Exhibit 10.12 to 2002 10-K
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LEASE AGREEMENT
Dated as of December 31, 1998
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually,
but solely as the Owner Trustee
under the CRT Realty Trust 1998-1,
as Lessor
and
CONVERGYS CORPORATION,
as Lessee
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This Lease Agreement is subject to a security interest in favor of NATIONSBANK,
N.A., as the agent for the Lenders and respecting the Security Documents, as the
agent for the Lenders and the Holders, to the extent of their interests (the
"Agent") under a Security Agreement dated as of December 31, 1998, between First
Security Bank, National Association, not individually, but solely as the Owner
Trustee under the CRT Realty Trust 1998-1 and the Agent, as amended, modified,
extended, supplemented, restated and/or replaced from time to time in accordance
with the applicable provisions thereof. This Lease Agreement has been executed
in several counterparts. To the extent, if any, that this Lease Agreement
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease Agreement may be created through the transfer or possession of any
counterpart other than the original counterpart containing the receipt therefor
executed by the Agent on the signature page hereof.
TABLE OF CONTENTS
ARTICLE I...........................................................................1
1.1 Definitions; Prohibitions Against Transfer.................................1
1.2 Interpretation.............................................................2
1.3 Prohibitions Against Transfer..............................................2
ARTICLE II..........................................................................2
2.1 Property...................................................................2
2.2 Lease Term.................................................................2
2.3 Title......................................................................3
2.4 Lease Supplements..........................................................3
ARTICLE III.........................................................................3
3.1 Rent.......................................................................3
3.2 Payment of Basic Rent......................................................4
3.3 Supplemental Rent..........................................................4
3.4 Performance on a Non-Business Day..........................................4
3.5 Rent Payment Provisions....................................................5
ARTICLE IV..........................................................................5
4.1 Taxes; Utility Charges.....................................................5
ARTICLE V...........................................................................5
5.1 Quiet Enjoyment............................................................5
5.2 Future Advances............................................................6
5.3 Assignment of Leases, Rents and Profits....................................6
ARTICLE VI..........................................................................6
6.1 Net Lease..................................................................6
6.2 No Termination or Abatement................................................7
ARTICLE VII.........................................................................7
7.1 Ownership of the Properties................................................7
ARTICLE VIII........................................................................9
8.1 Condition of the Properties................................................9
8.2 Possession and Use of the Properties......................................10
8.3 Integrated Properties.....................................................11
ARTICLE IX.........................................................................11
9.1 Compliance With Legal Requirements, Insurance Requirements and
Manufacturer's Specifications and Standards...............................11
ARTICLE X..........................................................................12
10.1 Maintenance and Repair; Return...........................................12
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10.2 Environmental Inspection.................................................14
ARTICLE XI.........................................................................14
11.1 Modifications............................................................14
ARTICLE XII........................................................................15
12.1 Warranty of Title........................................................15
ARTICLE XIII.......................................................................16
13.1 Permitted Contests Other Than in Respect of Indemnities..................16
13.2 Impositions, Utility Charges, Other Matters; Compliance with
Legal Requirements.......................................................17
ARTICLE XIV........................................................................17
14.1 Public Liability and Workers' Compensation Insurance.....................17
14.2 Permanent Hazard and Other Insurance.....................................17
14.3 Coverage.................................................................18
14.4 Additional Insurance Requirements........................................19
ARTICLE XV.........................................................................19
15.1 Casualty and Condemnation................................................19
15.2 Environmental Matters....................................................21
15.3 Notice of Environmental Matters..........................................22
ARTICLE XVI........................................................................23
16.1 Termination Upon Certain Events..........................................23
16.2 Procedures...............................................................23
ARTICLE XVII.......................................................................23
17.1 Lease Events of Default..................................................23
17.2 Surrender of Possession..................................................26
17.3A Foreclosure.............................................................26
17.3 Reletting................................................................27
17.4 Damages..................................................................27
17.5 Power of Sale............................................................28
17.6 Final Liquidated Damages.................................................28
17.7 Environmental Costs......................................................29
17.8 Waiver of Certain Rights.................................................29
17.9 Assignment of Rights Under Contracts.....................................29
17.10 Remedies Cumulative.....................................................29
ARTICLE XVIII......................................................................30
18.1 Lessor's Right to Cure Lessee's Lease Defaults...........................30
ARTICLE XIX........................................................................30
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option..........30
19.2 No Purchase or Termination With Respect to Less than All of a Property...30
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ARTICLE XX.........................................................................30
20.1 Purchase Option or Sale Option-General Provisions........................30
20.2 Lessee Purchase Option...................................................31
20.3 Third Party Sale Option..................................................32
ARTICLE XXI........................................................................33
21.1 [Intentionally Omitted]..................................................33
ARTICLE XXII.......................................................................33
22.1 Sale Procedure...........................................................33
22.2 Application of Proceeds of Sale..........................................36
22.3 Indemnity for Excessive Wear.............................................36
22.4 Appraisal Procedure......................................................37
22.5 Certain Obligations Continue.............................................37
ARTICLE XXIII......................................................................37
23.1 Holding Over.............................................................37
ARTICLE XXIV.......................................................................38
24.1 Risk of Loss.............................................................38
ARTICLE XXV........................................................................38
25.1 Assignment...............................................................38
25.2 Subleases................................................................39
ARTICLE XXVI.......................................................................39
26.1 No Waiver................................................................39
ARTICLE XXVII......................................................................39
27.1 Acceptance of Surrender..................................................39
27.2 No Merger of Title.......................................................40
ARTICLE XXVIII.....................................................................40
28.1 Limitations on Transfers By Lessor.......................................40
ARTICLE XXIX.......................................................................40
29.1 Notices..................................................................40
ARTICLE XXX........................................................................40
30.1 Miscellaneous............................................................40
30.2 Amendments and Modifications.............................................41
30.3 Successors and Assigns...................................................41
30.4 Headings and Table of Contents...........................................41
30.5 Counterparts.............................................................41
30.6 GOVERNING LAW............................................................41
30.7 Calculation of Rent......................................................41
30.8 Memoranda of Lease and Lease Supplements.................................41
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30.9 Allocations between the Lenders and the Holders..........................42
30.10 Limitations on Recourse.................................................42
30.11 WAIVERS OF JURY TRIAL...................................................42
30.12 Exercise of Lessor Rights...............................................42
30.13 SUBMISSION TO JURISDICTION; VENUE.......................................43
30.14 USURY SAVINGS PROVISION.................................................43
EXHIBITS
EXHIBIT A - Lease Supplement No.____
EXHIBIT B - Open-End Mortgage, Assignment of Leases, Rents and Profits and
Memorandum of Lease and Lease Supplement No.____ and Option
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LEASE AGREEMENT
THIS LEASE AGREEMENT dated as of December 31, 1998 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, this
"Lease") is 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 the Owner Trustee under
the CRT Realty Trust 1998-1, as lessor (the "Lessor"), and CONVERGYS
CORPORATION, an Ohio corporation, having its principal place of business at 201
East Fourth Street, 102-1900, Cincinnati, Hamilton County, Ohio, 45201-2301, as
lessee (the "Lessee").
W I T N E S S E T H:
A. WHEREAS, subject to the terms and conditions of the Participation
Agreement and the Agency Agreement, Lessor will (i) purchase or ground lease
various parcels of real property, some of which will (or may) have existing
Improvements thereon, from one (1) or more third parties designated by Lessee
and (ii) fund the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties by the Construction Agent; and
B. WHEREAS, the Basic Term shall commence with respect to each Property
upon the Property Closing Date with respect thereto; provided, Basic Rent with
respect thereto shall not be payable until the applicable Rent Commencement
Date; and
C. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease
from Lessor, each Property;
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 Definitions; Prohibitions Against Transfer.
For purposes of this Lease, capitalized terms used in this Lease and
not otherwise defined herein shall have the meanings assigned to them in
Appendix A to that certain Participation Agreement dated as of December 31, 1998
(as amended, modified, extended, supplemented, restated and/or replaced from
time to time in accordance with the applicable provisions thereof, the
"Participation Agreement") among Lessee, the various parties thereto from time
to time, as the Guarantors, Lessor, the various banks and other lending
institutions which are parties thereto from time to time, as the Holders, the
various banks and other lending institutions which are parties thereto from time
to time, as the Lenders, and NationsBank, N.A.,
as agent for the Lenders andrespecting the Security Documents, as the agent for
the Lenders and the Holders, to the extent of their interests. Unless otherwise
indicated, references in this Lease to articles, sections, paragraphs, clauses,
appendices, schedules and exhibits are to the same contained in this Lease.
1.2 Interpretation.
The rules of usage set forth in Appendix A to the Participation
Agreement shall apply to this Lease.
1.3 Prohibitions Against Transfer.
No Lender may participate, assign or transfer all or any portion of
its interest hereunder or under the other Operative Agreements unless the sum of
the Holder Commitments and the Lender Commitments in the aggregate exceeds
$30,000,000. No Holder may, directly or indirectly, assign, convey or otherwise
transfer any of its right, title or interest in or to the Trust Estate or the
Operative Agreements unless the sum of the Holder Commitments and the Lender
Commitments in the aggregate exceeds $30,000,000.
ARTICLE II
2.1 Property.
Subject to the terms and conditions hereinafter set forth and
contained in the respective Lease Supplement relating to each Property, Lessor
hereby leases to Lessee and Lessee hereby leases from Lessor, each Property.
2.2 Lease Term.
The basic term of this Lease with respect to each Property (the "Basic
Term") shall begin upon the Property Closing Date for such Property (in each
case the "Basic Term Commencement Date") and shall end on the third annual
anniversary of the Initial Closing Date (the "Basic Term Expiration Date"),
unless the Basic Term is earlier terminated or the term of this Lease is renewed
(as described below) in accordance with the provisions of this Lease.
Notwithstanding the foregoing, Lessee shall not be obligated to pay Basic Rent
until the Rent Commencement Date with respect to such Property.
To the extent no Default or Event of Default has occurred and is
continuing, and if Lessee has not provided written notice to Lessor at least one
hundred twenty (120) days prior to the first day of the applicable Renewal Term
of its determination to exercise its purchase option or sale option under
Article XX hereof, the term of this Lease for each Property shall be
automatically extended for up to two (2) additional terms each of one (1) year's
duration from the Basic Term Expiration Date (each, a "Renewal Term"); provided,
that the expiration date for the final Renewal Term for each Property shall not
be later than the fifth annual anniversary of the
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Initial Closing Date, unless such later expiration date has been expressly
agreed to, at the request of Lessee, in writing by each of Lessor, the Agent,
the Lenders and the Holders in their sole discretion.
2.3 Title.
Subject to the proviso to this sentence, each Property is leased to
Lessee without any representation or warranty, express or implied, by Lessor and
subject to the rights of parties in possession (if any), the existing state of
title (including without limitation the Permitted Liens) and all applicable
Legal Requirements; provided, however, Lessor does warrant that each Property
shall be kept free and clear of Lessor Liens. Lessee shall in no event have any
recourse against Lessor for any defect in Lessor's title to any Property or any
interest of Lessee therein other than for Lessor Liens.
2.4 Lease Supplements.
On or prior to each Basic Term Commencement Date, Lessee and Lessor
shall each execute and deliver a Lease Supplement for the Property to be leased
effective as of such Basic Term Commencement Date in substantially the form of
Exhibit A hereto.
ARTICLE III
3.1 Rent.
(a) Lessee shall pay Basic Rent in arrears on each Payment Date, and
on any date on which this Lease shall terminate with respect to any or all
Properties during the Term; provided, however, with respect to each
individual Property Lessee shall have no obligation to pay Basic Rent with
respect to such Property until the Rent Commencement Date with respect to
such Property (notwithstanding that Basic Rent for such Property shall
accrue from and including the Scheduled Interest Payment Date immediately
preceding such Rent Commencement Date).
(b) Basic Rent shall be due and payable in lawful money of the United
States and shall be paid by wire transfer of immediately available funds on
the due date therefor (or within the applicable grace period) to such
account or accounts at such bank or banks as Lessor shall from time to time
direct.
(c) Lessee's inability or failure to take possession of all or any
portion of any Property when delivered by Lessor, whether or not
attributable to any act or omission of Lessor, the Construction Agent,
Lessee or any other Person or for any other reason whatsoever, shall not
delay or otherwise affect Lessee's obligation to pay Rent for such Property
in accordance with the terms of this Lease.
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(d) Lessee shall make all payments of Rent prior to 12:00 Noon,
Eastern time, on the applicable date for payment of such amount.
3.2 Payment of Basic Rent.
Basic Rent shall be paid absolutely net to Lessor or its designee, so
that this Lease shall yield to Lessor the full amount thereof, without setoff,
deduction or reduction.
3.3 Supplemental Rent.
Lessee shall pay to the Person entitled thereto any and all
Supplemental Rent when and as the same shall become due and payable, and if
Lessee fails to pay any Supplemental Rent within the applicable grace periods
for the payment of Supplemental Rent provided in Sections 17.1(a) and (b),
Lessor shall have all rights, powers and remedies provided for herein or by law
or equity or otherwise in the case of nonpayment of Basic Rent. All such
payments of Supplemental Rent shall be in the full amount thereof, without
setoff, deduction or reduction. Lessee shall pay to the appropriate Person, as
Supplemental Rent due and owing to such Person, among other things, on demand,
(a) any and all payment obligations (except for amounts payable as Basic Rent)
owing from time to time under the Operative Agreements by any Person to the
Agent, any Lender, any Holder or any other Person, (b) interest at the
applicable Overdue Rate on any installment of Basic Rent not paid when due
(subject to the applicable grace period) for the period for which the same shall
be overdue and on any payment of Supplemental Rent not paid when due or demanded
by the appropriate Person (subject to any applicable grace period) for the
period from the due date or the date of any such demand, as the case may be,
until the same shall be paid and (c) amounts referenced as Supplemental Rent
obligations pursuant to Section 8.3 of the Participation Agreement. It shall be
an additional Supplemental Rent obligation of Lessee to pay to the appropriate
Person all rent and other amounts when such become due and owing from time to
time under each Ground Lease (without regard to whether such payment obligations
are stated to be obligations of the landlord or the tenant thereunder) and
without the necessity of any notice from Lessor with regard thereto. The
expiration or other termination of Lessee's obligations to pay Basic Rent
hereunder shall not limit or modify the obligations of Lessee with respect to
Supplemental Rent. Unless expressly provided otherwise in this Lease, in the
event of any failure on the part of Lessee to pay and discharge any Supplemental
Rent as and when due, Lessee shall also promptly pay and discharge any fine,
penalty, interest or cost which may be assessed or added for nonpayment or late
payment of such Supplemental Rent, all of which shall also constitute
Supplemental Rent.
3.4 Performance on a Non-Business Day.
If any Basic Rent is required hereunder on a day that is not a
Business Day, then such Basic Rent shall be due on the corresponding Scheduled
Interest Payment Date. If any Supplemental Rent is required hereunder on a day
that is not a Business Day, then such Supplemental Rent shall be due on the next
succeeding Business Day.
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3.5 Rent Payment Provisions.
Lessee shall make payment of all Basic Rent and Supplemental Rent when
due (subject to the applicable grace periods) regardless of whether any of the
Operative Agreements pursuant to which same is calculated and is owing shall
have been rejected, avoided or disavowed in any bankruptcy or insolvency
proceeding involving any of the parties to any of the Operative Agreements. Such
provisions of such Operative Agreements and their related definitions are
incorporated herein by reference and shall survive any termination, amendment or
rejection of any such Operative Agreements.
