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v EXHIBIT 10.4
MASTER LEASE AGREEMENT
dated as of May 18, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner Trustee
under the MiniMed Real Estate Trust 1999-1,
as Lessor
AND
MINIMED DEVELOPMENT CORP.,
as Lessee
THIS MASTER LEASE HAS BEEN GRANTED AS SECURITY
FOR INDEBTEDNESS OF THE LESSOR. SEE SECTION 21.
This Master Lease has been manually executed in __ counterparts, numbered
consecutively from 1 through __, of which this is No. __. To the extent, if any,
that this Master Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction) no security
interest in this Lease may be created or perfected through the transfer or
possession of any counterpart other than the original executed counterpart which
shall be the counterpart identified as counterpart No. 1.
MASTER LEASE AGREEMENT
Master Lease Agreement, dated as of May 18, 1999 (as the same may be
amended, restated, modified or supplemented from time to time, this "Lease"),
between First Security Bank, National Association, a national banking
association, having its principal office at 79 South Main Street, Salt Lake
City, Utah 84111, not individually, but solely as Owner Trustee under the
MiniMed Real Estate Trust 1999-1, Lessor (the
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"Lessor"), and MiniMed Development Corp., a Delaware corporation, Lessee (the
"Lessee").
SECTION 1. DEFINED TERMS.
Unless the context otherwise requires, each term defined in this Section 1
shall, when used in this Lease, have the meaning set forth in Appendix A to the
Participation Agreement dated as of May 18, 1999 among the Lessee, MiniMed Inc.,
and certain of its subsidiaries, Lessor, the Certificateholders, the Lenders,
the Revolving Credit Lender, ING Baring Furman Selz LLC as Syndication Agent and
ING (U.S.) Capital LLC as agent for the Lenders and the Revolving Credit Lenders
and as Collateral Agent.
SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE.
The Lessee represents, warrants and covenants to the Lessor:
(a) Corporate Matters. The Lessee (i) is duly organized and is and shall at
all times be validly existing as a corporation in good standing under the laws
of the State of Delaware, (ii) has and will continue to have full corporate
power, authority and legal right to own and operate its properties and to
conduct its business as presently conducted and to execute, deliver and perform
its obligations under this Lease and any Consent and any other Related Documents
to which it is a party, and (iii) is and shall at all times be duly qualified to
do business as a foreign corporation in good standing in the State of
California.
(b) Binding Agreement. The Lessee has the corporate power, authority and
legal right to make, deliver and perform this Lease and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Lease. No consent of any other Person (including, without limitation,
stockholders and creditors of the Lessee), and no authorization of, notice to,
or other act by any governmental authority, agency or instrumentality is
required in connection with the execution, delivery, performance, validity or
enforceability of this Lease. This Lease has been duly executed and delivered on
behalf of the Lessee, and this Lease constitutes a legal, valid and binding
obligation of the Lessee, enforceable against the Lessee in accordance with its
terms, except as such enforceability may be limited by bankruptcy and other
similar laws affecting the rights of creditors generally or by general
principles of equity. This Lease and any Consent have been duly authorized,
executed and delivered by the Lessee and, assuming the due authorization,
execution and delivery of this Lease and any Consent by the Lessor, this Lease
and any Consent are legal, valid and binding obligations of the Lessee,
enforceable according to their respective terms.
(c) Compliance with Other Instruments. The execution, delivery and
performance by the Lessee of this Lease and any Consent will not result in any
violation of any term of the certificate of incorporation or the by-laws of the
Lessee, do not require stockholder approval or the approval or consent of any
trustee or Certificateholders of indebtedness of the Lessee except such as have
been obtained prior to the date hereof and will not conflict with or result in a
breach of any terms or provisions of, or constitute a default under, or result
in the creation or imposition of any Lien (other than a Permitted
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Lien) upon any property or assets of the Lessee under, any indenture, mortgage
or other agreement or instrument to which the Lessee is a party or by which it
or any of its property is bound, or any existing applicable law, rule,
regulation, license, judgment, order or decree of any government, governmental
body or court having jurisdiction over the Lessee or any of its activities or
properties.
(d) Governmental Consents. There are no consents, licenses, orders,
authorizations, approvals, waivers, extensions or variances of, or notices to or
registrations or filings with (each a "Governmental Action"), any governmental
or public body or authority which are or will be required in connection with the
valid execution, delivery and performance of this Lease, or any Governmental
Action (i) which is or will be required in connection with any participation by
the Lessor or, to the best knowledge of Lessee, any Assignee, in the
transactions contemplated by any bill of sale, deed, assignment, assumption,
ownership agreement, operating agreement, or other agreement relating to any
Property or Equipment or (ii) which is or will be required to be obtained by the
Lessor or the Lessee, or, to the best knowledge of Lessee, any Assignee or any
Affiliate of the foregoing, during the Lease Term, with respect to any Property
or Equipment except such Governmental Actions, (A) as have been duly obtained,
given or accomplished, with true copies thereof delivered to the Lessor, (B) as
may be required by applicable law not now in effect, or (C) which may be
required as a result of the business, properties or activities of the Lessor,
or, to the best knowledge of Lessee, any Assignee or any Affiliate of the
foregoing and which are not dependent on the nature of any Property or Equipment
under this Lease or the business of the Lessee.
(e) Financial Statements. The Lessee has furnished to the Lessor copies of
the Parent Guarantor's Annual Report on Form 10-K for the year ended January 2,
1998 and the Parent Guarantor's Quarterly Reports on Form 10-Q for the quarters
ended April 3, 1998, July 3, 1998 and October 2, 1998. The financial statements
contained in such documents fairly present the financial position, results of
operations and statements of cash flows of the Parent Guarantor as of the dates
and for the periods indicated therein and have been prepared in accordance with
GAAP.
(f) Changes. Since October 2, 1998, there has been no Material Adverse
Effect.
(g) Litigation. Except as described in the Parent Guarantor's Quarterly
Report on Form 10-Q for the quarter ended October 2, 1998, there is no action,
suit, proceeding or investigation at law or in equity by or before any court,
governmental body, agency, commission or other tribunal now pending or, to the
best of Lessee's knowledge, threatened against or affecting the Lessee or any
Guarantor or any property or rights of the Lessee or any Guarantor which
questions the enforceability of this Lease or which could reasonably be expected
to have a Material Adverse Effect.
(h) Delivery of Information. The Lessee shall deliver to the Lessor from
time to time, (i) promptly upon their becoming available, and, in any event, not
more than 90 days after the end of the fiscal year of the Parent Guarantor,
copies of the Parent Guarantor's Annual Reports on Form 10-K, and promptly upon
their becoming available and, in any event, not more than 60 days after the end
of each fiscal quarter of the Parent Guarantor, copies of the Parent Guarantor's
Quarterly Reports on Form 10-Q and,
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promptly after filing, any other reports the Parent Guarantor files with the
Securities and Exchange Commission, (ii) promptly upon request, such other
information with respect to the Lessee's and Guarantor's operations, business,
properties, assets, financial condition or litigation as the Lessor or any
Assignee shall reasonably request, (iii) promptly, and in any event within five
(5) Business Days after a Responsible Officer of the Lessee obtains knowledge of
any Event of Default or any Potential Default hereunder, a certificate of a
Responsible Officer of the Lessee specifying the nature and period of existence
of such Event of Default or Potential Default, and what action, if any, the
Lessee has taken, is taking, or proposes to take with respect thereto, and (iv)
promptly, and in any event within five (5) Business Days after a Responsible
Officer of the Lessee obtains knowledge of any material adverse change in the
financial condition or business of the Lessee or any Guarantor or of any
litigation of the type described in paragraph (g) of this Section 2, a
certificate of a Responsible Officer of the Lessee describing such change or
litigation as the case may be.
(i) Accuracy of Appraisal. The information furnished by or on behalf of the
Lessee or the Parent Guarantor to the appraisers for use by such appraisers in
the Appraisal with respect to the Property is accurate and complete in all
material respects.
(j) Compliance with Legal Requirements and Insurance Requirements. The
operation, use and physical condition of the Property and Equipment are at all
times in substantial compliance with all Legal Requirements and Insurance
Requirements, except any Legal Requirements, the non-compliance with which,
individually or in the aggregate, (a) will not place either the Lessor or
Assignee in any danger of civil liability which the Lessor or Assignee in its
sole discretion determines is not adequately indemnified for or subject the
Lessor or Assignee to any danger of criminal liability as a result of failure to
comply therewith, (b) will not result in a diminution in the value of the
Property, (c) will not adversely affect the Lessee's ability to perform its
obligations under this Lease or any Related Documents and (d) is commercially
reasonable.
(k) Liens. No Property is subject to any Lien, except Permitted Liens.
(l) Construction Agency Agreement. The Property acquired and built pursuant
to the Construction Agency Agreement was or shall be acquired and built in
accordance with the terms of the Construction Agency Agreement. The
representations and warranties of the Lessee, as construction agent, in the
Construction Agency Agreement are true and correct in all material respects.
(m) ERISA. The Lessee has not established and does and will not maintain or
contribute to any employee benefit plan that is covered by Title IV of ERISA.
(n) Status of Lessee. All of the Lessee's Capital Stock is owned
beneficially and of record by the Parent Guarantor.
(o) Taxes. The Lessee has filed or caused to be filed all tax returns which
are required to be filed by it, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
assets and properties and has paid all other taxes, fees or other charges
imposed on it by any Governmental Authority (except taxes, fees and charges
subject to a Permitted Contest).
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(p) Nature of the Lessee's Business. The Lessee has not engaged in any
business other than as contemplated by this Lease and the Construction Agency
Agreement and the Permitted Uses of the Ground Sublease (as such term is defined
therein).
(q) Environmental Disclosure. As of the date hereof, there is no fact known
to the Lessee with respect to Environmental Matters which could reasonably be
expected to have a Material Adverse Effect.
SECTION 3. LEASE OF THE PROPERTY.
(a) Subject to the terms and conditions hereof, the Lessor shall lease to
the Lessee, and the Lessee may lease from the Lessor pursuant to this Lease, the
Property described on Exhibit A hereto, when and as the Lessee has need of such
Property or Equipment; provided, that:
(i) such Property or Equipment is available for purchase;
(ii) except with respect to any Parcel of Property acquired and
built pursuant to the Construction Agency Agreement, the
Lessor has approved the purchase order or acquisition with
respect to such Equipment or the acquisition with respect to
such Property (which approval shall be in the sole
discretion of the Lessor);
(iii) at the time any such Property or Equipment is to be ordered
or leased hereunder there exists no Event of Default or
Potential Default; and
(iv) the aggregate Acquisition Cost of such Property or Equipment
shall not, at the time any such Property or Equipment is to
be leased hereunder, exceed the Construction Budget for such
items.
(b) In connection with the Property acquired and built pursuant to the
Construction Agency Agreement, within three (3) months of the Final Advance (as
defined in Appendix A to the Participation Agreement) with respect to such
Parcel, the Lessee may deliver to the Lessor a certificate setting forth any
increased cost and the actual amount expended by the Lessee for items included
in the Construction Budget with respect to the Property while it was subject to
the Construction Agency Agreement, and Lessor shall have all of the rights set
forth in Section 2.01 with respect to such notice.
(c) In connection with the Property acquired and built pursuant to the
Construction Agency Agreement or to be leased hereunder, if Completion has not
occurred on or prior to the Construction Period Termination Date, the Lessee may
deliver to the Lessor a certificate setting forth the actual amount expended by
the Lessee with respect to such Property or Equipment and Lessor may, at its
sole and absolute discretion, elect to proceed as though Completion of such
Property had occurred prior to the
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Construction Period Termination Date and such failure to achieve Completion
during the Construction Period shall be deemed not to be an Event of Default
hereunder.
SECTION 4. INTENT OF THE PARTIES.
(a) It is the intent of the Lessor and the Lessee that: (i) the Lease
constitutes an operating lease from the Lessor to the Lessee for purposes of the
Lessee's financial reporting, and (ii) the Lease and other transactions
contemplated hereby preserve the beneficial ownership of the Property in the
Lessee for federal and state income tax and bankruptcy purposes, and (iii) the
Lease grants to the Lessor a Lien on all Property and Equipment. The Lessee and
the Lessor agree that the Lessor shall be deemed to have a valid and binding
security interest in and Lien on the Property, free and clear of all Liens,
other than Permitted Liens, as security for the obligations of the Lessee under
the Lease and the Construction Agency Agreement (it being understood and agreed
that the Lessee does hereby grant a Lien on, and convey, transfer, assign,
mortgage and warrant to the Lessor and its successors, transferees, and assigns,
for the benefit of the Lessor and its successors, transferees and assigns, the
Property and any proceeds or products thereof, to have and hold the same as
collateral security for the payment and performance of the obligations of the
Lessee under this Agreement, the Construction Agency Agreement and all Related
Documents). Each of the Lessor and the Lessee agrees that it will not file any
Federal, state or local income tax returns during the Lease Term and the term of
the Construction Agency Agreement that are inconsistent with the intention of
the Lessor and the Lessee expressed in this Section 4. Notwithstanding the
foregoing, neither party hereto has made, or shall be deemed to have made, any
representation or warranty as to the availability of any of the foregoing
treatments under applicable accounting rules, tax, bankruptcy, regulatory,
commercial or real estate law or under any other set of rules. Lessee shall
claim the cost recovery deductions associated with each Property, and Lessor
shall not, to the extent not prohibited by law, take on its tax return a
position inconsistent with Lessee's claim of such deductions.
(b) Specifically, without limiting the generality of paragraph (a) of this
Section 4, the Lessor and the Lessee intend and agree that in the event of any
insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting the Lessee, the
Lessor, any Assignee or any collection actions relating thereto, the
transactions evidenced by this Lease and the Construction Agency Agreement shall
be regarded as loans made by the Lessor to the Lessee.
SECTION 5. DELIVERY.
(a) The requirements for acceptance for lease hereunder of the Property
acquired and built pursuant to the Construction Agency Agreement shall be the
requirements set forth in the Construction Agency Agreement.
(b) The Lessee shall ensure that the installation or erection of any
Equipment is in accordance with the specifications and requirements of the
vendor thereof and Legal Requirements.
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(c) The obligations of the Lessee to pay all amounts payable pursuant to
this Lease (including specifically and without limitation amounts payable under
Sections 7 and 11 hereof) shall be absolute and unconditional under any and all
circumstances of any character, and such amounts shall be paid without notice,
demand, defense, setoff, deduction or counterclaim and without abatement,
suspension, deferment, diminution or reduction of any kind whatsoever, except as
herein expressly otherwise provided. The obligation of the Lessee to lease and
pay Basic Rent for the Property accepted for use pursuant to this Lease is
without any warranty or representation, express or implied, as to any matter
whatsoever on the part of the Lessor or any Assignee or any Affiliate of either,
or anyone acting on behalf of any of them.
THE LESSEE HAS SELECTED AND SHALL SELECT ALL PROPERTY OR EQUIPMENT ACQUIRED
OR ORDERED ON THE BASIS OF ITS OWN JUDGMENT. NEITHER THE LESSOR NOR ANY ASSIGNEE
NOR ANY AFFILIATE OF EITHER, NOR ANYONE ACTING ON BEHALF OF ANY OF THEM 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 THE PROPERTY, OR AS TO WHETHER THE PROPERTY OR THE
OWNERSHIP, USE, OCCUPANCY OR POSSESSION THEREOF COMPLIES WITH ANY LAWS, RULES,
REGULATIONS OR REQUIREMENTS OF ANY KIND.
AS BETWEEN THE LESSEE AND THE LESSOR, ANY ASSIGNEE OR ANY INDEMNIFIED
PERSON, THE LESSEE ASSUMES ALL RISKS AND WAIVES ANY AND ALL DEFENSES, SET-OFFS,
DEDUCTIONS, COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR FUTURE, AS TO THE
LESSEE'S OBLIGATION TO PAY BASIC RENT AND ALL OTHER AMOUNTS PAYABLE HEREUNDER,
INCLUDING, WITHOUT LIMITATION, ANY RELATING TO:
1. THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE,
MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF THE PROPERTY, LATENT OR NOT;
2. ANY SET OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR OTHER RIGHT
WHICH THE LESSEE MAY HAVE AGAINST THE LESSOR, ANY ASSIGNEE OR ANY INDEMNIFIED
PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER TRANSACTION OR
MATTER;
3. ANY DEFECT IN TITLE OR OWNERSHIP OF THE PROPERTY OR ANY TITLE
ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE PROPERTY;
4. ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR DESTRUCTION OF,
OR DAMAGE TO, THE PROPERTY, IN WHOLE
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OR IN PART, OR CESSATION OF THE USE OR POSSESSION OF THE PROPERTY BY THE LESSEE
FOR ANY REASON WHATSOEVER AND OF WHATEVER DURATION, OR ANY CONDEMNATION,
CONFISCATION, REQUISITION, SEIZURE, PURCHASE, TAKING OR FORFEITURE OF THE
PROPERTY, IN WHOLE OR IN PART;
5. ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE, OWNERSHIP,
OCCUPANCY OR POSSESSION OF THE PROPERTY BY THE LESSEE;
6. ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING BY OR
AGAINST THE LESSEE OR THE LESSOR OR ANY ASSIGNEE;
7. ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER TERMINATION
OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
8. THE INVALIDITY OR UNENFORCEABILITY OF THIS LEASE OR ANY OTHER INFIRMITY
HEREIN OR ANY LACK OF POWER OR AUTHORITY OF THE LESSOR OR THE LESSEE TO ENTER
INTO THIS CONTRACT;
9. THE INVALIDITY OR UNENFORCEABILITY OF ANY BILL OF SALE OF THE PROPERTY
EXECUTED IN CONNECTION WITH THIS LEASE OR ANY OTHER INFIRMITY THEREIN OR LACK OF
POWER OR AUTHORITY OF ANY PARTY THERETO TO ENTER INTO SUCH BILL OF SALE; OR
10. ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER, WHETHER OR NOT SIMILAR
TO ANY OF THE FOREGOING.
