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MASTER LEASE
(REMEC, Inc. Trust 1998-A)
dated as of August 25, 1998
between
UNION BANK OF CALIFORNIA, N.A.,
not in its individual capacity, but solely as Certificate Trustee and as Lessor,
and
REMEC, INC.,
as Lessee
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Lease Financing of Real Estate
Located in San Diego, California
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This Lease (which includes two Lease Supplements) is encumbered by a lien in
favor of Union Bank of California, as Agent (the "AGENT") under a Loan Agreement
dated as of August 18, 1998 among Lessor, the Lenders, and Agent, as amended or
supplemented from time to time. This Lease has been executed in several
counterparts. To the extent, if any, that this Lease constitutes chattel paper
(as such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no lien on this Lease may be created through the
transfer or possession of any counterpart other than the original counterpart
containing the receipt therefor executed by Agent on the signature page hereof.
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; INTERPRETATION; FULL RECOURSE ............... 1
ARTICLE II LEASE OF LEASED PROPERTY; TERM ........................... 1
2.1 Acceptance and Lease of Leased Property .................. 1
2.2 Acceptance Procedure for Leased Property ................. 2
2.3 Term ..................................................... 2
2.4 Title .................................................... 2
ARTICLE III OTHER PROPERTY ........................................... 2
ARTICLE IV RENT ..................................................... 3
4.1 Basic Rent ............................................... 3
4.2 Supplemental Rent ........................................ 3
4.3 Method and Amount of Payment ............................. 3
4.4 Late Payment ............................................. 3
ARTICLE V NET LEASE ................................................ 4
ARTICLE VI UTILITY CHARGES .......................................... 5
ARTICLE VII CONDITION OF LEASED PROPERTY ............................. 5
ARTICLE VIII NON-INTERFERENCE ......................................... 6
8.1 Non-Interference ......................................... 6
8.2 Certain Duties and Responsibilities of Lessor ............ 6
ARTICLE IX MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS ........ 7
9.1 Maintenance and Repair; Compliance With Law............... 7
9.2 Improvements and Alterations to Leased Property .......... 7
9.3 Title to Alterations ..................................... 9
9.4 Maintenance and Repair Reports ........................... 9
9.5 Permitted Contests ....................................... 9
9.6 Warranty of Title ........................................ 10
9.7 Inspection ............................................... 10
9.8 Reports .................................................. 10
9.9 Liens .................................................... 11
ARTICLE X USE ...................................................... 11
ARTICLE XI INSURANCE ................................................ 11
11.1 Required Coverages ....................................... 11
11.2 Delivery of Insurance Certificates ....................... 13
ARTICLE XII ASSIGNMENT AND SUBLEASING ................................ 13
12.1 Assignment by Lessee ..................................... 13
12.2 Subletting ............................................... 13
ARTICLE XIII CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS ......... 14
13.1 Event of Loss; Condemnation or Casualty .................. 14
13.2 Application of Payments Relating to an Event of Loss ..... 14
13.3 Application of Certain Payments Relating to a Condemnation 15
13.4 Casualty ................................................. 15
13.5 Negotiations ............................................. 15
13.6 Environmental Matters .................................... 16
13.7 Notice of Environmental Matters .......................... 16
ARTICLE XIV [Intentionally Left Blank] ............................... 16
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ARTICLE XV OWNERSHIP, GRANT OF LIEN AND FURTHER ASSURANCES .......... 17
15.1 Grant of Lien and Security Interest....................... 17
15.2 Attorney-in-Fact ......................................... 17
ARTICLE XVI LEASE EVENTS OF DEFAULT .................................. 18
ARTICLE XVII ENFORCEMENT .............................................. 21
17.1 Remedies ................................................. 21
17.2 Proceeds of Sale; Deficiency ............................. 24
17.3 Deed of Trust Remedies ................................... 24
17.4 Remedies Cumulative; No Waiver; Consents.................. 25
ARTICLE XVIII RIGHT TO PERFORM FOR LESSEE 25
ARTICLE XIX EARLY TERMINATION OPTION AND OBLIGATION TO PURCHASE ...... 26
19.1 Early Termination Option ................................. 26
19.2 Required Purchase ........................................ 26
ARTICLE XX END OF TERM OPTIONS ...................................... 26
20.1 End of Term Options ...................................... 26
20.2 Election of Options ...................................... 27
ARTICLE XXI SALE OPTION .............................................. 27
21.1 Sale Option Procedures ................................... 27
21.3 Application of Net Sale Proceeds and Recourse Payments ... 29
21.4 Appraisal ................................................ 30
ARTICLE XXII MISCELLANEOUS ............................................ 30
22.1 Binding Effect; Successors and Assigns; Survival ......... 30
22.2 Severability ............................................. 30
22.3 Notices .................................................. 30
22.4 Amendment; Complete Agreements ........................... 30
22.5 Headings ................................................. 31
22.6 GOVERNING LAW ............................................ 31
22.7 Discharge of Lessee's Obligations by its Affiliates ...... 31
22.8 Liability of Lessor Limited .............................. 31
22.9 Estoppel Certificates .................................... 32
22.10 No Joint Venture ......................................... 32
22.11 No Accord and Satisfaction ............................... 32
22.12 No Merger ................................................ 32
22.13. Successor Lessor ......................................... 33
22.14. Survival ................................................. 33
22.15. Transfer of Leased Property .............................. 33
22.16. Enforcement of Certain Warranties ........................ 34
22.17. Security Interest in Funds ............................... 34
22.18. Recording of Deed of Trust and Memorandum of Lease ....... 34
22.19. Nature of Transaction .................................... 35
Exhibit A - Legal Description of the Leased Property
Exhibit B-1 - Form of Land Supplement
Exhibit B-2 - Form of Improvements Supplement
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MASTER LEASE
This MASTER LEASE dated as of August 25, 1998 (including all Lease
Supplements from time to time executed and delivered, this "LEASE"), between
UNION BANK OF CALIFORNIA, N.A., not in its individual capacity, but solely as
Certificate Trustee, as Lessor, and REMEC, INC., a California corporation, as
Lessee.
W I T N E S S E T H:
A. Lessor will, subject to the terms and conditions of the
Participation Agreement, purchase the Leased Property (legally described in
EXHIBIT A) on the Advance Date.
