Secured Party certain Property;
WHEREAS, as a material inducement for Secured Party to enter into the
Lease and the Lease Documents, Lessee has agreed to execute and deliver this
Agreement for the purpose of securing the Secured Obligations and for the
purpose of subjecting the Collateral to the Lien of this Agreement as security
for the payment and performance of the Secured Obligations.
IT IS HEREBY COVENANTED AND DECLARED by and between the parties hereto
and their respective successors and assigns that the terms upon which the
Collateral shall be held and used are as follows:
ARTICLE 1
DEFINITIONS; INTERPRETATION
Section 1.1 CERTAIN DEFINITIONS. In this Agreement the following
capitalized terms have the respective following meanings:
"COLLATERAL" means the Receiving Account, the U.S. Government
Obligations, any proceeds thereof and any cash or other property now or
hereafter standing to the credit of the Receiving Account.
"CUSTODIAN" shall mean Hambrecht & Quist LLC, a limited liability
company, and any successor custodian selected by Lessee and acceptable to the
Secured Party in its sole discretion.
"CUSTODIAN ACCOUNT AGREEMENT" means the letter agreement dated as of
October ____, 1996, among the Lessee, the Custodian and the Secured Party, in
the form of EXHIBIT A hereto.
"DEPOSIT DATE" means each date on which Lessee is required to provide
to Secured Party Government Securities pursuant to Section 4(g) of the Lease.
"DEPOSITARY INSTITUTION" means a financial institution that has a
book-entry account in its name at the Fed and that regularly accepts in the
course of its business U.S. Government obligations as a custodial service for
customers and maintains accounts in the names of such customers reflecting
ownership of or an interest in such securities.
"DESIGNATED DEPOSITARY INSTITUTION" means a Depositary Institution
selected by the Custodian and satisfactory to the Secured Party.
"ELIGIBLE U.S. GOVERNMENT OBLIGATIONS" means direct obligations of the
Treasury Department of the United States of America, fully guaranteed by the
full faith and credit of the United States of America, in book-entry form, with
maturities of three years or less.
"FED" means the Federal Reserve Bank of New York.
"NOTICE" means notice to the Custodian of the Secured Party's security
interest in U.S. Government Obligations recorded on the books of such Custodian,
substantially in the form of the letter of notification attached hereto as
EXHIBIT B and all schedules and annexes thereto.
"RECEIVING ACCOUNT" means the account established by the Lessee with
the Custodian having the account information set forth on EXHIBIT B hereto.
"SECURED OBLIGATIONS" means, collectively (i) the obligation of the
Lessee to perform when due any obligation, or pay when due any amount, under the
Lease Documents and (ii) the obligations of the Lessee now or hereafter existing
under this Agreement.
"U.S. GOVERNMENT OBLIGATIONS" means Eligible U.S. Government
Obligations subjected to the Lien of this Agreement pursuant to Section
2.1(A)(i) or 3.4 hereof.
Section 1.2 DEFINITIONS NOT DEFINED HEREIN. Capitalized terms used
herein and not otherwise defined herein shall have the meanings specified in the
Lease.
ARTICLE 2
PURCHASE, PLEDGE AND ASSIGNMENT
2.1 PURCHASE, PLEDGE AND ASSIGNMENT
(A) On the Closing and each Deposit Date, Lessee shall instruct
Custodian to:
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(i) purchase Eligible U.S. Government Obligations with a value
at least equal to 102% of the Guaranteed Residual Value of
the related Property;
(ii) hold such Eligible U.S. Government Obligations in and pay,
or cause to be paid, all proceeds of such Eligible U.S.
Government Obligations at maturity or otherwise to the
Receiving Account, subject to this Agreement and the
Custodian Account Agreement;
(iii) ensure that the Designated Depositary Institution
causes the Fed to record by book entry the transfer of
such Eligible U.S. Government Obligations to the
Designated Depositary Institution;
(iv) ensure that the Designated Depositary Institution
identifies, by book entry, such Eligible U.S. Government
Obligations as belonging to the Custodian and provides
written confirmation thereof to the Custodian each in
accordance with Section 8313(1)(d) of the California Uniform
Commercial Code; and
(v) identify, by book entry, such Eligible U.S. Government
Obligations as belonging to the Lessee and provide written
confirmation thereof to the Lessee, each in accordance with
Section 8313(1)(d) of the California Uniform Commercial
Code.