THE LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS 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. Each
payment of Basic Rent, Additional Rent and any other amount due hereunder made
by the Lessee shall be final, and the Lessee, without waiving any other remedies
it may have, will not seek or have any right to recover all or any part of such
payment from the Lessor or any Assignee for any reason whatsoever, except as set
forth in the second succeeding sentence. Notwithstanding anything contained
herein to the contrary, the making of payments under this Lease by the Lessee
shall not be deemed to be a waiver of any claim or claims that the Lessee may
assert against the Lessor or any other Person. The Lessor agrees to repay the
Lessee amounts paid to the Lessor to the extent such payments were in error and
are not required by any of the terms and provisions of this Lease or the
Construction Agency Agreement.
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(d) Notwithstanding any other provision contained in this Lease, it is
specifically understood and agreed that neither the Lessor nor any Assignee nor
any Affiliate of either, 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, nor, except as set forth
in Section 21 of this Lease, has the Lessor or any Assignee or any Affiliate of
either, 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 as to
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.
SECTION 6. LEASE TERM.
The Lease Term with respect to the Property leased hereunder shall commence
on the Effective Date and shall continue to and including the fifth anniversary
of the Effective Date, unless terminated earlier pursuant to Sections 12, 13,
14, 15, 16, 18, 19 or 28 hereof or unless extended as provided in Section 13(g).
SECTION 7. RENT AND OTHER PAYMENTS.
(a) The Lessee hereby agrees to pay the Lessor by wire transfer in
immediately available funds, not later than 1:00 P.M. New York time (i) on each
Basic Rent Payment Date, the amount of Basic Rent due and payable on such Basic
Rent Payment Date and (ii) on any termination date of this Lease, all accrued
and unpaid Basic Rent.
(b) The Lessor shall furnish a statement of Basic Rent due on any Basic
Rent Payment Date to the Lessee five (5) Business Days prior to such Basic Rent
Payment Date. Prior to each Basic Rent Payment Date, the Lessor shall furnish
the Lessee with a summary of the calculations of Basic Rent payable on such
Basic Rent Payment Date.
(c) The Lessee hereby agrees to pay on demand all amounts (other than Basic
Rent) payable hereunder, including, without limitation, all amounts payable to
any Indemnified Person pursuant to Section 11 hereof; provided that such
payments during the Construction Period shall be limited by the limitation on
Lessee's payment obligations under Section 5.04 of the Construction Agency
Agreement at all times prior to the Completion Date.
(d) Without prejudice to the full exercise by the Lessor of its rights
under Sections 18 and 19 hereof, the Lessee shall pay to the Lessor from time to
time, on demand, as additional rent ("Additional Rent") (i) amounts required to
reimburse the Lessor for its obligations, costs and expenses (not previously
included in Basic Rent) incurred in acquiring, financing (including equity
financing and maintaining security for and exercising remedies in connection
with any such financing) and leasing the Property (including, without
limitation, all uninsured losses and obligations of the Lessor under the Ground
Sublease and all obligations of the Lessor under or in respect of any interest
rate swap, cap, collar or other financial hedging arrangement and any amounts
payable by the Lessor under any such arrangement to reduce the notional amount
thereof by the amount of any prepayment of any borrowing to which such interest
rate swap, cap, collar or other
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financial hedging arrangement relates), (ii) all amounts, liabilities and
obligations (other than Basic Rent) which the Lessee assumes or agrees to pay
the Lessor, the Certificateholders, the Agent, the Lenders or any other Person
under this Lease or under any other Related Document, including without
limitation, payments of the Termination Value or the Surrender Payment, (iii)
and all indemnification amounts, liabilities and obligations of Lessee, and (iv)
to the extent legally enforceable, an amount computed by multiplying (A) all
sums not paid by the Lessee to the Lessor as provided in this Lease on or before
the date such payments are due, by (B) the percentage used to calculate Loan
Basic Rent as of the most recent Basic Rent Payment Date, and by (C) a fraction
having a numerator equal to the number of days in the period from but excluding
such due date to and including the date of payment thereof and a denominator of
365, or in a leap year, 366. The Lessee shall also pay to the Lessor on demand
an amount equal to any expenses incurred by the Lessor in collecting such unpaid
sums, provided that during the Construction Period, Lessee's obligations
hereunder shall be subject to the limitations of Section 5.04 of the
Construction Agency Agreement.
(e) Basic Rent and Additional Rent and any other amount payable by the
Lessee to the Lessor shall be paid such that immediately available funds in the
full amount due are available on the date due, to the account of the Lessor at
such bank, or to such account of such other Person at such bank, or otherwise as
the Lessor may from time to time designate.
(f) If any Basic Rent or Additional Rent is required hereunder on a day
that is not a Business Day, then such Basic Rent or Additional Rent shall be due
on the next succeeding Business Day.
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SECTION 8. RESTRICTED USE; COMPLIANCE WITH LAWS.
(a) So long as no Event of Default shall have occurred and be continuing,
the Lessee may use the Property or Equipment in the regular course of its
business for any lawful purpose which complies with Section 5.1 of the Ground
Sublease. The Lessee will not do or permit any act or thing which might impair,
other than normal wear and tear arising out of the proper and normal use
thereof, the value of the Property. Lessee, at its sole cost and expense, shall
(i) comply with all applicable laws (including without limitation all
Environmental Requirements) and all Insurance Requirements relating to the
Property, (ii) procure, maintain and comply with all licenses, permits, orders,
approvals, consents and other authorizations required for the acquisition,
installation, testing, use, development, construction, material operation,
material maintenance, repair, refurbishment and restoration of the Equipment and
Property and (iii) comply with all manufacturer's specifications and standards,
including without limitation the acquisition, installation, testing, use,
development, construction, operation, maintenance, repair, refurbishment and
restoration of the Equipment and Property, whether or not compliance therewith
shall require structural or extraordinary changes in the Property or interfere
with the use and enjoyment of the Property, unless the failure to procure,
maintain and comply with such items identified in subparagraphs (ii) and (iii),
individually or in the aggregate, shall not have and could not reasonably be
expected to have a Material Adverse Effect. Lessor agrees to take such actions
as may be reasonably requested by Lessee in connection with the compliance by
Lessee of its obligations under this Section 8(a).
(b) The Lessee shall promptly and duly execute, deliver, file and record,
at the Lessee's expense, all such documents, statements, filings and
registrations, and take such further action, as the Lessor shall from time to
time reasonably request in order to establish, perfect and maintain the Lessor's
title to and interest in the Property and any Assignee's interest in this Lease
or the Property as against the Lessee or any third party in any applicable
jurisdiction. The Lessor agrees, at Lessee's request and expense, to confirm to
third parties the Lessee's rights and obligations in this regard. The Lessee
may, after notice in writing to the Lessor and upon Lessor's discretionary
consent and at the Lessee's own cost and expense, change the place of principal
location of any Equipment. Notwithstanding the foregoing, no change of location
shall be undertaken unless and until all Legal Requirements shall have been met.
At least once each year prior to the anniversary of the date of this Lease, and
more frequently at the reasonable request of the Lessor, the Lessee shall advise
the Lessor in writing where all Equipment leased hereunder as of such date is
located.
(c) The Lessee shall use every reasonable precaution consistent with
prudent business practices to prevent loss or damage to the Property and to
prevent injury to third persons or property of third persons. The Lessee shall
cooperate fully with the Lessor and all insurance companies providing insurance
pursuant to Section 10 hereof in the investigation and defense of any claims or
suits arising from the ownership, operation or use of any Equipment or
ownership, use, or occupancy of the Property; provided, that nothing contained
in this paragraph (c) shall be construed as imposing on the Lessor any duty to
investigate or defend any such claims or suits. The Lessee shall comply and
shall cause all Persons using or operating Equipment or using or occupying the
Property to
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comply with all Insurance Requirements and Legal Requirements applicable to such
Property or Equipment and to the acquiring, titling, registering, leasing,
insuring, using, occupying, operating and disposing of the Property or any
portion thereof, and the licensing of operators thereof.
(d) The Lessor or any Assignee or any authorized representative of either
may upon reasonable notice and during reasonable business hours from time to
time inspect the Property and deeds, registration certificates, certificates of
title and related documents covering the Property wherever the same may be
located, but neither the Lessor nor any Assignee shall have any duty to make any
such inspection.
(e) The Lessee shall not, without the prior written consent of the Lessor,
permit, or suffer to exist, any Lien, including mechanics' liens, other than
Permitted Liens or those Liens placed thereon by, or arising from, the Lessor's
own actions or which are subject to a Permitted Contest, nor may it assign any
right or interest herein or in the Property. The Lessee shall not, without the
prior written consent of the Lessor, which consent shall be withheld or denied
in the Lessor's or any Assignee's sole discretion, sublease or otherwise
relinquish possession of any Property or Equipment, except that (i) the Lessee
may relinquish possession of any portion of the Property to any contractor for
use in performing work for the Lessee on the Property; provided, that such
relinquishment of possession shall in no way affect the obligations of the
Lessee or the rights of the Lessor hereunder and with respect to the Property
and (ii) with respect to any sublease, the Lessee may sublease any portion of
the Property without Lessor or any Assignee's consent; provided, that (A) each
such permitted sublease shall expressly be made subject and subordinate to the
provisions hereof and shall by its terms be subject to termination upon the
termination for any reason of this Lease and shall expressly provide for the
surrender of the applicable portion of the Property by the sublessee at the
election of the Lessor or Assignee after the occurrence of an Event of Default
hereunder, (B) no such permitted sublease shall modify or limit any right or
power of the Lessor or Assignee hereunder or affect or reduce any obligation of
the Lessee hereunder, and all such obligations shall continue in full force and
effect as obligations of a principal and not of a guarantor or surety, as though
no such subletting had been made, and (C) any such permitted sublease made
otherwise than as expressly approved in writing by Lessor and any Assignee and
as permitted by this paragraph (e) shall be void and of no force and effect. As
additional security to the Lessor for the performance of the Lessee's
obligations under this Lease, the Lessee hereby assigns to the Lessor all of its
right, title and interest in and to all subleases permitted hereby and agrees to
cause any sublessee to enter into such commercially reasonable attornment
agreements with the Lessor as the Lessor may reasonably request. The Lessor
shall have the present and continuing right to collect and enjoy all rents and
other sums of money payable under any such sublease, and the Lessee hereby
irrevocably assigns such rents and other sums to the Lessor for the benefit and
protection of the Lessor; provided, that unless an Event of Default shall have
occurred and be continuing hereunder, the Lessee shall be entitled to collect
and enjoy such rents and other sums. The Lessee shall, within thirty (30) days
after the execution of any such permitted sublease, deliver a conformed copy
thereof to the Lessor and any Assignee. Nothing contained in this Lease shall be
construed as constituting the consent or request of the Lessor, express or
implied, to or for the performance by any contractor, laborer, materialman or
vendor of any labor or services or for the furnishing of any materials for
13
any construction, alteration, addition, repair or demolition of or to the
Property or any part thereof. Notice is hereby given that the Lessor will not be
liable for any labor, services or materials furnished or to be furnished to the
Lessee, or to anyone holding any portion of the Property or any part thereof
through or under the Lessee, and that no mechanics' or other liens for any such
labor, services or materials shall attach to or affect the interest of the
Lessor therein.
(f) If any Lien or charge of any kind or any judgment, decree or order of
any court or other governmental authority (including, without limitation, any
state or local tax lien affecting the Property), whether or not valid, shall be
asserted or entered which might interfere with the due and timely payment of any
sum payable or the exercise of any of the rights or the performance of any of
the duties or responsibilities under this Lease, the Lessee shall, upon
obtaining knowledge thereof or upon receipt of notice to that effect from the
Lessor, promptly take such action as may be necessary to prevent or terminate
such interference.
(g) The address stated in Section 23 of this Lease is the principal place
of business and chief executive office of Lessee (as such terms are used in
Section 9-103(3) of the Uniform Commercial Code of any applicable jurisdiction),
and Lessee will provide Lessor with prior written notice of any change of
location of its principal place of business or chief executive office. The
Equipment and Improvements respecting the Property will be located only at the
Property.
(h) Lessee covenants and agrees that it shall not, and that any sublease
shall provide that the Sublessee shall not, treat, use, store, dispose, release,
handle or otherwise manage Hazardous Materials (as defined in Section 6.7 of the
Ground Sublease) on the Property except in connection with any construction,
operation, maintenance or repair of the Improvements or in the ordinary course
of its business, and that such conduct shall be done in compliance with all
applicable federal, state and local laws, including all Environmental
Requirements. Lessee's violation of the foregoing prohibition shall constitute a
breach hereunder and Lessee shall indemnify, hold harmless and defend the Lessor
for such violation as provided below.
(i) Lessee, in the name and stead of Lessor, may enter into agreements
granting easements reasonably necessary for the development and operation of the
improvements, provided such agreements comply with Section 5.6 of the Ground
Sublease.
SECTION 9. CONSTRUCTION, IMPROVEMENT, MAINTENANCE AND REPAIR OF PROPERTY OR
EQUIPMENT.
(a) Lessee shall construct or cause the Construction Agent to construct or
cause to be constructed on the Property the Improvements necessary for Lessee to
develop and maintain its portion of the Property, all in substantial conformity
with the construction plans, drawings and related documents approved by Ground
Lessor in accordance with the Ground Sublease. The Ground Lessor has entered
into a joint powers agreement with the City (as defined in the Ground Sublease)
which sets forth the jurisdiction of those parties with respect to the
development of the Improvements. Lessee agrees that it will implement the
Mitigation Monitoring Plan (as defined in the Ground
14
Sublease), attached as Attachment No. 5 to the JPA (as defined in the Ground
Sublease), and those portions of the Mitigation Measures (as defined in the
Ground Sublease) which the Ground Lessor has the obligation to perform pursuant
to the Mitigation Monitoring Plan (as defined in the Ground Sublease), and that
it will cause the construction, use and occupancy of the Improvements to comply
with the mitigation measures set forth in Attachment No. 6 attached to the JPA.
The parties acknowledge and agree that during the term of the JPA the standards
set forth in the JPA are the standards to be applied with respect to this Lease
for land use, environmental quality, building and design codes, seismic, life
safety, and any other matters described in the JPA, and that no modification
shall be made to the standards set forth therein without the written consent of
the Ground Lessor and the Lessor. The parties hereto acknowledge that in the
future it may be necessary or desirable for Lessee to obtain, on a voluntary
basis, certain permits, subdivision approvals, or other land use approvals, and
if the Lessee so desires to process and obtain such approvals, Lessor agrees to
cooperate and assist Lessee, in the filing of such applications including
signing any such applications if required, in connection with the development of
the Property.
(b) It is the intention of Lessor and Lessee that all Improvements with the
Property be constructed, installed, erected, operated and maintained so that the
Improvements shall be aesthetically and architecturally harmonious. Accordingly
, except as otherwise provided hereinafter, all Improvements within the
Property, including initial construction and any major alterations (but not
including tenant improvements other than as may be requested by Ground Lessor
pursuant to Section 5.1(c) of the Ground Sublease), additions, exterior
remodeling or reconstructions of any Improvements following the initial
construction thereof, shall be performed only in accordance with plans approved
by the Ground Lessor for such work. Lessee represents and warrants that as of
the Effective Date, the schematic design for the Improvements has been approved
by the Ground Lessor.
(c) Prior to the commencement of the construction and/or installation of
any Improvements whatsoever on the Property or any part thereof by Lessee
pursuant to the Construction Agency Agreement, Lessee shall deliver to the
Ground Lessor the Plans and Specifications including detailed plans through and
including construction drawings of scaled elevations, exterior design concepts,
material selection and color for the exterior surfaces of the proposed
Improvements (which Plans and Specifications shall include a grading plan and/or
a utility plan, to the extent applicable). Lessee shall obtain the approval of
the Plans and Specifications by the Ground Lessor unless the Ground Lessor fails
to approve or disapprove the Plans and Specifications in accordance with the
terms of the Ground Lease within such thirty (30) day period, the Plans and
Specifications shall be deemed disapproved by Ground Lessor. Upon a deemed
disapproval, Lessee shall comply with the provisions of the Ground Lease for
seeking Ground Lessor's approval.
(d) Upon the Completion of the initial construction and installation of the
Improvements, the same shall not be thereafter materially changed or materially
altered without the prior written approval of Lessor and Ground Lessor if such
changes or alterations would substantially modify the exterior appearance of
such Improvements, which approval shall be sought pursuant to the terms set
forth above and in the Ground Lease and shall not be unreasonably withheld in
accordance with the criteria set forth
15
above. Lessor shall not withhold or delay its approval of any proposed changes
or alterations to any Improvements which are consistent with the architectural
design, aesthetic quality, and exterior materials of Improvements existing at
the Property and previously approved by Lessor. In addition, Lessor shall have
no approval rights with respect to changes to exterior plans or materials which
are required by any governmental authority. Nothing herein shall require Lessee
to obtain Lessor's approval of the interior designs of the Improvements.