B. Lessor desires to lease to Lessee, and Lessee desires to lease
from Lessor, the Leased 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
DEFINITIONS; INTERPRETATION; FULL RECOURSE
For all purposes hereof, the capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in Appendix 1 to
that certain Participation Agreement dated as of even date herewith, among
Lessee, Lessor, Agent and the Participants identified therein (the
"PARTICIPATION AGREEMENT"). The rules of interpretation set forth in such
APPENDIX 1 shall also apply to this Lease. All obligations imposed on the
"Lessee" in this Lease shall be the full recourse liability of Lessee;
subject to the limitation on such recourse set forth in SECTION 21.3.
ARTICLE II
LEASE OF LEASED PROPERTY; TERM
2.1. ACCEPTANCE AND LEASE OF LEASED PROPERTY. On the Advance Date,
Lessor, subject to the satisfaction or waiver of the conditions set forth in
Article III of the Participation Agreement, hereby agrees to accept delivery
on such date of fee title to the Leased Property pursuant to the terms of the
Participation Agreement and the Lease Supplements and simultaneously to lease
to Lessee for the Lease Term, Lessor's interest in the Leased Property
together with Lessor's interest in any Alterations which thereafter may be
constructed thereon pursuant to this Lease, and Lessee hereby agrees to lease
commencing on the Advance Date from Lessor for the Lease Term, Lessor's
interest in the Leased Property together with Lessor's interest in any
Alterations which thereafter may be constructed thereon pursuant to this
Lease and the Operative Documents.
2.2. ACCEPTANCE PROCEDURE FOR LEASED PROPERTY. Lessor hereby authorizes
one or more employees of Lessee, to be designated by Lessee, as the
authorized representative or representatives of Lessor to accept delivery on
behalf of Lessor of fee title to the Leased Property. Lessee hereby agrees
that such acceptance of delivery by such authorized representative or
representatives on the Advance Date and the execution and delivery by Lessee
of the Lease Supplements (in the form of EXHIBITS B-1 and B-2, appropriately
completed) with respect to the Leased Property shall, without further act,
constitute the irrevocable acceptance by Lessee of the Leased Property for
all purposes of this Lease and the other Operative Documents on the terms set
forth therein and herein.
2.3. TERM. The term of this Lease (the "LEASE TERM") shall begin on
the Advance Date and shall end on the date (such date, the "LEASE EXPIRATION
DATE") which is the earlier of: (i) the day preceding the fifth (5th)
anniversary of the Advance Date or, if the Lease Term is renewed in
accordance with ARTICLE XX hereof, the day preceding the tenth (10th)
anniversary of the Advance Date, (ii) the date on which this Lease is
terminated in accordance with the provisions hereof, or (iii) the Final
Maturity Date.
2.4. TITLE. The Leased Property is leased to Lessee without any
representation or warranty, express or implied, by Lessor, Agent, Arranger or
any Participant and subject to the rights of parties in possession, the
existing state of title (including the Permitted Exceptions), and all
Applicable Laws. Lessee shall not have any recourse against Lessor for any
defect in or exception to title to the Leased Property other than resulting
from Lessor Liens.
ARTICLE III
OTHER PROPERTY
Lessee may from time to time own or hold under lease from Persons other
than Lessor, furniture, trade fixtures, equipment and other tangible personal
property (including software) located on or about the Leased Property and
which personal property is not subject to this Lease. Lessor acknowledges
Lessee's right to finance and to secure under the UCC inventory, furnishings,
furniture, equipment, machinery, leasehold improvements and other personal
property located at the Leased Property so long as such UCC filings are not
recorded against the Leased Property and by their terms specifically exclude
any interest in the Leased Property. Lessor shall from time to time, upon
the reasonable request, and at the sole cost and expense of Lessee, which
request shall be accompanied by such supporting information and documents as
Lessor may reasonably require, promptly acknowledge in writing to Lessee or
other Persons that the particular items of furniture, trade fixtures and
equipment in question and which are located on the Leased Property are not
part of the Leased Property and that, subject to the rights of Lessor under
any other Operative Documents, Lessor does not own or have any other right or
interest in or to such furniture, trade fixtures and equipment. Lessor
agrees to execute as reasonably requested by Lessee in writing and at the
sole cost of Lessee, such waiver forms and releases from Lessor Liens (which
shall contain customary indemnities for the benefit of Lessor and other
protections including the right to treat such property as abandoned if not
timely removed by Lessee) in favor of any purchase money seller, lessor or
lender which has financed or is in the process of consummating such financing
of such personal property items.
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ARTICLE IV
RENT
4.1. BASIC RENT. Lessee shall pay to Lessor Basic Rent: (i) on each
Payment Date, (ii) on any date required under SECTIONS 14.1 or 20.1 or
ARTICLE XIX, and (iii) on any date on which this Lease terminates or upon
demand following a Lease Event of Default pursuant to SECTION 17.1.
4.2. SUPPLEMENTAL RENT. Lessee shall pay to Lessor (or if to a
Non-Party to such Person as shall be entitled thereto as expressly provided
herein or in any other Operative Document, and Lessor hereby directs Lessee,
on behalf of Lessor, to so pay any such Non-Party), any and all Supplemental
Rent promptly as the same shall become due and payable and, upon any failure
on the part of Lessee to pay any Supplemental Rent, Lessor shall have all
rights, powers and remedies provided for herein or by law or in equity or
otherwise in the case of nonpayment of Basic Rent. Lessee hereby reaffirms
that its obligation to pay Supplemental Rent shall include (i) the payment of
any and all Additional Costs, and (ii) all amounts determined to be due and
payable or otherwise subject to distribution pursuant to Article III of the
Loan Agreement in accordance with its terms. 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, upon 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 under any agreement with a third party
for nonpayment or late payment of such Supplemental Rent, all of which shall
also constitute Supplemental Rent.
4.3. METHOD AND AMOUNT OF PAYMENT. Basic Rent and Supplemental Rent
due any Party shall be paid by a wire transfer to Lessor at such place as
Lessor shall specify in writing to Lessee pursuant to Schedule II to the
Participation Agreement or Section 9.3 of the Participation Agreement;
PROVIDED, HOWEVER, that, so long as the Notes remain outstanding, Lessor
directs Lessee to pay Rent directly to the Agent. In lieu of such wire
transfer of Basic Rent and Supplemental Rent, Lessee may, subject to the
Required Participant's approval, provide for payment of such installments of
Basic Rent and Supplemental Rent by internal transfers of funds from accounts
maintained by Lessee with Agent into an account maintained by Agent for the
receipt of Basic Rent and Supplemental Rent hereunder. Each payment of Basic
Rent due any Party shall be made by Lessee prior to 1:00 p.m. Los Angeles,
California time (and payments made after such time shall be deemed to have
been made on the next day) at the place of payment in funds consisting of
lawful currency of the United States of America which shall be immediately
available on the scheduled date when such payment shall be due. Supplemental
Rent due any Non-Party shall be paid as provided in the Operative Documents,
or if no specific requirement is set forth in the Operative Documents, as
required by such Non-Party, but in any event before the delinquency date for
such payment.