ARTICLE IV
4.1 Taxes; Utility Charges.
Subject to Lessee's right to contest (as provided in Section 13.1) an
Imposition, utility charge or other similar amount referenced in this Section
4.1, Lessee shall pay or cause to be paid all Impositions with respect to the
Properties and/or the use, occupancy, operation, repair, access, maintenance or
operation thereof and all charges for electricity, power, gas, oil, water,
telephone, sanitary sewer service and all other rents, utilities and operating
expenses of any kind or type used in or on any Property and related real
property during the Term. Upon Lessor's request, Lessee shall provide from time
to time Lessor with evidence of all such payments referenced in the foregoing
sentence. Lessee shall be entitled to receive any credit or refund with respect
to any Imposition or utility charge paid by Lessee. Unless an Event of Default
shall have occurred and be continuing, the amount of any credit or refund
received by Lessor on account of any Imposition or utility charge paid by
Lessee, net of the costs and expenses incurred by Lessor in obtaining such
credit or refund, shall be promptly paid over to Lessee. All charges for
Impositions or utilities imposed with respect to any Property for a period
during which this Lease expires or terminates shall be adjusted and prorated on
a daily basis between Lessor and Lessee, and each party shall pay or reimburse
the other for such party's pro rata share thereof.
ARTICLE V
5.1 Quiet Enjoyment.
Subject to the rights of Lessor contained in Sections 17.2, 17.3 and
20.3 and the other terms of this Lease and the other Operative Agreements and so
long as no Event of Default shall have occurred and be continuing, Lessee shall
peaceably and quietly have, hold and enjoy each Property for the applicable
Term, free of any claim or other action by Lessor or anyone rightfully claiming
by, through or under Lessor (other than Lessee) with respect to any matters
arising from and after the applicable Basic Term Commencement Date.
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5.2 Future Advances.
Within twenty (20) years from the Initial Closing Date, the Financing
Parties may advance or loan additional sums (herein "Future Advances") to
Lessee. This Lease shall secure not only existing indebtedness and other
obligations, but also such Future Advances, with interest or Holder Yield
thereon, whether such advances are obligatory or to be made at the option of the
Financing Parties, or otherwise, as are made within twenty (20) years from the
Initial Closing Date, to the same extent as if such Future Advances were made on
the Initial Closing Date. The total amount of indebtedness and other obligations
secured hereby may decrease or increase from time to time, but the total unpaid
balance so secured at any one time shall not exceed $30,000,000.00, plus
interest and Holder Yield thereon, and any disbursements made for the payment of
taxes, levies or insurance on the Properties, with interest on such
disbursements.
5.3 Assignment of Leases, Rents and Profits.
(a) Lessee hereby immediately and absolutely sells, assigns, transfers, and
sets over unto Lessor, its successors and assigns, the rights, interests and
privileges which Lessee may have as lessor in any and all leases now existing or
hereafter made that affect the Properties (or any of them). So long as no Lease
Event of Default exists, Lessee shall have the right under a license granted
hereby to collect all rents and profits from the leases.
(b) With respect to the assignment of the leases and agreements affecting
the Properties (or any of them) and the rents and profits, Lessor shall not be
obligated to perform or discharge any obligation or duty to be performed or
discharged by Lessee under any of the leases or agreements assigned under this
Lease. Lessee hereby agrees to indemnify Lessor and the other Financing Parties
for, and to save them harmless from, any and all liability arising from any such
agreements or from such assignment. Such assignment shall not place
responsibility for the control, care, management or repair of the Properties (or
any of them) upon Lessor, or make Lessor responsible or liable for any
negligence in the management, operation, upkeep, repair or control of the
Properties (or any of them) resulting in loss or injury or death to any tenant,
licensee, employee or stranger.
ARTICLE VI
6.1 Net Lease.
This Lease shall constitute a net lease, and the obligations of Lessee
hereunder are absolute and unconditional. Lessee shall pay all operating
expenses arising out of the use, operation and/or occupancy of each Property.
Any present or future law to the contrary notwithstanding, this Lease shall not
terminate, nor shall Lessee be entitled to any abatement, suspension, deferment,
reduction, setoff, counterclaim, or defense with respect to the Rent, nor shall
the obligations of Lessee hereunder be affected (except as expressly herein
permitted and by performance of the obligations in connection therewith) for any
reason whatsoever, including without limitation by reason of: (a) any damage to
or destruction of any Property or any part
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thereof; (b) any taking of any Property or any part thereof or interest therein
by Condemnation or otherwise; (c) any prohibition, limitation, restriction or
prevention of Lessee's use, occupancy or enjoyment of any Property or any part
thereof, or any interference with such use, occupancy or enjoyment by any Person
or for any other reason; (d) any title defect, Lien or any matter affecting
title to any Property; (e) any eviction by paramount title or otherwise; (f) any
default by Lessor hereunder; (g) any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution or other proceeding relating to or
affecting the Agent, any Lender, Lessor, Lessee, any Holder or any Governmental
Authority; (h) the impossibility or illegality of performance by Lessor, Lessee
or both; (i) any action of any Governmental Authority or any other Person; (j)
Lessee's acquisition of ownership of all or part of any Property; (k) breach of
any warranty or representation with respect to any Property or any Operative
Agreement; (l) any defect in the condition, quality or fitness for use of any
Property or any part thereof; or (m) any other cause or circumstance whether
similar or dissimilar to the foregoing and whether or not Lessee shall have
notice or knowledge of any of the foregoing. The parties intend that the
obligations of Lessee hereunder shall be covenants, agreements and obligations
that are separate and independent from any obligations of Lessor hereunder and
shall continue unaffected unless such covenants, agreements and obligations
shall have been modified or terminated in accordance with an express provision
of this Lease. Lessor and Lessee acknowledge and agree that the provisions of
this Section 6.1 have been specifically reviewed and subjected to negotiation.
6.2 No Termination or Abatement.
Lessee shall remain obligated under this Lease in accordance with its
terms and shall not take any action to terminate, rescind or avoid this Lease,
notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting any Person or any
Governmental Authority, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or liquidator of
any Person or any Governmental Authority or by any court with respect to any
Person, or any Governmental Authority. Lessee hereby waives all right (a) to
terminate or surrender this Lease (except as permitted under the terms of the
Operative Agreements) or (b) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.
ARTICLE VII
7.1 Ownership of the Properties.
(a) Lessor and Lessee intend that for federal and all state and local
income tax purposes, bankruptcy purposes, regulatory purposes, commercial
law and real estate purposes and all other purposes (other than for
accounting purposes) (A) this Lease will be treated as a financing
arrangement and (B) Lessee will be treated as the owner of the
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Properties and will be entitled to all tax benefits ordinarily available to
owners of property similar to the Properties for such tax purposes;
provided, however, that for financial accounting purposes, Lessor and
Lessee intend that this Lease will be treated as an operating lease.
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) For all purposes described in Section 7.1(a) except for financial
accounting purposes, Lessor and Lessee intend this Lease to constitute a
finance lease and not a true lease. In order to secure the obligations of
Lessee now existing or hereafter arising under any and all Operative
Agreements, Lessee hereby conveys, grants, assigns, transfers,
hypothecates, mortgages and sets over to Lessor, for the benefit of all
Financing Parties, a first priority security interest in and lien (but
subject to the security interest and lien in the assets granted by Lessee
in favor of the Agent in accordance with the Security Documents) on all
right, title and interest of Lessee (now owned or hereafter acquired) in
and to all Properties to the extent such is personal property and does
hereby irrevocably MORTGAGE, GRANT, BARGAIN, SELL, ALIEN, REMISE, RELEASE,
CONFIRM AND CONVEY to Lessor, for the benefit of all Financing Parties, a
lien and mortgage (but subject to the lien and mortgage in the assets
granted by Lessee in favor of the Agent in accordance with the Security
Documents) on all right, title and interest of Lessee (now owned or
hereafter acquired) in and to all Properties to the extent such is a real
property. The security interest, lien and mortgage in the assets granted by
Lessee in favor of Lessor are assigned by Lessor to the Agent and/or
subject to additional security interests, liens and mortgages granted by
Lessor to the Agent. Lessor and Lessee further intend and agree that, for
the purpose of securing the obligations of Lessee and/or the Construction
Agent now existing or hereafter arising under the Operative Agreements, (i)
this Lease shall be a security agreement and financing statement within the
meaning of Article 9 of the Uniform Commercial Code respecting each of the
Properties and all proceeds (including without limitation insurance
proceeds thereof) to the extent such is personal property and an
irrevocable grant and conveyance of a lien and mortgage on each of the
Properties and all proceeds (including without limitation insurance
proceeds thereof) to the extent such is real property; (ii) the acquisition
of title by Lessor (or to the extent applicable, a leasehold interest
pursuant to a Ground Lease) in each Property referenced in Article II
constitutes a grant by Lessee to Lessor of a security interest, lien and
mortgage in all of Lessee's right, title and interest in and to each
Property and all proceeds (including without limitation insurance proceeds
thereof) 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, and an assignment of all
rents, profits and income produced by each Property; and (iii)
notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents
(as applicable) of Lessee
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shall be deemed to have been given for the purpose of perfecting such lien,
security interest and mortgage lien under applicable law. Lessee shall
promptly take such actions as Lessor may reasonably request (including
without limitation the filing of Uniform Commercial Code Financing
Statements, Uniform Commercial Code Fixture Filings and memoranda (or short
forms) of this Lease and the various Lease Supplements) to ensure that the
lien, security interest, lien and mortgage lien in each Property and the
other items referenced above will be deemed to be a perfected lien,
security interest and mortgage lien of first priority under applicable law
and will be maintained as such throughout the Term. The security
agreements, financing statements, liens, security interests, deeds of trust
and mortgages provided in clauses (i), (ii) and (iii) hereof shall be
individually defined as the "Security Right", and individual collateral
secured by the corresponding Security Right as provided in clauses (i),
(ii) and (iii) hereof shall be defined herein as the "Specified
Collateral".
(c) In the event that Lessee's interest in the Properties as provided
in this Lease is recharacterized by a court of competent jurisdiction, and
last resort in the case of an appeal, as a grant of an equitable mortgage
by Lessee or as a financing instrument provided in favor of Lessee or
otherwise, and not as a leasehold estate in substantial conformity with the
terms and conditions contained in this Lease, then Lessee and Lessor agree
that this Lease shall constitute a Security Right with respect to the
applicable Specified Collateral provided in clauses (i), (ii) and (iii) of
Section 7.1(b) and shall be enforceable in accordance with the terms and
conditions contained in this Lease to the extent that such terms and
conditions may be enforceable pursuant to the determination of such court
of competent jurisdiction. Lessor and Lessee further agree that the
provisions of this Section 7.1 are for the benefit of, and may be
enforceable by Lessor, Lessee and each of the Financing Parties.
ARTICLE VIII
8.1 Condition of the Properties.
LESSEE ACKNOWLEDGES AND AGREES THAT IT IS LEASING EACH PROPERTY "AS-IS
WHERE-IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY
LESSOR (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR OF LESSOR
LIENS) AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE, (B) THE
RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY STATE OF FACTS
REGARDING ITS PHYSICAL CONDITION OR WHICH AN ACCURATE SURVEY MIGHT SHOW, (D) ALL
APPLICABLE LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY
EXIST ON THE DATE HEREOF AND/OR THE DATE OF THE APPLICABLE LEASE SUPPLEMENT.
NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER HAS MADE OR SHALL BE
DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED) (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR
9
OF LESSOR LIENS) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE
TITLE, VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY
OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF), AND NEITHER LESSOR NOR THE AGENT
NOR ANY LENDER NOR ANY HOLDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREON OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY LEGAL REQUIREMENT. LESSEE HAS OR PRIOR TO THE BASIC TERM COMMENCEMENT
DATE WILL HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT EACH PROPERTY AND THE
IMPROVEMENTS THEREON (IF ANY), IS OR WILL BE (INSOFAR AS LESSOR, THE AGENT, EACH
LENDER AND EACH HOLDER ARE CONCERNED) SATISFIED WITH THE RESULTS OF ITS
INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS OF THE RESULTS
OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE MATTERS DESCRIBED IN THE
PRECEDING SENTENCE, AS BETWEEN LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS,
ON THE ONE HAND, AND LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.
8.2 Possession and Use of the Properties.
(a) At all times during the Term with respect to each Property, such
Property shall be a Permitted Facility and shall be used by Lessee in the
ordinary course of its business. Lessee shall pay, or cause to be paid, all
charges and costs required in connection with the use of the Properties as
contemplated by this Lease. Lessee shall not commit or permit any waste of
the Properties or any part thereof. Notwithstanding anything contained
herein, Lessee shall not be required to occupy all or any portion of any
Property so long as Lessee takes reasonable precautions to secure each
Property or portion thereof which is unoccupied and procures any additional
insurance coverages (in addition to the insurance coverages required
pursuant to Article XIV) reasonably necessary to protect the unoccupied
Property or portion thereof.
(b) The address stated in Section 29.1 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. Regarding a particular Property, each Lease Supplement
correctly identifies the initial location of the related Equipment (if any)
and Improvements (if any) and contains an accurate legal description for
the related parcel of Land or a copy of the Ground Lease (if any). The
Equipment and Improvements respecting each particular Property will be
located only at the location identified in the applicable Lease Supplement.
(c) Lessee will not attach or incorporate any item of Equipment to or
in any other item of equipment or personal property or to or in any real
property in a manner that
10
could give rise to the assertion of any Lien on such item of Equipment by
reason of such attachment or the assertion of a claim that such item of
Equipment has become a fixture and is subject to a Lien in favor of a third
party that is prior to the Liens thereon created by the Operative
Agreements.
(d) On the Basic Term Commencement Date for each Property, Lessor and
Lessee shall execute a Lease Supplement in regard to such Property which
shall contain an Equipment Schedule that has a general description of the
Equipment which shall comprise the Property, an Improvement Schedule that
has a general description of the Improvements which shall comprise the
Property and a legal description of the Land to be leased hereunder (or in
the case of any Property subject to a Ground Lease to be subleased
hereunder) as of such date. Each Property subject to a Ground Lease shall
be deemed to be ground subleased from Lessor to Lessee as of the effective
date of the applicable Ground Lease, and such ground sublease shall be in
effect until this Lease is terminated or expires, in each case in
accordance with the terms and provisions hereof. Lessee shall satisfy and
perform all obligations imposed on Lessor under each Ground Lease.
Simultaneously with the execution and delivery of each Lease Supplement,
such Equipment, Improvements, Land, ground subleasehold interest, all
additional Equipment and all additional Improvements which are financed
under the Operative Agreements after the Basic Term Commencement Date and
the remainder of such Property shall be deemed to have been accepted by
Lessee for all purposes of this Lease and to be subject to this Lease.
(e) At all times during the Term with respect to each Property, Lessee
will comply with all obligations under and (to the extent no Event of
Default exists and provided that such exercise will not impair the value,
utility or remaining useful life of such Property) shall be permitted to
exercise all rights and remedies under, all operation and easement
agreements and related or similar agreements applicable to such Property.
8.3 Integrated Properties.
On the Rent Commencement Date for each Property, Lessee shall, at its
sole cost and expense, cause such Property and the applicable property subject
to a Ground Lease to constitute (and for the duration of the Term shall continue
to constitute) all of the equipment, facilities, rights, other personal property
and other real property necessary or appropriate to operate, utilize, maintain
and control a Permitted Facility in a commercially reasonable manner.
ARTICLE IX
9.1 Compliance With Legal Requirements, Insurance Requirements and
Manufacturer's Specifications and Standards.
Subject to the terms of Article XIII relating to permitted contests,
Lessee, at its sole cost and expense, shall (a) comply with all applicable Legal
Requirements (including
11
without limitation all Environmental Laws) and all Insurance Requirements
relating to the Properties, (b) procure, maintain and comply with all licenses,
permits, orders, approvals, consents and other authorizations required for the
acquisition, installation, testing, use, development, construction, operation,
maintenance, repair, refurbishment and restoration of the Properties and (c)
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 Properties, whether or not compliance therewith shall require structural or
extraordinary changes in any Property or interfere with the use and enjoyment of
any Property, unless the failure to procure, maintain and comply with such items
identified in subparagraphs (b) and (c), 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
9.1. Lessor agrees to use commercially reasonable efforts to assist Lessee with
Lessee's obligation to comply with this Section 9.1; provided, however, Lessee
shall give Lessor and the Agent reasonable advance notice of any action which
Lessor is requested to take regarding compliance with this Section 9.1, Lessee
shall pay any and all reasonable out-of-pocket fees and expenses incurred by
Lessor in connection therewith and in no event shall such action on the part of
Lessor create any additional risk for any Financing Party (as reasonably
determined by the Agent).