(e) During the preparation of any revisions to the Plans and Specifications
or the preparation of any other submissions, Lessee shall hold progress meetings
with Ground Lessor to coordinate the preparation, submission and review thereof.
Lessor and Lessee shall communicate and consult informally as frequently as is
necessary to ensure that the formal submission of all documents and Plans and
Specifications to Lessor shall receive reasonably prompt and speedy
consideration.
(f) The parties hereto acknowledge that the preliminary Site Plan attached
to this Lease as Exhibit B is a conceptual Site Plan of the Improvements, which
Site Plan is hereby approved by Lessor. Any material modifications to the Site
Plan shall be subject to the approval of Lessor, which approval shall not be
unreasonably withheld or delayed. In the event Lessee submits a revised Site
Plan to Lessor, Lessor shall approve or disapprove the revised Site Plan within
thirty (30) days of Lessee's submittal. If Lessor fails to approve or disapprove
the revised Site Plan in accordance with the terms of this Lease within such
thirty (30) day period, the revised Site Plan shall be deemed disapproved. Upon
a deemed disapproval, Lessee may deliver a notice to Lessor which states that
there has been a deemed disapproval, requesting that Lessor approve or
disapprove the Site Plan, stating that Lessor must approve or disapprove the
Site Plan within 15 days, after Lessor's receipt of this notice, and that
failure by Lessor to either approve or disapprove the Site Plan within such 15
day period will result in deemed approval. Upon submission of any disapproval,
Lessor shall inform Lessee in writing with particularity of the reasons for
disapproval. Lessee acknowledges that any proposed increases in the scale,
density, square footage, bulk or other factors which may impact the environment
may require further review pursuant to the California Environmental Quality Act
prior to a grant of approval.
(g) If there is a dispute between the parties regarding an acceptable,
revised site plan, the parties shall attempt in good faith to mediate such
dispute and use their best efforts to reach agreement on the matters in dispute.
Within 5 days of the request of a party, the requesting party shall attempt to
employ the services of a third person mutually acceptable to the parties to
conduct such mediation within 5 days of his appointment. If on completion of
such mediation, the parties are unable to agree upon an acceptable, revised site
plan, then Lessee shall have those remedies available at law or equity.
(h) With respect to any Improvements which Lessee may elect to construct,
Lessee shall submit to Lessor for informational purposes only, a copy of the
final construction contracts relating thereto, which submission shall occur
prior to the commencement of any significant construction work pursuant to any
such construction contracts.
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(i) Prior to commencing construction of any of the Improvements, Lessee
shall have obtained (and delivered insurance certificates therefor to Lessor)
all insurance coverage required under Section 10 of this Lease.
(j) All Improvements, together with all off-site improvements that may be
constructed by reason of Governmental Requirements as a condition to the
construction of Improvements upon the Property, shall be constructed in a good
and workmanlike manner using materials of good quality and in substantial
compliance with the Plans and Specifications as modified pursuant hereto and to
the Ground Lease, and shall comply with all applicable governmental permits,
laws, ordinances and regulations.
(k) Lessee covenants that the Improvements to be constructed on the
Property, and all other construction thereon, when undertaken, while in progress
and as completed: (i) will comply with all Governmental Actions, including,
without limitation, all laws and ordinances necessary to permit the development,
completion and lease of the Property pursuant to this Lease and the Ground
Lease; (ii) will be entirely on the Property and will not encroach upon the land
of others; (iii) will be wholly within any enforceable building restriction
lines, however established, and will not violate any enforceable use restriction
or any applicable easement, license, covenant, condition or restriction of
record; and (iv) will comply in all material respects with the Site Plan (as may
be modified as provided herein), all Plans and Specifications approved for such
Improvements (as may be modified as provided herein), and all provisions of this
Lease and the Ground Lease. All work performed on the Property pursuant to this
Lease and the Ground Lease, or authorized by this Lease and the Ground Lease,
shall be done in a good workmanlike manner. The interior architectural design
and appearance and the interior improvements and finish of each of the
structures on the Property shall not be subject to the review and approval of
Lessor.
(l) Lessor shall bear the cost of developing the Property and constructing
the Improvements, including all fees and mitigation measures, provided however
that, Lessee will be responsible to pay for and to construct certain of those
mitigation measures (the "Mitigation Measures") applicable to the development of
the Property pursuant to the Ground Lease, and that Ground Lessor and Lessee
will share the cost of such mitigation measures; Ground Lessor's payment for
such mitigation measures will be by way of Rent credits, which are reflected in
the Rent Schedule (as defined in the Ground Sublease), as set forth at Article 4
of the Ground Sublease. The parties agree that Lessee will contribute $111,000
toward the cost of the Mitigation Measures. In addition, Lessee agrees that it
shall pay the cost of all Mitigation Measures that are the responsibility of the
Parent Guarantor pursuant to the terms of the Ground Sublease, including,
without limitation, in the event the cost of the Mitigation Measures exceeds
$2,481,000, the amount of such overage.
(m) Subject to Lessee's right to contest as hereinafter provided, at all
times after the Completion Date, Lessee shall keep the Property, including all
Improvements now or hereafter located on the Property, free and clear of all
liens and claims of liens for labor, services, materials, supplies, or equipment
performed on or furnished to the Property. Lessee shall (i) promptly pay and
discharge, or cause the Property to be released from, any such lien or claim of
lien, or, (ii) if Lessee decides to
17
contest said lien, furnish Lessor such bond as may be required by law to free
the Property from the effect of such a lien and to secure Lessor against payment
of such lien, or provide Lessor with other assurances with respect thereto which
are satisfactory to Lessor, in its good faith discretion. Should Lessee fail to
pay and discharge, or cause the Property to be released from any such lien or
claim of lien or to provide a bond or other assurance as permitted hereunder
within thirty (30) days after service on Lessee by Lessor of a written request
to do so, Lessor may pay, adjust, compromise and discharge any such lien or
claim of lien on such terms and in such manner as Lessor may deem appropriate.
In such event, Lessee shall, following any such payment by Lessor, and after
receiving not less than thirty (30) days' written notice and reasonable evidence
of payment, reimburse Lessor for the full amount so paid by Lessor, including
any reasonable attorneys' fees or other costs expended by Lessor, and such
amount shall constitute Additional Rent and become a part of Lessee's
obligations hereunder.
(n) In the event that Lessee discovers the presence of Contaminants on or
under the Property subsequent to the Effective Date, Lessee shall, within five
(5) days of such discovery, notify Lessor and the Collateral Agent in writing of
such discovery and shall promptly thereafter provide a reasonably detailed
description of the location, extent and nature of the Contaminants discovered,
and Lessee must provide a plan to remediate such contamination. All remediation
which is undertaken with respect to the Property shall comply with all
Governmental Actions.
(o) Notwithstanding anything that is or appears to be to the contrary
herein, any and all Improvements erected on the Property as permitted by this
Lease, as well as any and all alterations or additions thereto or any other
Improvements or fixtures on the Property, shall be owned by Lessor until the
expiration of the Lease Term or sooner termination of this Lease. Upon the
expiration or sooner termination of this Lease, all Improvements and all
alterations, additions or improvements thereto that are made to or placed on the
Property by Lessee or any other person shall be considered part of the real
property of the Property and shall remain on the Property and become the
property of Lessor, provided that Lessee shall retain ownership of and shall be
required to remove furniture, equipment, machinery, trade fixtures and removable
personal property which are not part of the Property, except as may be left on
the Property with Lessor's prior written approval. Except as otherwise expressly
provided in this Lease, any non-disturbance agreement approved by Lessor, any
easement approved by Lessor, or any written instrument executed by Lessor which
expressly states that Lessor is waiving its rights under this Section (o) to
receive such Improvements free and clear of all other claims, said Improvements
shall become Lessor's property free and clear of any and all rights to
possession and all claims to or against them by Lessee or any third person or
entity.
(p) Subject to reasonable procedures regarding safety established by
Lessee, during normal construction hours, representatives of Lessor and Ground
Lessor shall have the reasonable right of access to the Property without charges
or fees for the purpose of inspecting the work being performed in constructing
the Improvements; provided, however, that such representatives shall present and
identify themselves at Lessee's construction office, be accompanied by a
representative of Lessee while on the Property and obey Lessee's, or its
contractor's safety rules and regulations. In addition, Lessor and Ground Lessor
shall have the right to authorize other public agencies to enter
18
the Property, upon the same terms after reasonable prior notice to Lessee, for
the purpose of constructing, reconstructing, maintaining or repairing any public
improvements or public facilities located on the Property. Lessor hereby
indemnifies and holds Lessee, and its representatives, and the Property,
harmless from and against any loss, cost damage or liability, including, without
limitation, attorneys' fees and disbursements, which results from the exercise
by Lessor, or any party acting under Lessor's authority, of the rights granted
by this Section.
(q) If requested by Lessor, the Collateral Agent or Ground Lessor in
writing, Lessee covenants and agrees to deliver to Lessor, the Collateral Agent
or Ground Lessor, as applicable, conformed copies (and certified copies of all
recorded instruments) of all governmental approvals and permits obtained by
Lessee for the construction, alteration or reconstruction of any Improvements
upon the Property in accordance with this Section 9. In no event shall Lessee
commence construction of any Improvements pursuant to the provisions of this
Section 9 until such time as Lessee shall have obtained all necessary
governmental approvals and permits to so construct such Improvements.
(r) Upon the request of the Lessee, so long as no Event of Default shall
have occurred and be continuing, and, in any event, upon the Lessee's purchase
of the Property in accordance with Section 13 hereof, the Lessor will assign
without recourse or warranty or otherwise make available to the Lessee any and
all rights the Lessor may have under any vendor's or manufacturer's warranties
or undertakings with respect to any Property or Equipment.
(s) From and after the Completion Date, the Lessee shall pay all costs,
expenses, fees and charges (including, without limitation, charges of any
community or property owner to which any Property is subject) incurred in
connection with the ownership, use or occupancy of any Property or ownership,
use and operation of any Equipment. The Lessee shall operate and maintain the
Property in accordance with prudent industry standards and in a manner
reasonably consistent with that of similar property and equipment owned and
operated by the Parent Guarantor and its Affiliates. Except as otherwise
provided in Section 15 hereof, the Lessee shall at all times, at its own
expense, and subject to reasonable wear and tear, keep the Property in good
operating order, repair, condition and appearance and in compliance with (i) all
Governmental Restrictions and (ii) all applicable rules, orders and regulations
or any insurance company insuring all or any part of the Property, and Lessee
shall make or cause to be made whatever repairs and replacements are required by
such enactments or provisions or future enactments or provisions. Lessor shall
not be required to maintain or make any repairs or replacements of other nature
or description to the Property thereon, except as expressly provided herein. The
foregoing undertaking to maintain the Property in good repair shall apply
regardless of the cause necessitating repair and regardless of whether the
Lessee has possession of the Property, and as between the Lessor and the Lessee
all risks of damage to the Property are assumed by the Lessee except as
otherwise provided in Section 33. With respect to any Property, the undertaking
to maintain in good repair shall include, without limitation, all interior and
exterior repairs, whether structural or nonstructural, foreseen or unforeseen,
ordinary or extraordinary and all common area maintenance including, without
limitation, removal of dirt, snow, ice, rubbish and other obstructions and
maintenance of sidewalks and landscaping. The Lessee hereby agrees to indemnify
19
and hold the Lessor and any Assignee harmless from and against all costs,
expenses, claims, losses, damages, fines or penalties, including reasonable
counsel fees, arising out of or due to the Lessee's failure to fulfill its
obligations under this paragraph (s).
(t) From and after the Rent Commencement Date with respect to the Property,
the Lessee shall pay, subject to the Lessee's rights under paragraph (a) of
Section 27 hereof relating to Permitted Contests: (i) all taxes, assessments,
levies, fees, water and sewer rents and charges, and all other governmental
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, which are, at any time, imposed or levied upon or assessed against
(A) the Property, (B) any Basic Rent, any Additional Rent or other sum payable
hereunder or (C) this Lease, the leasehold estate hereby created, or which
arises in respect of the ownership, operation, occupancy, possession or use of
the Property; (ii) all gross receipts or similar taxes (i.e., taxes based upon
gross income which fail to take into account all customary deductions (e.g.,
ordinary operating expenses, depreciation and interest) relating to the
Property) imposed or levied upon, assessed against or measured by any Basic
Rent, or any Additional Rent or other sum payable hereunder; (iii) all sales,
value added, use and similar taxes at any time levied, assessed or payable on
account of the acquisition, leasing or use of the Property; (iv) all
Impositions; (v) charges of utilities and communications services serving the
Property; and (vi) all taxes and assessments required to be paid by Lessor, as
tenant under the Ground Sublease. The Lessee shall not be required to pay any
franchise, estate, inheritance, transfer, income or similar tax of the Lessor
(other than any tax referred to in clause (ii) above) unless such tax is
imposed, levied or assessed in substitution for any other tax, assessment,
charge or levy which the Lessee is required to pay pursuant to this paragraph
(v); provided, however, that if at any time during the Lease Term, the method of
taxation shall be such that there shall be levied, assessed or imposed on the
Lessor a capital levy or other tax directly on the rents received therefrom, or
upon the value of any Property or any present or any future improvement or
improvements on any Property, then all such taxes, assessments, levies or
charges or the part thereof so measured or based, shall be payable by the
Lessee, but only to the extent that such taxes would be payable if the Property
affected were the only property of the Lessor, and the Lessee shall pay and
discharge the same as herein provided. The Lessee will furnish to the Lessor,
promptly after demand therefor, proof of payment of all items referred to above
which are payable by the Lessee. If any such Impositions payable hereunder may
legally be paid in installments, the Lessee may pay such Imposition in
installments. The Lessee will pay and discharge, or cause to be paid and
discharged, all Impositions imposed upon it or its income or properties, prior
to the date on which penalties attach thereto, except to the extent that any
such tax, assessment, governmental charge or levy is the subject of a Permitted
Contest.
(u) The Lessee may make alterations to any Equipment without the prior
written consent of the Lessor, provided that such alterations do not impair the
value or utility of such Equipment. Any improvements or additions to any
Equipment shall become and remain the property of the Lessor, except that any
addition to Equipment made by the Lessee shall remain the property of the Lessee
if it can be removed from such Equipment without impairing the functioning of
such Equipment or its resale value, excluding such addition.
20
(v) Following completion of construction of the Improvements pursuant to
Section 9 of this Lease and the Construction Agency Agreement and so long as no
Event of Default shall have occurred and be continuing, the Lessee may, at its
expense, make or permit additions to and alterations to the Property; provided
Lessee complies with all terms and conditions of the Ground Sublease with
respect to such alterations and additions and, that upon completion of such
additions or alterations (i) neither the fair market value of the Property shall
be lessened thereby nor the utility of such Property impaired, below the value
or utility thereof immediately prior to such action (assuming such Property was
then of a condition and repair required to be maintained pursuant to paragraph
(s) of Section 9 hereof), (ii) such additions or alterations shall not result in
a change of use of such Property, (iii) such work shall be completed in a good
and workmanlike manner in accordance with generally accepted and prudent
engineering and construction practices and in compliance with all applicable
Legal Requirements and Insurance Requirements and (iv) no exterior walls of any
building or other improvement constituting a part of the Property shall be
demolished unless (A) the Lessee has made adequate provision according to
nationally recognized sound and prudent engineering and architectural standards
to preserve and maintain the structural integrity of the affected portion of the
Improvements and for the restoration of such Property to a structurally sound
architectural whole and (B) if such addition or alteration costs more than 10%
of the Acquisition Cost of the Property, the obligations of the Lessee to
preserve, maintain and restore are reasonably assured to the Lessor's
satisfaction. Any and all such additions and alterations shall be and remain
part of the Property and shall be subject to this Lease. Notwithstanding
anything contained herein, the Lessee shall not perform any addition or
alteration to any Property which would have an estimated cost in excess of 10%
of the Acquisition Cost of the Property, without the Lessor's and Collateral
Agent's prior written consent, which consent may be conditioned upon, among
other things, the Lessor's and Collateral Agent's approval of the plans and
specifications for such additions and alterations and the Lessee's furnishing of
such security as the Lessor may reasonably require to protect the Lessor against
any Liens or claims affecting the Property as a result of such addition or
alteration.
SECTION 10. INSURANCE.
(a) The Lessee shall cause the Construction Agent to maintain in full force
and effect at all times on or prior to the Completion Date the following
insurance with respect to the Property:
(i) Builder's all-risk insurance coverage against losses by
fire and lightning and other risks for the full insurable
replacement value of the Property and the Improvements, with
agreed amount endorsement or endorsements providing equivalent
protection, including loss by windstorm, flood, earthquake, hail,
explosion, riot (including a riot attending a strike), civil
commotion, aircraft, vehicles, smoke damage, vandalism and
malicious
21
mischief in an amounts not less than the full insurable
replacement value of all Improvements on the Property, but in no
event less than the Project Cost. The term "full insurable
replacement value" as used herein means the actual replacement
cost of the Improvements on the Property, including the cost of
debris removal, capitalized accrued interest on the Notes and
accrued yield on the Certificates resulting from any delay.
(ii) Comprehensive general public liability insurance
covering the legal liability of the Lessor and the Lessee against
claims for bodily injury, death or property damage, occurring on
or about the Property or occurring as a result of the ownership
of the Property, the construction of the Improvements thereon in
a minimum amount of $1,000,000 with respect to any one occurrence
plus an "umbrella" policy insuring up to $11,000,000.