4.4. LATE PAYMENT. If any Basic Rent shall not be paid when due,
Lessee shall pay to Lessor, or if any Supplemental Rent payable to a Party,
or any Indemnitee is not paid when due, Lessee shall pay to such Person as
shall be entitled thereto, in each case as Supplemental
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Rent, interest at the Overdue Rate (to the maximum extent permitted by
Applicable Laws) on such overdue amount from and including the due date
thereof (without regard to any applicable grace period) to but excluding the
Business Day of payment thereof.
ARTICLE V
NET LEASE
This Lease shall constitute a net lease and, notwithstanding any other
provision of this Lease, it is intended that Basic Rent, Supplemental Rent,
the Lease Balance and all other amounts due and payable under the Operative
Documents shall be paid without counterclaim, setoff, deduction or defense of
any kind and without abatement, suspension, deferment, diminution or
reduction of any kind, and Lessee's obligation to pay all such amounts
throughout the Lease Term is absolute and unconditional. The obligations and
liabilities of Lessee hereunder shall in no way be released, discharged or
otherwise affected for any reason, including, to the maximum extent permitted
by Applicable Laws: (a) any defect in the condition, merchantability, design,
construction, quality or fitness for use of any portion of the Leased
Property, or any failure of the Leased Property to comply with all Applicable
Laws, including any inability to occupy or use the Leased Property by reason
of such non-compliance; (b) any damage to, abandonment, loss, contamination
of or Release from or destruction of or any requisition or taking of the
Leased Property or any part thereof, including eviction; (c) any restriction,
prevention or curtailment of or interference with any use of the Leased
Property or any part thereof, including eviction; (d) any defect in title to
or rights to the Leased Property or any Lien on such title or rights or on
the Leased Property; (e) any change, waiver, extension, indulgence or other
action or omission or breach in respect of any obligation or liability of or
by Any Party; (f) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings relating to
Lessee, any Party or any other Person, or any action taken with respect to
this Lease by any trustee or receiver of Lessee, any Party or any other
Person, or by any court, in any such proceeding; (g) any claim that Lessee
has or might have against any Person, including Lessor or any other Party;
(h) any failure on the part of Lessor to perform or comply with any of the
terms of this Lease, any other Operative Document or of any other agreement
whether or not related to the Overall Transaction; (i) any invalidity or
unenforceability or disaffirmance against or by Lessee of this Lease or any
provision hereof or any of the other Operative Documents or any provision of
any thereof; (j) the impossibility of performance by Lessee, Lessor or both;
(k) any action by any court, administrative agency or other Authority; any
restriction, prevention or curtailment of or any interference with any use of
the Leased Property or any part thereof; (l) the failure of Lessee to achieve
any accounting or tax benefits or the characterization of the transaction
intended by SECTION 22.19 of this Lease and Section 2.7 of the Participation
Agreement; or (m) any other occurrence whatsoever, whether similar or
dissimilar to the foregoing, whether or not Lessee shall have notice or
knowledge of any of the foregoing. Except as specifically set forth in
ARTICLE XIV, ARTICLE XIX or SECTION 20.1, this Lease shall be non-terminable
and noncancellable by Lessee for any reason whatsoever, and Lessee, to the
extent permitted by Applicable Laws, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender this Lease,
or to any diminution, abatement or reduction of Rent payable by Lessee
hereunder. If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of law or otherwise,
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except as expressly provided in ARTICLE XIV, Lessee shall, unless prohibited
by Applicable Laws, nonetheless pay to Lessor (or, in the case of
Supplemental Rent due to any Non-Party, to such Person as shall be entitled
thereto) an amount equal to each Rent payment (including the Lease Balance or
any other amount due and payable under any Operative Documents) at the time
and in the manner that such payment would have become due and payable under
the terms of this Lease if it had not been terminated in whole or in part.
Each payment of Rent and any payment of the Lease Balance made by Lessee
hereunder shall be final and, absent manifest error in the computation of the
amount thereof, Lessee shall not seek or have any right to recover all or any
part of such payment from any Party or any other party to any agreements
related thereto for any reason whatsoever. Lessee assumes the sole
responsibility for the condition, use, operation, maintenance, and management
of the Leased Property and Lessor shall have no responsibility in respect
thereof and shall have no liability for damage to the property of Lessee or
any subtenant of Lessee on any account or for any reason whatsoever other
than by reason of Lessor's willful misconduct or gross negligence or
negligence in the handling of funds; PROVIDED, HOWEVER, any liability of
Lessor with respect to any such willful misconduct or gross negligence or
negligence in the handling of funds shall not limit or affect Lessee's
absolute obligations as set forth in this ARTICLE V. Without affecting
Lessee's obligation to pay Basic Rent, Supplemental Rent, the Lease Balance
and all other amounts due and payable under the Operative Documents, or to
perform its obligations under the Operative Documents, Lessee may seek
damages or any other remedy at law or equity against Lessor for a breach by
Lessor of its obligations under this Lease or the Participation Agreement.
ARTICLE VI
UTILITY CHARGES
Lessee shall pay or cause to be paid all charges for electricity, power,
gas, oil, water, telephone, sanitary sewer service and all other rents and
utilities used in or on the Leased Property during the Lease Term. Lessee
shall be entitled to receive any credit or refund with respect to any utility
charge paid by Lessee and the amount of any credit or refund received by
Lessor on account of any utility charges paid by Lessee, net of the costs and
expenses reasonably incurred by Lessor in obtaining such credit or refund,
shall be promptly paid over to Lessee. All charges for utilities imposed
with respect to the Leased Property for a billing period during which this
Lease expires or terminates (except pursuant to ARTICLE XIX SECTION 20.1(b)
hereof, in which case Lessee shall be solely responsible for all such
charges) shall be adjusted and prorated on a daily basis between Lessee and
any purchaser of the Leased Property, and each party shall pay or reimburse
the other for each party's pro rata share thereof; PROVIDED, that Lessor
shall not have any liability therefor.