(B) As security for the prompt payment and performance when due of
all the Secured Obligations, Lessee hereby pledges to Secured Party and grants a
first priority security interest in, and a Lien upon and right of set-off
against, the Collateral.
(C) To effect the pledge and perfect the security interest granted by
Lessee hereunder, on the Closing and each Deposit Date, Lessee shall give Notice
to the Custodian of the Secured Party's security interest in the Collateral, and
at such time instruct the Custodian to (i) identify by book entry the U.S.
Government Obligations of Lessee that are being held in the Receiving Account as
being subject to the security interest created hereunder in favor of the Secured
Party, and (ii) execute and deliver a confirmation substantially in the form
annexed to the Notice, in the case of (i) and (ii) above each in accordance with
Section 8313(1)(d) of the California Uniform Commercial Code.
(D) Lessee agrees not to withdraw, liquidate, sell, convey, endorse,
negotiate, or in any way dispose of, or create, incur or permit to exist any
Lien whatsoever, or cause any of the foregoing to occur in or with respect to,
any of the Collateral without the prior written consent of Secured Party, other
than pursuant to Section 3.4 hereof.
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(E) Lessee agrees, at no expense to Secured Party, to defend Secured
Party's security interest in and to the Collateral against the claims of any
Person (other than claims arising as a result of an act or omission of the
Secured Party) and to ensure that Secured Party has at all times pursuant to
this Agreement a valid and perfected first priority perfected Lien on and
security interest in the Collateral, subject to no prior or equal Lien or
security interest whatsoever (other than claims arising as a result of an act or
omission of the Secured Party).
(F) All rights of the Secured Party hereunder, and all obligations of
Lessee hereunder, shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of this Agreement or any Lease Document; (ii)
any change in the time, manner or place of payment of, or any other term of, all
or any of the Secured Obligations, or any amendment or waiver of or any consent
to any departure from this Agreement or the Lease Documents; (iii) any taking,
exchange, release or non-perfection of any other collateral or any taking,
release or amendment or waiver of or consent to departure from any guaranty or
indemnity for all or any of the Secured Obligations; (iv) any manner of
application of collateral, or proceeds thereof, to all or any of the Secured
Obligations, or any manner of sale or disposition of any collateral for all or
any of the Secured Obligations or any other assets of Lessee; and (v) any
change, restructuring or termination of the corporate existence of the Lessee.
ARTICLE 3
COVENANTS OF LESSEE
3.1 WAIVER OF DILIGENCE, PROTEST, ETC. Lessee hereby expressly
waives (i) any requirement that any right or power be exhausted or any action be
taken against Lessee, or any other Person with respect to the Secured
Obligations, (ii) except as otherwise set forth in the Lease, all notices
(whether of non-payment or non-performance by any Person, dishonor, protest or
otherwise) with respect to any of the Secured Obligations and (iii) notice of
acceptance of this Agreement by the Secured Party or any other Persons.
3.2 NO SET-OFF.
(A) Lessee and Secured Party acknowledge that the Custodian may from
time to time have other banking relationships with the Lessee or Secured Party
that are not related to the transactions contemplated by the Lease.
(B) No set-off, counterclaim, reduction or diminution of any
obligation, or any defense of any kind or nature (other than complete
performance by Lessee of its obligations hereunder) which Lessee may have or
assert against Secured Party or any other Lessor, shall be available hereunder
to, or shall be asserted by, Lessee in any action arising out of the
transactions contemplated hereby or out of any of the documents or instruments
referred to herein or otherwise.
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3.3 MAINTAINING THE RECEIVING ACCOUNT.
(A) So long as the Lease remains in full force and effect or any of
the Secured Obligations remain outstanding, Lessee shall maintain the Receiving
Account with the Custodian subject at all times to this Agreement and the
Custodian Account Agreement.
(B) Except as set forth in Section 3.5, it shall be a term and
condition of the Custodian Account Agreement that, notwithstanding any term or
condition to the contrary in any other agreement relating to the Receiving
Account, no U.S. Government Obligation held in the Receiving Account and no
proceeds thereof whether through liquidation, maturity or otherwise, shall be
transferred or delivered to any Person (other than the Secured Party) from the
Receiving Account without the prior written consent of the Secured Party.