(iii) Explosion insurance in respect of any boilers and
similar apparatus located on the Property in a minimum amount of
the full replacement cost or in such greater amounts as are then
customary for a property similar in use to the Property.
(iv) Such other insurance, in such amounts and against such
risks as are customarily maintained.
(b) The Lessee will maintain or cause to be maintained
insurance of the following character with respect to the Property:
(i) All risk insurance coverage against losses by fire and
lightning and other risks for the full insurable replacement
value of each Parcel of Property, with agreed amount endorsement
or endorsements providing equivalent protection, including loss
by windstorm, flood, earthquake, hail, explosion, riot (including
riot attending a strike), civil commotion, aircraft, vehicles,
smoke damage, and vandalism and malicious mischief, in amounts
not less than the full insurable replacement value of all
buildings and other improvements on the Property, but in no event
less than the Project Cost. The term "full insurable replacement
value" as used herein means the actual replacement cost,
including the costs of debris removal, but excluding the cost of
constructing foundation and footings.
22
(ii) Comprehensive general public liability insurance
covering the legal liability of the Lessor and the Lessee against
claims for bodily injury, death or property damage, occurring on,
in or about the Property or occurring as a result of ownership of
facilities located on the Property in the minimum amount of
$10,000,000 per occurrence.
(iii) Product liability insurance covering the legal
liability of the Lessor and the Lessee as a result of the use of
products or materials designed, developed, manufactured, stored,
processed, constructed or sold, or services rendered, on the
Property, in the minimum amount of $1,000,000 with respect to any
one occurrence or incidence of negligence plus an "umbrella"
policy insuring up to $11,000,000.
(iv) The Lessee shall comply with applicable workers'
compensation laws of the states where each Parcel of Property is
located, and shall maintain such insurance if and to the extent
necessary for such compliance.
(v) Explosion insurance in respect of any boilers and
similar apparatus located on the Property in the minimum amount
of the full replacement cost or in such greater amounts as are
then customary for property similar in use.
(vi) Such other insurance, in such amounts and against such
risks, as is customarily maintained by similarly situated
operators of similar properties for businesses similar to that
conducted by the Lessee.
The insurance required under this Section 10 shall be maintained in effect with
insurers of recognized responsibility satisfactory to the Lessor. Such insurance
may provide for such deductibles and the Lessee may self-insure with respect to
the required coverage only to the extent approved in writing by the Lessor and
Assignee. Insurance claims by reason of damage or destruction to the Property
shall be adjusted by the Lessee, subject to the approval of the Lessor and
Assignee, which approval the Lessor and Assignee agree not to unreasonably
withhold or delay; provided, that if the amount claimed exceeds $1,000,000, the
Lessor may participate in such adjustment to the extent necessary in the
Lessor's reasonable judgment to protect the Lessor's interest in the Property,
at the Lessee's expense and Lessee shall not adjust any such claim without the
prior written consent of the Lessor and Assignee.
23
(c) Any policies of insurance carried in accordance with this Section 10
and any policies taken out in substitution or replacement for any such policies
(i) shall name the Lessor and each Assignee as additional Insured's, as their
respective interests may appear (but without imposing upon any such Person any
obligation imposed on the insured, including, without limitation, the liability
to pay the premium for any such policy), (ii) with respect to insurance carried
in accordance with the preceding paragraphs (a) and (b) shall name the Assignee
as loss payee, (iii) shall provide that as against the Lessor and Assignee, the
insurers shall waive any rights of subrogation, (iv) shall provide that if the
insurers cancel such insurance for any reason whatsoever, or any substantial
change is made in the coverage or the same is allowed to lapse for nonpayment of
premium or such insurance coverage is reduced, such cancellation, change, lapse
or reduction shall not be effective as to the Lessor or any Assignee for thirty
(30) days after receipt by the Assignee of written notice by such insurers of
such cancellation, change, lapse or reduction, and (v) shall provide that in
respect of the interest of the Lessor and each Assignee in such policies the
insurance shall not be invalidated by any action or inaction of the Lessee or
any other Person (other than of the Lessor or any such Assignee in respect of
its own interest) and shall insure the interests of the Lessor and each such
Assignee, as they appear, regardless of any breach or violation of any
warranties, declarations or conditions contained in such policies by the Lessee
or any other Person. Each liability policy (A) shall be primary without right of
contribution from any other insurance which is carried by the Lessor with
respect to its interest as such in the Property and (B) shall expressly provide
that all of the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured.
(d) As between the Lessor and the Lessee it is agreed that any insurance
payments received as the result of the occurrence of (i) any event of loss
described in paragraph (c) of Section 15 hereof with respect to the Property, or
(ii) any event of Taking described in Section 16 hereof shall be paid to an
account of the Lessor and disposed of, as set forth in paragraph (c) of Section
15 hereof.
(e) As between the Lessor and the Lessee, so long as no Event of Default
shall have occurred and be continuing, insurance proceeds of any property damage
loss to any Property will be held in an account of the Lessor and applied in
payment (or to reimburse the Lessee) for repairs or replacement in accordance
with the terms of paragraph (b) of Section 15 hereof. The Lessee shall be
entitled (i) to receive the amounts so deposited against certificates, invoices
or bills satisfactory to the Lessor, delivered to the Lessor from time to time
as such work or repair progresses, and (ii) to direct the investment of the
amounts so deposited as provided in paragraph (f) of this Section 10. If after
the Completion Date, the Lessor estimates that the cost of such work or repair
shall exceed the amount of proceeds, the Lessee shall make adequate provisions
for the payment thereof, which provisions shall be acceptable to the Lessor. Any
moneys remaining in the aforesaid account after final payment for repairs has
been made shall be paid to the Lessee.
(f) The Lessor, at the Lessee's instruction, may invest the amounts
deposited with the Lessor pursuant to paragraph (e) of this Section 10 in any
investments permitted under the Credit Agreement and the Participation
Agreement. Such investments shall mature in such amounts and on such dates so as
to provide that amounts shall be
24
available on the draw dates sufficient to pay the amounts requested by and due
to the Lessee. Any interest earned on investments of such funds shall be paid to
the Lessee. The Lessor shall not be liable for any loss resulting from the
liquidation of each and every such investment and the Lessee shall bear the risk
of such loss, if any.
(g) Any amount referred to in paragraphs (c), (d) or (e) of this Section 10
which is payable to the Lessee shall not be paid to the Lessee or, if it has
been previously paid to the Lessee, shall not be retained by the Lessee, if at
the time of such payment an Event of Default shall have occurred and be
continuing. In such event, all such amounts shall be paid to and held by the
Lessor as security for the obligations of the Lessee hereunder or, at the
Lessor's option, applied by the Lessor toward payment of any of such obligations
of the Lessee at the time due hereunder as the Lessor may elect. At such time as
there shall not be continuing any Event of Default, all such amounts at the time
held by the Lessor in excess of the amount, if any, which the Lessor shall have
elected to apply as above provided shall be paid to the Lessee.
(h) On or before the execution of this Lease, on the Effective Date with
respect to the Property, and annually on or before the anniversary of the date
of this Lease, the Lessee will furnish to the Lessor certificates or other
evidence reasonably acceptable to the Lessor certifying that the insurance then
carried and maintained on the Property complies with the terms hereof.
(i) The Lessee covenants that it will not use or operate any equipment at
the Property or use or occupy the Property or permit the use or occupancy of the
Property or the use or operation of any equipment at the Property at a time when
the insurance required by this Section 10 is not in force with respect to such
Property.
(j) The Lessee may, at its cost and expense, prosecute any claim against
any insurer or contest any settlement proposed by any insurer, and the Lessee
may bring any such prosecution or contest in the name of the Lessor, the Lessee,
or both, and the Lessor will join therein at the Lessee's request; provided,
that the Lessee shall indemnify the Lessor against any losses, costs or expenses
(including reasonable attorneys' fees) which the Lessor may incur in connection
with such prosecution or contest.
SECTION 11. INDEMNITIES.
The Lessee shall indemnify, defend, protect and hold harmless the Lessor,
any Assignee, the Collateral Agent, any successor or successors, and any
Affiliate of each of them, and their respective officers, directors,
incorporators, shareholders, partners, employees, agents and servants (each of
the foregoing an "Indemnified Person") from and against all liabilities
(including, without limitation, Environmental Damages and strict liability in
tort), taxes, losses, obligations, claims (including, without limitation,
Environmental Damages and strict liability in tort), damages, penalties, causes
of action, suits, costs and expenses (including, without limitation, attorneys'
and accountants' fees and expenses) or judgments of any nature relating to or in
any way arising out of:
(a) The ordering, delivery, acquisition, purchase, or agreement for the
acquisition, construction, title on acquisition, rejection, installation,
possession, titling, retitling, registration, reregistration, custody by the
Lessee of title and registration
25
documents, ownership, use, non-use, misuse, financing (including, without
limitation, all obligations of the Lessor under or in respect of any interest
rate swap, cap, collar or other financial hedging arrangement and any amounts
payable by the Lessor under any such arrangement to reduce the notional amount
thereof by the amount of any prepayment of any borrowing to which such interest
rate swap, cap, collar or other financial hedging arrangement relates), lease,
sublease, operation, transportation, repair or control of any Property or
Equipment or the past, present or future presence or the release of hazardous
substances on, under, to or from, or the generation or transportation of
hazardous substances to or from, or the failure to report, disclose or remediate
the foregoing with respect to any Property, leased or to be leased hereunder,
(i) except to the extent that such costs are included in the Acquisition Cost of
the Property within the limitations provided in paragraph (a)(iv) of Section 3
hereof (or within any change of such limitations agreed to in writing by the
Lessor and the Lessee), (ii) except for any general administrative expenses of
the Lessor and (iii) except the income taxes with respect to which
indemnification is excluded under paragraph (c) of this Section 11;
(b) The assertion of any claim or demand based upon any infringement or
alleged infringement of any patent or other right, by or in respect of the
Property; provided, however, that upon request of the Lessee, the Lessor will
make available to the Lessee the Lessor's rights under any similar
indemnification arising from any manufacturer's or vendor's warranties or
undertakings with respect to the Property;
(c) All U.S. Federal, state, county, municipal, foreign or other fees and
taxes of whatsoever nature, including but not limited to license, qualification,
franchise, withholding, sales, use, gross income, gross receipts, ad valorem,
business, personal property, real estate, value added, excise, motor vehicle,
occupation fees and stamp or other taxes or tolls of any nature whatsoever, and
penalties and interest thereon, whether assessed, levied against or payable by
the Lessor or otherwise, with respect to the Property or the acquisition,
purchase, sale, rental, use, operation, control, ownership or disposition of any
Property or Equipment (including, without limitation, any claim by any
Governmental Authority for transfer tax, transfer gains tax, mortgage recording
tax, filing or other similar taxes or fees in connection with the acquisition of
the Property by the Lessor or otherwise in connection with this Lease) or
measured in any way by the value thereof or by the business of, investment in,
or ownership by the Lessor with respect thereto; provided, that this indemnity
shall not apply to Federal net income taxes, or to state and local net income
taxes, except that such indemnity shall apply to state and local net income
taxes (A) to the extent imposed by reason in whole or in part of (1) a relation
or asserted relation of any such taxing jurisdiction to the Property or to the
transactions contemplated herein or (2) the actual or deemed use by any Person
of any portion of the Property in such taxing jurisdiction, other than in the
case of both clauses (1) and (2), taxes to the extent such taxes would have been
imposed by a taxing jurisdiction because of a relationship between the Lessor
and such taxing jurisdiction without regard to the circumstances described in
clauses (1) and (2), and (B) to the extent imposed as a result of the inability
to claim, disallowance or other loss by Lessor or any Assignee of deductions
customarily allowed in computing net income (e.g., interest expense, financing,
administrative, ordinary operating expenses and other fees and expenses); or
26
(d) Any violation, or alleged violation by the Lessee, of the terms of the
Ground Lease to be performed by Lessor thereunder, this Lease or of any other
contracts or agreements to which the Lessee is a party or by which it is bound
or of any laws, rules, regulations, orders, writs, injunctions, decrees,
consents, approvals, exemptions, authorizations, licenses and withholdings of
objection, of any governmental or public body or authority and all other Legal
Requirements.
The Lessee shall forthwith upon demand reimburse any Indemnified Person for
any sum or sums expended with respect to any of the foregoing or, upon request
from any Indemnified Person, shall pay such amounts directly. Any payment made
to or on behalf of any Indemnified Person pursuant to this Section 11 shall be
increased to such amount as will, after taking into account all taxes imposed
with respect to the accrual or receipt of such payment (as the same may be
increased pursuant to this sentence), equal the amount of the payment, reduced
by the amount of any savings in such taxes actually realized by the Indemnified
Person as a result of the payment or accrual of the amounts in respect of which
the payment to or on behalf of the Indemnified Person hereunder is made. To the
extent that the Lessee in fact indemnifies any Indemnified Person under the
indemnity provisions of this Lease, the Lessee shall be subrogated to such
Indemnified Person's rights in the affected transaction and shall have a right
to determine the settlement of claims therein.
The indemnities contained in this Section 11 shall not be affected by any
termination of this Lease as a whole or in respect of any Property or Equipment
leased hereunder or any failure or refusal of the Lessee to accept any Property
or Equipment acquired or ordered pursuant to the terms hereof.
Notwithstanding any provisions of this Section 11 to the contrary, the
Lessee shall not indemnify and hold harmless any Indemnified Person against any
claims and liabilities arising from the gross negligence or willful misconduct
of such Indemnified Person. Additionally, notwithstanding any provisions of this
Section 11 to the contrary, at no time during the Construction Period shall
Lessee's indemnities contained in this Section 11 (i) include any
indemnification of any Indemnified Person with respect to any costs arising from
third-party damage claims other than those third-party damage claims caused by
or resulting from the actions or failure to act by Lessee, or any of its agents,
employees, consultants, contractors or subcontractors (or anyone else under the
control of Lessee), while Lessee is in possession or control of the Property,
nor (ii) result in the total amount payable by Lessee under this Lease and the
Related Documents to exceed the limitations on Lessee's payment obligations
under Section 5.04 of the Construction Agency Agreement. Without limiting the
express rights of the Indemnified Persons under this Section 11, the Lessee's
obligations under this Section 11 shall be construed as an indemnity only and
not a guaranty of the residual value of the Property or a guarantee of the
Outstanding Borrowings or Fundings.
In the event the Lessor shall be a party defendant to any litigation
arising out of any provision contained in this Lease for which the Lessee has
given indemnification, the Lessor shall give prompt notice thereof to the Lessee
by telephone and in writing and shall consult and cooperate, at the Lessee's
expenses with the Lessee, and if the Lessor shall not have appeared or pleaded
to any such action then the Lessor
27
does hereby empower any attorney of any court of record appointed by the Lessee
(who shall give prompt written notice to the Lessor of such appointment) to
appear for the Lessor and in good faith and with due diligence defend such
action, to enter counterclaims, to institute actions against third parties and
to do all things necessary or desirable in the judgment of such attorney after
consultation with the Lessor and the Lessee to preserve the rights of the Lessor
and the Lessee, all at the Lessee's own cost and expense. No failure or delay of
the Lessor to give the notice required by this Section 11 shall excuse the
obligation of the Lessee to indemnify the Lessor with respect to such litigation
except to the extent that any increase in liability is a direct result of such
failure or delay.
SECTION 12. LESSEE'S RIGHT TO TERMINATE.
(a) The Lessee shall have the right, upon ninety (90) days' notice to the
Lessor (the "Termination Notice"), to terminate the lease of the Property on any
Basic Rent Payment Date during the Lease Term or on any Basic Rent Payment Date
during any Renewal Term, by arranging, at its own cost and expense, for the sale
of the Property and the Lessor's rights under the Ground Sublease in an
arm's-length transaction on the date of termination and the receipt by the
Lessor of cash in an amount equal to the sale price of such Property (the "Cash
Proceeds"); provided, however, that if such sale will result in cash proceeds
less than the Termination Value plus amounts due under paragraph (c) of this
Section 12, the Lessor and Assignees may elect in their sole discretion not to
proceed with such sale and the Lessee shall not terminate this Lease pursuant to
this paragraph (a) unless the Lessee has obtained the prior written consent, to
be granted or withheld in their sole discretion, of the Lessor and Assignees to
such termination of this Lease and the sale of such Property and the Lessor's
rights under the Ground Sublease; provided, further, that if an Event of Default
has occurred and is continuing, and, prior to the termination of this Lease
pursuant to this paragraph (a), the Lessor arranges for the sale of the Property
and the Lessor's rights under the Ground Sublease to a third party purchaser in
accordance with the provisions of Section 19 hereof, the Termination Notice
shall be invalidated and the Lessee shall no longer have the right to cause the
termination of the lease of the Property and sale of the Property and the
Lessor's rights under the Ground Sublease in accordance with the terms of this
paragraph (a) until such Event of Default has been effectively cured by the
Lessee. At the time the Property is sold pursuant to this Section 12, the
Lessor's rights and obligations in respect of the Ground Sublease shall be
assumed by the purchaser, with the Lessor released from liability in respect
thereof.