ARTICLE VII
CONDITION OF LEASED PROPERTY
LESSEE ACKNOWLEDGES AND AGREES THAT, ALTHOUGH LESSOR WILL OWN AND HOLD
RECORD TITLE TO THE LEASED PROPERTY, LESSEE IS SOLELY
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RESPONSIBLE FOR THE LEASED PROPERTY AND ANY ALTERATIONS. The Leased Property
is let by Lessor "AS IS" in its present condition, subject to (a) any rights
of any parties in possession thereof, (b) the state of the title thereto
existing at the time Lessor acquired its interest in the Leased Property, (c)
any state of facts which an accurate survey or physical inspection might show
(including any survey delivered on or prior to the Advance Date), (d) all
Applicable Laws, and (e) any violations of Applicable Laws which may exist at
the commencement of the Lease Term. Lessee has examined the Leased Property
and (insofar as Lessor is concerned) has found the same to be satisfactory.
NONE OF LESSOR, AGENT, ARRANGER NOR ANY PARTICIPANT HAS MADE OR SHALL BE
DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR
SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE TO THE
LEASED PROPERTY OR TO THE VALUE, MERCHANTABILITY, HABITABILITY, CONDITION, OR
FITNESS FOR USE OF THE LEASED PROPERTY, OR ANY PART THEREOF, OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE LEASED PROPERTY, OR ANY PART THEREOF, AND NONE OF LESSOR, AGENT, ARRANGER
NOR ANY PARTICIPANT SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREIN OR THE FAILURE OF THE LEASED PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY APPLICABLE LAWS, except that Lessor hereby represents and warrants
that the Leased Property, is and shall be free of Lessor Liens. Lessee has
been afforded full opportunity to inspect the Leased Property, is 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 discussed in the preceding sentence, as between Lessor, Agent,
Arranger and the Participants, on the one hand, and Lessee, on the other, are
to be borne by Lesse. The provisions of this ARTICLE VII have been
negotiated, and, except to the extent otherwise expressly stated, the
foregoing provisions are intended to be a complete exclusion and negation of
any representations or warranties by any of Lessor, Agent, Arranger or the
Participants, express or implied, with respect to the Leased Property (or any
interest therein), that may arise pursuant to any law now or hereafter in
effect or otherwise.
ARTICLE VIII
NON-INTERFERENCE
8.1. NON-INTERFERENCE. Except as provided for at ARTICLE XVIII and so
long as no Lease Event of Default has occurred and is continuing, Lessor
covenants that it will not interfere in Lessee's or any of its permitted
subtenants' use of the Leased Property in accordance with this Lease during
the Lease Term; it being agreed that Lessee's remedies for breach of the
foregoing covenant shall be limited to a claim for damages or the
commencement of proceedings to enjoin such breach. Such right is independent
of and shall not affect Lessee's obligations hereunder and under the other
Operative Documents or Lessor's or any other Person's rights otherwise to
initiate legal action to enforce the obligations of Lessee under this Lease.
8.2. CERTAIN DUTIES AND RESPONSIBILITIES OF LESSOR. Lessor undertakes
to perform such duties and only such duties as are specifically set forth
herein and in the other Operative
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Documents, and no implied covenants or obligations shall be read into this
Lease against Lessor, and Lessor agrees that it shall not, nor shall it have
a duty to, manage, control, use, sell, maintain, insure, register, lease,
operate, modify, dispose of or otherwise deal with the Leased Property or any
other part of the Trust Estate in any manner whatsoever, except as required
by the terms of the Operative Documents and as otherwise provided herein.
ARTICLE IX
MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS
9.1. MAINTENANCE AND REPAIR; COMPLIANCE WITH LAW. Lessee, at its own
expense, shall at all times (a) maintain the Leased Property in at least its
current condition, subject to ordinary wear and tear, and in any event at
least as good as the condition of similar buildings owned or leased by Lessee
or its Affiliates and in good repair and condition and free from nuisance;
(b) except to the extent SECTION 9.5 shall apply, maintain, manage and
monitor the Leased Property in accordance with all Applicable Laws and
Regulations, whether or not such maintenance requires structural
modifications; (c) comply with the Insurance Requirements which are in effect
at any time with respect to the Leased Property or any part thereof; (d)
maintain, manage and monitor the Leased Property in accordance with all
applicable contracts, including service contracts and insurance contracts;
(e) conduct all scheduled maintenance of the Leased Property in conformity
with maintenance and repair guidelines comparable to guidelines of Lessee or
its Affiliates for similar properties owned by Lessee and/or its Affiliates;
(f) use the buildings located on the Land only as administrative, marketing,
research, and development and manufacturing buildings and cause the Leased
Property to have at all times the capacity and functional ability to be used,
on a continuing basis and in commercial operation, as administrative,
marketing, research, and development and manufacturing buildings; (g) make
all necessary or appropriate repairs, replacements and renewals of the Leased
Property or any part thereof which may be required to keep the Leased
Property in the condition required by the preceding CLAUSES (a) through (f),
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, and including, without limitation,
repairs, replacements and renewals that would constitute capital expenditures
under GAAP if incurred by an owner of property; and (h) procure, maintain and
comply in all material respects with all material licenses, permits, orders,
approvals, consents and other authorizations required for the construction,
use, maintenance and operation of the Leased Property and for the use,
operation, maintenance, repair and restoration of the Improvements. Lessee
waives any right that it may now have or hereafter acquire to (x) require
Lessor to maintain, repair, replace, alter, remove or rebuild all or any part
of the Leased Property or (y) make repairs at the expense of Lessor pursuant
to any Applicable Laws and Regulations or other agreements.
9.2. IMPROVEMENTS AND ALTERATIONS TO LEASED PROPERTY.
(a) (i) Lessee, at Lessee's own cost and expense, shall make
alterations, improvements and additions to the Leased Property and/or any
part thereof and substitutions and replacements therefor (collectively,
"ALTERATIONS") which are: (A) necessary to repair or maintain the Leased
Property in the condition required by SECTION 9.1; (B) necessary in order for
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the Leased Property to be in compliance with Applicable Laws; or (C)
necessary to restore the Leased Property to its condition existing prior to a
Casualty or Condemnation to the extent required pursuant to ARTICLE XIII; and
(ii) so long as no Lease Event of Default or Lease Default has occurred and
is continuing, Lessee, at Lessee's own cost and expense, may undertake
Alterations on the Leased Property so long as such Alterations comply with
Applicable Laws and with SECTION 9.1 and SUBSECTION (B) of this SECTION 9.2.