ARTICLE X
10.1 Maintenance and Repair; Return.
(a) Lessee, at its sole cost and expense, shall maintain each Property
in good condition, repair and working order (ordinary wear and tear
excepted) and in the repair and condition as when originally delivered to
Lessor and make all necessary repairs thereto and replacements thereof, of
every kind and nature whatsoever, whether interior or exterior, ordinary or
extraordinary, structural or nonstructural or foreseen or unforeseen, in
each case as required by Section 9.1 and on a basis consistent with the
operation and maintenance of properties or equipment comparable in type and
function to the applicable Property, such that such Property is capable of
being immediately utilized by a third party and in compliance with standard
industry practice subject, however, to the provisions of Article XV with
respect to Casualty and Condemnation.
(b) Lessee shall not use or locate any component of any Property
outside of the Approved State therefor. Lessee shall not move or relocate
any component of any Property beyond the boundaries of the Land (comprising
part of such Property) described in the applicable Lease Supplement, except
for the temporary removal of Equipment and other personal property for
repair or replacement and except as otherwise permitted with respect to
Modifications or pursuant to Section 10.1(c).
(c) If Lessee wishes for whatever reason to replace any component of
any Property or any component of any Property becomes worn out, lost,
destroyed, damaged
12
beyond repair or otherwise permanently rendered unfit for use, Lessee, at
its own expense, will within a reasonable time replace such component with
a replacement component which is free and clear of all Liens (other than
Permitted Liens and Lessor Liens) and has a value, utility and useful life
at least equal to the component replaced (assuming the component replaced
had been maintained and repaired in accordance with the requirements of
this Lease). All components which are added to any Property shall
immediately become the property of (and title thereto shall vest in) Lessor
and shall be deemed incorporated in such Property and subject to the terms
of this Lease as if originally leased hereunder. Regarding each component
which is added to any Property as referenced in this Section 10.1(c),
Lessee shall cause a Bill of Sale (in form and substance reasonably
satisfactory to the Agent) to be delivered in favor of Lessor and such
title affidavits and other documents as may be reasonably requested by any
title insurance underwriter issuing title insurance in connection with the
purchase of such interest by Lessee. All components which are replaced
shall immediately become the property of (and title thereto shall vest in)
Lessee and shall be deemed separated from such Property and no longer
subject to the terms of this Lease. Regarding each component which is
removed from any Property as referenced in this Section 10.1(c), Lessor
shall cause a Bill of Sale to be delivered in favor of Lessee in accordance
with the requirements of Section 20.2(b) and, to the extent the following
are agreed to by the Agent in its reasonable discretion, such title
affidavits and other documents as may be reasonably requested by any title
insurance underwriter issuing title insurance in connection with the
acquisition of such component by Lessee.
(d) Upon reasonable advance notice, Lessor and its agents shall have
the right to inspect each Property and all maintenance records with respect
thereto at any reasonable time during normal business hours but shall not,
in the absence of an Event of Default, materially disrupt the business of
Lessee.
(e) Lessee shall cause to be delivered to Lessor (at Lessee's sole
expense) one or more additional Appraisals (or reappraisals of Property) as
Lessor may request if any one of Lessor, the Agent, the Trust Company, any
Lender or any Holder is required pursuant to any applicable Legal
Requirement to obtain such Appraisals (or reappraisals) and upon the
occurrence of any Event of Default.
(f) Lessor shall under no circumstances be required to build any
improvements or install any equipment on any Property, make any repairs,
replacements, alterations or renewals of any nature or description to any
Property, make any expenditure whatsoever in connection with this Lease or
maintain any Property in any way. Lessor shall not be required to maintain,
repair or rebuild all or any part of any Property, and Lessee waives the
right to (i) require Lessor to maintain, repair, or rebuild all or any part
of any Property, or (ii) make repairs at the expense of Lessor pursuant to
any Legal Requirement, Insurance Requirement, contract, agreement,
covenant, condition or restriction at any time in effect.
13
(g) Lessee shall, upon the expiration or earlier termination of this
Lease with respect to a Property, if Lessee shall not have exercised its
Purchase Option with respect to such Property and purchased such Property,
surrender such Property (i) pursuant to the exercise of the applicable
remedies upon the occurrence of a Lease Event of Default, to Lessor or (ii)
pursuant to the second paragraph of Section 22.1(a) hereof, to Lessor or
the third party purchaser, as the case may be, subject to Lessee's
obligations under this Lease (including without limitation the obligations
of Lessee at the time of such surrender under Sections 9.1, 10.1(a) through
(f), 10.2, 11.1, 12.1, 22.1 and 23.1).
10.2 Environmental Inspection.
If Lessee has not given notice of exercise of its Purchase Option on
the Expiration Date pursuant to Section 20.1 or for whatever reason Lessee does
not purchase a Property in accordance with the terms of this Lease, then not
more than one hundred twenty (120) days nor less than sixty (60) days prior to
the Expiration Date, Lessee at its expense shall cause to be delivered to Lessor
a Phase I environmental site assessment recently prepared (no more than thirty
(30) days prior to the date of delivery) by an independent recognized
professional reasonably acceptable to Lessor, and in form, scope and content
reasonably satisfactory to Lessor.
ARTICLE XI
11.1 Modifications.
(a) Lessee at its sole cost and expense, at any time and from time to
time without the consent of Lessor may make modifications, alterations,
renovations, improvements and additions to any Property or any part thereof
and substitutions and replacements therefor whether such are for the
interior or exterior of any Property or are structural or non-structural
for any Property (collectively, "Modifications"), and Lessee shall make any
and all Modifications required to be made pursuant to all Legal
Requirements, Insurance Requirements and manufacturer's specifications and
standards; provided, that: (i) no Modification shall materially and
adversely impair the value, utility or useful life of any Property from
that which existed immediately prior to such Modification; (ii) each
Modification shall be done expeditiously and in a good and workmanlike
manner; (iii) no Modification shall adversely affect the structural
integrity of any Property; (iv) to the extent required by Section 14.2(a),
Lessee shall maintain builders' risk insurance at all times when a
Modification is in progress; (v) subject to the terms of Article XIII
relating to permitted contests, Lessee shall pay all costs and expenses and
discharge any Liens arising with respect to any Modification; (vi) each
Modification shall comply with the requirements of this Lease (including
without limitation Sections 8.2 and 10.1); and (vii) no Improvement shall
be demolished or otherwise rendered unfit for use unless Lessee shall
finance the proposed replacement Modification outside of this lease
facility; provided, further, Lessee shall not make any Modification (unless
required by any Legal Requirement) to the extent any such Modification,
individually or in the aggregate, shall have or could reasonably be
expected
14
to have a Material Adverse Effect. All Modifications required be made
pursuant to any Legal Requirement, Insurance Requirement or manufacturer's
specification or standard and all Modifications that are not severable from
the applicable Property without materially and adversely impairing the
value, utility or useful life of any Property shall immediately and without
further action upon their incorporation into the applicable Property (1)
become property of Lessor, (2) be subject to this Lease and (3) be titled
in the name of Lessor, and Lessee shall not remove or attempt to remove any
Modification from any Property. Regarding all Modifications that are not
severable from the applicable Property without materially and adversely
impairing the value, utility or useful life of any Property, Lessee shall
cause a Bill of Sale (in form and substance reasonably satisfactory to the
Agent) to be delivered in favor of Lessor. Title to all other Modifications
will vest with Lessee. Each Ground Lease for a Property shall expressly
provide for the provisions of the foregoing sentence. Lessee, at its own
cost and expense, will pay for the repairs of any damage to any Property
caused by the removal or attempted removal of any Modification.
(b) The construction process provided for in the Agency Agreement is
acknowledged by Lessor to be consistent with and in compliance with the
terms and provisions of this Article XI.
ARTICLE XII
12.1 Warranty of Title.
(a) Lessee hereby acknowledges and shall cause title in each Property
(including without limitation all Equipment, all Improvements, all
replacement components to each Property and all Modifications) immediately
and without further action to vest in and become the property of Lessor and
to be subject to the terms of this Lease (provided, respecting each
Property subject to a Ground Lease, Lessor's interest therein is
acknowledged to be a leasehold interest pursuant to such Ground Lease) from
and after the date hereof or such date of incorporation into any Property.
Lessee agrees that, subject to the terms of Article XIII relating to
permitted contests, Lessee shall not directly or indirectly create or allow
to remain, and shall promptly discharge at its sole cost and expense, any
Lien, defect, attachment, levy, title retention agreement or claim upon any
Property, any component thereof or any Modifications or any Lien,
attachment, levy or claim with respect to the Rent or with respect to any
amounts held by Lessor, the Agent, any Lender or any Holder pursuant to any
Operative Agreement, other than Permitted Liens and Lessor Liens. Lessee
shall promptly notify Lessor in the event it receives actual knowledge that
a Lien other than a Permitted Lien or Lessor Lien has occurred with respect
to a Property, the Rent or any other such amounts, and Lessee represents
and warrants to, and covenants with, Lessor that the Liens in favor of
Lessor and/or the Agent created by the Operative Agreements are (and until
the Financing Parties under the Operative Agreements have been paid in full
shall remain) first priority perfected Liens subject only to Permitted
Liens and Lessor Liens. At all times subsequent
15
to the Basic Term Commencement Date respecting a Property, Lessee shall (i)
cause a valid, perfected, first priority Lien on each applicable Property
to be in place in favor of the Agent (for the benefit of the Lenders and
the Holders) and (ii) file, or cause to be filed, all necessary documents
under the applicable real property law and Article 9 of the Uniform
Commercial Code to perfect such title and Liens.
(b) Nothing contained in this Lease shall be construed as constituting
the consent or request of Lessor, expressed or implied, to or for the
performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or to any
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND
SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO LESSEE, OR TO ANYONE HOLDING A PROPERTY OR ANY PART THEREOF
THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
LESSOR IN AND TO ANY PROPERTY.
ARTICLE XIII
13.1 Permitted Contests Other Than in Respect of Indemnities.
Except to the extent otherwise provided for in Section 11 of the
Participation Agreement, Lessee, on its own or on Lessor's behalf but at
Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial proceedings or arbitration proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or in part, of any
Legal Requirement, Imposition or utility charge payable pursuant to Section 4.1
or any Lien, attachment, levy, encumbrance or encroachment, and Lessor agrees
not to pay, settle or otherwise compromise any such item, provided, that (a) the
commencement and continuation of such proceedings shall suspend the collection
of any such contested amount from, and suspend the enforcement thereof against,
the applicable Properties, Lessor, each Holder, the Agent and each Lender; (b)
there shall not be imposed a Lien (other than Permitted Liens and Lessor Liens)
on any Property and no part of any Property nor any Rent would be in any danger
of being sold, forfeited, lost or deferred; (c) at no time during the permitted
contest shall there be a risk of the imposition of criminal liability or
material civil liability on Lessor, any Holder, the Agent or any Lender for
failure to comply therewith; and (d) in the event that, at any time, there shall
be a material risk of extending the application of such item beyond the end of
the Term, then Lessee shall deliver to Lessor an Officer's Certificate
certifying as to the matters set forth in clauses (a), (b) and (c) of this
Section 13.1. Lessor, at Lessee's sole cost and expense, shall execute and
deliver to Lessee such authorizations and other documents as may reasonably be
required in connection with any such contest and, if reasonably requested by
Lessee, shall join as a party therein at Lessee's sole cost and expense.
16
13.2 Impositions, Utility Charges, Other Matters; Compliance with Legal
Requirements.
Except with respect to Impositions, Legal Requirements, utility
charges and such other matters referenced in Section 13.1 which are the subject
of ongoing proceedings contesting the same in a manner consistent with the
requirements of Section 13.1, Lessee shall cause (a) all Impositions, utility
charges and such other matters to be timely paid, settled or compromised, as
appropriate, with respect to each Property and (b) each Property to comply with
all applicable Legal Requirements.
ARTICLE XIV
14.1 Public Liability and Workers' Compensation Insurance.
During the Term for each Property, Lessee shall procure and carry, at
Lessee's sole cost and expense, commercial general liability and umbrella
liability insurance for claims for bodily injuries or death sustained by persons
or damage to property while on such Property or respecting the Equipment as are
then customarily carried by similarly situated companies conducting business
similar to that conducted by Lessee. Such insurance shall be on terms and in
amounts that are no less favorable than insurance maintained by Lessee with
respect to similar properties and equipment that it owns and are then carried by
similarly situated companies conducting business similar to that conducted by
Lessee, and in no event shall have a minimum combined single limit per
occurrence coverage (i) for commercial general liability of less than $1,000,000
and (ii) for umbrella liability of less than $5,000,000. The policies shall name
Lessee as the named insured and shall include the Lessor, the Holders, the Agent
and the Lenders as additional insureds, with respect to the Property or
Equipment or matters arising with respect thereto. The policies shall also
specifically provide that such policies shall be considered primary insurance
which shall apply to any loss or claim before any contribution by any insurance
which Lessor, any Holder, the Agent or any Lender may have in force. In the
operation of the Properties, Lessee shall comply with applicable workers'
compensation laws and protect Lessor, each Holder, the Agent and each Lender
against any liability for its failure to comply with such laws.
14.2 Permanent Hazard and Other Insurance.
(a) During the Term for each Property, Lessee shall keep such Property
insured against all risk of physical loss or damage by fire and all risks
usually and customarily covered under a standard all risk property policy
and shall maintain builders' risk insurance during construction of any
Improvements or Modifications in each case in amounts no less than the then
current replacement value of such Property (assuming that such Property was
in the condition required by the terms of this Lease immediately prior to
such loss) and on terms that (i) are no less favorable than insurance
covering other similar properties owned by Lessee and (ii) are then carried
by similarly situated companies conducting business similar to that
conducted by Lessee. The policies shall
17
name Lessee as the insured and shall be endorsed to designate Lessor and
the Agent (on behalf of the Lenders and the Holders) as a loss payee, to
the extent of their respective interests in the Properties; provided, so
long as no Event of Default exists, any loss payable under the insurance
policies required by this Section for losses up to $1,000,000 will be paid
solely to Lessee for its use in repairing or replacing damaged Properties.
(b) If, during the Term with respect to a Property the area in which
such Property is located is designated a "flood-prone" area pursuant to the
Flood Disaster Protection Act of 1973, or any amendments or supplements
thereto or is in a zone designated A or V, then Lessee shall comply with
the National Flood Insurance Program as set forth in the Flood Disaster
Protection Act of 1973. In addition, Lessee will fully comply with the
requirements of the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as each may be amended from time to time,
and with any other Legal Requirement, concerning flood insurance to the
extent that it applies to any such Property.
14.3 Coverage.
(a) As of the date of this Lease and annually thereafter during the
Term, Lessee shall furnish the Agent (on behalf of Lessor and the other
beneficiaries of such insurance coverage) with certificates prepared by the
insurers or insurance broker of Lessee showing the insurance required under
Sections 14.1 and 14.2 to be in effect, listing (to the extent of their
respective interests) Lessor, the Holders, the Agent and the Lenders as
additional insureds or loss payees and evidencing the other requirements of
this Article XIV. All such insurance shall be at the cost and expense of
Lessee and provided by nationally recognized, financially sound insurance
companies having an A- or better rating by A.M. Best's Key Rating Guide.