(b) In the event the Lessee exercises its right to terminate the lease of
the Property pursuant to this Section 12 or in the event a termination of the
lease of the Property occurs pursuant to Section 14 hereof and the Lessee
chooses to effect a sale pursuant to this Section:
(i) if the Cash Proceeds are greater than the Termination Value
plus the amounts due under paragraph (c) of this Section 12,
the Lessor shall pay to the Lessee the amount by which such
Cash Proceeds exceed the Termination Value plus the amounts
due under paragraph (c) of this Section 12;
28
(ii) if the Cash Proceeds equal or exceed the Termination Value
plus the amounts due under paragraph (c) of this Section 12
less the Surrender Payment at such time but are less than
the Termination Value plus the amounts due under paragraph
(c) of this Section 12, the Lessee shall pay to the Lessor
an amount equal to (A) the Termination Value plus the
amounts due under paragraph (c) of this Section 12 less (B)
the Cash Proceeds; and
(iii) if the Cash Proceeds are less than the Termination Value
plus (without duplication) the amounts due under paragraph
(c) of this Section 12 less the Surrender Payment, the
Lessee shall pay to the Lessor an amount equal to the sum
of (A) the Surrender Payment, plus (B) the amounts due
under paragraph (c) of this Section 12 (without
duplication), plus (C) the amount by which the residual
value of the Property has been reduced by wear and tear in
excess of that attributable to normal and proper use (the
amount of such excess wear and tear to be such amount as
the Lessor and the Lessee agree, or if no agreement is
reached, the amount determined pursuant to the Appraisal
Procedure).
(c) All payments and credits referred to in paragraph (b) above shall be
made on the termination date of the lease of the Property pursuant to this
Section 12, and the parties shall account to each other for such payments and
credits, and the Lessee shall pay to the Lessor (without duplication) (i) all
Basic Rent payable, (ii) any Additional Rent owing, (iii) all amounts payable
pursuant to Sections 11, 25 and 27 hereof, (iv) all losses, damages, costs and
expenses (including, without limitation, attorneys' fees and expenses,
commissions, filing fees and sales or transfer taxes) sustained by the Lessor by
reason of such sale, and (v) all other amounts owing by Lessee hereunder and
under any Related Documents, each as of the termination date. Upon receipt by
the Lessor of the Cash Proceeds and all other amounts then due and owing
hereunder, including, without limitation, the amount of excess wear and tear
determined pursuant to paragraph (b)(iii) of this Section 12, the Lessor shall
transfer its interest in the Property and the Ground Sublease to the purchaser
at the sale designated by the Lessee. The "Cash Proceeds" referred to in
paragraph (b) hereof shall mean the cash proceeds of sale without reduction for
any amounts paid by the Lessee. In the event of a sale pursuant to this Section
12, neither the Lessee or any Affiliate of the Lessee shall purchase the
Property or the Lessor's interest in the Ground Sublease.
(d) In its notice given pursuant to paragraph (a) of this Section 12, the
Lessee shall advise the Lessor if the sale provided for in such notice will
result in the applicability of paragraph (b)(iii) of Section 12 hereof. If the
Lessee advises the Lessor that such paragraph will be applicable, the Lessor and
the Assignees shall have the right in their sole and absolute discretion (i) to
preclude such sale or (ii) to arrange for a sale of the Property and the
Lessor's interest in the Ground Sublease to be made to a purchaser designated by
the Lessor, if such purchaser will pay an amount greater than the amount
29
offered by the Lessee's purchaser. If the Lessor shall fail to arrange for such
sale and shall give the Lessee notice that it is consenting to the sale
requested by the Lessee, the Lessee may proceed with the sale to the purchaser
designated by it. In the event the Lessor fails to consent to the sale requested
by the Lessee within sixty (60) days of the Lessor's receipt of the Lessee's
notice provided for in paragraph (a) of this Section 12, the Lessee may arrange
for such sale to be made to another purchaser designated by it, if such
purchaser shall pay an amount sufficient to render paragraph (b)(iii) of Section
12 hereof inapplicable.
SECTION 13. PURCHASE BY LESSEE, SURRENDER AND RENEWAL.
(a) The Lessee shall have the right, upon at least thirty (30) days'
written notice to the Lessor, to purchase the Property under this Lease and the
Lessor's interest in the Ground Sublease on any Basic Rent Payment Date during
the Lease Term or any Renewal Term for an amount equal to its Termination Value;
provided that the purchase option contained in this paragraph shall only be
available to the Lessee if in the reasonable judgment of the Lessor or any
Assignee, the purchase price and all other amounts paid by the Lessee will not
in the circumstances in which such payment is made constitute a preferential
payment or a voidable transfer or otherwise be subject to recapture pursuant to
the provisions of the Federal Bankruptcy Code in a bankruptcy proceeding by or
against the Lessee and will not otherwise result in the payment being subject to
recapture from the Lessor, provided, however, that notwithstanding the
foregoing, the Lessee's purchase option contained in this paragraph shall be
available to Lessee following delivery to Lessor of reasonable evidence that
Lessee will be solvent both before and after payment of the Termination Value.
In connection with, and as a condition to, any purchase under this Section 13,
on the Basic Rent Payment Date upon which such purchase occurs, the Lessee shall
pay to the Lessor (without duplication) (i) the Termination Value, (ii) all
Basic Rent payable, (iii) any Additional Rent owing, (iv) all amounts payable
pursuant to Sections 11, 25 and 27 hereof, (v) all losses, damages, costs and
expenses (including, without limitation, attorneys' fees and expenses,
commissions, filing fees and sales or transfer taxes) sustained by the Lessor by
reason of such purchase, and (vi) all other amounts owing by Lessee hereunder or
under any Related Documents.
(b) So long as no Potential Default or Event of Default has occurred and is
continuing, the Lessee shall by written notice given to the Lessor and the Agent
three hundred sixty-five (365) days prior to the end of the Lease Term (with a
second notice to be delivered to the Lessor one hundred eighty (180) days prior
to the expiration of such three hundred sixty-five (365) day period) elect to
either (1) purchase the Property and the Lessor's interest in the Ground
Sublease pursuant to clause 13(a) above or (2) subject to satisfaction of the
Surrender Covenants set forth in paragraph (c) below, terminate this Lease and
surrender the Property under this Lease and any rights Lessee may have with
respect to the Ground Sublease to the Lessor on the Basic Rent Payment Date of
the last month of the Lease Term or on any Basic Rent Payment Date during any
Renewal Term.
(c) In the event the Lessee provides the termination notice contemplated in
paragraph (b))(2) above, the Lessee hereby covenants to the Lessor (the
30
"Surrender Covenants") as follows: (A) on the Surrender Date, (i) no Event of
Default or Potential Default hereunder or under the Ground Sublease shall have
occurred and be continuing, (ii) the Property shall not be undergoing any
repairs, additions or alterations that could reasonably be expected to diminish
the fair market value, utility or remaining economic useful life which the
Property would have had at such time had such repair, addition or alteration not
been undergoing (assuming the Property and Equipment is in the condition
required hereby), and (iii) the Property shall be in compliance with all Legal
Requirements, (B) on or prior to the Surrender Date, but in no event greater
than three hundred sixty-five (365) days prior to the Surrender Date, the Lessee
shall, at its expense, deliver to the Lessor an environmental audit satisfactory
in scope and content to the Lessor and Assignee in their reasonable discretion,
to the effect that the Property has been operated and maintained in compliance
with, and at the applicable time the Property is in compliance with, and is not
subject to any unperformed Remedial Actions with respect to, Environmental
Requirements, (C) on or prior to the Surrender Date, but in no event greater
than ninety (90) days prior to the Surrender Date, the Lessee shall deliver to
the Lessor and Assignee an appraisal from a nationally recognized appraisal firm
satisfactory to the Lessor and Assignee in their reasonable discretion, to the
effect that the Property has been maintained in accordance with the terms and
conditions of Section 9 of this Lease and prudent industry practices, (D) on the
Surrender Date, the Lessor shall have good and marketable title to the Property,
free and clear of all liens other than Permitted Liens, and (E) on the Surrender
Date, the Lessee shall provide evidence satisfactory in the reasonable
discretion of each of the Lessor and the Assignee that the Lessor has all rights
of way, easements, licenses, utilities, Governmental Actions, permits, services,
manuals, records and other information necessary to own, operate and maintain
the Property from and after the termination of this Lease.
(d) In the event the Lessee has elected to terminate pursuant to Section
13(b)(2) above and has complied with each of the Surrender Covenants, the Lessee
shall, on the Surrender Date, terminate this Lease, surrender the Property to
the Lessor and pay to the Lessor the Surrender Payment and all other amounts
owing by the Lessee hereunder or under any Related Documents. Upon such
surrender, the Lessor shall assume control of the Property, subject to the
provisions of this paragraph (d), the Lessor or Assignee (acting on behalf of
the Lessor) shall have the right to sell the Property and Ground Sublease to a
third party and the Lessee shall have no further right, claim or interest in the
Property and Ground Sublease (it being understood that the Lessor shall be
entitled to commence the marketing of the Property and Ground Sublease at any
time subsequent to the first day of the sixth month prior to the Surrender Date,
and the Lessee agrees that it shall cooperate in connection therewith). The
proceeds of sale received by the Lessor or Assignees, as the case may be, from
any sale of the Property and Ground Sublease shall be retained by the Lessor or
Assignees, as the case may be, provided that if the proceeds of sale exceed the
sum of (x) Termination Value and (y) all other amounts owing by the Lessee
hereunder or under any Related Documents, including, without limitation or
duplication, (i) all Basic Rent payable, (ii) any Additional Rent owing, (iii)
all amounts payable pursuant to Sections 11, 25 and 27 hereof, (iv) all losses,
damages, costs and expenses (including, without limitation, attorneys' fees and
expenses, commissions, filing fees and sales or transfer taxes) sustained by the
Lessor by reason of such sale, and (v) all other amounts owing by Lessee
hereunder or under any Related Documents, then, such excess and the Surrender
Payment previously paid by Lessee shall be paid by the Lessor or
31
Assignee, as the case may be, to the Lessee. The Lessee shall use reasonable
efforts commencing six (6) months prior to the Surrender Date to seek on behalf
of the Lessor bona fide arm's-length bids for the Property from prospective
purchasers who are financially capable of purchasing the Property for cash, on
an as-is, non-installment sale basis, without warranty by, or recourse to, the
Lessor. The Lessee shall notify the Lessor of the amount of each such bid, and
the name and address of the Person submitting such bid.
(e) In the event the Lessee shall surrender the Property to the Lessor or
to a purchaser of the Property from the Lessor pursuant to the provisions of
this Section 13, on the Surrender Date, the Lessee shall pay to the Lessor
without duplication (i) the Surrender Payment, (ii) all Basic Rent payable and
accrued through the Surrender Date, (iii) any Additional Rent owing, (iv) all
amounts payable pursuant to Sections 11, 25 and 27 hereof, (v) all losses,
damages, costs and expenses (including, without limitation, attorneys' fees and
expenses, commissions, filing fees and sales or transfer taxes) sustained by the
Lessor by reason of such surrender, and (vi) any other amounts owing by Lessee
hereunder or under any Related Documents as of the Surrender Date. Upon payment
by the Lessee to the Lessor of all amounts owing under this Section 13 and
delivery of the Property to the Lessor or such purchaser, this Lease shall
terminate, except to the extent otherwise provided in this Lease.
(f) Upon the occurrence of an Event of Default and upon the written request
of the Lessee, which shall be received no later than fifteen (15) Business Days
subsequent to receipt of notice from the Lessor or any Assignee pursuant to this
Lease that an Event of Default has occurred, the Lessee shall have the right,
not later than thirty (30) Business Days after the Lessor's receipt of such
request, to purchase all Property under this Lease at a price equal to the
Termination Value; provided that the purchase option contained in this paragraph
shall only be available to the Lessee if in the reasonable judgment of the
Lessor or any Assignee, the purchase price and all other amounts paid by the
Lessee will not in the circumstances in which such payment is made constitute a
preferential payment or a voidable transfer or otherwise be subject to recapture
pursuant to the provisions of the Federal Bankruptcy Code in a bankruptcy
proceeding by or against the Lessee and will not otherwise result in the payment
being subject to recapture from the Lessor, provided, however, that
notwithstanding the foregoing, the Lessee's purchase option contained in this
paragraph shall be available to Lessee following delivery to Lessor of
reasonable evidence that Lessee will be solvent both before and after payment of
the Termination Value. In connection with, and as a condition to, the purchase
of the Property pursuant hereto, (i) the Lessee shall pay at the time of
purchase, in addition to the purchase price, (A) all Basic Rent payable, (B) any
Additional Rent owing, (C) all amounts payable pursuant to Sections 11, 25 and
27 hereof, (D) all losses, damages, costs and expenses (including, without
limitation, attorneys' fees and expenses, commissions, filing fees and sales or
transfer taxes), sustained by the Lessor by reason of such purchase, and (F) all
other amounts owing by the Lessee hereunder or under any Related Documents as of
the date of termination, including, without limitation, all Accrued Default
Obligations, and (ii) when the Lessor transfers title, such transfer shall be on
an as-is, non-installment sale basis, without warranty by, or recourse to, the
Lessor but free of any Lien created pursuant to the Credit Agreement.
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(g) The Lessee shall have the right, upon written notice to Lessor not more
than four hundred fifty-five (455) days and not less than three hundred
sixty-five (365) days prior to the end of the Lease Term, and provided no Event
of Default or Potential Event of Default exists and that the Parent Guarantor
has met the EBITDA Standards, to renew the lease of the Property for a term (the
"Renewal Term") of two separate one (1) year extensions commencing on the first
day of the calendar month following the last day of the Lease Term or the last
day of the previous one year extension, as the case may be.
(h) The Lessee's purchase rights described in this Section 13 shall be
secured by the Lessee's Deed of Trust.
SECTION 14. LESSOR'S RIGHT TO TERMINATE.
(a) The Lessor shall have the right, upon written notice to the Lessee, to
terminate this Lease with respect to all Property under this Lease as of the
date stipulated in such notice if, at any time, the Credit Agreement expires at
the end of its term, or the Credit Agreement is terminated by any Assignee as a
result of the introduction of, or any change in, any applicable law, rule or
regulation or in the interpretation or administration thereof by any
Governmental Authority which shall make it unlawful for the Lessor to borrow
funds under such Credit Agreement, and the Lessor cannot arrange for bank
borrowings to refinance its obligations hereunder with respect to all Property
under this Lease upon terms reasonably acceptable to the Lessor.
(b) In the event of a termination with respect to all Property pursuant to
paragraph (a) of this Section 14, the Lessee shall be required, at its option,
either (i) to arrange for such Property to be sold in accordance with the terms,
and subject to satisfying the conditions for the use, of Section 12 above and
with the consequences therein provided, except that such sale must occur on the
Basic Rent Payment Date stipulated in the written notice contemplated in
paragraph (a) of this Section 14, or (ii) to purchase, on the Basic Rent Payment
Date stipulated in the written notice contemplated by paragraph (a) of this
Section 14, such Property for cash at the Termination Value. In connection with,
and as a condition to any purchase or sale under this paragraph, on the Basic
Rent Payment Date upon which such purchase or sale occurs, the Lessee shall pay
to the Lessor, in addition to any purchase price payable, all other amounts
owing hereunder as of the date of such purchase or sale, including, without
limitation (and without duplication), (i) all Basic Rent payable and accrued
through the date of purchase, (ii) any Additional Rent owing, (iii) all amounts
payable pursuant to Sections 11, 25 and 27 hereof, (iv) all losses, damages,
costs and expenses (including, without limitation, attorney's fees and expenses,
commissions, filing fees and sales or transfer taxes) sustained by the Lessor by
reason of such purchase, and (v) all other amounts owing by Lessee hereunder or
under any Related Documents.
(c) If (i) as a result of the requirements of subsection (a) above with
respect to it becoming unlawful for the Lessor to borrow funds under the Credit
Agreement, then the Lessee shall be entitled to designate a replacement to such
Lender reasonably acceptable to the Collateral Agent, and such Lender shall
execute and deliver to such replacement Lender an assignment agreement between
such Lender and such replacement Lender as required in the Credit Agreement. If
the Lessee exercises its
33
election under this subsection (c) to replace a Lender, the Lessee shall pay the
assignment fee payable to the Collateral Agent under Section 11.01 of the Credit
Agreement.
SECTION 15. LOSS OF OR DAMAGE TO PROPERTY OR EQUIPMENT.
(a) The Lessee hereby assumes all risk of loss of or damage to the
Property, however caused. No loss of or damage to the Property shall impair any
obligation of the Lessee under this Lease, which shall continue in full force
and effect with respect to any loss or damage to the Property.
(b) In the event of damage of any kind whatsoever to any portion of the
Property (unless the same is determined by the Lessor and Assignee to be damaged
beyond repair) the Lessee, at its own cost and expense, shall place the same in
good operating order, repair, condition and appearance. The Lessee's right to
any proceeds paid under any insurance policy or policies required under Section
10 of this Lease with respect to any such damage to the Property which has been
so placed by the Lessee in good operating order, repair, condition and
appearance is governed by paragraph (e) of Section 10 hereof.
(c) If any portion of the Property is lost, stolen, destroyed, seized,
confiscated, rendered unfit for use or damaged beyond repair (in the judgment of
the Lessor and Assignees), or if the use thereof by the Lessee in the ordinary
course of business is prevented by the act of any third Person or Persons or
governmental instrumentality for a period exceeding ninety (90) consecutive
days, or if such portion of the Property is attached (other than on a claim
against the Lessor as to which the Lessee is not obligated to indemnify the
Lessor) and the attachment is not removed within ninety (90) consecutive days,
or if a Taking as described in Section 16 shall occur, then in any such event,
(i) the Lessee shall promptly notify the Lessor in writing of such event, (ii)
on the Basic Rent Payment Date following such event the Lessee shall pay to the
Lessor an amount equal to the Acquisition Cost of the Property, any Additional
Rent and other amounts owing hereunder, (iii) this Lease shall thereupon
terminate with respect to such Property, and (iv) the Lessor shall on such Basic
Rent Payment Date transfer title to such affected Property to the Lessee, and
the Lessee shall be subrogated to the Lessor's rights resulting from such event.