3.4 SUBSTITUTION. At any time Lessee (or its designee, which
designee has been approved by Secured Party) may instruct the Custodian to sell
a U.S. Government Obligation and immediately use the proceeds of sale to
purchase other Eligible U.S. Government Obligation(s) which the Custodian shall
immediately treat as a U.S. Government Obligation, including without limitation
for purposes of Section 2.1(A)(ii)-(v). Lessee shall not request such sale,
however, unless after the related purchase Lessee remains in compliance with
Section 2.1(A)(i).
3.5 RELEASE OF CERTAIN ACCRUED INTEREST. Subject to and in
accordance with Section 4(g)(vi) of the Lease, Secured Party shall cause the
Custodian to release to Lessee certain Government Securities, cash and interest
that accrues with respect to the Government Securities that is held by or in the
control of Custodian.
ARTICLE 4
REMEDIES
Section 4.1 REPOSSESSION. Lessee agrees that (a) Secured Party
shall have all of the rights and remedies with respect to the Collateral of a
secured party under the California Uniform Commercial Code (whether or not in
effect in the jurisdiction where the rights and remedies are asserted) and all
of the rights and powers provided in this Agreement and (b) upon the occurrence
of an Event of Default, and during the continuation thereof, Secured Party, by
agent or representative, shall have the right and power to take possession of
all or any part of the Collateral, and to exclude Lessee and all Persons
claiming under Lessee wholly or partly therefrom, and thereafter to hold, use,
manage and control the same (it being understood and agreed that Secured Party
may instruct the Designated Depositary Institution in writing to take any of the
actions expressed as being permitted to be taken by Secured Party under this
Article 4), including, without limitation, applying the Collateral to payment of
the Secured Obligations.
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4.2 POWER OF SALE, SUITS FOR ENFORCEMENT. Subject to the limitations
of Section 4.3, if there exists an Event of Default, Secured Party, personally
or by agents, with or without possession of the Collateral, may take any one or
more of the following actions.
(a) (i) Secured Party may, without being required to give any notice
except as hereinafter provided, apply the cash or other property in the
Receiving Account to the payment of any Secured Obligations then due and,
if there shall be no such cash or other property or the cash or other
property so applied shall be insufficient to pay in full all such Secured
Obligations, sell or cause to be sold an amount of the U.S. Government
Obligations sufficient to discharge any Secured Obligations then due at
public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery, and in the case of
a public sale to the highest bidder and in the case of a private sale, or
at any broker's board or on any securities exchange, in a commercially
reasonable manner in accordance with Applicable Law of the United Sates of
America and the State of California.
(ii) Secured Party is authorized, at any such sale, if it deems it
advisable so to do, to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing for their own
account, for investment, and not with a view to the distribution or sale of
any of the U.S. Government Obligations;
(iii) upon any such sale Secured Party shall have the right to
deliver, assign and transfer to the purchaser thereof the U.S. Government
Obligations so sold. Each purchaser (including Secured Party and any other
holder of any of the U.S. Government Obligations) at any such sale shall
hold the property sold absolutely, free from any claim or right of
whatsoever kind, including any equity or rights of redemption, of Lessee,
who hereby specifically waives as against any such purchaser all rights of
redemption, stay or appraisal which it has or may have under any rule of
law or statute now existing or hereafter adopted;
(iv) any such public sale shall be held at such time or times within
the ordinary business hours and at such place or places in the City of San
Francisco, or elsewhere, as Secured Party may fix in the notice of such
sale. At any such sale the U.S. Government Obligations, or that portion
thereof so being sold, may be sold in one lot as an entirety or in separate
portions, as Secured Party may determine.