Lessee shall cause such certificates to include a provision for thirty (30)
days' advance written notice by the insurer to the Agent (on behalf of
Lessor and the other beneficiaries of such insurance coverage) in the event
of cancellation or material alteration of such insurance. If an Event of
Default has occurred and is continuing and the Agent (on behalf of Lessor
and the other beneficiaries of such insurance coverage) so requests, Lessee
shall deliver to the Agent (on behalf of Lessor and the other beneficiaries
of such insurance coverage) copies of all insurance policies required by
Sections 14.1 and 14.2.
(b) Lessee agrees that the insurance policy or policies required by
Sections 14.1, 14.2(a) and 14.2(b) shall include an appropriate clause
pursuant to which any such policy shall provide that it will not be
invalidated should Lessee or any Contractor, as the case may be, waive, at
any time, any or all rights of recovery against any party for losses
covered by such policy or due to any breach of warranty, fraud, action,
inaction or misrepresentation by Lessee or any Person acting on behalf of
Lessee. Lessee hereby waives any and all such rights against Lessor, the
Holders, the Agent and the Lenders to the extent of payments made to any
such Person under any such policy.
18
(c) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Article XIV, except that Lessor may carry
separate liability insurance at Lessor's sole cost so long as (i) Lessee's
insurance is designated as primary and in no event excess or contributory
to any insurance Lessor may have in force which would apply to a loss
covered under Lessee's policy and (ii) each such insurance policy will not
cause Lessee's insurance required under this Article XIV to be subject to a
coinsurance exception of any kind.
(d) Lessee shall pay as they become due all premiums for the insurance
required by Section 14.1 and Section 14.2, shall renew or replace each
policy prior to the expiration date thereof or otherwise maintain the
coverage required by such Sections without any lapse in coverage.
14.4 Additional Insurance Requirements.
Not in limitation of any provision of the Operative Agreements but in
addition thereto, Lessee shall obtain any and all additional insurance policies
(including without limitation with respect to Condemnation) with regard to the
Properties or otherwise with respect to the transactions contemplated by the
Operative Agreements as reasonably requested from time to time by Lessor as are
then customarily required of similarly situated companies conducting business
similar to that conducted by Lessee.
ARTICLE XV
15.1 Casualty and Condemnation.
(a) Subject to the provisions of the Agency Agreement and this Article
XV and Article XVI (in the event Lessee delivers, or is obligated to
deliver or is deemed to have delivered, a Termination Notice), and prior to
the occurrence and continuation of a Default or an Event of Default, Lessee
shall be entitled to receive (and Lessor hereby irrevocably assigns to
Lessee all of Lessor's right, title and interest in) any condemnation
proceeds, award, compensation or insurance proceeds under Sections 14.2(a)
or 14.2(b) hereof to which Lessee or Lessor may become entitled by reason
of their respective interests in a Property (i) if all or a portion of such
Property is damaged or destroyed in whole or in part by a Casualty or (ii)
if the use, access, occupancy, easement rights or title to such Property or
any part thereof is the subject of a Condemnation; provided, however, if a
Default or an Event of Default shall have occurred and be continuing or if
such award, compensation or insurance proceeds shall exceed $1,000,000,
then such award, compensation or insurance proceeds shall be paid directly
to Lessor or, if received by Lessee, shall be held in trust for Lessor, and
shall be paid over by Lessee to Lessor and held in accordance with the
terms of this Article XV. All amounts held by Lessor hereunder on account
of any award, compensation or insurance proceeds either paid directly to
Lessor or turned over to Lessor shall be held as security for the
performance of
19
Lessee's obligations hereunder and under the other Operative Agreements and
when all such Defaults and Events of Default have been cured within the
permitted cure periods or otherwise waived, all amounts so held by Lessor
shall be paid over to Lessee.
(b) Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or
insurance payment on account of any such Casualty or Condemnation and shall
pay all expenses thereof. At Lessee's reasonable request, and at Lessee's
sole cost and expense, Lessor and the Agent shall participate in any such
proceeding, action, negotiation, prosecution or adjustment. Lessor and
Lessee agree that this Lease shall control the rights of Lessor and Lessee
in and to any such award, compensation or insurance payment.
(c) If Lessee shall receive notice of a Casualty or a Condemnation of
a Property or any interest therein where damage to the affected Property is
estimated to equal or exceed fifty one percent (51%) of the Property Cost
of such Property, Lessee shall give notice thereof to Lessor promptly after
Lessee's receipt of such notice. In the event such a Casualty or
Condemnation occurs (regardless of whether Lessee gives notice thereof),
then Lessee shall be deemed to have delivered a Termination Notice to
Lessor and the provisions of Sections 16.1 and 16.2 shall apply.
(d) In the event of a Casualty or a Condemnation (regardless of
whether notice thereof must be given pursuant to paragraph (c)), this Lease
shall terminate with respect to the applicable Property in accordance with
Section 16.1 if Lessee, within thirty (30) days after such occurrence,
delivers to Lessor a notice to such effect.
(e) If pursuant to this Section 15.1 this Lease shall continue in full
force and effect following a Casualty or Condemnation with respect to the
affected Property, Lessee shall, at its sole cost and expense (subject to
reimbursement in accordance with Section 15.1(a)) promptly and diligently
repair any damage to the applicable Property caused by such Casualty or
Condemnation in conformity with the requirements of Sections 10.1 and 11.1,
using the as-built Plans and Specifications or manufacturer's
specifications for the applicable Improvements, Equipment or other
components of the applicable Property (as modified to give effect to any
subsequent Modifications, any Condemnation affecting the applicable
Property and all applicable Legal Requirements), so as to restore the
applicable Property to the same or a greater remaining economic value,
useful life, utility, condition, operation and function as existed
immediately prior to such Casualty or Condemnation (assuming all
maintenance and repair standards have been satisfied). In such event, title
to the applicable Property shall remain with Lessor.
(f) In no event shall a Casualty or Condemnation affect Lessee's
obligations to pay Rent pursuant to Article III.
(g) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(e), if during the Term with respect to a Property a
Casualty occurs with respect to such Property or Lessee receives notice of
a Condemnation with respect to such
20
Property, and following such Casualty or Condemnation, the applicable
Property cannot reasonably be restored, repaired or replaced on or before
the day one hundred eighty (180) days prior to the Expiration Date or the
date eighteen (18) months after the occurrence of such Casualty or
Condemnation (if such Casualty or Condemnation occurs during the Term) to
the same or a greater remaining economic value, useful life, utility,
condition, operation and function as existed immediately prior to such
Casualty or Condemnation (assuming all maintenance and repair standards
have been satisfied) or on or before such day such Property is not in fact
so restored, repaired or replaced, then Lessee shall be required to
exercise its Purchase Option for such Property on the next Payment Date
(notwithstanding the limits on such exercise contained in Section 20.2) and
pay Lessor the Termination Value for such Property; provided, if any
Default or Event of Default has occurred and is continuing, Lessee shall
also promptly (and in any event within three (3) Business Days) pay Lessor
any award, compensation or insurance proceeds received on account of any
Casualty or Condemnation with respect to any Property; provided, further,
that if no Default or Event of Default has occurred and is continuing, any
Excess Proceeds shall be paid to Lessee. If a Default or an Event of
Default has occurred and is continuing and any Loans, Holder Advances or
other amounts are owing with respect thereto, then any Excess Proceeds (to
the extent of any such Loans, Holder Advances or other amounts owing with
respect thereto) shall be paid to Lessor, held as security for the
performance of Lessee's obligations hereunder and under the other Operative
Agreements and applied to such obligations upon the exercise of remedies in
connection with the occurrence of an Event of Default, with the remainder
of such Excess Proceeds in excess of such Loans, Holder Advances and other
amounts owing with respect thereto being distributed to the Lessee.
(h) The provisions of Sections 15.1(a) through 15.1(g) shall not apply
to any Property until after the Construction Period Termination Date
applicable to such Property.
15.2 Environmental Matters.
Promptly upon Lessee's actual knowledge of a Release of any Hazardous
Substance affecting any portion of any Property which requires notification to
any applicable governmental authority and clean-up or remediation, the cost of
which is reasonably expected to exceed the sum of $30,000, Lessee shall notify
Lessor in writing (and in reasonable detail) of such Release. In the event of
any Environmental Violation (regardless of whether notice thereof must be
given), Lessee shall, not later than thirty (30) days after Lessee has actual
knowledge of such Environmental Violation, either (subject to the next sentence)
deliver to Lessor a Termination Notice with respect to the applicable Property
or Properties pursuant to Section 16.1, if applicable, or, at Lessee's sole cost
and expense, promptly and diligently undertake and diligently complete any
response, clean-up, remedial or other action (including without limitation the
pursuit by Lessee of appropriate action against any off-site or third party
source for contamination) necessary to remove, clean-up or remediate the
Environmental Violation in accordance with all Environmental Laws. (Lessor
acknowledges that (i) the reporting of a Release of any Hazardous Substance from
any off-site point source, not caused in any way by
21
Lessee, to the applicable governmental authorities or (ii) the commencement and
prosecution of appropriate legal proceedings with a governmental agency or court
of competent jurisdiction and the diligent prosecution of such proceedings as a
result of such Release shall, in the case of (i) or (ii) above, fulfill (subject
to the provisos to this sentence) Lessee's obligations contained in the
immediately preceding sentence if Lessee does not tender a Termination Notice to
Lessor; provided, however, that if Lessee does not substantially prevail in such
prosecution prior to any sale of the applicable Property or Properties in
accordance with the terms of the Operative Agreements and, in the case of (i) or
(ii) above, cause the diligent completion of any response, clean-up, remedial or
other action necessary to remove, clean-up or remediate the Environmental
Violation in accordance with all Environmental Laws, Lessee shall fulfill its
obligations as set forth in the preceding sentence; provided, further, the
provisions of this sentence shall not absolve Lessee of its obligation to
deliver to Lessor a Phase I environmental site assessment and purchase each
affected Property pursuant to the following provisions of this Section 15.2).
Any such undertaking shall be timely completed in accordance with prudent
industry standards. If Lessee does not deliver a Termination Notice with respect
to such Property pursuant to Section 16.1, Lessee shall, upon completion of
remedial action by Lessee (or its agents) or any third party, cause to be
prepared by a reputable environmental consultant acceptable to Lessor a report
describing the Environmental Violation and the actions taken by Lessee (or its
agents) or any third party in response to such Environmental Violation, and a
statement by the consultant that the Environmental Violation has been remedied
in full compliance with applicable Environmental Law. Not less than sixty (60)
days prior to any time that Lessee elects to cease operations with respect to
any Property or to remarket any Property pursuant to Section 20.1 hereof or any
other provision of any Operative Agreement, Lessee at its expense shall cause to
be delivered to Lessor a Phase I environmental site assessment respecting such
Property prepared in accordance with the then most recent edition of the ASTM
Protocols for Commercial Real Estate Transactions, which shall be dated within
thirty (30) days from the date of delivery to Lessor, and prepared by an
environmental consultant reasonably acceptable to Lessor. Notwithstanding any
other provision of any Operative Agreement, if Lessee fails to comply with the
foregoing obligation regarding the Phase I environmental site assessment, Lessee
shall be obligated to purchase such Property for its Termination Value and shall
not be permitted to exercise (and Lessor shall have no obligation to honor any
such exercise) any rights under any Operative Agreement regarding a sale of such
Property to a Person other than Lessee.
15.3 Notice of Environmental Matters.
Promptly, but in any event within five (5) Business Days from the date
Lessee has actual knowledge thereof, Lessee shall provide to Lessor written
notice of any pending or threatened claim, action or proceeding involving any
Environmental Law or any Release on or in connection with any Property or
Properties. All such notices shall describe in reasonable detail the nature of
the claim, action or proceeding and Lessee's proposed response thereto. In
addition, Lessee shall provide to Lessor, within five (5) Business Days of
receipt, copies of all material written communications with any Governmental
Authority relating to any Environmental Law in connection with any Property.
Lessee shall also promptly provide such detailed reports of any such material
environmental claims as may reasonably be requested by Lessor.
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ARTICLE XVI
16.1 Termination Upon Certain Events.
If Lessee has delivered, or is deemed to have delivered, written
notice of a termination of this Lease with respect to the applicable Property to
Lessor in the form described in Section 16.2(a) (a "Termination Notice")
pursuant to the provisions of this Lease, then following the applicable
Casualty, Condemnation or Environmental Violation, this Lease shall terminate
with respect to the affected Property on the applicable Termination Date.
16.2 Procedures.
(a) A Termination Notice shall contain: (i) notice of termination of
this Lease with respect to the affected Property on a Payment Date not more
than sixty (60) days after Lessor's receipt of such Termination Notice (the
"Termination Date"); and (ii) a binding and irrevocable agreement of Lessee
to pay the Termination Value for the applicable Property and purchase such
Property on such Termination Date.
(b) On each Termination Date, Lessee shall pay to Lessor the
Termination Value for the applicable Property, and Lessor shall convey such
Property or the remaining portion thereof, if any, to Lessee (or Lessee's
designee), all in accordance with Section 20.2.
ARTICLE XVII
17.1 Lease Events of Default.
If any one (1) or more of the following events (each a "Lease Event of
Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic Rent (except as
set forth in clause (ii)) within five (5) Business Days after the same has
become due and payable or (ii) any Termination Value, on the date any such
payment is due and payable, or any payment of Basic Rent or Supplemental
Rent due on the due date of any such payment of Termination Value, or any
amount due on the Expiration Date;
(b) Lessee shall fail to make payment of any Supplemental Rent (other
than Supplemental Rent referred to in Section 17.1(a)(ii)) or any other
Credit Party shall fail to make any payment of any amount under any
Operative Agreement which has become due and payable within five (5)
Business Days after receipt of notice that such payment is due;
23
(c) Lessee shall fail to maintain insurance as required by Article XIV
of this Lease or to deliver any requisite annual certificate with respect
thereto within ten (10) days after receipt of notice that such certificate
is due under the terms hereof;
(d) (i) Lessee shall fail to observe or perform any term, covenant,
obligation or condition of Lessee under this Lease or any other Operative
Agreement to which Lessee is a party other than those set forth in Sections
17.1(a), (b) or (c) hereof, or any other Credit Party shall fail to observe
or perform any term, covenant, obligation or condition of such Credit Party
under any Operative Agreement other than those set forth in Section 17.1(b)
hereof and such failure shall continue for thirty (30) days after notice
thereof to Lessee or such Credit Party; provided, if such failure cannot be
cured within such thirty (30) days but can be cured with subsequent
diligence and Lessee or such Credit Party diligently pursues such cure,
then no Lease Event of Default shall be deemed to occur with respect to
such failure until the passage of an additional sixty (60) days after the
initial thirty (30) days referenced above or (ii) any representation or
warranty made by Lessee or any other Credit Party set forth in this Lease
or in any other Operative Agreement or in any document entered into in
connection herewith or therewith or in any document, certificate or
financial or other statement delivered in connection herewith or therewith
shall be false or inaccurate in any material way when made and such matter
giving rise to such misrepresentation or breach of warranty shall continue
for thirty (30) days after notice thereof to Lessee or such Credit Party;
provided, if such matter giving rise to such misrepresentation or breach of
warranty cannot be cured within such thirty (30) days but can be cured with
subsequent diligence and Lessee or such Credit Party diligently pursues
such cure, then no Lease Event of Default shall be deemed to occur with
respect to such failure until the passage of an additional sixty (60) days
after the initial thirty (30) days referenced above;
(e) An Agency Agreement Event of Default shall have occurred and be
continuing;
(f) Any Credit Party or any Subsidiary of any Credit Party shall
default (beyond applicable periods of grace and/or notice and cure) under
the terms applicable to any Debt of such Credit Party in an aggregate
principal amount of at least $30,000,000; or any other event or condition
shall occur which results in a default of any such Debt or enables the
holder of any such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof;
(g) An involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any Credit Party or any Subsidiary of any Credit Party
or its debts, or of a substantial part of its assets, under any federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Credit
Party or any Subsidiary of any Credit Party or for a substantial part of
its assets, and, in any such case, such proceeding
24
or petition shall continue undismissed for sixty (60) or more days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(h) Any Credit Party or any Subsidiary of any Credit Party shall (i)
voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to contest
in a timely and appropriate manner, any proceeding or petition described in
clause (g) of this Section 17.1, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Credit Party or any Subsidiary of any Credit Party
or for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;
(i) Any Credit Party or any Subsidiary of any Credit Party shall
become unable, admit in writing its inability or fail generally to pay its
debts as they become due;
(j) The entering of any order in any proceedings against any Credit
Party or any Subsidiary of any Credit Party decreeing the dissolution,
divestiture or split-up of any Credit Party or any Subsidiary of any Credit
Party, and such order remains in effect for more than sixty (60) days;
(k) Any report, certificate, financial statement or other instrument
delivered to Lessor by or on behalf of any Credit Party pursuant to the
terms of this Lease or any other Operative Agreement is false or misleading
in any material respect when made or delivered;
(l) [Intentionally Omitted];
(m) One or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 shall be rendered against any Credit Party,
any Subsidiary thereof or any combination thereof and the same shall remain
undischarged for a period of thirty (30) consecutive days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to attach or levy upon the assets of any
Credit Party or any Subsidiary thereof to enforce any such judgment;
(n) An ERISA Event shall have occurred that, in the opinion of Lessor
(upon the advice of the Agent), when taken together with all other ERISA
Events that have occurred, could reasonably be expected to result in a
Material Adverse Effect; or
(o) A Change in Control shall occur;
(p) Any Operative Agreement shall cease to be in full force and
effect; or
25
(q) Except as to any Credit Party which is released in connection with
the Operative Agreements, the guaranty given by any Guarantor under the
Participation Agreement or any material provision thereof shall cease to be
in full force and effect, or any Guarantor or any Person acting by or on
behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under such guaranty, or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to any guaranty;
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee five (5) days notice of such termination (provided,
notwithstanding the foregoing, this Lease shall be deemed to be automatically
terminated without the giving of notice upon the occurrence of a Lease Event of
Default under Sections 17.1(g), (h) or (i)), and this Lease shall terminate, and
all rights of Lessee under this Lease shall cease. Lessee shall, to the fullest
extent permitted by law, pay as Supplemental Rent all costs and expenses
incurred by or on behalf of Lessor or any other Financing Party, including
without limitation reasonable fees and expenses of counsel, as a result of any
Lease Event of Default hereunder.