Insurance and condemnation proceeds, if any, received by the Lessor in excess of
the Acquisition Cost of the affected Property, so long as no Event of Default
has occurred and is continuing, shall be paid by the Lessor to the Lessee upon
the payment by the Lessee of all amounts referred to in the preceding sentence.
(d) If any of the events described in paragraphs (b) and (c) above occur or
Lessor suffers a loss as a result thereof after the Effective Date but before
the Completion Date which are caused by or resulting from the Lessee's own
actions or failures to act during such period, including without limitation,
failure to maintain required insurance, then Lessee shall pay to Lessor the
Termination Value plus all other amounts due hereunder rather than the
Acquisition Cost as provided in clause (c) above and Lessee shall be entitled to
receive any excess above the Termination Value and all other amounts due
hereunder, rather than the excess above the Acquisition Cost, as provided in the
last sentence of paragraph (c) above.
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SECTION 16. CONDEMNATION AND DEDICATION OF PROPERTY.
(a) If the use, occupancy or title to all or a substantial portion of a
Parcel of Property is taken, requisitioned or sold in, by or on account of
actual or threatened eminent domain proceedings or other action by any person or
authority having the power of eminent domain (such events collectively referred
to as a "Taking"), then the Lease Term or Renewal Term shall terminate, as
provided in paragraph (c) of Section 15 hereof. Upon receipt of proceeds from
any award or sale made in connection with such Taking, if the Lessee has paid
all amounts owing under paragraph (c) of Section 15 hereof, so long as no Event
of Default or Potential Default has occurred and is continuing, the Lessor shall
remit to the Lessee the net amount of such proceeds remaining after
reimbursement for all costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred by the Lessor in connection with the
negotiation and settlement of any proceedings related to such Taking. A Taking
shall be deemed to affect a "substantial portion" of a Unit if, after such
Taking, such Parcel of Property is unusable for the Lessee's ordinary business
purposes.
(b) If less than a substantial portion of a Parcel of Property is subject
to a Taking, then this Lease shall continue in effect as to the portion of the
Parcel not taken and, so long as no Event of Default or Potential Default has
occurred and is continuing, any net proceeds shall be paid to the Lessee.
SECTION 17. SURRENDER OF PROPERTY OR EQUIPMENT.
(a) Subject to the provisions of Sections 12, 13, 14, 15, 18, 19 and 28
hereof, upon termination of the lease of the Property hereunder, the Lessee
shall surrender the Property to the Lessor. The Property shall be surrendered in
the condition required by paragraph (s) of Section 9.
(b) Upon the surrender of the Property, the Lessee shall deliver to the
Lessor or its designee all logs, manuals, inspection data, books and records or
copies thereof and other information, which are necessary to operate the
Property and which are in accordance with sound industry practice customarily
retained (or that the Lessee actually did retain) or are required by law to be
retained with respect to similar property and equipment, including, without
limitation, all software and manuals applicable to the Property and all design
plans, know-how, records and information used by the Lessee during operation of
the Property.
SECTION 18. EVENTS OF DEFAULT.
Any of the following events of default shall constitute an "Event of
Default" and shall give rise to the rights on the part of the Lessor described
in Section 19 hereof:
(a) Failure of the Lessee to comply with paragraph (b) of Section 14
hereof, failure of the Lessee to pay amounts due to the Lessor at the time of
any scheduled sale of Property, failure of the Lessee to pay Basic Rent for more
than five (5) Business Days after such payment is due pursuant to Section 7
hereof, or failure of the Lessee to
35
pay any other amount payable by the Lessee hereunder on or prior to ten (10)
days after written demand for such other payment from the Lessor; or
(b) Failure to maintain the insurance required by Section 10 hereof; or
(c) Default in the performance of any other obligation or covenant of the
Lessee pursuant to this Lease or any Consent or other Related Documents and the
continuance of such default for thirty (30) days after written notice to the
Lessee by the Lessor or any Assignee; provided that if such default is of such a
nature that it is not capable of being cured within such thirty (30) day period,
and the Lessee promptly commences appropriate steps to cure such default within
such thirty (30) day period and continues to pursue such cure with diligence and
good faith thereafter, such thirty (30) day period shall be extended to ninety
(90) days (unless the Lessor or Assignee determines that such delay could
reasonably be expected to have a Material Adverse Effect), or
(d) The entry of a decree or order for relief in respect of the Lessee or
any Guarantor by a court having jurisdiction in the premises or the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Lessee or Guarantor or of any substantial part of the
Lessee's or any Guarantor's property, or ordering the winding up or liquidation
of the Lessee's or any Guarantor's affairs, in an involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law and such
decree or order remains unstayed and in effect for sixty (60) consecutive days;
or the commencement against the Lessee or Guarantor of an involuntary case under
the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law, and the
continuance of any such case unstayed and in effect for a period of sixty (60)
consecutive days; or
(e) The suspension or discontinuance of the Lessee's or any Guarantor's
business operations which are likely to have a Material Adverse Effect when
considered as a whole, the Lessee's or any Guarantor's insolvency (however
evidenced) or the Lessee's or any Guarantor's admission of insolvency or
bankruptcy, or the commencement by the Lessee or any Guarantor of a voluntary
case under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or the consent by the Lessee or any Guarantor to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Lessee or any Guarantor or of any substantial
part of the Lessee's or any Guarantor's property, or the making by the Lessee or
any Guarantor of an assignment for the benefit of creditors, or the failure of
the Lessee or any Guarantor generally to pay their debts as such debts become
due, or the taking of corporate action by the Lessee or any Guarantor in
furtherance of any such action; or
(f) A default or event of default, the effect of which is to permit the
holder or holders of any Indebtedness, or a trustee or agent on behalf of such
holder or holders, to cause such Indebtedness to become due prior to its stated
maturity shall occur under the provisions of any agreement pursuant to which
such Indebtedness was created or instrument evidencing such Indebtedness in
excess of $1,000,000 in the aggregate of any Guarantor or any obligation of any
Guarantor for the payment of such Indebtedness
36
shall become or be declared to be due and payable prior to its stated maturity,
or shall not be paid when due; or
(g) Any representation or warranty made by the Lessee in this Lease, any
Consent or any document contemplated hereby or thereby proves to be false or
inaccurate in any material respect on or as of the date made or deemed made; or
(h) Final non-appealable judgment or judgments for the payment of money in
excess of $1,000,000 in the aggregate shall be rendered against any Guarantor by
any court of competent jurisdiction and the same shall remain undischarged for a
period of thirty (30) days during which execution of such judgment or judgments
shall not be effectively stayed; or
(i) Any representation or warranty made by any Guarantor in any Guaranty,
any Consent, any Related Documents or any document contemplated hereby or
thereby proves to be false, misleading or inaccurate in any material respect or
any Guarantor shall fail to perform or observe any agreement or covenant
contained in any Guaranty; or
(j) Any Guaranty ceases to be in full force and effect; or
(k) Any Guarantor defaults in the performance of any obligation or covenant
contained in any Guaranty, any required notice of such default shall have been
given, and any applicable grace period shall be expired; or
(l) An Event of Default (as defined in the Construction Agency Agreement)
shall occur under the Construction Agency Agreement; or
(m) The Lessee shall fail to observe or perform, after the expiration of
any applicable grace period, any material term, covenant or condition of the
Ground Sublease on the part of the Lessor, as tenant thereunder, to be observed
or performed, unless any such observance or performance shall have been waived
or not required by the landlord under the Ground Sublease, or if any one or more
of the events referred to in the Ground Sublease shall occur which would cause
the Ground Sublease to terminate without notice or action by the landlord
thereunder or which would entitle the landlord under the Ground Sublease to
terminate the Ground Sublease and the term thereof by the giving of notice to
the Lessor without opportunity to cure, as tenant thereunder, or if any of the
terms, covenants or conditions of the Ground Sublease shall in any manner be
modified, changed, supplemented, altered or amended in any material respect
without the consent of the Lessor and Assignee; or
(n) The occurrence of any event or circumstance relating to Environmental
Matters with respect to the Property that could reasonably be expected to have a
Material Adverse Effect; or
(o) An Event of Default (as defined in the Participation Agreement, Credit
Agreement or the Revolving Credit Agreement) shall occur; or
37
(p) A Change of Control shall occur, which is not a Permitted Change of
Control; or
(q) The failure to achieve Substantial Completion of all Improvements to
all Property and the delivery to the Property of substantially all Equipment
prior to the end of the Construction Period.
SECTION 19. RIGHTS UPON DEFAULT.
Subject in all cases to the Lessee's rights under paragraph (f) of Section
13 of this Lease and to the entirety of this Section 19, upon the occurrence and
continuation of any Event of Default the Lessor may do any one or more of the
following:
(a) Terminate the lease of any or all Property or Equipment leased
hereunder;
(b) Whether or not the lease of Property is terminated, take immediate
possession of and remove any or all Equipment and other equipment or property of
the Lessor in the possession of the Lessee, wherever situated, and for such
purpose, enter upon any premises without liability to the Lessee for so doing;
(c) Whether or not any action has been taken under paragraph (a) or (b)
above, sell any Property or Equipment (with or without the concurrence or
request of the Lessee) at public or private sale (judicially or non-judicially)
pursuant to such notices and procedures as may be required by law, to the extent
such requirements are not effectively waived by the Lessee hereunder, provided
that the disposition of any Property or Equipment shall take place in a
commercially reasonable manner;
(d) Hold, use, occupy, operate, repair, remove, lease or keep idle any or
all of the Property as the Lessor in its sole discretion may determine, without
any duty to account to the Lessee with respect to any such action or inaction or
for any proceeds thereof;
(e) Exercise any other right or remedy which may be available under
applicable law and in general proceed by appropriate judicial proceedings,
either at law or in equity, to enforce the terms hereof or to recover damages
for the breach hereof; and
(f) Continue this Lease in full force and effect and collect rent when due
and/or enter the Property and assemble the Equipment and relet for the Lessee's
account, with the Lessee liable for all costs incurred by the Lessor in
reletting the same.
Suit or suits for the recovery of any default in the payment of any sum due
hereunder or for damages may be brought by the Lessor from time to time at the
Lessor's election, and nothing herein contained shall be deemed to require the
Lessor to await the date whereon this Lease or the term hereof would have
expired by limitation had there been no such default by the Lessee or no such
termination or cancellation.
The receipt of any payments under this Lease by the Lessor with knowledge
of any breach of this Lease by the Lessee or of any default by the Lessee in the
38
performance of any of the terms, covenants or conditions of this Lease, shall
not be deemed to be a waiver of any provision of this Lease.
Subject to the provisions of paragraph (f) of Section 13 hereof, no receipt
of moneys by the Lessor from the Lessee after the termination or cancellation
hereof in any lawful manner shall reinstate, continue or extend the Lease Term
or any Renewal Term, or affect any notice theretofore given to the Lessee, or
operate as a waiver of the right of the Lessor to enforce the payment of Basic
Rent or Additional Rent or other charges payable hereunder, or operate as a
waiver of the right of the Lessor to recover possession of any Unit of Equipment
or Parcel of Property by proper suit, action, proceedings or remedy; it being
agreed that, after the service of notice to terminate or cancel this Lease, and
the expiration of the time therein specified, if the default has not been cured
in the meantime, or after the commencement of any suit, action or summary
proceedings or of any other remedy, or after a final order, warrant or judgment
for the possession of any Unit of Equipment or Parcel of Property, the Lessor
may demand, receive and collect any moneys payable hereunder, without in any
manner affecting such notice, proceedings, suit, action, order, warrant or
judgment; and any and all such moneys so collected shall be deemed to be
payments on account for the use and operation of the Property, or at the
election of the Lessor, on account of the Lessee's liability hereunder.
Acceptance of the keys to the Property, or any similar act, by the Lessor, or
any agent or employee of the Lessor, during the term hereof, shall not be deemed
to be an acceptance of a surrender of the Property unless the Lessor and
Assignee shall consent thereto in writing.
After any Event of Default, the Lessee shall be liable for, and the Lessor
may recover from the Lessee (without duplication) (i) all Basic Rent accrued to
date of payment, (ii) any Additional Rent owing, (iii) all amounts payable
pursuant to Sections 11, 25 and 27 hereof, (iv) all losses, damages, costs and
expenses (including, without limitation, attorneys' fees and expenses,
commissions, filing fees and sales or transfer taxes) sustained by the Lessor by
reason of such Event of Default and the exercise of the Lessor's remedies with
respect thereto, including without limitation, in the event of a sale by the
Lessor of the Property pursuant to this Section 19, all costs and expenses
associated with such sale and (v) all other amounts owing hereunder. The amounts
payable in clauses (i) through (v) above are hereinafter sometimes referred to
as the "Accrued Default Obligations".
After an Event of Default, but subject to the provisions of paragraph (f)
of Section 13 hereof, the Lessor may sell its interest in the Property and the
Ground Sublease upon any commercially reasonable terms that the Lessor deems
satisfactory, free of any rights of the Lessee or any Person claiming through or
under the Lessee. In the event of any such sale, in addition to the Accrued
Default Obligations, the Lessor shall be entitled to recover from the Lessee, as
liquidated damages and not as a penalty, and subject to the second succeeding
sentence, an amount equal to the Termination Value. Proceeds of sale received by
the Lessor in excess of the Termination Value shall be credited against the
Accrued Default Obligations the Lessee is required to pay under this Section 19.
If such proceeds and/or payment of Termination Value under this Lease exceed the
sum of (i) the Accrued Default Obligations and (ii) the Termination Value, and
if the Lessee has paid the Termination Value, the Accrued Default Obligations
and all other amounts required to be
39
paid by Lessee under the Related Documents, such excess shall be paid by the
Lessor to the Lessee. As an alternative to any such sale, in addition to the
Accrued Default Obligations, the Lessor may require the Lessee to pay to the
Lessor, and the Lessee shall pay to the Lessor, as liquidated damages and not as
a penalty, an amount equal to the Termination Value. If the Lessor subsequently
sells its interest in the Property, the proceeds of any such sale and/or any
such amounts realized (net of any unreimbursed costs or liabilities incurred by
the Lessor or Assignee with respect to the Property after the termination of the
Lease, which are not included in the Accrued Default Obligations) shall be
distributed as provided in the third and fourth sentences of this paragraph.
Notwithstanding anything to the contrary contained herein, if the Lessee
converts the Property or any part thereof after an Event of Default, or if the
Property is lost or destroyed by the Lessee at the time of the Event of Default,
in addition to the Accrued Default Obligations, the Lessor may require the
Lessee to pay to the Lessor, and the Lessee shall pay to the Lessor, as
liquidated damages and not as a penalty, an amount equal to the Termination
Value.
In addition to any other remedies available under this Lease to the Lessor,
the Lessor may choose, in its sole discretion, upon termination of this Lease to
recover the maximum amount (including interest) to which the Lessor is entitled
under applicable law with respect to rent accrued, or which would have accrued,
under this Lease as of the time of any award, and, with respect to the loss of
future rents, to recover from the Lessee the worth, at the time of the award, of
the amount by which the unpaid rent for the balance of the term after the time
of award exceeds the amount of the loss of rent that the Lessee proves could
have been reasonably avoided. "The worth at the time of award", as used herein,
is to be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award, plus one percent, or if
less, the minimum discount rate permitted by law.
In the event of a sale pursuant to this Section 19, upon receipt by the
Lessor of the amounts payable hereunder, the Lessor shall transfer all of the
Lessor's right, title and interest in and to the Property to a purchaser other
than the Lessee or to the Lessee, as the case may be.
No remedy referred to in this Section 19 is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to the Lessor at law or in equity, and the exercise in
whole or in part by the Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by the Lessor of any or all such
other remedies.
No waiver by the Lessor of any Event of Default hereunder shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default.
With respect to the termination of this Lease as a result of an Event of
Default, the Lessee hereby waives service of any notice of intention to
re-enter. The Lessee hereby waives any and all rights to recover or regain
possession of the Property or to reinstate this Lease as permitted or provided
by or under any statute, law or decision now or hereafter in force and effect.
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SECTION 20. EQUIPMENT TO BE PERSONAL PROPERTY.
It is the intention and understanding of the Lessor and the Lessee that all
Equipment shall be and at all times remain personal property. The Lessee shall
obtain and record such instruments and take such steps as may be necessary to
prevent any Person from acquiring any rights in Equipment paramount to the
rights of the Lessor by reason of such Equipment being deemed to be real
property.
SECTION 21. SALE OR ASSIGNMENT BY LESSOR.
(a) The Lessor shall have the right to obtain equity and debt financing for
the acquisition and ownership of the Property by selling or assigning its right,
title and interest in any or all amounts due from the Lessee or any third party
under this Lease and granting a security interest in this Lease to the Agent or
a lender or lenders under the Credit Agreement; provided, that any such sale or
assignment shall be subject to the rights and interests of the Lessee under this
Lease.