(v) Secured Party shall not be obligated to make any sale pursuant to
any such notice. Secured Party may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale, and such
sale may be made at any time or place to which the same may be so
adjourned;
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(vi) in case of any sale of all or any part of the U.S. Government
Obligations on credit or for future delivery, the U.S. Government
Obligations so sold must be retained by Secured Party until the selling
price is paid by the purchaser thereof, but Secured Party shall not incur
any liability in case of the failure of such purchaser to take up and pay
for the U.S. Government Obligations so sold and, in case of any such
failure, such U.S. Government Obligations may again be sold upon like
notice; or
(b) proceed to protect and enforce the rights of Secured Party under
this Agreement by suit, whether for specific performance of any covenant
herein contained, or in aid of the execution of any power herein granted,
or for the foreclosure of this Agreement and the sale of the Collateral
under the judgment or decree of a court of competent jurisdiction, or for
the enforcement of any other right, as Secured Party shall determine, and
Secured Party shall be entitled, as a matter of right, to the appointment
of a receiver of all or any part of the Collateral.
4.3 NOTICE OF SALE. Secured Party shall give Lessee written notice
of any sale under this Article 4 (except that notice shall not be required as to
a Person if such action is then stayed by operation of law), which notice shall
state the time when and the place where the same is to be made, and shall
contain a brief description of the property to be sold, and shall be
sufficiently given if mailed to Lessee by registered mail, postage prepaid, at
least ten (10) days prior to the sale, and shall otherwise comply with all
Applicable Law of the United States of America and the State of California and
with any order of a court, if any, having jurisdiction over such sale.
Every such sale shall operate to divest all right, title, claim and
demand whatsoever of Lessee of, in and to the Collateral so sold, and shall be a
perpetual bar, both at law and in equity, against Lessee, all persons claiming
the Collateral sold, or any part thereof, through Lessee and its successors or
assigns.
Lessee hereby waives any claims against Secured Party arising by
reason of the fact that the price at which any of the U.S. Government
Obligations may have been sold at a private sale in accordance with this
Agreement was less than the price which might have been obtained at a private
sale or was less than the aggregate amount of the Secured Obligations.
4.4 APPLICATION OF PROCEEDS. The proceeds of any sale of the
Collateral, or any part thereof, under this Article 4, together with any other
sums then held by Secured Party, as part of the Collateral, shall be applied as
follows:
FIRST. To the payment of the costs and expenses of obtaining
possession or control of the Collateral and of such sale, and a reasonable
compensation to Secured Party's agents, attorneys and counsel, and to all
other charges, expenses, liabilities and advances incurred or made by
Secured Party;
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SECOND. To the payment or satisfaction of the Secured Obligations;
THIRD. The surplus, if any, shall be paid to the Lessee, its
successors or assigns, or to whoever may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
As used in this Agreement, "proceeds" of the U.S. Government
Obligations shall mean cash, securities and other property realized in respect
of, and distributions in kind of, the U.S. Government Obligations, including any
thereof received under any adjustment of debt of the United States of America or
any agency or corporate instrumentality thereof.
Section 4.5 SECURED PARTY MAY PURCHASE. At any sale under this
Article 4, to the extent permitted by Applicable Law of the United States of
America and the State of California, Secured Party may bid for and purchase the
property offered for sale, and, upon compliance with the terms of sale, may
hold, retain and dispose of such property without further accountability
thereof.
Section 4.6 REMEDIES CUMULATIVE. No remedy herein is intended to
be exclusive of any other remedy, but every such remedy shall be cumulative and
shall be in addition to every other remedy herein conferred or now or hereafter
existing at law or in equity or by statute. No delay or omission of Secured
Party to exercise any right or remedy arising hereunder shall impair any right
or remedy or shall be construed to be a waiver of the Secured Obligations or any
acquiescence in the failure or omission to pay or perform the Secured
Obligations; and every right and remedy given by this Agreement to Secured Party
may be exercised from time to time and as often as may be deemed expedient by
Secured Party.
Section 4.7 WAIVER OF APPRAISEMENT AND SIMILAR LAWS. Lessee
agrees, to the full extent that it may lawfully so agree, that neither it nor
any Person claiming through or under it will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension or redemption law now
or hereafter in force, in order to prevent, hinder or delay the enforcement or
foreclosure of this Agreement, or the absolute sale of the Collateral or any
part thereof, or the final and absolute putting into possession thereof,
immediately after such sale, of the purchaser thereof; and Lessee, for itself
and all who may at any time claim through or under it, hereby waives, to the
full extent that it may be lawful so to do, the benefit of all such laws, and
any and all right to have any of the properties or assets comprising the
Collateral marshalled upon any such sale, and agrees that Secured Party or any
court having jurisdiction to foreclose the Lien hereof may sell the Collateral
as an entirety or in such portions as Secured Party may determine.