A POWER OF SALE HAS BEEN GRANTED IN THIS LEASE. A POWER OF SALE MAY ALLOW
LESSOR TO TAKE THE PROPERTIES AND SELL THE PROPERTIES WITHOUT GOING TO COURT IN
A FORECLOSURE ACTION UPON THE OCCURRENCE OF A LEASE EVENT OF DEFAULT.
17.2 Surrender of Possession.
If a Lease Event of Default shall have occurred and be continuing, and
whether or not this Lease shall have been terminated pursuant to Section 17.1,
Lessee shall, upon thirty (30) days written notice, surrender to Lessor
possession of the Properties. Lessor may enter upon and repossess the Properties
by such means as are available at law or in equity, and may remove Lessee and
all other Persons and any and all personal property and Lessee's equipment and
personalty and severable Modifications from the Properties. Lessor shall have no
liability by reason of any such entry, repossession or removal performed in
accordance with applicable law. Upon the written demand of Lessor, Lessee shall
return the Properties promptly to Lessor, in the manner and condition required
by, and otherwise in accordance with the provisions of, Section 22.1(c) hereof.
17.3A Foreclosure.
Lessor shall have the right to foreclose the interest of Lessee in all or
any part of the Properties (or any of them) by judicial foreclosure in
accordance with applicable law. In case of foreclosure, the Properties (or any
of them) may be offered for sale in one or more parcels at the election of
Lessor. Lessee agrees to the full extent permitted by law that in case of a
default on its part hereunder, neither it nor anyone claiming through or under
it shall or will set up, claim or seek to take advantage of any stay, extension
or redemption laws now or hereafter in force, in order to prevent or hinder the
enforcement or foreclosure of this Lease, or the absolute sale of the
26
Properties (or any of them) or the final and absolute putting into possession
thereof, immediately after such sale, of the purchasers thereof, and Lessee for
itself and all who may at any time claim through or under it, hereby waives, to
the full extent that it may lawfully so do, the benefit of all such laws, and
any and all right to have the assets comprising the Properties (or any of them)
marshaled upon any foreclosure of the lien hereof and agrees that Lessor or any
court having jurisdiction to foreclose such lien may sell the Properties (or any
of them) in part or as an entirety. In the event this Lease is foreclosed,
Lessee also waives, to the extent such waiver may be enforceable at the time of
foreclosure, any right to have the Properties (or any of them) appraised after
foreclosure for the purpose of reducing a deficiency judgment.
17.3 Reletting.
If a Lease Event of Default shall have occurred and be continuing, and
whether or not this Lease shall have been terminated pursuant to Section 17.1,
Lessor may, but shall be under no obligation to, relet any or all of the
Properties, for the account of Lessee or otherwise, for such term or terms
(which may be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which may include
concessions or free rent) and for such purposes as Lessor may determine, and
Lessor may collect, receive and retain the rents resulting from such reletting.
Lessor shall not be liable to Lessee for any failure to relet any Property or
for any failure to collect any rent due upon such reletting.
17.4 Damages.
Neither (a) the termination of this Lease as to all or any of the
Properties pursuant to Section 17.1; (b) the repossession of all or any of the
Properties; nor (c) the failure of Lessor to relet all or any of the Properties,
the reletting of all or any portion thereof, nor the failure of Lessor to
collect or receive any rentals due upon any such reletting, shall relieve Lessee
of its liabilities and obligations hereunder, all of which shall survive any
such termination, repossession or reletting. If any Lease Event of Default shall
have occurred and be continuing and notwithstanding any termination of this
Lease pursuant to Section 17.1, Lessee shall forthwith pay to Lessor all Rent
and other sums due and payable hereunder to and including without limitation the
date of such termination. Thereafter, on the days on which the Basic Rent or
Supplemental Rent, as applicable, are payable under this Lease or would have
been payable under this Lease if the same had not been terminated pursuant to
Section 17.1 and until the end of the Term hereof or what would have been the
Term in the absence of such termination, Lessee shall pay Lessor, as current
liquidated damages (it being agreed that it would be impossible accurately to
determine actual damages) an amount equal to the Basic Rent and Supplemental
Rent that are payable under this Lease or would have been payable by Lessee
hereunder if this Lease had not been terminated pursuant to Section 17.1, less
the net proceeds, if any, which are actually received by Lessor with respect to
the period in question of any reletting of any Property or any portion thereof;
provided, that Lessee's obligation to make payments of Basic Rent and
Supplemental Rent under this Section 17.4 shall continue only so long as Lessor
shall not have received the amounts specified in Section 17.6. In calculating
the amount of such net proceeds from reletting, there shall be deducted all of
Lessor's, any Holder's, the Agent's and any Lender's reasonable expenses in
connection therewith, including without limitation repossession
27
costs, brokerage or sales commissions, fees and expenses for counsel and any
necessary repair or alteration costs and expenses incurred in preparation for
such reletting. To the extent Lessor receives any damages pursuant to this
Section 17.4, such amounts shall be regarded as amounts paid on account of Rent.
Lessee specifically acknowledges and agrees that its obligations under this
Section 17.4 shall be absolute and unconditional under any and all circumstances
and shall be paid and/or performed, as the case may be, without notice or demand
and without any abatement, reduction, diminution, setoff, defense, counterclaim
or recoupment whatsoever.
17.5 Power of Sale.
Without limiting any other remedies set forth in this Lease, Lessor
and Lessee agree that Lessee has granted, pursuant to Section 7.1(b) hereof and
each Lease Supplement, a Lien against the Properties WITH POWER OF SALE, and
that, upon the occurrence and during the continuance of any Lease Event of
Default, Lessor shall have the power and authority, to the extent provided by
law, after prior notice and lapse of such time as may be required by law, to
foreclose its interest (or cause such interest to be foreclosed) in all or any
part of the Properties.
17.6 Final Liquidated Damages.
If a Lease Event of Default shall have occurred and be continuing,
whether or not this Lease shall have been terminated pursuant to Section 17.1
and whether or not Lessor shall have collected any current liquidated damages
pursuant to Section 17.4, Lessor shall have the right to recover, by demand to
Lessee and at Lessor's election, and Lessee shall pay to Lessor, as and for
final liquidated damages, but exclusive of the indemnities payable under Section
11 of the Participation Agreement (which, if requested, shall be paid
concurrently), and in lieu of all current liquidated damages beyond the date of
such demand (it being agreed that it would be impossible accurately to determine
actual damages) the Termination Value. Upon payment of the amount specified
pursuant to the first sentence of this Section 17.6, Lessee shall be entitled to
receive from Lessor, either at Lessee's request or upon Lessor's election, in
either case at Lessee's cost, an assignment of Lessor's entire right, title and
interest in and to the Properties, Improvements, Fixtures, Modifications,
Equipment and all components thereof, in each case in recordable form and
otherwise in conformity with local custom and free and clear of the Lien of this
Lease (including without limitation the release of any memoranda of Lease and/or
the Lease Supplement recorded in connection therewith) and any Lessor Liens. The
Properties shall be conveyed to Lessee "AS-IS, WHERE-IS" and in their then
present physical condition. If any statute or rule of law shall limit the amount
of such final liquidated damages to less than the amount agreed upon, Lessor
shall be entitled to the maximum amount allowable under such statute or rule of
law; provided, however, Lessee shall not be entitled to receive an assignment of
Lessor's interest in the Properties, the Improvements, Fixtures, Modifications,
Equipment or the components thereof unless Lessee shall have paid in full the
Termination Value. Lessee specifically acknowledges and agrees that its
obligations under this Section 17.6 shall be absolute and unconditional under
any and all circumstances and shall be paid and/or performed, as the case may
be, without notice or demand and without any abatement, reduction, diminution,
setoff, defense, counterclaim or recoupment whatsoever.
28
17.7 Environmental Costs.
If a Lease Event of Default shall have occurred and be continuing, and
whether or not this Lease shall have been terminated pursuant to Section 17.1,
Lessee shall pay directly to any third party (or at Lessor's election, reimburse
Lessor) for the cost of any environmental testing and/or remediation work
undertaken respecting any Property, as such testing or work is deemed
appropriate in the reasonable judgment of Lessor. Lessee shall pay all amounts
referenced in the immediately preceding sentence within ten (10) days of any
request by Lessor for such payment. The provisions of this Section 17.7 shall
not limit the obligations of Lessee under any Operative Agreement regarding
indemnification obligations, environmental testing, remediation and/or work.
17.8 Waiver of Certain Rights.
If this Lease shall be terminated pursuant to Section 17.1, Lessee
waives, to the fullest extent permitted by Law, (a) any notice of re-entry or
the institution of legal proceedings to obtain re-entry or possession; (b) any
right of redemption, re-entry or possession; (c) the benefit of any laws now or
hereafter in force exempting property from liability for rent or for debt; and
(d) any other rights which might otherwise limit or modify any of Lessor's
rights or remedies under this Article XVII.
17.9 Assignment of Rights Under Contracts.
If a Lease Event of Default shall have occurred and be continuing, and
whether or not this Lease shall have been terminated pursuant to Section 17.1,
Lessee shall upon Lessor's demand immediately assign, transfer and set over,
without recourse, to Lessor all of Lessee's right, title and interest in and to
each agreement executed by Lessee in connection with the acquisition,
installation, testing, use, development, construction, operation, maintenance,
repair, refurbishment and restoration of the Properties (including without
limitation all right, title and interest of Lessee with respect to all warranty,
performance, service and indemnity provisions), as and to the extent that the
same relate to the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties or any of them.
17.10 Remedies Cumulative.
The remedies herein provided shall be cumulative and in addition to
(and not in limitation of) any other remedies available at law, equity or
otherwise, including without limitation any mortgage foreclosure remedies.
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ARTICLE XVIII
18.1 Lessor's Right to Cure Lessee's Lease Defaults.
Lessor, without waiving or releasing any obligation or Lease Event of
Default, may (but shall be under no obligation to) remedy any Lease Event of
Default for the account and at the sole cost and expense of Lessee, including
without limitation the failure by Lessee to maintain the insurance required by
Article XIV, and may, to the fullest extent permitted by law, and
notwithstanding any right of quiet enjoyment in favor of Lessee, enter upon any
Property, and take all such action thereon as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of any lessee. All
out-of-pocket costs and expenses so incurred (including without limitation fees
and expenses of counsel), together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid by Lessor, shall be paid
by Lessee to Lessor on demand.
ARTICLE XIX
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option.
Subject to Section 19.2, in connection with any termination of this
Lease with respect to any Property pursuant to the terms of Section 16.2, or in
connection with Lessee's exercise of its Purchase Option, upon the date on which
this Lease is to terminate with respect to any Property, and upon tender by
Lessee of the amounts set forth in Sections 16.2(b) or 20.2, as applicable,
Lessor shall execute and deliver to Lessee (or to Lessee's designee) at Lessee's
cost and expense an assignment (by deed or other appropriate instrument) of
Lessor's entire interest in such Property, in each case in recordable form and
otherwise in conformity with local custom and free and clear of any Lessor Liens
attributable to Lessor but without any other warranties (of title or otherwise)
from Lessor. Such Property shall be conveyed to Lessee "AS-IS, "WHERE-IS" and in
then present physical condition.
19.2 No Purchase or Termination With Respect to Less than All of a
Property.
Lessee shall not be entitled to exercise its Purchase Option or the Sale
Option separately with respect to a portion of any Property consisting of Land,
Equipment, Improvements and/or any interest pursuant to a Ground Lease but shall
be required to exercise its Purchase Option or the Sale Option with respect to
an entire Property.
ARTICLE XX
20.1 Purchase Option or Sale Option-General Provisions.
Not less than one hundred twenty (120) days and no more than one
hundred eighty (180) days prior to the Expiration Date or (respecting the
Purchase Option only) any Payment
30
Date, Lessee may give Lessor irrevocable written notice (the "Election Notice")
that Lessee is electing to exercise either (a) the option to purchase all, but
not less than all, the Properties on the Expiration Date or on the Payment Date
specified in the Election Notice (the "Purchase Option") or (b) with respect to
an Election Notice given in connection with the Expiration Date only, the option
to remarket all, but not less than all, the Properties to a Person other than
Lessee or any Affiliate of Lessee and cause a sale of such Properties to occur
on the Expiration Date pursuant to the terms of Section 22.1 (the "Sale
Option"). Not more than two hundred (200) days prior to the final Expiration
Date, Lessor may give Lessee notice of Lessee's obligation to deliver the
Election Notice. If Lessee fails to give an Election Notice within the specified
time period prior to the Expiration Date and Lessor has not given Lessee notice
as specified in the preceding sentence, then Lessor shall give Lessee notice of
Lessee's obligation to deliver the Election Notice, and Lessee shall have five
(5) Business Days after receipt of such notice within which to make the Election
Notice. If Lessee elects, or is deemed to have elected, either the Purchase
Option or the Sale Option and fails to satisfy all related obligations of Lessee
pursuant to the Operative Agreements, then such failure shall be deemed to be a
Lease Event of Default. If Lessee does not give an Election Notice indicating
the Purchase Option or the Sale Option at least one hundred twenty (120) days
and not more than one hundred eighty (180) days prior to the Expiration Date,
then, unless such Expiration Date is the final Expiration Date to which the Term
may be extended, the term of this Lease shall be extended in accordance with
Section 2.2 hereof; if such Expiration Date is the final Expiration Date (and
Lessor has given Lessee notice of Lessee's obligation to deliver the Election
Notice but Lessee has not made its Election Notice within five (5) Business Days
after receipt of such notice from Lessor), then Lessee shall be deemed to have
elected the Purchase Option. If Lessee shall either (i) elect (or be deemed to
have elected) to exercise the Purchase Option or (ii) elect the Sale Option and
fail to cause all, but not less than all, the Properties to be sold in
accordance with the terms of Section 22.1 on the Expiration Date, then in either
case Lessee shall pay to Lessor on the date on which such purchase or sale is
scheduled to occur an amount equal to the Termination Value for all, but not
less than all, the Properties (which the parties do not intend to be a "bargain"
purchase price) and, upon receipt of such amounts and satisfaction of such
obligations, Lessor shall transfer to Lessee all of Lessor's right, title and
interest in and to all, but not less than all, the Properties in accordance with
Section 20.2.