(b) Any Assignee shall, except as otherwise agreed by the Lessor and such
Assignee, have all the rights, powers, privileges and remedies of the Lessor
hereunder, and the Lessee's obligations as between itself and such Assignee
hereunder shall not be subject to any claims or defense that the Lessee may have
against the Lessor; provided that the foregoing shall not be deemed to be a
waiver of any claims the Lessee may have against the Lessor. Upon written notice
to the Lessee of any such assignment, the Lessee shall thereafter make payments
of Basic Rent, Additional Rent and other sums due hereunder to the Assignee, to
the extent specified in such notice, and such payments shall discharge the
obligation of the Lessee to the Lessor hereunder to the extent of such payments.
Anything contained herein to the contrary notwithstanding, no Assignee shall be
obligated to perform any duty, covenant or condition required to be performed by
the Lessor hereunder, and any such duty, covenant or condition shall be and
remain the sole obligation of the Lessor.
SECTION 22. UTILITY SERVICES.
During the Lease Term, Lessee shall pay, or cause to be paid, and shall
indemnify, defend and hold Lessor and the property of Lessor harmless from all
charges for water, sewage, gas, heat, air conditioning, light, power, steam,
telephone service and all other services and utilities used, rendered or
supplied to, on or in the Property during the Lease Term. Lessor shall not be
required to furnish to Lessee or to any other occupant of the Property during
the Lease Term, any water, sewage, gas, heat, air conditioning, light, power,
steam, telephone or any other utilities, equipment, labor, materials or services
of any kind whatsoever.
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SECTION 23. NOTICES AND REQUESTS.
All notices, offers, acceptances, approvals, waivers, requests, demands and
other communications hereunder or under any other instrument, certificate or
other document delivered in connection with the transactions described herein
shall be in writing, shall be addressed as provided below and shall be
considered as properly given (a) if delivered in person, (b) if sent by express
courier service (including, without limitation, Federal Express, Emery, DHL,
Airborne Express, and other similar express delivery services), (c) in the event
overnight delivery services are not readily available, if mailed through the
United States Postal Service, postage prepaid, registered or certified with
return receipt requested, or (d) if sent by telecopy and confirmed; provided,
that in the case of a notice by telecopy, the sender shall in addition confirm
such notice by writing sent in the manner specified in clauses (a), (b) or (c)
of this Section 23. All notices shall be effective upon receipt by the
addressee; provided, however, that if any notice is tendered to an addressee and
the delivery thereof is refused by such addressee, such notice shall be
effective upon such tender. For the purposes of notice, the addresses of the
parties shall be as set forth below; provided, however, that any party shall
have the right to change its address for notice hereunder to any other location
by giving written notice to the other party in the manner set forth herein. The
initial addresses of the parties hereto are as follows:
If to the Lessor:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton, Vice President
Telephone: 801-246-5300
Telecopy: 801-246-5053
With a copy of all notices under this Section 23 to be simultaneously given,
delivered or served to the Agent at the following respective addresses:
ING (U.S.) Capital LLC
200 Galleria Parkway, Suite 950
Atlanta, Georgia 30339
Attention: Darren J. Wells
Telephone: (770)984-4511
Telecopy: (770)951-1005
King & Spalding
191 Peachtree St.
Atlanta, Georgia 30305-1763
Attention: Walter Driver, Jr.
Telephone: 404-572-4600
Telecopy: 404-572-5100
If to the Lessee:
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MiniMed Development Corp.
12744 San Fernando Road
Sylmar, California 91342-3782
Attention: General Counsel
Telephone: (818) 362-2358
Telecopy: (818) 367-1460
With a copy to
Brobeck, Phleger & Harrison LLP
550 West C Street, Suite 1200
San Diego, California 92101-3532
Attention: Scott Biel
Telephone: (619) 234-1966
Telecopy: (619) 234-3848
With a copy of all notices under this Section 23 to any Assignee at such address
as such Assignee may specify by written notice to the Lessor and the Lessee.
SECTION 24. COVENANT OF QUIET ENJOYMENT.
During the Lease Term or Renewal Term, if any, of the Property hereunder
and so long as no Event of Default shall have occurred and be continuing, the
Lessor recognizes the Lessee's right to quiet enjoyment of the Property on the
terms and conditions provided in this Lease and the Construction Agency
Agreement without any interference from the Lessor or anyone claiming through or
under the Lessor.
SECTION 25. RIGHT TO PERFORM FOR LESSEE.
(a) If the Lessee fails to perform or comply with any of its covenants or
agreements contained in this Lease, the Lessor may, upon at least ten (10) days'
advance written notice to the Lessee (or without notice to the Lessee if the
Lessor in its sole discretion determines that any delay in performing or
complying with such covenant or agreement could have a material adverse effect
on (a) the operation, maintenance, leasing, ownership, use or value of the
Property, (b) the ability of the Lessee to observe and perform its obligations
under this Lease or the Construction Agency Agreement in a timely manner or the
ability of any Guarantor to perform its obligations under any Guaranty in a
timely manner, (c) the business, assets, properties, financial condition,
operations or prospects of the Lessee or any Guarantor, or (d) the rights or
interests of the Lessor or Assignee under this Lease or the Construction Agency
Agreement) 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 Lessor incurred in connection with such performance
or compliance, shall be payable by the Lessee, not later than ten (10) days
after written notice by the Lessor.
(b) Without in any way limiting the obligations of the Lessee hereunder,
the Lessee hereby irrevocably appoints the Lessor as its agent and attorney at
the time at which the Lessee is obligated to deliver possession of the Property
to the
43
Lessor, to demand and take possession of the Property in the name and on behalf
of the Lessee from whomsoever shall be at the time in possession thereof.
SECTION 26. EXPENSES.
The Lessee shall pay all of the out-of-pocket costs and expenses incurred
by the Lessor, and any Assignee in connection with the management and operation
of the Property including, without limitation, the reasonable fees and
disbursements of counsel to the Lessor and counsel to any Assignee.
SECTION 27. PERMITTED CONTESTS.
(a) The Lessee shall not be required, nor shall the Lessor have the right,
to pay, discharge or remove any tax, assessment, levy, fee, rent, charge or
Lien, or to comply or cause the Property to comply with any Legal Requirements
applicable to the Property or the occupancy, use or operation thereof, so long
as no Event of Default exists under this Lease with respect to the Property,
and, in the reasonable judgment of the Lessee's counsel, the Lessee shall have
reasonable grounds to contest the existence, amount, applicability or validity
thereof by appropriate proceedings, which proceedings in the reasonable judgment
of the Lessor and Assignee, (i) shall not involve any material danger that the
Property or any Basic Rent or any Additional Rent would be subject to sale,
forfeiture or loss, as a result of failure to comply therewith, (ii) shall not
affect the payment of any Basic Rent or any Additional Rent or other sums due
and payable hereunder or result in any such sums being payable to any Person
other than the Lessor or any Assignee, (iii) will not place either the Lessor or
any Assignee in any danger of civil liability for which the Lessor or any
Assignee is not adequately indemnified (the Lessee's obligations under Section
11 of this Lease shall be deemed to be adequate indemnification if no Event of
Default or Potential Default exists and if such civil liability is reasonably
likely to be less than $500,000 in the aggregate) or to any criminal liability,
(iv) if involving taxes, shall suspend the collection of taxes, and (v) shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which the Lessee or the Property is subject and shall not
constitute a default thereunder (the "Permitted Contest"). The Lessee shall
conduct all Permitted Contests in good faith and with due diligence and shall
promptly after the final determination (including appeals) of any Permitted
Contest pay and discharge all amounts which shall be determined to be payable
therein. The Lessor shall cooperate in good faith with the Lessee with respect
to all Permitted Contests conducted by the Lessee pursuant to this Section 27.
(b) In the event the Lessor deems, in its reasonable discretion, that its
interests under this Lease or in the Property are not adequately protected in
connection with a Permitted Contest brought by the Lessee under this Section 27,
the Lessee shall give such reasonable security, as may be demanded by the Lessor
to ensure payment of such tax, assessment, levy, fee, rent, charge or Lien and
compliance with Legal Requirements and to prevent any sale or forfeiture of the
Property, any Basic Rent or any Additional Rent by reason of such nonpayment or
noncompliance. The Lessee hereby agrees that the Lessor may assign such security
provided by the Lessee to any Assignee.
(c) At least ten (10) days prior to the commencement of any Permitted
Contest, the Lessee shall notify the Lessor and any Assignee in writing thereof
if the
44
amount in contest exceeds $100,000, and shall describe such proceeding in
reasonable detail. In the event that a taxing authority or subdivision thereof
proposes an additional assessment or levy of any tax for which the Lessee is
obligated to reimburse the Lessor under this Lease, or in the event that the
Lessor is notified of the commencement of an audit or similar proceeding which
could result in such an additional assessment, then the Lessor shall in a timely
manner notify the Lessee in writing of such proposed levy or proceeding.
SECTION 28. LEASEHOLD INTERESTS.
(a) The Lessee hereunder covenants and agrees to perform and to observe all
of the terms, covenants, provisions, conditions and agreements of the Ground
Subleases on the Lessor's part as lessee thereunder to be performed and observed
(including, without limitation, payment of all rent, additional rent and other
amounts payable by the Lessor as lessee under the Ground Sublease) to the end
that all things shall be done which are necessary to keep unimpaired the rights
of the Lessor as lessee under the Ground Sublease. Except as specifically
provided in this Lease, Lessee shall not be granted or have the right to
exercise any of the rights, remedies or elections granted to Lessor under the
Ground Sublease. Specifically, without limitation, Lessee shall not have the
right to exercise any of the renewal options or termination rights of Lessor in
the Ground Sublease.
(b) The Lessee covenants and agrees pursuant to Section 11 hereof to
indemnify and hold harmless the Lessor, the Collateral Agent and any Assignee
from and against any and all liability, loss, damage, suits, penalties, claims
and demands of every kind and nature (including, without limitation, reasonable
attorneys' fees and expenses) by reason of the Lessee's failure to comply with
the Ground Sublease or the provisions of this Section 28.
(c) The Lessor and the Lessee agree that the Lessor shall have no
obligation or responsibility to provide services or equipment required to be
provided or repairs or restorations required to be made in accordance with the
provisions of the Ground Sublease by the lessor thereunder. The Lessor shall in
no event be liable to the Lessee nor shall the obligations of the Lessee
hereunder be impaired or the performance thereof excused because of any failure
or delay on the part of the lessor under the Ground Sublease in providing such
services or equipment or making such restorations or repairs and such failure or
delay shall not constitute a basis for any claim against the Lessor or any
offset against any amount payable to the Lessor under this Lease.
(d) If the Lessor's interest under the Ground Sublease shall expire,
terminate or otherwise be extinguished, the lease of the Property shall
thereupon terminate as provided in this paragraph (d). Upon such expiration,
termination or extinguishment, the Lessee shall be required to purchase the
Lessor's interest in the Property at the Termination Value if such termination
or extinguishment is not caused by Lessor's actions or omissions, otherwise
Lessee may elect to pay the Surrender Payment. If the Lessee shall be required
to purchase the Lessor's interest in the Property, then (i) on the Basic Rent
Payment Date next succeeding such event, the Lessee shall pay to the Lessor an
amount equal to the Termination Value, (ii) the Lease Term of the Property shall
continue until the date on which the Lessor receives payment from the Lessee of
the amount
45
payable pursuant to this paragraph (d) and of all Basic Rent payable, and any
Additional Rent and other amounts owing hereunder, and shall then terminate upon
the payment of such amounts, and (iii) the Lessor shall on such date transfer
title to the Lessor's interest in such Parcels to the Lessee.
(e) Notwithstanding anything contained herein to the contrary, in the event
that any of the terms and provisions of the Ground Subleases are inconsistent or
conflict with, and are more onerous than, the terms and provisions of the Lease,
the terms and provisions of the Ground Subleases shall control.
(f) This Lease is subject to and subordinate to the provisions of the
Ground Sublease.
SECTION 29. INTERRELATIONSHIP BETWEEN UNIVERSITY AND PROPERTY.
(a) The parties hereto acknowledge that the Property is currently located
on the campus of the University. It is the desire of Lessor and Lessee that the
services, goods and facilities of the Improvements will (a) relate to many
functions of the University, (b) provide and/or share services and facilities
needed for the students, faculty and employees of the University, and (c)
provide opportunities for student employment, materials and education. In
addition, it is the desire of Lessor and Lessee that the presence of the
Improvements will (i) enhance the attractiveness of the University campus; (ii)
encourage students, faculty and visitors to make increased use of present
University facilities; and (iii) allow some of the businesses operating at the
Improvements to interrelate with University activities.
(b) Lessee shall, subject to the qualifications set forth below, cooperate
with Lessor and Ground Lessor to provide the following:
(i) Provide internships for undergraduate and graduate students;
(ii) Participate in work-study programs for undergraduate and
graduate students;
(iii) Provide employment opportunities for undergraduate and
graduate students;
(iv) Undertake joint research programs with the University's
faculty;
(v) Co-sponsor research seminars or conferences;
(vi) Undertake such other academic activities as mutually agreed
upon; and
(vii) Make the Improvements available for University use in
accordance with Section 5.1(c) of the Ground Sublease.
46
The above goals, purposes and programs shall be provided as long as they do
not unreasonably interfere with the operation and management of the
Improvements.
The above items shall be by way of example and, and not of the limitation,
with the understanding that such undertakings will relate to Lessee and any
sublessee which will operate their businesses in the Improvements pursuant to
subleases with Lessee. Lessee will incorporate provisions in its subleases to
accommodate these goals, purposes and programs, and to reasonably provided for
such accommodations in any conditions, covenants or restrictions governing the
Improvements.
(c) Lessee shall use its reasonable good faith efforts to agree to (a)
interact with the University business school, (b) make corporate and enterprise
personnel available for lecturing and instruction to the University, and (c)
provide intern programs to University students.
(d) Lessee shall (a) establish rules and regulations acceptable to Ground
Lessor and Lessor regarding the use of the Conference Center (as defined in the
Ground Sublease) on a non-interfering basis by faculty, staff and students of
the University which promote the integration of the Conference Center (as
defined in the Ground Sublease) into the University's activities, (b) engage in
advertising and public relations noting the University and the interface between
the research center and the University, (c) designate management personnel of
the research center to be coordinators and contacts with the University for
events and public relations, (d) subject to the terms of this lease, make
hardscape and landscape areas within the Improvements available for University
events and functions on a non-interfering basis as appropriate such an art
exhibits and displays featuring the University and it students, faculty and
programs, and (e) consult with and develop programs and public relations for
co-sponsored University and research center events with an event and information
officer of the University campus.
SECTION 30. MISCELLANEOUS.
(a) All agreements, indemnities, representations and warranties, and the
obligation to pay Additional Rent contained in this Lease shall survive the
expiration or other termination hereof.
(b) This Lease 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
this Lease or the Property, except as provided herein or therein.
(c) This Lease may not be amended, modified or terminated, nor may any
obligation hereunder be waived orally, and no such amendment, modification,
termination or waiver shall be effective for any purpose unless it is in
writing, signed by the party against whom enforcement thereof is sought. A
waiver on one occasion shall not be construed to be a waiver with respect to any
other occasion.
47
(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. Any provision of this Lease which is prohibited by 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
law, and, as nearly as possible, to produce the same economic, financial and tax
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 and the Lessor hereby waive any
provision of law which renders any provision hereof prohibited or unenforceable
in any respect. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW
YORK. THE LESSEE AND THE LESSOR AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY
THE LAW OF THE STATE OF NEW YORK, THIS LEASE, AND THE RIGHTS AND DUTIES OF THE
LESSEE AND THE LESSOR HEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
IN ALL RESPECTS, INCLUDING WITHOUT LIMITATION IN RESPECT OF ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. THE LESSEE HEREBY IRREVOCABLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE SUPREME COURT OF THE STATE
OF NEW YORK IN THE COUNTY OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS LEASE OR THE TRANSACTIONS
CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE LESSEE
HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS LEASE OR ANY DOCUMENT OR ANY
INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED
IN OR BY SUCH COURT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE LESSEE
AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF
ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE
CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE LESSEE AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE
ADDRESS FOR NOTICES SET FORTH IN THIS LEASE OR ANY METHOD AUTHORIZED BY THE LAWS
OF NEW YORK. THE LESSOR AND THE LESSEE EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM RELATED
48
TO THIS LEASE OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE LESSOR AND THE LESSEE
ACKNOWLEDGE THAT THE PROVISIONS OF THIS PARAGRAPH (D) OF SECTION 30 HAVE BEEN
BARGAINED FOR AND THAT THEY HAVE BEEN REPRESENTED BY COUNSEL IN CONNECTION
THEREWITH.
(e) In connection with any sale of Property or Equipment pursuant to
Section 12, 13, 14, 15, 19, 20 or 28 of this Lease, when the Lessor transfers
title, such transfer shall be on an as-is, non-installment sale basis, without
warranty by, or recourse to, the Lessor. The purchase price for any such sale
shall be paid entirely in cash in immediately available funds.
(f) In connection with the sale or purchase of the Property pursuant to
Section 12, 13, 14, 15, 19, 20 or 28 of this Lease, the Lessee shall pay or
shall cause the purchaser of the Property to pay in addition to the purchase
price, all transfer taxes, transfer gains taxes, mortgage recording tax, if any,
recording and filing fees and all other similar taxes, fees (including, without
limitation, brokerage fees), expenses and closing costs (including reasonable
attorneys' fees) in connection with the conveyance of the Property or Equipment
to the Lessee or any purchaser.