(b) The making of any Alterations must be in compliance with the
following requirements:
(i) No such Alterations with a cost exceeding $500,000
shall be made or undertaken except upon not less than thirty
days' prior written notice to Lessor.
(ii) Lessee shall not make any Alterations in violation of
the terms of any restriction, easement, condition or covenant or
other matter affecting title to the Leased Property.
(iii) No Alterations shall be undertaken until Lessee shall
have procured and paid for, so far as the same may be required
from time to time, all permits and authorizations relating to
such Alterations of all municipal and other Authorities having
jurisdiction over the Leased Property. Lessor, at Lessee's
expense, shall join in the application for any such permit or
authorization and execute and deliver any document in connection
therewith, whenever such joinder is necessary or advisable.
(iv) The Alterations shall be expeditiously completed in a
good and workmanlike manner and in compliance with all Applicable
Laws and Regulations then in effect and the standards imposed by
any insurance policies required to be maintained hereunder.
(v) All Alterations shall, when completed, be of such a
character as to not materially adversely affect the fair market
value, utility, remaining economic useful life or residual value
of the Leased Property from their fair market value, utility,
remaining economic useful life or residual value immediately
prior to the making thereof or, in the case of Alterations being
made by virtue of a Casualty or Condemnation, immediately prior
to the occurrence of such Casualty or Condemnation. If requested
by Required Participants, Lessor may engage an appraiser of
nationally recognized standing, at Lessee's sole cost and
expense, to determine (by appraisal methods satisfactory to the
Required Participants) the projected Fair Market Value of the
Leased Property following completion of the Alterations relating
thereto.
(vi) Lessee shall have made adequate arrangements for
payment of the cost of all Alterations when due so that the
Leased Property shall at all times be free of Liens for labor and
materials supplied or claimed to have been supplied to the Leased
Property, other than Permitted Liens; PROVIDED, that Lessee shall
have the right to engage in Permitted Contests in accordance with
SECTION 9.5.
(vii) The Alterations must be located solely on the Land.
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9.3. TITLE TO ALTERATIONS. Title to the following described
Alterations shall without further act vest in Lessor and shall be deemed to
constitute a part of the Leased Property and be subject to this Lease:
(a) Alterations that are Nonseverable; and
(b) Alterations that are required to be made pursuant to the
terms of SECTION 9.1 or 9.2(a)(i) hereof.
(c) Alterations that are in replacement of or in substitution
for a portion of any Improvements existing on the date of this Lease.
Lessee, at Lessor's request, shall execute and deliver any deeds, bills
of sale, assignments or other documents of conveyance reasonably necessary to
evidence the vesting of title in and to such Alterations to Lessor.
If such Alterations are not within any of the categories set forth in
CLAUSES (a),(b) and (c) of this SECTION 9.3, then title to such Alterations
shall vest in Lessee and such Alterations shall not be deemed to be
Alterations which are part of the Leased Property.
All Alterations to which Lessee shall have title may, so long as removal
thereof shall not result in the violation of any Applicable Laws and no Lease
Event of Default or Lease Default is continuing, be removed at any time by
Lessee. Lessee agrees to notify Lessor in writing at least 30 days before it
removes any Alterations and Lessee shall at its expense repair any damage to
the Leased Property caused by the removal of such Alterations. Lessor (or
the purchaser of the Leased Property) may purchase from Lessee Alterations
(if not already owned by Lessor) which Lessee notifies Lessor that Lessee
intends to remove from the Leased Property prior to the return of the Leased
Property to Lessor or sale of the Leased Property, which purchase shall be at
the fair market value of such Alterations as determined by the Appraiser at
the time of such purchase. Title to any Alterations shall vest in Lessor (or
the purchaser of the applicable Leased Property) if not removed from the
Leased Property by Lessee prior to the return of the Leased Property to
Lessor or sale of the Leased Property.
9.4. MAINTENANCE AND REPAIR REPORTS. Lessee shall keep reports in
sufficient detail, and as customary for owners of commercial real estate, to
indicate the nature and date of major work done. Such reports shall be made
available at Lessee's office to Lessor upon reasonable request. Lessee shall
give notice to Lessor of any Condemnation or Casualty, the cost to repair
which is reasonably expected by Lessee to exceed $500,000, promptly after
Lessee has knowledge thereof.
9.5. PERMITTED CONTESTS. If, to the extent and for so long as: (a)
Lessee prosecutes a Permitted Contest for review of any Applicable Laws or
any Governmental Action relating to the Leased Property or to the operation
or maintenance thereof, or (b) compliance with such Applicable Laws or such
Governmental Action shall have been excused or exempted by a valid
nonconforming use permit, waiver, extension or forbearance, Lessee shall not
be required to comply with such Applicable Laws or such Governmental Action
but only if and so long as such test, challenge, appeal, proceeding or
noncompliance shall in the reasonable opinion of Lessor,
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acting at the direction of the Required Participants, constitute a Permitted
Contest. Lessor will not be required to join in any Permitted Contest
pursuant to this SECTION 9.5 unless a provision of any Applicable Laws
requires, or, in the good faith opinion of Lessee, it is helpful to Lessee,
that such proceedings be brought by or in the name of Lessor; and in that
event, Lessor will join in the proceedings or permit them or any part thereof
to be brought in its name if and so long as no Lease Event of Default is
continuing and Lessee pays all related out-of-pocket expenses and reasonable
allocated internal costs of Lessor and provides to Lessor adequate
indemnification.
9.6. WARRANTY OF TITLE.
(a) Lessee agrees that, except as otherwise provided herein and
subject to the terms of SECTION 9.5 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 the Leased Property
or any Alterations to the Leased Property, or any Lien, attachment, levy or
claim with respect to the Rent or with respect to any amounts held by Agent
pursuant to the Loan Agreement or the other Loan Documents, other than
Permitted Liens and Lessor 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 of the Leased Property or any part thereof.