20.2 Lessee Purchase Option.
Provided, no Default or Event of Default shall have occurred and be
continuing (other than those that will be cured by the payment of the
Termination Value for all the Properties) and provided, that the Election Notice
has been appropriately given specifying the Purchase Option, Lessee shall
purchase all the Properties on the Expiration Date or Payment Date at a price
equal to the Termination Value for such Properties (which the parties do not
intend to be a "bargain" purchase price).
Subject to Section 19.2, in connection with any termination of this
Lease with respect to any Property pursuant to the terms of Section 16.2, or in
connection with Lessee's exercise of its Purchase Option, upon the date on which
this Lease is to terminate with respect to a Property or all of the Properties,
and upon tender by Lessee of the amounts set forth in
31
Section 16.2(b) or this Section 20.2, as applicable, Lessor shall execute,
acknowledge (where required) and deliver to Lessee, at Lessee's cost and
expense, each of the following: (a) a termination or assignment (as requested by
the Lessee) of each applicable Ground Lease and special or limited warranty
Deeds conveying each Property (to the extent it is real property not subject to
a Ground Lease) to Lessee free and clear of the Lien of this Lease, the Lien of
the Credit Documents and any Lessor Liens; (b) a Bill of Sale conveying each
Property (to the extent it is personal property) to Lessee free and clear of the
Lien of this Lease, the Lien of the Credit Documents and any Lessor Liens and,
to the extent the following are agreed to by the Agent in its reasonable
discretion, such title affidavits and other documents as may be reasonably
requested by any title insurance underwriter issuing title insurance in
connection with the acquisition of each such Property by Lessee; (c) any real
estate tax affidavit or other document required by law to be executed and filed
in order to record the applicable Deed and/or the applicable Ground Lease
termination; and (d) FIRPTA affidavits. All of the foregoing documentation must
be in form and substance reasonably satisfactory to Lessor. The applicable
Property shall be conveyed to Lessee "AS-IS, WHERE-IS" and in then present
physical condition.
If any Property is the subject of remediation efforts respecting
Hazardous Substances at the Expiration Date which could materially and adversely
impact the Fair Market Sales Value of such Property (with materiality determined
in Lessor's discretion), then Lessee shall be obligated to purchase each such
Property pursuant to Section 20.2.
On the Expiration Date and/or any Payment Date on which Lessee has
elected to exercise its Purchase Option, Lessee shall pay (or cause to be paid)
to Lessor, the Agent and all other parties, as appropriate, the sum of all costs
and expenses incurred by any such party in connection with the election by
Lessee to exercise its Purchase Option and all Rent and all other amounts then
due and payable or accrued under this Lease and/or any other Operative
Agreement.
20.3 Third Party Sale Option.
(a) Provided, that (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the Election Notice has been
appropriately given specifying the Sale Option, Lessee shall undertake to
cause a sale of the Properties on the Expiration Date (all as specified in
the Election Notice) in accordance with the provisions of Section 22.1
hereof.
(b) In the event Lessee exercises the Sale Option then, as soon as
practicable and in all events not less than sixty (60) days prior to the
Expiration Date, Lessee at its expense shall cause to be delivered to
Lessor a Phase I environmental site assessment for each of the Properties
in accordance with the then most recent edition of the ASTM Protocols for
Commercial Real Estate Transactions, which shall be dated within thirty
(30) days from the date of delivery to Lessor, and prepared by an
environmental consultant reasonably acceptable to Lessor. Lessor (at the
direction of the Agent) shall elect whether the costs incurred respecting
the above-referenced Phase I environmental site assessment shall be paid by
either (i) sales proceeds from the Properties, (ii) Lessor
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(but only the extent amounts are available therefor with respect to the
Available Commitments and the Available Holder Commitments or each Lender
and each Holder approves the necessary increases in the Available
Commitments and the Available Holder Commitments to fund such costs) or
(iii) Lessee; provided, amounts funded by the Lenders and the Holders with
respect to the foregoing shall be added to the Property Cost of each
applicable Property; provided, further, amounts funded by Lessee with
respect to the foregoing shall be a part of (and limited by) the Maximum
Residual Guarantee Amount. In the event that Lessor shall not have received
such environmental site assessment by the date sixty (60) days prior to the
Expiration Date or in the event that such environmental assessment shall
reveal the existence of any material violation of Environmental Laws, other
material Environmental Violation or potential material Environmental
Violation (with materiality determined in each case by Lessor in its
reasonable discretion), then Lessee on the Expiration Date shall pay to
Lessor an amount equal to the Termination Value for all the Properties and
any and all other amounts due and owing hereunder. Upon receipt of such
payment and all other amounts due under the Operative Agreements, Lessor
shall transfer to Lessee all of Lessor's right, title and interest in and
to all the Properties in accordance with Section 19.1.
ARTICLE XXI
21.1 [Intentionally Omitted].
ARTICLE XXII
22.1 Sale Procedure.
(a) During the Marketing Period, Lessee, on behalf of Lessor, shall
obtain bids for the cash purchase of all the Properties in connection with
a sale to one (1) or more third party purchasers to be consummated on the
Expiration Date or such earlier date as is acceptable to the Agent and the
Lessee (the "Sale Date") for the highest price available, shall notify
Lessor promptly of the name and address of each prospective purchaser and
the cash price which each prospective purchaser shall have offered to pay
for each such Property and shall provide Lessor with such additional
information about the bids and the bid solicitation procedure as Lessor may
reasonably request from time to time. All such prospective purchasers must
be Persons other than any Credit Party or any Affiliate or Subsidiary of
any Credit Party. On the Sale Date, Lessee shall pay (or cause to be paid)
to Lessor and all other parties, as appropriate, all Rent and all other
amounts then due and payable or accrued under this Lease and/or any other
Operative Agreement and Lessor (at the direction of the Agent) shall elect
whether the costs and expenses incurred by Lessor and/or the Agent
respecting the sale of one or more Properties shall be paid by either (i)
sales proceeds from the Properties, (ii) Lessor (but only the extent
amounts are available therefor with respect to the Available Commitments
and the Available Holder Commitments or each Lender and each Holder
approves the necessary
33
increases in the Available Commitments and the Available Holder Commitments
to fund such costs and expenses) or (iii) Lessee; provided, amounts funded
by the Lenders and the Holders with respect to such costs and expenses
shall be added to the Property Cost of each applicable Property; provided,
further, amounts funded by Lessee with respect to such costs and expenses
shall be a part of (and limited by) the Maximum Residual Guarantee Amount.
Lessor may reject any and all bids and may solicit and obtain bids by
giving Lessee written notice to that effect; provided, however, that
notwithstanding the foregoing, Lessor may not reject the bids submitted by
Lessee if such bids, in the aggregate, are greater than or equal to the sum
of the Limited Recourse Amount for all the Properties, and represent bona
fide offers from one (1) or more third party purchasers. If the highest
price which a prospective purchaser or the prospective purchasers shall
have offered to pay for all the Properties on the Sale Date is less than
the sum of the Limited Recourse Amount for all the Properties or if such
bids do not represent bona fide offers from one (1) or more third parties
or if there are no bids, Lessor may elect to retain one or more of the
Properties by giving Lessee prior written notice of Lessor's election to
retain the same, and promptly upon receipt of such notice, Lessee shall
surrender, or cause to be surrendered, each of the Properties specified in
such notice in accordance with the terms and conditions of Section 10.1.
Upon acceptance of any bid, Lessor agrees, at Lessee's request and expense,
to execute a contract of sale with respect to such sale, so long as the
same is consistent with the terms of this Article 22 and provides by its
terms that it is nonrecourse to Lessor.
Unless Lessor shall have elected to retain one or more of the
Properties pursuant to the provisions of the preceding paragraph, Lessee
shall arrange for Lessor to sell all the Properties free and clear of the
Lien of this Lease and any Lessor Liens attributable to Lessor, without
recourse or warranty (of title or otherwise), for cash on the Sale Date to
the purchaser or purchasers offering the highest cash sales price, as
identified by Lessee or Lessor, as the case may be; provided, however,
solely as to Lessor or the Trust Company, in its individual capacity, any
Lessor Lien shall not constitute a Lessor Lien so long as Lessor or the
Trust Company, in its individual capacity, is diligently and in good faith
contesting, at the cost and expense of Lessor or the Trust Company, in its
individual capacity, such Lessor Lien by appropriate proceedings in which
event the applicable Sale Date, all without penalty or cost to Lessee,
shall be delayed for the period of such contest. To effect such transfer
and assignment, Lessor shall execute, acknowledge (where required) and
deliver to the appropriate purchaser each of the following: (a) special or
limited warranty Deeds conveying each such Property (to the extent it is
real property titled to Lessor) and an assignment of the Ground Lease
conveying the leasehold interest of Lessor in each such Property (to the
extent it is real property and subject to a Ground Lease) to the
appropriate purchaser free and clear of the Lien of this Lease, the Lien of
the Credit Documents and any Lessor Liens; (b) a Bill of Sale conveying
each such Property (to the extent it is personal property) titled to Lessor
to the appropriate purchaser free and clear of the Lien of this Lease, the
Lien of the Credit Documents and any Lessor Liens and, to the extent the
following are agreed to by the Agent in its reasonable discretion,
34
such title affidavits and other documents as may be reasonably requested by
any title insurance underwriter issuing title insurance in connection with
the acquisition of each such Property by the appropriate purchaser; (c) any
real estate tax affidavit or other document required by law to be executed
and filed in order to record each Deed and/or each Ground Lease assignment;
and (d) FIRPTA affidavits, as appropriate. All of the foregoing
documentation must be in form and substance reasonably satisfactory to
Lessor. Lessee shall surrender the Properties so sold or subject to such
documents to each purchaser in the condition specified in Section 10.1, or
in such other condition as may be agreed between Lessee and such purchaser.
Lessee shall not take or fail to take any action which would have the
effect of unreasonably discouraging bona fide third party bids for any
Property. If each of the Properties is not either (i) sold on the Sale Date
in accordance with the terms of this Section 22.1, or (ii) retained by
Lessor pursuant to an affirmative election made by Lessor pursuant to the
second sentence of the second paragraph of this Section 22.1(a), then (x)
Lessee shall be obligated to pay Lessor on the Sale Date an amount equal to
the aggregate Termination Value for all the Properties less any sales
proceeds received by the Lessor, and (y) Lessor shall transfer each
applicable Property to Lessee in accordance with Section 20.2.
(b) If the Properties are sold on a Sale Date to one (1) or more third
party purchasers in accordance with the terms of Section 22.1(a) and the
aggregate purchase price paid for all the Properties is less than the sum
of the aggregate Property Cost for all the Properties (hereinafter such
difference shall be referred to as the "Deficiency Balance"), then Lessee
hereby unconditionally promises to pay to Lessor on the Sale Date the
lesser of (i) the Deficiency Balance, or (ii) the Maximum Residual
Guarantee Amount for all the Properties. On a Sale Date if (x) Lessor
receives the aggregate Termination Value for all the Properties from one
(1) or more third party purchasers, (y) Lessor and such other parties
receive all other amounts specified in the last sentence of the first
paragraph of Section 22.1(a) and (z) the aggregate purchase price paid for
all the Properties on such date exceeds the sum of the aggregate Property
Cost for all the Properties, then Lessee may retain such excess. If one or
more of the Properties are retained by Lessor pursuant to an affirmative
election made by Lessor pursuant to the provisions of Section 22.1(a), then
Lessee hereby unconditionally promises to pay to Lessor on the Sale Date an
amount equal to the Maximum Residual Guarantee Amount for the Properties so
retained. Any payment of the foregoing amounts described in this Section
22.1(b) shall be made together with a payment of all other amounts
referenced in the last sentence of the first paragraph of Section 22.1(a).
(c) In the event that all the Properties are either sold to one (1) or
more third party purchasers on the Sale Date or retained by Lessor in
connection with an affirmative election made by Lessor pursuant to the
provisions of Section 22.1(a), then in either case on the applicable Sale
Date Lessee shall provide Lessor or such third party purchaser (unless
otherwise agreed by such third party purchaser) with (i) all permits,
certificates of occupancy, governmental licenses and authorizations
necessary to use, operate, repair, access and maintain each such Property
for the purpose it is being used by Lessee, and (ii) such manuals, permits,
easements, licenses, intellectual property, know-how, rights-of-
35
way and other rights and privileges in the nature of an easement as are
reasonably necessary or desirable in connection with the use, operation,
repair, access to or maintenance of each such Property for its intended
purpose or otherwise as Lessor or such third party purchaser(s) shall
reasonably request (and a royalty-free license or similar agreement to
effectuate the foregoing on terms reasonably agreeable to Lessor or such
third party purchaser(s), as applicable). All assignments, licenses,
easements, agreements and other deliveries required by clauses (i) and (ii)
of this paragraph (c) shall be in form reasonably satisfactory to Lessor or
such third party purchaser(s), as applicable, and shall be fully assignable
(including without limitation both primary assignments and assignments
given in the nature of security) without payment of any fee, cost or other
charge. Lessee shall also execute any documentation requested by Lessor or
such third party purchaser(s), as applicable, evidencing the continuation
or assignment of each Ground Lease.
22.2 Application of Proceeds of Sale.
In the event Lessee receives any proceeds of sale of any Property,
such proceeds shall be deemed to have been received in trust on behalf of Lessor
and Lessee shall promptly remit such proceeds to Lessor. Lessor shall apply the
proceeds of sale of any Property in the following order of priority:
(a) FIRST, to pay or to reimburse Lessor (and/or the Agent, as the
case may be) for the payment of all reasonable costs and expenses incurred
by Lessor (and/or the Agent, as the case may be) in connection with the
sale (to the extent Lessee has not satisfied its obligation to pay such
costs and expenses);
(b) SECOND, so long as the Credit Agreement is in effect and any Loans
or Holder Advances or any amount is owing to the Financing Parties under
any Operative Agreement, to the Agent to be applied pursuant to
intercreditor provisions among Lessor, the Lenders and the Holders
contained in the Operative Agreements; and
(c) THIRD, to Lessee.
22.3 Indemnity for Excessive Wear.
If the proceeds of the sale described in Section 22.1 with respect to
the Properties shall be less than the Limited Recourse Amount with respect to
the Properties, and at the time of such sale it shall have been reasonably
determined (pursuant to the Appraisal Procedure) that the Fair Market Sales
Value of the Properties shall have been impaired by greater than expected wear
and tear during the term of the Lease, Lessee shall pay to Lessor within ten
(10) days after receipt of Lessor's written statement (i) the amount of such
excess wear and tear determined by the Appraisal Procedure or (ii) the amount of
the Sale Proceeds Shortfall, whichever amount is less.