(g) The Lessor and any Assignee shall, to the extent reasonably requested
by the Lessee, and at the Lessee's cost and expense, cooperate to allow the
Lessee to (a) perform its covenants contained in this Lease, including at any
time and from time to time, upon the reasonable request of the Lessee, and at
the Lessee's cost and expense, to execute and deliver any and all such further
instruments and documents as the Lessee may reasonably request in order to
perform such covenants, and (b) further the Lessee's requirements as lessee of
the Property, including, at the Lessee's cost and expense, to file any statement
with respect to any tax abatements or other tax requirements.
(h) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE
FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS LEASE AND FOR ANY COUNTERCLAIM THEREIN.
(i) Lessee hereby acknowledges and agrees that the rights and powers of
Lessor under this Lease have been assigned to the Agent pursuant to the terms of
the Security Agreement and the other Related Documents. Lessor and Lessee hereby
acknowledge and agree that (a) the Agent shall, in its discretion, direct and/or
act on behalf of Lessor pursuant to the provisions of Sections 8.2(h) and 8.6 of
the Participation Agreement, (b) all notices to be given to Lessor shall be
given to the Agent and (c) all notices to be given by Lessor may be given by the
Agent, at its election.
(j) THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO
JURISDICTION, VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS
MUTANDIS.
(k) IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND CONTRACT IN
STRICT COMPLIANCE WITH APPLICABLE
49
USURY LAW FROM TIME TO TIME IN EFFECT. TO THE EXTENT ANY RENT OR PAYMENTS
HEREUNDER ARE HEREINAFTER CHARACTERIZED BY ANY COURT OF COMPETENT JURISDICTION
AS THE REPAYMENT OF PRINCIPAL AND INTEREST THEREON, THIS PARAGRAPH SHALL APPLY.
ANY SUCH RENT OR PAYMENTS SO CHARACTERIZED AS INTEREST MAY BE REFERRED TO HEREIN
AS "INTEREST." ALL AGREEMENTS AMONG THE PARTIES HERETO ARE HEREBY LIMITED BY THE
PROVISIONS OF THIS PARAGRAPH WHICH SHALL OVERRIDE AND CONTROL ALL SUCH
AGREEMENTS, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER WRITTEN OR
ORAL. IN NO WAY, NOR IN ANY EVENT OR CONTINGENCY (INCLUDING WITHOUT LIMITATION
PREPAYMENT OR ACCELERATION OF THE MATURITY OF ANY OBLIGATION), SHALL ANY
INTEREST TAKEN, RESERVED, CONTRACTED FOR, CHARGED, OR RECEIVED UNDER THIS LEASE
OR OTHERWISE, EXCEED THE MAXIMUM NONUSURIOUS AMOUNT PERMISSIBLE UNDER APPLICABLE
LAW. IF, FROM ANY POSSIBLE CONSTRUCTION OF ANY OF THE RELATED DOCUMENTS OR ANY
OTHER DOCUMENT OR AGREEMENT, INTEREST WOULD OTHERWISE BE PAYABLE IN EXCESS OF
THE MAXIMUM NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION SHALL BE SUBJECT TO THE
PROVISIONS OF THIS PARAGRAPH AND SUCH AMOUNTS UNDER SUCH DOCUMENTS OR AGREEMENTS
SHALL BE AUTOMATICALLY REDUCED TO THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED UNDER
APPLICABLE LAW, WITHOUT THE NECESSITY OF EXECUTION OF ANY AMENDMENT OR NEW
DOCUMENT OR AGREEMENT. IF LESSOR SHALL EVER RECEIVE ANYTHING OF VALUE WHICH IS
CHARACTERIZED AS INTEREST WITH RESPECT TO THE OBLIGATIONS OWED HEREUNDER OR
UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM THIS PROVISION, BE IN EXCESS OF
THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH WOULD HAVE BEEN
EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE REDUCTION OF THE
COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE PAYMENT OF INTEREST,
OR REFUNDED TO LESSEE OR ANY OTHER PAYOR THEREOF, IF AND TO THE EXTENT SUCH
AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE COMPONENT OF PAYMENTS DEEMED
TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY AMOUNTS EVIDENCED BY ANY OF
THE RELATED DOCUMENTS DOES NOT INCLUDE THE RIGHT TO RECEIVE ANY INTEREST WHICH
HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH DEMAND, AND LESSOR DOES NOT INTEND
TO CHARGE OR RECEIVE ANY UNEARNED INTEREST IN THE EVENT OF SUCH DEMAND. ALL
INTEREST PAID OR AGREED TO BE PAID TO LESSOR SHALL, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BE AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE
FULL STATED TERM (INCLUDING WITHOUT LIMITATION ANY RENEWAL OR EXTENSION) OF THIS
LEASE SO THAT THE AMOUNT OF INTEREST ON ACCOUNT OF SUCH PAYMENTS DOES NOT EXCEED
THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED BY APPLICABLE LAW.
50
(l) In the event that a court of competent jurisdiction rules that this
Lease constitutes a mortgage, deed of trust, security agreement or other secured
financing, then Lessor and Lessee agree that (a) the conveyance provided for in
Section 3 shall be deemed to be a Lien against the Property subject hereto WITH
POWER OF SALE, and that, upon the occurrence of any Event of Default, Lessor
shall have the power and authority, to the extent provided by applicable law,
after proper notice and lapse of such time as may be required by applicable law,
to sell such Property at the time and place of sale fixed by Lessor in said
notice of sale, either as a whole, or in separate lots or parcels or items and
in such order as Lessor may elect, at auction to the highest bidder for cash in
lawful money of the United States payable at the time of sale; accordingly, it
is acknowledged that A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT; A
POWER OF SALE MAY ALLOW LESSOR TO TAKE THE APPLICABLE PROPERTY AND SELL IT
WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY LESSEE UNDER THIS
INSTRUMENT, (b) upon the occurrence of an Event of Default, Lessor, in lieu of
or in addition to exercising any power of sale hereinabove given, may proceed by
a suit or suits in equity or at law, whether for a foreclosure hereunder, or for
the sale of the Property, or for the specific performance of any covenant or
agreement herein contained or in aid of the execution of any power herein
granted, or for the appointment of a receiver pending any foreclosure hereunder
or the sale of the Property, or for the enforcement of any other appropriate
legal or equitable remedy, (c) with respect to any personal property subject
hereto, (i) this Lease shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the Uniform Commercial
Code; (ii) the conveyance provided for in Section 4 shall be deemed to be a
grant by Lessee to Lessor of a security interest in all of Lessee's right, title
and interest in and to the Property 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; (iii) the possession by Lessor or any of its agents 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
Uniform Commercial Code; and (iv) notifications to Persons holding such
property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of Lessee shall be deemed to
have been given for the purpose of perfecting such security interest under
applicable law. Lessor and Lessee shall, to the extent consistent with this
Lease, take such actions as may be necessary to ensure that, if this Lease were
deemed to create a security interest in the Property in accordance with this
subsection (n), such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the Lease Term.
51
SECTION 31. NO RECOURSE.
Notwithstanding anything contained in this Lease to the contrary, Lessee
agrees to look solely to Lessor's estate and interest in the Property and the
proceeds thereof, including, but not limited to, any sales proceeds, insurance
proceeds or any award or other compensation arising from a Taking (and in no
circumstance to the Collateral Agent, the Lenders, the Certificateholders, the
Revolving Credit Lenders or otherwise to Lessor) for the collection of any
judgment requiring the payment of money by Lessor in the event of liability by
Lessor, and no other property or assets of Lessor, or any director, officer,
employee, beneficiary, Affiliate of any of the foregoing shall be subject to
levy, execution or other enforcement procedure for the satisfaction of the
remedies of Lessee under or with respect to this Lease, the relationship of
Lessor and Lessee hereunder or Lessee's use of the Property. Nothing in this
Section shall be interpreted so as to limit the terms of Section 14.13 of the
Participation Agreement.
SECTION 32. NO MERGER.
There shall be no merger of this Lease or of the leasehold estate hereby
created with the fee estate in the Property by reason of the fact that the same
person acquires or holds, directly or indirectly, this Lease or the leasehold
estate hereby created or any interest herein or in such leasehold estate as well
as the fee estate in the Property or any interest in such fee estate.
SECTION 33. CONSTRUCTION PERIOD PROVISIONS.
Notwithstanding any other provision of this Lease or any of the Related
Documents, the following shall apply and take priority over any other provision
hereof or any of the Related Documents from the date hereof until the earlier of
Completion or the Construction Period Termination Date:
(a) If Completion has not occurred prior to the Construction Period
Termination Date which failure is not accepted by the Lessor as provided in
Section 3(c) or extended to the extent provided in Section 2.06(c) of the
Construction Agency Agreement; or
(b) Upon the occurrence of an Event of Default which is based upon a breach
of Section 2.06(a) of the Construction Agency Agreement which is not funded as
provided in Section 2.01 of the Construction Agency Agreement; or
(c) Upon the occurrence of an Event of Default described in Section 18(c)
which is based upon the existence of any mechanics, materialmen or similar lien
based upon goods or services provided to the Property which is not a Permitted
Lien; or
(d) Upon the occurrence of an Event of Default described in Section 18(c)
which is based upon a casualty loss of all or substantially all of the Property
and Equipment;
which, in any event, is both (i) unrelated to any breach by the Lessee, any
Guarantor or the Construction Agent of any representation, warranty or
obligation under any Related
52
Document, (ii) such event or circumstances are beyond the control of such
Persons, and (iii) not caused by any fraud, misrepresentation, misapplication of
funds or malfeasance of Lessee, then, in any such event, Lessee shall
immediately pay to Lessor the Construction Risk Payment, whereupon this Lease
shall terminate.
SECTION 34. WAIVER.
(a) The provisions of this Lease shall remain in full force and effect
notwithstanding (i) any release of Parent Guarantor of any of its subsidiaries
from its obligations under the Related Documents, (ii) any release of Lessee
from any liability with respect to the obligations hereunder; or (iii) any
release or subordination of any real or personal property now or hereafter held
by Lessor as security for the performance of the obligations hereunder:
(b) Lessee expressly waives any and all benefits which might otherwise be
available to Lessee under California Civil Code Sections 2809, 2810, 2819, 2839,
2845, 2849, 2850, 2899 and 3433;
(c) Lessee hereby waives any and all defenses, including but not limited to
Lessee's defense of estoppel discussed in Union Bank vs. Gradsky (1968) 265
Cal.App.2d 40, based upon a foreclosure against all or any part of the real
property leased hereby pursuant to the power of sale contained in this Lease as
opposed to proceeding by way of judicial foreclosure. Lessee waives all rights
and defenses arising out of an election of remedies by Lessor, even though that
election of remedies such as a nonjudicial foreclosure with respect to security
for a guaranteed obligation, has destroyed Lessee's rights of subrogation and
reimbursement by the operation of Section 580d of the Code of Civil Procedure or
otherwise;
(d) Lessee hereby waives all of the rights and defenses of Lessee as a
"guarantor" under Section 2856(a) of the California Civil Code. Lessee hereby
waives all rights and defenses that Lessee may have because any of Lessee's debt
is secured by real property. This means, among other things: (1) Lessor may
collect from Lessee without first foreclosing on any real or personal property
collateral pledged by any other borrower, including without limitation, Parent
Guarantor or any of its Subsidiaries (collectively, the "Other Borrowers" and
individually an "Other Borrower") (2) If Lessor forecloses on any real property
collateral pledged by Lessee or any one or more Other Borrowers: (A) the amount
of debt may be reduced only by the price for which the collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price, (B)
Lessor may collect from Lessee or each Other Borrower even if Lessor, by
foreclosing on the real property collateral, has destroyed any right such Other
Borrower may have to collect from any of the Other Borrowers. This is an
unconditional and irrevocable waiver of any rights and defenses Lessee may have
because Lessee's debt is secured by real property. These rights and defenses
include, but are not limited to, any rights or defenses based upon Section 580a,
580b, 580d, or 726 of the Code of Civil Procedure.
(e) In the case of a power of sale foreclosure under this Lease, the fair
market value of the real property collateral shall be conclusively deemed to be
the amount of the successful bid at the foreclosure sale. Lessee waives any
rights or benefits it may now or hereafter have to a fair value hearing under
Section 580a of the California Code of
53
Civil Procedure. Lessor shall have absolutely no obligation to make a bid at any
foreclosure sale, but rather may make no bid or bid any amount which Lessor, in
its sole discretion, deems appropriate.
(f) Lessee hereby irrevocably authorizes Lessor to apply any and all
amounts received by Lessee in repayment of the obligations hereunder first to
amounts which are guaranteed pursuant to the terms of the Lease and then to
amounts which are not guaranteed pursuant to the terms of the Lease, if any.
Lessee hereby waives any and all rights that it has or may hereafter have under
Section 2822 of the California Civil Code which provides that if a guarantor is
"liable upon only a portion of an obligation and the principal provides partial
satisfaction of the obligation, the principal may designate the portion of the
obligation that is to be satisfied."
(g) Lessor acknowledges that the provisions of this Section 35 are intended
to constitute a waiver of any rights and defenses Lessee may now or hereafter
have as a "guarantor" to the extent the Lease executed by Lessee is construed to
be in whole or in part a guaranty of the Other Borrowers' obligations under the
Related Documents. Nothing contained in this Section 35 shall be deemed to
constitute a waiver of the antideficiency or one action protections afforded
Lessee under Section 580a, 580d and 726 of the California Code of Civil
Procedure, as modified or recodified from time to time.
(h) Lessee warrants and represents to Lessor that (i) it now has or will
continue to have full and complete access to any and all information concerning
the transactions contemplated by the Related Documents referred to therein, the
value of the assets owned or to be acquired by any of the Other Borrowers under
the Related Documents, their financial status and their respective ability to
pay and perform their respective obligations under the Related Documents; and
(ii) Lessee has reviewed and approved copies of the Related Documents and is
fully informed of the remedies Lessor may pursue, with or without notice to
Lessee, in the event of default under the Related Documents. Lessee shall keep
fully informed as to all aspects of the financial condition of the Other
Borrowers and the performance of their respective obligations under the Related
Documents.
(i) Lessee agrees that Lessor may exercise any right or remedy hereunder or
under any of the Related Documents without the necessity of resorting to or
exhausting any security or collateral conveyed or assigned by Lessee or any of
the Other Borrowers or any guarantor of any of the obligations hereunder. Lessee
hereby waives any right it may now or hereafter have to require Lessor to
proceed against any of the Other Borrowers, to proceed against any guarantor of
any of the obligations hereunder, to foreclose any lien on any real or personal
property collateral conveyed or assigned to Lessor by Lessee or any of the Other
Borrowers, to exercise any right or remedy under the Related Documents, to draw
upon any letter of credit issued in connection with any of the obligations
hereunder, or to pursue any other remedy or to enforce any other right under the
Related Documents.
54
IN WITNESS WHEREOF, the Lessor 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.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as
Owner Trustee under the
MiniMed Real Estate Trust 1999-1, as Lessor
By: /s/ VAL T. ORTON
--------------------------------------
Name: Val T. Orton
Title: Vice President
MINIMED DEVELOPMENT CORP.,
as Lessee
By: /s/ TERRANCE H. GREGG
-------------------------------
Name: Terrance H. Gregg
Title: President
55
EXHIBIT A
Description of Property:
56
EXHIBIT B
Site Plan
57
TABLE OF CONTENTS
Page
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SECTION 1. DEFINED TERMS. 1
SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE. 1
SECTION 3. LEASE OF THE PROPERTY. 4
SECTION 4. INTENT OF THE PARTIES. 5
SECTION 5. DELIVERY. 5
SECTION 6. LEASE TERM. 8
SECTION 7. RENT AND OTHER PAYMENTS. 8
SECTION 8. RESTRICTED USE; COMPLIANCE WITH LAWS. 9
SECTION 9. CONSTRUCTION, IMPROVEMENT, MAINTENANCE AND
REPAIR OF PROPERTY OR EQUIPMENT. 12
SECTION 10. INSURANCE. 19
SECTION 11. INDEMNITIES. 22
58
SECTION 12. LESSEE'S RIGHT TO TERMINATE. 25
SECTION 13. PURCHASE BY LESSEE, SURRENDER AND RENEWAL. 27
SECTION 14. LESSOR'S RIGHT TO TERMINATE. 30
SECTION 15. LOSS OF OR DAMAGE TO PROPERTY OR EQUIPMENT. 31
SECTION 16. CONDEMNATION AND DEDICATION OF PROPERTY. 32
SECTION 17. SURRENDER OF PROPERTY OR EQUIPMENT. 32
SECTION 18. EVENTS OF DEFAULT. 32
SECTION 19. RIGHTS UPON DEFAULT. 35
SECTION 20. EQUIPMENT TO BE PERSONAL PROPERTY. 37
SECTION 21. SALE OR ASSIGNMENT BY LESSOR. 38
SECTION 22. UTILITY SERVICES. 38
SECTION 23. NOTICES AND REQUESTS. 38
SECTION 24. COVENANT OF QUIET ENJOYMENT. 40
59
SECTION 25. RIGHT TO PERFORM FOR LESSEE. 40
SECTION 26. EXPENSES. 40
SECTION 27. PERMITTED CONTESTS. 41
SECTION 28. LEASEHOLD INTERESTS. 42
SECTION 29. INTERRELATIONSHIP BETWEEN UNIVERSITY AND PROPERTY. 43
SECTION 30. MISCELLANEOUS. 44
SECTION 31. NO RECOURSE. 48
SECTION 32. NO MERGER. 48
SECTION 33. CONSTRUCTION PERIOD PROVISIONS. 48
SECTION 34. WAIVER. 49
EXHIBIT A Legal Description of Property
EXHIBIT B Site Plan