9.7. INSPECTION. Upon five (5) Business Days prior notice to Lessee,
Lessor or its authorized representatives (the "INSPECTING PARTIES") may
inspect (a) the Leased Property and (b) the books and records of Lessee
relating to the Leased Property and make copies and abstracts therefrom. All
such inspections shall be at the expense of the Inspecting Parties, except
that if a Lease Event of Default or Lease Default has occurred and is
continuing, Lessee shall reimburse the Inspecting Parties for the reasonable
costs of such inspections. Lessee shall furnish to the Inspecting Parties
statements accurate in all material respects regarding the condition and
state of repair of the Leased Property, at such times and as may be
reasonably requested. No inspection shall unreasonably interfere with
Lessee's operations or the operations of any permitted sublessee of the
Leased Property. None of the Inspecting Parties shall have any duty to make
any such inspection or inquiry. None of the Inspecting Parties shall incur
any liability or obligation by reason of making any such inspection or
inquiry unless and solely to the extent such Inspecting Party causes damage
to the Leased Property or any property of Lessee or any other Person during
the course of such inspection, and then only to the extent of the actual cost
to repair such damage.
9.8. REPORTS. To the extent permissible under Applicable Laws, Lessee
shall prepare and file in timely fashion, or, where Lessor shall be required
to file, Lessee shall prepare and make available to Lessor within a
reasonable time prior to the date for filing and Lessor shall file, any
reports with respect to the condition or operation of the Leased Property
that shall be required to be filed with any Authority.
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9.9. LIENS. Lessee will not directly or indirectly create, incur,
assume or suffer to exist any Lien (other than Permitted Liens) on or with
respect to (i) any of the Leased Property or any portion of thereof,
Lessor's title thereto, or any interest therein, or (ii) this Lease or any of
Lessor's, Agent's, or any Participant's interest in all or any portion of the
Leased Property, their respective interests in this Lease or the Overall
Transaction. Lessee, at its own expense, will promptly pay, satisfy and
otherwise take such actions as may be necessary to keep this Lease free and
clear of, and duly to discharge, eliminate or bond in a manner reasonably
satisfactory to Lessor, Agent and the Required Participants, any such Lien
not accepted above if the same shall arise at any time. Lessee will notify
Lessor in writing promptly upon becoming aware of any Tax or other Lien
(other than any Permitted Lien) that shall attach to the Leased Property,
Lessor's, Agent's, or any Participant's interest in all or any portion of the
Leased Property or their respective interests in this Lease or the Overall
Transaction and the full particulars thereof.
ARTICLE X
USE
The Leased Property shall be used only as administrative, marketing,
research, and development and manufacturing buildings. Lessee shall not use
the Leased Property or any part thereof for any purpose or in any manner that
would materially adversely affect the Fair Market Value, utility, remaining
useful life or residual value of the Leased Property or that would create a
materially increased risk of environmental liability or that would violate or
conflict with, or constitute or result in a violation or default under (a)
any Applicable Laws whether now existing or hereafter in effect, foreseen or
unforeseen, except to the extent permitted by SECTION 9.5, (b) the Insurance
Requirements, or (c) any Operative Document. Lessee will cause each of its
guests and invitees acting upon the Leased Property to exercise reasonable
care and prudence. Lessee shall pay, or cause to be paid, all charges and
costs required in connection with the use of the Leased Property as
contemplated by this Lease and the Participation Agreement. Lessee shall
not, and shall not permit any other Person to, use or develop the Leased
Property or any portion thereof for residential uses. Lessee shall not
commit or permit any waste of the Leased Property or any part thereof or take
any act or fail to take any act which would cause or permit a nuisance to
exist or occur upon the Leased Property.
ARTICLE XI
INSURANCE
11.1. REQUIRED COVERAGES. Lessee will keep insured all property
of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the kinds
and in the amounts customarily insured against by such corporations, and
carry such other insurance as is usually carried by such corporations;
PROVIDED, that in any event Lessee will maintain:
(a) COMPREHENSIVE GENERAL LIABILITY INSURANCE. Combined single
limit insurance against claims for third-party bodily injury, including death
and third-party property
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damage occurring on, in or about the Leased Property (including adjoining
streets and sidewalks) at least equal to $1,000,000 per occurrence and a
minimum of $5,000,000 excess of such coverage. Such coverage may be subject
to deductibles or self-insured retentions up to an amount that is customarily
carried by a company of similar size and engaged in business similar to
Lessee and shall be otherwise acceptable to the Required Participants.
(b) PROPERTY INSURANCE. Insurance against loss or damage
covering the Improvements or any portion thereof by reason of any Peril (as
defined below) in an amount (subject to such deductibles in such minimum
amounts as is carried by corporations owning and/or operating similar
properties) otherwise acceptable to the Required Participants; PROVIDED,
HOWEVER, that at no time shall the amount of such coverage be less than the
replacement cost of the Improvements, including any costs that may be
required to cause the Improvements to be reconstructed to then current
Applicable Laws. The term "PERIL" shall mean, collectively, fire, lightning,
flood (to the extent required by law), windstorm, hail, explosion, vandalism
and malicious mischief, damage from aircraft, vehicles and smoke and all
other perils covered by the "all risk endorsement" then in use in the State
of California. Alternatively, at Lessee's election, such insurance shall be
on a coverage form reasonably available in the commercial insurance market at
the time of the most recent policy reviewed.
(c) WORKERS' COMPENSATION INSURANCE. Lessee shall, in the
construction of any Alterations and the operation of the Leased Property,
comply with the Applicable Laws regarding workers' compensation and protect
each Party against any liability under such Applicable Laws arising out of
injury to employees of Lessee or its construction contractors. Lessee is not
hereby obligated to insure or indemnify against such liability as described
in this SECTION 11.1(c) for injury to employees of any Party.