Section 4.8 POWER OF ATTORNEY. Lessee hereby irrevocably appoints
Secured Party the true and lawful attorney of Lessee (with full power of
substitution) in the name, place and stead of, and at the expense of, Lessee
solely in connection with the enforcement of the rights and remedies provided
for in this Section 4: (a) to give any necessary receipts or acquittances for
amounts collected or received thereunder, (b) to make all necessary transfers of
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any of the Collateral in connection with any sale or other disposition made
pursuant hereto, (c) to execute and deliver for value all necessary or
appropriate bills of sale, assignments and other instruments and agreements in
connection with any such sale or other disposition, Lessee hereby ratifying and
confirming all that such attorney (or any substitute) shall lawfully do
hereunder and pursuant hereto and (d) to sign any agreements, orders or other
documents in connection with or pursuant to this Agreement (to the extent the
same relate to the Collateral). Nevertheless, if so requested by Secured Party
or a purchaser, Lessee shall ratify and confirm, to the extent it has the power
to do so, any such sale or other disposition by executing and delivering to
Secured Party or such purchaser all proper bills of sale, assignments, releases
and other instruments as may be designated in any such request.
ARTICLE 5
RELEASES
If all of the Secured Obligations shall have been paid or satisfied in
full, then, upon the written request of Lessee, Secured Party shall execute such
releases as may be necessary to discharge the Lien and security interest of this
Agreement and this Agreement shall terminate.
ARTICLE 6
THIRD PARTIES
No person dealing with the Secured Party shall be concerned to inquire
whether an Event of Default shall have occurred or whether the power that
Secured Party is purporting to exercise has become exercisable or whether any
Secured Obligations remain unpaid or unperformed or otherwise as to the
propriety or regularity of any sale or other dealing by Secured Party with any
Collateral and all the protections to purchasers conferred by Applicable Law
shall apply to such Persons dealing with Secured Party. The receipt by Secured
Party of the purchase moneys shall effectively discharge the purchaser who shall
not be concerned with the manner of application thereof.
ARTICLE 7
MISCELLANEOUS
Section 7.1 NOTICES. Notices and other communications required or
permitted to be given or made under the terms of this Agreement shall be given
in the manner set forth in Section 26 of the Lease.
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Section 7.2 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 7.3 CONTINUING SECURITY. Except as provided in Article 5,
the security constituted by this Agreement shall not be considered as satisfied
by payment or satisfaction of any part of the Secured Obligations but shall be a
continuing security and extend to cover any and all sums of money or other
obligations which shall for the time being constitute Secured Obligations and
shall not be discharged or prejudiced or affected in any way by time being given
to Lessee or any other Person or by any other indulgence or concession to Lessee
or any other Person granted by Secured Party, by the taking, holding, varying,
nonenforcement or release by Secured Party of any other security for all or any
of the Secured Obligations, by any other thing done or omitted or neglected to
be done by Secured Party or by any other dealing or thing including any
variation of or amendment to any of the Lease Documents and any circumstances
whatsoever that but for this provision might operate to discharge any of the
Secured Obligations or to exonerate or discharge Lessee from its obligations
hereunder or otherwise affect the security hereby constituted.
Section 7.4 AMENDMENTS. This Agreement may be amended only by a
consent in writing signed by Secured Party and Lessee specifically identified as
an amendment hereto.
Section 7.5 SEVERABILITY. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without invalidating, prohibiting the observance of or
rendering unenforceable the remaining provisions hereof, and any such
invalidity, illegality or unenforceability in any jurisdiction shall not
invalidate, prohibit the observance of or render unenforceable such provision in
any other jurisdiction.
Section 7.6 GOVERNING LAW.
THE TERMS OF THIS AGREEMENT AND ALL RIGHTS AND OBLIGATIONS HEREUNDER
SHALL BE GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS
EXECUTED DELIVERED, AND TO BE FULLY PERFORMED, IN THE STATE OF CALIFORNIA,
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
[Signatures Appear on Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NOVELLUS SYSTEMS, INC.