36
22.4 Appraisal Procedure.
For determining the Fair Market Sales Value of the Properties or any
other amount which may, pursuant to any provision of any Operative Agreement, be
determined by an appraisal procedure, Lessor and Lessee shall use the following
procedure (the "Appraisal Procedure"). Lessor and Lessee shall endeavor to reach
a mutual agreement as to such amount for a period of ten (10) days from
commencement of the Appraisal Procedure under the applicable section of the
Lease, and if they cannot agree within ten (10) days, then two (2) qualified
appraisers, one (1) chosen by Lessee and one (1) chosen by Lessor, shall
mutually agree thereupon, but if either party shall fail to choose an appraiser
within twenty (20) days after notice from the other party of the selection of
its appraiser, then the appraisal by such appointed appraiser shall be binding
on Lessee and Lessor. If the two (2) appraisers cannot agree within twenty (20)
days after both shall have been appointed, then a third appraiser shall be
selected by the two (2) appraisers or, failing agreement as to such third
appraiser within thirty (30) days after both shall have been appointed, by the
American Arbitration Association. The decisions of the three (3) appraisers
shall be given within twenty (20) days of the appointment of the third appraiser
and the decision of the appraiser most different from the average of the other
two (2) shall be discarded and such average shall be binding on Lessor and
Lessee; provided, that if the highest appraisal and the lowest appraisal are
equidistant from the third appraisal, the third appraisal shall be binding on
Lessor and Lessee. The fees and expenses of the appraiser appointed by Lessee
shall be paid by Lessee; the fees and expenses of the appraiser appointed by
Lessor shall be paid by Lessor (such fees and expenses not being indemnified
pursuant to Section 13 of the Participation Agreement); and the fees and
expenses of the third appraiser shall be divided equally between Lessee and
Lessor.
22.5 Certain Obligations Continue.
During the Marketing Period, the obligation of Lessee to pay Rent with
respect to the Properties (including without limitation the installment of Basic
Rent due on the Expiration Date) shall continue undiminished until payment in
full to Lessor of the sale proceeds, if any, the Maximum Residual Guarantee
Amount, the amount due under Section 22.3, if any, and all other amounts due to
Lessor or any other Person with respect to all Properties or any Operative
Agreement. Lessor shall have the right, but shall be under no duty, to solicit
bids, to inquire into the efforts of Lessee to obtain bids or otherwise to take
action in connection with any such sale, other than as expressly provided in
this Article XXII.
ARTICLE XXIII
23.1 Holding Over.
If Lessee shall for any reason remain in possession of a Property
after the expiration or earlier termination of this Lease as to such Property
(unless such Property is conveyed to Lessee), such possession shall be as a
tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were
37
the Lease then in full force and effect with respect to such Property and Lessee
shall continue to pay Basic Rent at the lesser of the highest lawful rate and
one hundred ten percent (110%) of the last payment of Basic Rent due with
respect to such Property prior to such expiration or earlier termination of this
Lease. Such Basic Rent shall be payable from time to time upon demand by Lessor
and such additional amount of Basic Rent shall be applied by Lessor ratably to
the Lenders and the Holders based on their relative amounts of the then
outstanding aggregate Property Cost for all Properties. During any period of
tenancy at sufferance, Lessee shall, subject to the second preceding sentence,
be obligated to perform and observe all of the terms, covenants and conditions
of this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to tenants at sufferance, to continue their occupancy and
use of such Property. Nothing contained in this Article XXIII shall constitute
the consent, express or implied, of Lessor to the holding over of Lessee after
the expiration or earlier termination of this Lease as to any Property (unless
such Property is conveyed to Lessee) and nothing contained herein shall be read
or construed as preventing Lessor from maintaining a suit for possession of such
Property or exercising any other remedy available to Lessor at law or in equity.
ARTICLE XXIV
24.1 Risk of Loss.
During the Term, unless Lessee shall not be in actual possession of
any Property in question solely by reason of Lessor's exercise of its remedies
of dispossession under Article XVII, the risk of loss or decrease in the
enjoyment and beneficial use of such Property as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by Lessee, and Lessor shall in no event be answerable or
accountable therefor.
ARTICLE XXV
25.1 Assignment.
(a) Lessee may not assign this Lease or any of its rights or
obligations hereunder or with respect to any Property in whole or in part
to any Person without the prior written consent of the Agent, the Lenders,
the Holders and Lessor, such consent to be granted or withheld in the sole
discretion of each such party.
(b) No assignment by Lessee (referenced in this Section 25.1 or
otherwise) or other relinquishment of possession to any Property shall in
any way discharge or diminish any of the obligations of Lessee to Lessor
hereunder and Lessee shall remain directly and primarily liable under the
Operative Agreements as to any rights or obligations assigned by Lessee or
regarding any Property in which rights or obligations have been assigned or
otherwise transferred.
38
25.2 Subleases.
(a) Promptly, but in any event within five (5) Business Days,
following the execution and delivery of any sublease permitted by this
Article XXV, Lessee shall notify Lessor of the execution of such sublease.
As of the date of each Lease Supplement, Lessee shall lease the respective
Properties described in such Lease Supplement from Lessor, and any existing
tenant respecting such Property shall automatically be deemed to be a
subtenant of Lessee and not a tenant of Lessor.
(b) Without the prior written consent of the Agent, any Lender, any
Holder or Lessor and subject to the other provisions of this Section 25.2,
Lessee may sublet any Property or portion thereof to any Person to the
extent, but only to the extent, that the requirements of Sections 25.2(a),
(b) and (c) are satisfied. Except as referenced in the immediately
preceding sentence, no other subleases shall be permitted unless consented
to in writing by Lessor, such consent not to be unreasonably withheld or
delayed. All subleasing shall be done on market terms and shall in no way
diminish the fair market value or useful life of any applicable Property.
(c) No sublease (referenced in this Section 25.2 or otherwise) or
other relinquishment of possession to any Property shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder and
Lessee shall remain directly and primarily liable under this Lease as to
such Property, or portion thereof, so sublet. During the Basic Term, the
term of any such sublease shall not extend beyond the Basic Term. During
any Renewal Term, the term of any such sublease shall not extend beyond
such Renewal Term. Each sublease shall be expressly subject and subordinate
to this Lease.
ARTICLE XXVI
26.1 No Waiver.
No failure by Lessor or Lessee to insist upon the strict performance
of any term hereof or to exercise any right, power or remedy upon a default
hereunder, and no acceptance of full or partial payment of Rent during the
continuance of any such default, shall constitute a waiver of any such default
or of any such term. To the fullest extent permitted by law, no waiver of any
default shall affect or alter this Lease, and this Lease shall continue in full
force and effect with respect to any other then existing or subsequent default.
ARTICLE XXVII
27.1 Acceptance of Surrender.
No surrender to Lessor of this Lease or of all or any portion of any
Property or of any part of any thereof or of any interest therein shall be valid
or effective unless agreed to and
39
accepted in writing by Lessor and no act by Lessor or the Agent or any
representative or agent of Lessor or the Agent, other than a written acceptance,
shall constitute an acceptance of any such surrender.
27.2 No Merger of Title.
There shall be no merger of this Lease or of the leasehold estate
created hereby by reason of the fact that the same Person may acquire, own or
hold, directly or indirectly, in whole or in part, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate, (b) any right, title or interest in any Property, (c) any Notes, or (d)
a beneficial interest in Lessor.
ARTICLE XXVIII
28.1 Limitations on Transfers By Lessor.
As further security for Lessor's obligations under this Lease and the
other Operative Agreements and in furtherance of the underlying transactions
contemplated thereby, Lessor, by operation of law or otherwise, shall not
assign, mortgage, pledge, hypothecate or otherwise transfer any portion of its
interest in and to any Property, except as such is contemplated pursuant to the
Operative Agreements (which shall include Liens granted in favor of the Agent
and any assignment, mortgage, pledge, hypothecation or other transfer of any
portion of any Property after the occurrence and during the continuance of any
Lease Event of Default and/or Agency Agreement Event of Default) or otherwise
with the written consent of Lessee and the Agent. Lessor acknowledges and agrees
that the prohibition in the preceding sentence is reasonable and supported by
consideration and is intended, among other things, to protect Lessee's interest
in the Properties.
ARTICLE XXIX
29.1 Notices.
All notices required or permitted to be given under this Lease shall
be in writing and delivered as provided in the Participation Agreement.
ARTICLE XXX
30.1 Miscellaneous.
Anything contained in this Lease to the contrary notwithstanding, all
claims against and liabilities of Lessee or Lessor arising from events
commencing prior to the expiration or earlier termination of this Lease shall
survive such expiration or earlier termination. If any provision of this Lease
shall be held to be unenforceable in any jurisdiction, such
40
unenforceability shall not affect the enforceability of any other provision of
this Lease and such jurisdiction or of such provision or of any other provision
hereof in any other jurisdiction.
30.2 Amendments and Modifications.
Neither this Lease nor any Lease Supplement may be amended, waived,
discharged or terminated except in accordance with the provisions of Section
12.4 of the Participation Agreement.
30.3 Successors and Assigns.
All the terms and provisions of this Lease shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
30.4 Headings and Table of Contents.
The headings and table of contents in this Lease are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
30.5 Counterparts.
This Lease may be executed in any number of counterparts, each of
which shall be an original, but all of which shall together constitute one (1)
and the same instrument.
30.6 GOVERNING LAW.
THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA, EXCEPT TO
THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR PROPERTY IS LOCATED ARE
REQUIRED TO APPLY.
30.7 Calculation of Rent.
All calculation of Rent payable hereunder shall be computed based on
the actual number of days elapsed over a year of three hundred sixty (360) days
or, to the extent such Rent is based on the Prime Lending Rate, three hundred
sixty-five (365) (or three hundred sixty-six (366), as applicable) days.
30.8 Memoranda of Lease and Lease Supplements.
This Lease shall not be recorded; provided, Lessor and Lessee shall
promptly record (a) a memorandum of this Lease and the applicable Lease
Supplement (in substantially the form of Exhibit B attached hereto) or a short
form lease (in form and substance reasonably satisfactory to Lessor) regarding
each Property promptly after the acquisition thereof in the local filing office
with respect thereto, in all cases at Lessee's cost and expense, and as required
under
41
applicable law to sufficiently evidence this Lease and any such Lease Supplement
in the applicable real estate filing records. Lessor (at the direction of the
Agent) shall elect whether the costs and expenses incurred by Lessor and/or the
Agent respecting the recordation of the above-referenced items shall be paid by
either (i) Lessor (but only the extent amounts are available therefor with
respect to the Available Commitments and the Available Holder Commitments or
each Lender and each Holder approves the necessary increases in the Available
Commitments and the Available Holder Commitments to fund such costs and
expenses) or (ii) Lessee; provided, amounts funded by the Lenders and the
Holders with respect to such costs and expenses shall be added to the Property
Cost of each applicable Property; provided, further, amounts funded by Lessee
with respect to such costs and expenses shall be a part of (and limited by) the
Maximum Residual Guarantee Amount.
30.9 Allocations between the Lenders and the Holders.
Notwithstanding any other term or provision of this Lease to the
contrary, the allocations of the proceeds of the Properties and any and all
other Rent and other amounts received hereunder shall be subject to the
inter-creditor provisions between the Lenders and the Holders contained in the
Operative Agreements (or as otherwise agreed among the Lenders and the Holders
from time to time).
30.10 Limitations on Recourse.
Notwithstanding anything contained in this Lease to the contrary,
Lessee agrees to look solely to Lessor's estate and interest in the Properties
(and in no circumstance to the Agent, the Lenders, the Holders 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 shareholder, owner or partner (direct or indirect) in or 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
Properties or any other liability of Lessor to Lessee. Nothing in this Section
shall be interpreted so as to limit the terms of Sections 6.1 or 6.2 or the
provisions of Section 12.9 of the Participation Agreement.
30.11 WAIVERS OF JURY TRIAL.
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.
30.12 Exercise of Lessor Rights.
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
42
Agreement and the other Operative Agreements. 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.
30.13 SUBMISSION TO JURISDICTION; VENUE.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION
TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS
MUTANDIS.
30.14 USURY SAVINGS PROVISION.
IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND CONTRACT IN
STRICT COMPLIANCE WITH APPLICABLE 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 SECTION 30.14 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 OPERATIVE AGREEMENTS 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
43
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 OPERATIVE AGREEMENTS 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.
[signature page follows]
44
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
and delivered as of the date first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely
as the Owner Trustee under the CRT Realty
Trust 1998-1, as Lessor
By: /s/ Val T. Orton
-----------------------------------------
Name: Val T. Orton
---------------------------------------
Title: Vice President
--------------------------------------
CONVERGYS CORPORATION, as Lessee
By: /s/ Robert P. Komin, Jr.
-----------------------------------------
Name: Robert P. Komin, Jr.
---------------------------------------
Title: Vice President Finance and Treasurer
--------------------------------------
Receipt of this original
counterpart of the foregoing
Lease is hereby acknowledged
as the date hereof
NATIONSBANK, N.A., as the Agent
By: /s/ John E. Williams
------------------------------
Name: John E. Williams
----------------------------
Title: Sr. Vice President
---------------------------
EXHIBIT A TO THE LEASE
LEASE SUPPLEMENT NO.
---
THIS LEASE SUPPLEMENT NO. (this "Lease Supplement") dated as of ,
--- ---------
199 between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
--
association, not individually, but solely as the Owner Trustee under the CRT
Realty Trust 1998-1, as lessor (the "Lessor"), and CONVERGYS CORPORATION, an
Ohio corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property described
on Schedule 1 hereto (the "Leased Property") and wishes to lease the same to
Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of December 31, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the CRT Realty
Trust 1998-1, the various banks and other lending institutions which are parties
thereto from time to time, as the Holders, the various banks and other lending
institutions which are parties thereto from time to time, as the Lenders, and
NationsBank, N.A., as the Agent for the Lenders and respecting the Security
Documents, as the Agent for the Lenders and Holders, to the extent of their
interests, as such may be amended, modified, extended, supplemented, restated
and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the description
of the Leased Property, with an Equipment Schedule attached hereto as Schedule
1-A, an Improvement Schedule attached hereto as Schedule 1-B and [a legal
description of the Land/a copy of the Ground Lease] attached hereto as Schedule
1-C. Effective upon the execution and delivery of this Lease Supplement by
Lessor and Lessee, the Leased Property shall be subject to the terms and
provisions of the Lease. Without further action, any and all additional
Equipment funded under the Operative Agreements and any and all additional
Improvements made to the Land shall be deemed to be titled to the Lessor and
subject to the terms and conditions of the Lease and this Lease Supplement.
This Lease Supplement shall constitute a mortgage, security agreement and
financing statement under the laws of the state in which the Leased Property is
situated. The maturity date of the obligations secured hereby shall be December
31, 2001, unless extended to not later than December 31, 2003.
A-1
For purposes of provisions of the Lease and this Lease Supplement related
to the creation and enforcement of the Lease and this Lease Supplement as a
security agreement and a fixture filing, Lessee is the debtor and Lessor is the
secured party. The mailing addresses of the debtor (Lessee herein) and of the
secured party (Lessor herein) from which information concerning security
interests hereunder may be obtained are set forth on the signature pages hereto.
A carbon, photographic or other reproduction of the Lease and this Lease
Supplement or of any financing statement related to the Lease and this Lease
Supplement shall be sufficient as a financing statement for any of the purposes
referenced herein.
SECTION 3. Use of Property. At all times during the Term with respect to
each Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.
SECTION 4. Ratification; Incorporation by Reference. Except as specifically
modified hereby, the terms and provisions of the Lease and the Operative
Agreements are hereby ratified and confirmed and remain in full force and
effect. The Lease is hereby incorporated herein by reference as though restated
herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement 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 Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies set
forth in the Lease, in the event that a court of competent jurisdiction rules
that the Lease constitutes a mortgage or other secured financing as is the
intent of the parties, then Lessor and Lessee agree that Lessee hereby grants a
Lien against the Leased Property WITH POWER OF SALE, and that, upon the
occurrence of any Lease Event of Default, Lessor shall have the power and
authority, to the extent provided by law, after prior notice and lapse of such
time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
A-2
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
For purposes of the provisions of this Lease Supplement concerning
this Lease Supplement constituting a security agreement and fixture filing, the
addresses of the debtor (Lessee herein) and the secured party (Lessor herein),
from whom information may be obtained about this Lease Supplement, are as set
forth on the signature pages hereto.