(d) GENERAL REQUIREMENTS. Such insurance shall be written by
reputable insurance companies that are financially sound and solvent and
otherwise reasonably appropriate considering the amount and type of insurance
being provided by such companies. Any insurance company selected by Lessee
shall be rated in A.M. Best's Insurance Guide or any successor thereto (or if
there be none, an organization having a similar national reputation) and
shall have a general policyholder rating of "A" (or comparable rating for a
rating by an organization other than A.M. Best) and a financial rating of at
least "X" (or comparable rating for a rating by an organization other than
A.M. Best) or be otherwise acceptable to the Required Participants. In the
case of liability insurance maintained by Lessee, it shall name Lessor (both
in its individual capacity and as trustee), Agent, and each of the
Participants, as additional insureds and, in the case of property insurance
maintained by Lessee, it shall name Agent, as mortgagee and loss payee. The
insurance coverages required under this Section may be obtained under one or
more blanket policies covering Lessee and its Subsidiaries and/or covering
properties of Lessee and its Subsidiaries in addition to the Leased Property
and may be provided by a combination of primary insurance policies and excess
liability ("umbrella") insurance policies otherwise in compliance with this
SECTION 11.1. Each policy referred to in this SECTION 11.1 shall provide
that: (i) it will not be canceled, materially modified or its limits
reduced, or allowed to lapse without renewal, except after not less than 30
days' prior written notice to Lessor; (ii) the interests of the Parties shall
not be invalidated by any act or negligence of or breach of warranty or
representation by Lessee or any Person having an interest in the Leased
Property; (iii) such insurance is primary with respect to any other insurance
carried by or
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available to any Party; (iv) the insurer shall waive any right of
subrogation, setoff, counterclaim, or other deduction, whether by attachment
or otherwise, against Lessor; and (v) such policy shall contain a
cross-liability clause providing for coverage of each Party, as if separate
policies had been issued to each of them. Lessee will notify Lessor promptly
of any policy cancellation, reduction in policy limits, modification or
amendment.
11.2. DELIVERY OF INSURANCE CERTIFICATES. On or before the Advance
Date, Lessee shall deliver to Lessor certificates of insurance satisfactory
to Lessor evidencing the existence of all insurance required to be maintained
hereunder and setting forth the respective coverages, limits of liability,
carrier, policy number and period of coverage. Thereafter, throughout the
Lease Term, at the time each of Lessee's insurance policies is renewed (but
in no event less frequently than once each year on or before December 31 of
each year) or upon written request by Lessor following a Lease Event of
Default, Lessee shall deliver to Lessor certificates of insurance evidencing
that all insurance required by SECTION 11.1 to be maintained by Lessee with
respect to the Leased Property is in effect.
ARTICLE XII
ASSIGNMENT AND SUBLEASING
12.1. ASSIGNMENT BY LESSEE. Lessee may not assign this Lease or any of
its rights or transfer or delegate any of its obligations hereunder in whole
or in part to any Person, except that Lessee may sublease any of the Leased
Property or any portion thereof as permitted under SECTION 12.2.
12.2. SUBLETTING. Lessee may not assign, mortgage or pledge to any
Person, including an Affiliate of Lessee, at any time, in whole or in
part, any of its right, title or interest in, to or under this Lease or
any portion of the Leased Property and any such assignment, mortgage or
pledge shall be void. Lessee may from time to time, sublease, in whole
or in part, any of its right, title or interest in, to or under this
Lease or any portion of the Leased Property (including the Existing
Lease) to any Person and extend, modify or renew any sublease without
the approval of Lessor or Agent; PROVIDED, HOWEVER, that: (a) no
sublease or other relinquishment of possession of the Leased Property
shall in any way discharge or diminish any of Lessee's obligations to
Lessor hereunder, nor release or discharge, in whole or in part, Lessee
from any such obligations, and Lessee shall remain directly and
primarily liable under this Lease as to the Leased Property, or portion
thereof, so sublet; (b) each sublease shall expressly be made subject to
and subordinate to this Lease and to the rights of Lessor hereunder; (c)
each sublease shall expressly provide for the surrender of the
applicable Leased Property or portion thereof by the applicable
sublessee at the election of the Required Participants or Lessor (as
applicable) after the occurrence of a Lease Event of Default or upon the
expiration or termination of this Lease; (d) each sublease provides for
a fair market lease term and a fair market rental rate as of the date
such sublease was executed, and (e) Lessee pledges its entire interest
in any such Sublease, including the right to receive rent or other
payments thereunder, to lessor pursuant to SECTION 15.1.. With respect
to any sublease permitted under this ARTICLE XII, Lessee shall not
sublease any portion of the Leased Property to, or permit the sublease
of any portion of the Leased Property to, or permit the sublease of any
portion of the Leased
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Property by, any Person (a) who, to the knowledge of any Responsible
Officer of Lessee with operational responsibility, after reasonable
inquiry, shall then be in default with respect to the payments of money
under any instrument evidencing indebtedness or with respect to any
liability for borrowed money or for the deferred purchase price of
property if the aggregate amount of all such indebtedness, liabilities
and purchase prices under or with respect to which such Person is then
in default exceeds one-half of one percent (0.50%) of such Person's net
worth or capital and surplus, or (b) who shall then be engaged in any
proceedings for relief under any bankruptcy or insolvency law or laws
relating to the relief of debtors.
All of Lessee's right, title and interest in, to and under each sublease
is hereby pledged by Lessee to Lessor, as collateral for Lessee's obligations
under this Lease and shall be further assigned to Agent pursuant to the
Assignment of Lease and the Assignment of Subleases, and Lessee shall, at its
expense, do any further act and execute, acknowledge, deliver, file, register
and record any further documents which Agent or any Participant may
reasonably request in order to create, perfect, preserve and protect Lessor's
and Agent's security interest in such sublease. Lessee shall, within fifteen
(15) days after execution of any sublease to a Person which is not a
wholly-owned Subsidiary of Lessee, deliver to Agent a fully executed copy of
such sublease.
ARTICLE XIII
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
13.1. EVENT OF LOSS; CONDEMNATION OR CASUALTY.
(a) If a Significant Casualty or a Significant Condemnation
shall occur, Lessee shall give Lessor prompt written notice of such
occurrence and the date thereof and Lessee shall purchase the Leased Property
from Lessor on the next succeeding Payment Date after the date such
Significant Casualty or Significant Condemnation shall have occurred at a
purchase price equal to the Purchase Amount. In the case of a Significant
Condemnation which is deemed to have occurred because of a requisition which
is not scheduled to last beyond the Lease Expiration Date but which in fact
is continuing on the Lease Expiration Date, the foregoing purchase price
shall be paid on the Lease Expiration Date.
(b) Upon payment in full of all amounts payable pursuant to
SECTION 13.1(a): (i) the Lease Term shall end with respect to the Leased
Property and (ii) the obligations of Lessee hereunder with respect to the
Leased Property (other than any obligations expressed herein or any other
Operative Document as surviving termination of this Lease) shall terminate as
of the date of such payment. Lessor shall thereupon transfer its right,
title and interest in the Leased Property to Lessee in accordance with
SECTION 22.15(a).