By:_________________________
Name:
Title:
SUMITOMO BANK LEASING AND
FINANCE, INC., as Agent
By:_________________________
Name:
Title:
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EXHIBIT B
[NOVELLUS SYSTEMS, INC. LETTERHEAD]
______________, 1996
To: Hambrecht & Quist LLC
One Bush Street
San Francisco, California 94104
Attn: ______________________
Re: Account No. ________ (the "Receiving Account") of Novellus Systems,
Inc. (the "Lessee") pledged to Sumitomo Bank Leasing and Finance,
Inc., as agent ("Secured Party") pursuant to Security Agreement,
dated as of October___, 1996 BETWEEN LESSEE AND SECURED PARTY
(THE "AGREEMENT")
PLEASE BE ADVISED THAT the securities set forth on Schedule I annexed
hereto (the "U.S. GOVERNMENT OBLIGATIONS") to be held and maintained in or
credited to the Receiving Account, the proceeds thereof and any other property
held and maintained in or credited to the Receiving Account, are pledged to
Secured Party pursuant to the Agreement to secure all obligations of the Lessee
to the Secured Party under the Purchase and Master Lease Agreement dated as of
____________, 1996, between Lessee and the Secured Party, and certain other
agreements. You should reflect the pledge and security interest (and its first
priority status) described in this Notice on your books and records accordingly.
Upon receipt of this Notice, and upon each receipt by you of the U.S.
Government Obligations, please acknowledge and confirm that such pledge is
reflected on your books and records by delivering a confirmation substantially
in the form annexed hereto, with a copy to our attention.
You are hereby further instructed to, upon maturity of the U.S.
Government Obligations, transfer the proceeds thereof to the Receiving Account
subject in all respects to the letter agreement, dated as of ____________, 1996,
among you, the Lessee and the Secured Party.
Thank you for your kind cooperation.
Very truly yours,
NOVELLUS SYSTEMS, INC.
By:___________________________
Name:
Title:
Schedule 1 to Security Agreement Notice
Schedule of U.S. Government Obligations
Pledged to Secured Party under the Security Agreement
Designation by Name, Series, Maturity Date and CUSIP Number
Owned by Lessee as follows:
CUSIP AMOUNT MATURITY
NAME NUMBER (AT MATURITY) DATE
CONFIRMATION
To: Sumitomo Bank Leasing and Finance, Inc., as Agent
Novellus Systems, Inc.
The undersigned hereby confirms that it has received the securities
described on Schedule I annexed hereto and, in accordance with Section
8313(1)(d) of the California Uniform Commercial Code, the undersigned confirms
that our books and records reflect the pledge of such securities in favor of
Sumitomo Bank Leasing and Finance, Inc., as Agent (and no other security
interest or pledge).
HAMBRECHT & QUIST LLC
By:__________________________
Title:
October ____, 1996
Hambrecht & Quist LLC
One Bush Street
San Francisco, California 94104
Attn: Mr. Steven N. Machtinger
Re: ACCOUNT NO.
Gentlemen:
In consideration of Sumitomo Bank Leasing and Finance, Inc. ("Secured Party")
entering into the Purchase and Master Lease Agreement dated as of October 24,
1996 (the "Lease") with Novellus Systems, Inc. (the "Lessee"), the Lessee has
executed a Security Agreement ("Security Agreement"), dated October 24, 1996,
with Secured Party, and Lessee has, in addition to other collateral, thereby
granted to Secured Party a security interest in various securities and proceeds
therefrom to be held by you on Secured Party's behalf and for Secured Party's
sole and exclusive benefit in account no. _________________ maintained with you
and known as "Novellus Systems, Inc., in favor of Sumitomo Bank Leasing and
Finance, Inc., as pledgee for the benefit of certain Lessors" ("Receiving
Account") and in all property of every kind now or hereafter held in or held for
the credit of the Receiving Account (collectively the "Collateral"), to secure
Lessee's indebtedness to Secured Party, whether now existing or hereafter
incurred. A copy of the Security Agreement is attached as EXHIBIT A.