[The remainder of this page has been intentionally left blank.]
A-3
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,not individually, but solely
as the Owner Trustee under the CRT Realty
Trust1998-1, as Lessor
By: /s/ Val T. Orton
-----------------------------------------
Name: Val T. Orton
---------------------------------------
Title: Vice President
--------------------------------------
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Val T. Orton
Vice President
CONVERGYS Corporation, as Lessee
By: /s/ Robert P. Komin, Jr.
-----------------------------------------
Name: Robert P. Komin, Jr.
---------------------------------------
Title: Vice President Finance and Treasurer
--------------------------------------
Convergys Corporation
201 East Fourth Street, 102-1900
Cincinnati, Ohio 45201-2301
Attn: Robert P. Komin, Jr.
Vice President Finance and Treasurer
Receipt of this original
counterpart of the foregoing Lease
Supplement is hereby acknowledged
as the date hereof.
NATIONSBANK, N.A., as the Agent
By: /s/ John E. Williams
------------------------------
Name: John E. Williams
----------------------------
Title: Sr. Vice President
---------------------------
A-4
[CONFORM TO STATE LAW REQUIREMENTS]
STATE OF )
---------------
) ss:
COUNTY OF )
--------------
The foregoing Lease Supplement was acknowledged before me, the undersigned
Notary Public, in the County of this day of
--------------- ------
, by , as of FIRST SECURITY
- --------------- --------------- ---------------
BANK, NATIONAL ASSOCIATION, a national banking association, not individually,
but solely as the Owner Trustee under the CRT Realty Trust 1998-1, on behalf of
the Owner Trustee.
[Notarial Seal]
---------------------------------
Notary Public
My commission expires:
---------------
STATE OF )
---------------
) ss:
COUNTY OF )
---------------
The foregoing Lease Supplement was acknowledged before me, the undersigned
Notary Public, in the County of this day of
--------------- -------
, by , as of Convergys
- --------------- --------------- ---------------
Corporation, an Ohio corporation, on behalf of the corporation.
[Notarial Seal]
--------------------------------
Notary Public
My commission expires:
---------------
STATE OF )
---------------
) ss:
COUNTY OF )
---------------
The foregoing Lease Supplement was acknowledged before me, the undersigned
Notary Public, in the County of this day of ,
--------------- ------- ----------
by , as of NationsBank, N.A., a national banking
--------------- ---------------
association, as the Agent.
[Notarial Seal]
---------------------------------
Notary Public
My commission expires:
---------------
A-5
SCHEDULE 1
TO LEASE SUPPLEMENT NO.
-----
(Description of the Leased Property)
A-6
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO.
-----
(Equipment)
A-7
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO.
-----
(Improvements)
A-8
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO.
-----
[Land/
(Ground Lease)]
A-9
EXHIBIT B TO THE LEASE
[MODIFY OR SUBSTITUTE SHORT FORM LEASE AS
NECESSARY FOR LOCAL LAW REQUIREMENTS]
Recordation requested by:
Moore & Van Allen, PLLC
After recordation return to:
Moore & Van Allen, PLLC (WMA)
100 North Tryon Street, Floor 47
Charlotte, NC 28202-4003
Space above this line
for Recorder's use
- --------------------------------------------------------------------------------
OPEN-END MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND PROFITS AND MEMORANDUM
OF LEASE AND LEASE SUPPLEMENT NO. AND OPTION
-------
THIS OPEN-END MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND PROFITS AND
MEMORANDUM OF LEASE AND LEASE SUPPLEMENT NO. AND OPTION ("Memorandum"),
-------
dated as of , 199 , is by and between FIRST SECURITY BANK,
-------------- --
NATIONAL ASSOCIATION, a national banking association, not individually, but
solely as the Owner Trustee under the CRT Realty Trust 1998-1, with an office at
79 South Main Street, Salt Lake City, Utah 84111 (hereinafter referred to as
"Lessor") and CONVERGYS CORPORATION, an Ohio corporation, with an office at 201
East Fourth Street, 102-1900, Cincinnati, Ohio 45201-2301 (hereinafter referred
to as "Lessee").
WITNESSETH:
That for value received, Lessor and Lessee do hereby covenant, promise and
agree as follows:
1. Demised Premises and Date of Lease. Lessor has leased to Lessee, and
Lessee has leased from Lessor, for the Term (as hereinafter defined), certain
real property and other property located in Seminole County, Florida, which is
described in the attached Schedule 1 (the "Property"), pursuant to the terms of
a Lease Agreement between Lessor and Lessee dated as of December 31, 1998 (as
such may be amended, modified, extended, supplemented, restated and/or replaced
from time to time, "Lease") and a Lease Supplement No. between Lessor and
----
Lessee dated as of (the "Lease Supplement"). Capitalized terms used
-------
in this
B-1
Memorandum but not otherwise defined in this Memorandum shall have the meanings
set forth therefor in or pursuant to the Lease.
The Lease and the Lease Supplement shall constitute a mortgage and security
agreement and financing statement under the laws of the state in which the
Property is situated. The maturity date of the obligations secured thereby shall
be December 31, 2001, unless extended to not later than December 31, 2003.
For purposes of provisions of the Lease and the Lease Supplement related to
the creation and enforcement of the Lease and the Lease Supplement as a security
agreement and a fixture filing, Lessee is the debtor and Lessor is the secured
party. The mailing addresses of the debtor (Lessee herein) and of the secured
party (Lessor herein) from which information concerning security interests
hereunder may be obtained are as set forth on the signature pages hereof. A
carbon, photographic or other reproduction of this Memorandum or of any
financing statement related to the Lease and the Lease Supplement shall be
sufficient as a financing statement for any of the purposes referenced herein.
2. Term, Renewal, Extension and Purchase Option. The term of the Lease for
the Property ("Term") commenced as of , , andshall end as of
--------- ---------
, 2001, unless the Term is extended or earlier terminated in accordance
- ---------
with the provisions of the Lease. The Lease contains provisions for renewal and
extension. The tenant has a purchase option under the Lease.
3. Tax Payer Numbers.
Lessor's tax payer number: .
--------------
Lessee's tax payer number: .
--------------
4. Mortgage; Power of Sale; Additional Remedies. Without limiting any other
remedies set forth in the Lease, in the event that a court of competent
jurisdiction rules that the Lease constitutes a mortgage or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee has granted, pursuant to the terms of the Lease and the Lease Supplement,
a Lien against the Property WITH POWER OF SALE, and that, upon the occurrence
and during the continuance of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Property. Not in limitation
of the foregoing but in addition thereto, upon the occurrence and during the
continuance of any Lease Event of Default, Lessor shall have available to it all
of the remedies specified or otherwise referenced in Article XVII of the Lease
(including without limitation the remedy of foreclosure as specified in Section
17.2A of the Lease).
5. Effect of Memorandum. The purpose of this instrument is to give notice
of the Lease and the Lease Supplement and their respective terms, covenants and
conditions to the same extent as if the Lease and the Lease Supplement were
fully set forth herein. This Memorandum
B-2
shall not modify in any manner the terms, conditions or intent of the Lease or
the Lease Supplement and the parties agree that this Memorandum is not intended
nor shall it be used to interpret the Lease or the Lease Supplement or determine
the intent of the parties under the Lease or the Lease Supplement.
6. Grant of Lien.
(a) For all purposes except for financial accounting purposes, Lessor
and Lessee intend the Lease and the Lease Supplement to constitute a
finance lease and not a true lease. In order to secure the obligations of
Lessee now existing or hereafter arising under any and all Operative
Agreements, Lessee (pursuant to Section 7.1(b) of the Lease) conveyed,
granted, assigned, transferred, hypothecated, mortgaged and set over to
Lessor, for the benefit of all Financing Parties, a first priority security
interest in and lien (but subject to the security interest and lien in the
assets granted by Lessee in favor of the Agent in accordance with the
Security Documents) on all right, title and interest of Lessee (now owned
or hereafter acquired) in and to the Property (and any other property
subject to the Lease from time to time) to the extent such is personal
property and irrevocably MORTGAGED, GRANTED, BARGAINED, SOLD, ALIENED,
REMISED, RELEASED, CONFIRMED AND CONVEYED to Lessor, for the benefit of all
Financing Parties, a lien and mortgage (but subject to the lien and
mortgage in the assets granted by Lessee in favor of the Agent in
accordance with the Security Documents) on all right, title and interest of
Lessee (now owned or hereafter acquired) in and to the Property (and any
other property subject to the Lease from time to time) to the extent such
is a real property. The security interest, lien and mortgage in the assets
granted by Lessee in favor of Lessor have been assigned by Lessor to the
Agent and/or subject to additional security interests, liens, deeds of
trust and mortgages granted by Lessor to the Agent. Lessor and Lessee
further intend and agree that, for the purpose of securing the obligations
of Lessee and/or the Construction Agent now existing or hereafter arising
under the Operative Agreements, (i) the Lease and the Lease Supplement
shall be a security agreement and financing statement within the meaning of
Article 9 of the Uniform Commercial Code respecting the Property (and any
other property subject to the Lease from time to time) and all proceeds
(including without limitation insurance proceeds thereof) to the extent
such is personal property and an irrevocable grant and conveyance of a lien
and mortgage on the Property (and any other property subject to the Lease
from time to time) and all proceeds (including without limitation insurance
proceeds thereof) to the extent such is real property; (ii) the acquisition
of title by Lessor (or to the extent applicable, a leasehold interest
pursuant to a Ground Lease) in the Property (and any other property subject
to the Lease from time to time) referenced in Article II of the Lease
constitutes a grant by Lessee to Lessor of a security interest, lien and
mortgage in all of Lessee's right, title and interest in and to the
Property (and any other property subject to the Lease from time to time)
and all proceeds (including without limitation insurance proceeds thereof)
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, and an assignment of all rents,
profits and income produced by the Property (and any other property subject
to the Lease from time
B-3
to time); and (iii) 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 lien, security interest and
mortgage lien under applicable law. Lessee shall promptly take such actions
as Lessor may reasonably request (including without limitation the filing
of Uniform Commercial Code Financing Statements, Uniform Commercial Code
Fixture Filings and memoranda (or short forms) of the Lease and the various
Lease Supplements) to ensure that the lien, security interest, lien and
mortgage lien in each Property and the other items referenced above will be
deemed to be a perfected lien, security interest and mortgage lien of first
priority under applicable law and will be maintained as such throughout the
Term. The security agreements, financing statements, liens, security
interests, deeds of trust and mortgages provided in clauses (i), (ii) and
(iii) hereof shall be individually defined as the "Security Right" (as such
definition is referenced in Section 7.1(b) of the Lease), and individual
collateral secured by the corresponding Security Right as provided in
clauses (i), (ii) and (iii) hereof shall be defined herein as the
"Specified Collateral" (as such definition is referenced in Section 7.1(b)
of the Lease).
(b) In the event that Lessee's interest in the Property as provided in
the Lease and the Lease Supplement is recharacterized by a court of
competent jurisdiction, and last resort in the case of an appeal, as a
grant of an equitable mortgage by Lessee or as a financing instrument
provided in favor of Lessee or otherwise, and not as a leasehold estate in
substantial conformity with the terms and conditions contained in the Lease
and the Lease Supplement, then Lessee and Lessor agree that the Lease and
the Lease Supplement shall constitute a Security Right with respect to the
applicable Specified Collateral provided in clauses (i), (ii) and (iii) of
Section 6(a) and shall be enforceable in accordance with the terms and
conditions contained in the Lease and the Lease Supplement to the extent
that such terms and conditions may be enforceable pursuant to the
determination of such court of competent jurisdiction. Lessor and Lessee
further agree that the provisions of this Section 6 are for the benefit of,
and may be enforceable by Lessor, Lessee and each of the Financing Parties.
7. Future Advances.
Within twenty (20) years from the Initial Closing Date, the Financing
Parties may advance or loan additional sums (herein "Future Advances") to
Lessee. The Lease and the Lease Supplement shall secure not only existing
indebtedness and other obligations, but also such Future Advances, with interest
or Holder Yield thereon, whether such advances are obligatory or to be made at
the option of the Financing Parties, or otherwise, as are made within twenty
(20) years from the Initial Closing Date, to the same extent as if such Future
Advances were made on the Initial Closing Date. The total amount of indebtedness
and other obligations secured hereby may decrease or increase from time to time,
but the total unpaid balance so secured at any one time shall not exceed
$30,000,000.00, plus interest and Holder Yield thereon, and any disbursements
made for the payment of taxes, levies or insurance on the Properties, with
interest on such disbursements.
B-4
8. Lessee Purchase Option.
Pursuant to Article 20 of the Lease, Lessee has the option to purchase the
Property on the expiration date of the term of the Lease.
9. Assignment of Leases, Rents and Profits.
(a) Pursuant to Section 5.3(a) of the Lease, Lessee immediately and
absolutely sold, assigned, transferred, and set over unto Lessor, its successors
and assigns, the rights, interests and privileges which Lessee may have as
lessor in any and all leases now existing or hereafter made that affect the
Property. So long as no Lease Event of Default exists, Lessee shall have the
right under a license granted hereby to collect all rents and profits from the
leases.
(b) With respect to the assignment of the leases and agreements affecting
the Property and the rents and profits, Lessor shall not be obligated to perform
or discharge any obligation or duty to be performed or discharged by Lessee
under any of the leases or agreements assigned under this Lease. Pursuant to
Section 5.3(b) of the Lease, Lessee agreed to indemnify Lessor and the other
Financing Parties for, and to save them harmless from, any and all liability
arising from any such agreements or from such assignment. Such assignment shall
not place responsibility for the control, care, management or repair of the
Property upon Lessor, or make Lessor responsible or liable for any negligence in
the management, operation, upkeep, repair or control of the Property resulting
in loss or injury or death to any tenant, licensee, employee or stranger.
10. No Fee Interest.
This Memorandum is intended to only encumber the leasehold interests of
Lessor and Lessee in the Property and Lessor shall have no lien on the fee title
to the Property.
[The remainder of this page has beenintentionally left blank.]
B-5
IN WITNESS WHEREOF, the parties hereto have duly executed this instrument
as of the day and year first written.
LESSOR:
FIRST SECURITYBANK, NATIONAL
ASSOCIATION, not individually, but solely
as the Owner Trustee under the CRT Real
Estate Trust 1998-1
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Val T. Orton
Vice President
LESSEE:
CONVERGYS CORPORATION
By:
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Name:
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Title:
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Convergys Corporation
201 East Fourth Street, 102-1900
Cincinnati, Ohio 45201-2301
Attn: Robert P. Komin, Jr.
Vice President Finance and Treasurer
B-6
SCHEDULE 1
(Description of Property)
B-7
[CONFORM TO STATE LAW REQUIREMENTS]
STATE OF )
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) ss:
COUNTY OF )
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The foregoing Open-End Mortgage, Assignment of Leases, Rents and Profits
and Memorandum of Lease and Lease Supplement No. and Option was
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acknowledged before me, the undersigned Notary Public, in the County of
this day of , by , as
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of FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
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banking association, not individually, but solely as the Owner Trustee under the
CRT Realty Trust 1998-1, on behalf of the Owner Trustee.
[Notarial Seal]
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Notary Public
My commission expires:
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STATE OF )
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) ss:
COUNTY OF )
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The foregoing Open-End Mortgage, Assignment of Leases, Rents and Profits
and Memorandum of Lease and Lease Supplement No. and Option was
-----
acknowledged before me, the undersigned Notary Public, in the County of
this day of , by , as
- -------------- ----- -------------- --------------
of Convergys Corporation, an Ohio corporation, on behalf of
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the corporation.
[Notarial Seal]
---------------------------------
Notary Public
My commission expires:
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B-8