The purpose of this letter is to obtain the agreement of you and the Lessee as
to certain matters necessary to protect our interests in the Collateral and the
Receiving Account. By signing and returning the enclosed copy of this letter
you hereby acknowledge and confirm that, unless Secured Party otherwise agrees
in writing:
1. The Collateral will be held in the above-entitled Receiving
Account. As long as the Collateral is pledged to Secured Party,
you will not invade the account to cover margin debits or calls
in any other accounts of Lessee, or to satisfy any other
obligations owed by Lessee or any of its affiliates to you or any
of your affiliates.
Page 2
2. You shall transfer or sell the Collateral from the Receiving
Account only upon receipt of prior written instructions from
Secured Party, provided, however, that so long as (i) no Default
Notice described by paragraph 6 hereof has been delivered to you
which notice has not been rescinded, (ii) all proceeds are
reinvested in Collateral, (iii) all investments are "Eligible
U.S. Government Securities" as defined in the Security Agreement,
and (iv) after such reinvestment the Lessee will remain in
compliance with the requirement of the second sentence of
paragraph 3 hereof, you are authorized to sell or transfer any
portion of the Collateral on deposit in the Receiving Account
upon the written instruction received from Lessee and reinvest
the proceeds in Eligible U.S. Government Securities on deposit in
the Receiving Account. Such instructions may instead be provided
to you by a third party designated by Lessee and approved by
Secured Party. Notwithstanding anything contained herein, you
shall not release any Collateral from the Receiving Account to
Lessee except pursuant to, and then only to the extent of, the
specific written instruction of Secured Party. You acknowledge
that we may instruct you to disburse to the Lessee from time to
time interest that shall have accrued with respect to the
Government Securities; provided, however, no such disbursement
shall be made without the prior written instruction from us.
Secured Party and Lessee acknowledge that Custodian is empowered
to act pursuant to this Custodian Agreement upon unilateral
notice from Secured Party and may disregard any instructions
hereafter given by Lessee to Custodian which conflict in any
manner with any such notice from Secured Party.
3. You agree to provide to us a monthly statement of assets together
with a copy to the Lessee (or to any other person authorized to
receive statements) with respect to the Receiving Account. You
further agree to provide us daily with a statement of the fair
market value of the Collateral. If we do not receive such daily
statement, we will advise Lessee by telephone. It is understood
and agreed that nothing contained herein or in any other document
given in connection herewith imposes any responsibility or
liability on Custodian for maintaining any specified net asset
value for the Receiving Account or for any diminution in the
value of the Receiving Account, except for willful misconduct and
bad faith on the part of Custodian.
Page 3
4. You have marked, and agree in the future to mark, your records to
indicate that the Receiving Account and all Collateral now or
hereafter held by you in or for the credit of the Receiving
Account are or will be held in our name as collateral pledgee as
described in the first paragraph hereof.
5. You acknowledge that except for this Agreement, you have not
received from any other party notice that any party claims a
security interest or other interest in the Receiving Account or
the Collateral.
6. You agree to transfer to us the Collateral in the Receiving
Account immediately upon your receipt of written notice from us
in the form of the letter attached hereto as EXHIBIT B that an
Event of Default as defined in the Lease has occurred ("Default
Notice"). Until your receipt of a Default Notice, Lessee shall
be entitled to control the trading in securities and the right to
exercise voting power over securities held in the Receiving
Account, subject to the terms and limitations of this Agreement.
7. All notices, consents, requests, instructions, approvals or other
communications ("notices") shall be addressed to the person and
address shown below, or to such other person or address as may be
specified in writing. Such notices shall be deemed to have been
received as of the date hand delivered or telecopied, or if sent
by private overnight courier on the day following the day sent,
or if by mail on the day five days from and including the day
sent.
To Secured Party:
Sumitomo Bank Leasing and Finance, Inc.
277 Park Avenue
New York, New York 10172
Attn: Mr. Carl Morales
Fax: (212) 224-5222
or (212) 224-5221
Page 4
To Lessee:
Novellus Systems, Inc.
3950 North First Street
San Jose, California 95125
Attn: Mr. John Root
Fax: (408) 943-3422
To Custodian:
Hambrecht & Quist LLC
One Bush Street
San Francisco, California 94104
Attn: Mr. Steven N. Machtinger
Fax: (415) 576-3638
We agree to provide prompt written notice to each other if there should be
a change in the designated person or address.
8. The Secured Party shall have the right to require Lessee to
appoint a successor custodian to serve as Custodian under this
Agreement at any time that Custodian shall become in breach of
its obligations hereunder. In addition, Custodian may resign
upon 21 days prior written notice to the Secured Party and
Lessee, with such resignation to become effective upon the
earlier of (a) appointment of a successor custodian in accordance
with this Section 8 or (b) the 21st day after receipt of such
resignation notice from Custodian. If Custodian or any successor
custodian is replaced or has resigned, the Secured Party and the
Lessee will cooperate to effect a transfer of the Collateral to
the successor custodian and cause such successor custodian to
take the actions required to be taken by Custodian under Section
2 of the Security Agreement to continue the effectiveness of the
pledge to and the perfection of the security interest of the
Secured Party in the Collateral.
9. Lessee agrees to pay you the following fees for your services
hereunder:
Page 5
10. This agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an
original, but all such counterparts together constitute one and
the same Agreement.
11. Lessee agrees to indemnify and hold harmless Custodian (and its
officers, directors, employees and affiliates) from all losses,
claims, damages or liabilities to which it may be come subject
and to reimburse it for any legal or other expenses incurred in
connection with defending against any such loss, claim, damage or
liability or in connection with any investigation or inquiry of
Custodian arising out of, and covenants not to sue Custodian in
connection with, the performance of its duties hereunder, or in
connection with the Security Agreement or the Receiving Account,
except for willful misconduct and bad faith on the part of
Custodian, including without limitation any action taken or
omitted in good faith relating to the duties and responsibilities
of Custodian under this Custodian Agreement or any action taken
or omitted in reliance upon any instrument, or notices from
Secured Party provided for herein, not only as to its due
execution and the validity and effectiveness of its provisions,
but also as to the truth and accuracy of any information
contained therein.
12. This letter agreement shall be governed by and construed in
accordance with the laws of the State of California, without
regard to the provisions thereof relating to conflict of laws.
13. This Agreement may only be modified by a written agreement
executed by Custodian, Secured Party and Lessee.
Very truly yours,
SUMITOMO BANK LEASING AND FINANCE, INC.
By:_____________________________________
Its:_________________________________
Page 6
Accepted and Agreed to the
______ day of October, 1996
HAMBRECHT & QUIST LLC
By:_____________________________
Title:_______________________
NOVELLUS SYSTEMS, INC.
By:_____________________________
Title:_______________________
EXHIBIT A
SECURITY AGREEMENT
EXHIBIT B
DEFAULT NOTICE
[DATE]
Hambrecht & Quist LLC
One Bush Street
San Francisco, California 94104
Attn: Mr. Steven N. Machtinger
Re: Security Agreement dated October ____, 1996 (the "Security Agreement")
between Novellus Systems, Inc. ("Lessee"), and Sumitomo Bank Leasing and
Finance, Inc. ("Secured Party")
Ladies and Gentlemen:
The undersigned, as Secured Party under the Security Agreement, hereby gives you
notice that an Event of Default as defined in the Lease (as defined in the
Security Agreement) has occurred, and pursuant to Section 6 of the Letter
Agreement among Lessee, Secured Party and you dated October _____, 1996, the
Secured Party directs you to deliver the Collateral and other property listed on
SCHEDULE A affixed hereto to the following address:
[The undersigned must provide good delivery instructions
to Custodian in appropriate detail.]
The undersigned certifies that the Collateral and other property are withdrawn
from the Receiving Account in accordance with the terms and conditions of the
Security Agreement to pay obligations due by the Lessee in connection with the
Security Agreement.
Very truly yours,
SUMITOMO BANK LEASING AND FINANCE, INC.
By:_____________________________________
Title:_______________________________
EXHIBIT T
TO LEASE
SECURITY AGREEMENT
[SECURITY AGREEMENT]
EXHIBIT U
TO LEASE
LIST OF
REPORTS RECEIVED
6. ALTA Survey dated July 24, 1996, prepared by Kier & Wright Civil Engineers
and Surveyors
7. Phase I Environmental Site Assessment Report dated July 23, 1996, prepared
by SECOR International Incorporated
8. Phase II Site Investigation Report dated August 22, 1996, prepared by SECOR
International Incorporated