13.2. APPLICATION OF PAYMENTS RELATING TO AN EVENT OF LOSS. All Net
Casualty/Condemnation Proceeds received at any time by Lessee from any
Authority or other Person with respect to any Significant Condemnation or
Significant Casualty shall be promptly remitted to Lessor and, upon the
purchase of the Leased Property by Lessee pursuant to SECTION 13.1(a) and the
payment by Lessee of the Purchase Amount payable by Lessee
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pursuant to SECTION 13.1(a), any such Net Casualty/Condemnation Proceeds and
property insurance proceeds remaining thereafter shall be paid over to, or
retained by, Lessee, or as Lessee may direct.
13.3. APPLICATION OF CERTAIN PAYMENTS RELATING TO A CONDEMNATION. In
case of a requisition for temporary use of all or a portion of the Leased
Property which is not a Significant Condemnation, this Lease shall remain in
full force and effect, without any abatement or reduction of Rent, and the
proceeds received from any Authority relating to a Condemnation for the
affected portion of the Leased Property shall, so long as no Lease Default or
Lease Event of Default exists, be paid to Lessee for use by Lessee to the
extent applicable to repair and restore the Leased Property to the condition
required by SECTION 9.1. Notwithstanding anything herein to the contrary, any
portion of such proceeds that is awarded with respect to the time period
after the expiration or termination of the Lease Term (unless Lessee shall
have exercised an option to purchase the Leased Property and consummated such
purchase) shall be paid to Lessor; PROVIDED, that if Lessee has paid the
Purchase Amount, such proceeds (or the portion of such proceeds in excess of
the portion thereof applied as set forth above) shall be paid over to Lessee.
13.4. CASUALTY. Upon any Casualty with respect to any portion of the
Leased Property the cost of repair of which would exceed $500,000, Lessee
shall give to Lessor written notice thereof. As soon as practicable after a
Casualty, but in any event prior to the Lease Expiration Date, Lessee shall
repair and rebuild the affected portions of the Leased Property suffering
such Casualty (or cause such affected portions to be repaired and rebuilt) to
the condition required to be maintained by SECTION 9.1 hereof; PROVIDED, that
the value and functional capability of such item as restored is at least
equivalent to the value and functional capability of such item as in effect
immediately prior to the occurrence of such Casualty. Any insurance proceeds
in excess of $500,000 received with respect to any Casualty shall be paid
over to or retained by Lessor until, subject to SECTION 14.2, Lessee repairs
and rebuilds (or causes to be repaired and rebuilt) the affected portions of
the Leased Property in accordance with the conditions set forth in this
SECTION 13.4; PROVIDED, that such proceeds may be distributed to Lessee
(subject to SECTION 22.17) from time to time in reimbursement for funds
expended by Lessee in repairing and rebuilding, subject to customary
practices and procedures for disbursements under a construction loan facility.
13.5. NEGOTIATIONS. If any part of the Leased Property becomes subject
to condemnation or requisition proceedings, Lessee shall give notice thereof
to Lessor promptly after Lessee has knowledge thereof and, to the extent
permitted by any Applicable Laws, Lessee shall control the negotiations with
the relevant Authority unless a Lease Event of Default exists, in which case
Lessor may control such negotiations; PROVIDED, that in any event Lessor may
participate at Lessor's expense (or if a Lease Event of Default exists, at
Lessee's expense) in such negotiations. In all cases, no settlement of the
amount of Condemnation and/or Casualty Proceeds will be made without Lessor's
prior written consent, not to be unreasonably withheld. At no cost to
Lessor, Lessee shall give to Lessor such information, and copies of such
documents, which relate to proceedings or negotiations to determine the
amount of Condemnation and/or Casualty Proceeds, or which relate to the
settlement of amounts due in connection with any Condemnation and/or
Casualty, and are in the possession of Lessee, as
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are reasonably requested by Lessor. Nothing contained in this SECTION 13.5
shall diminish Lessor's rights with respect to Net Casualty/Condemnation
Proceeds under SECTION 14.2.
13.6. ENVIRONMENTAL MATTERS. Promptly upon Lessee's knowledge of the
existence of an Environmental Violation with respect to the Leased Property,
Lessee shall notify Lessor in writing of such Environmental Violation. If
Lessor elects not to terminate this Lease with respect to the Leased Property
pursuant to SECTION 14.1, at Lessee's sole cost and expense, Lessee shall
promptly and diligently commence any response, clean up, remedial or other
action necessary to remove, clean up or remediate the Environmental Violation
in accordance with the terms of ARTICLE IX. Lessee shall, upon completion of
remedial action by the Lessee, cause to be prepared by an environmental
consultant reasonably acceptable to Lessor a report describing the
Environmental Violation and the actions taken by Lessee (or its agents) in
response to such Environmental Violation, and a statement by the consultant
that the Environmental Violation has been remedied in compliance in all
material respects with applicable Environmental Laws. Each such
Environmental Violation shall be remedied prior to the Lease Expiration Date
unless the Leased Property with respect to which an Environmental Violation
has occurred but has not been remedied has been purchased by Lessee in
accordance with ARTICLE XIX or SECTION 20.1(b). Nothing in this ARTICLE XIII
shall reduce or limit Lessee's obligations under Article VII of the
Participation Agreement.
13.7. NOTICE OF ENVIRONMENTAL MATTERS. Promptly, but in any event
within sixty (60) 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 Laws or any Release
on or in connection with the Leased Property. 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, promptly following receipt, copies of all written communications with
any Authority relating to any Environmental Violation in connection with the
Leased Property. Lessee shall also promptly provide such detailed reports of
any such material environmental claims as may reasonably be requested by
Lessor or Agent. If Lessor receives written notice of any pending or
threatened claim, action or proceeding involving any Environmental Laws or
any Release on or in connection with the Leased Property, Lessor shall
promptly give notice thereof to Lessee. For purposes of this paragraph,
"ACTUAL KNOWLEDGE" of Lessee shall mean the actual knowledge of Richard
Marino, Facilities/Safety Manager, or any successor who has substantially
similar duties or who is primarily responsible for the day to day operation
of the Leased Property.
ARTICLE XIV
[Intentionally left blank]
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ARTICLE XV
OWNERSHIP, GRANT OF LIEN AND FURTHER ASSURANCES
15.1. GRANT OF LIEN AND SECURITY INTEREST. Title to the Leased Property
is held by and shall remain in Lessor, as security for the obligations of
Lessee hereunder and under each of the other Operative Documents to which it
is a party until such time as Lessee shall have fulfilled all of its
obligations hereunder and under such other Operative Documents. Lessee
hereby mortgages, grants, conveys, assigns, warrants, transfers, sets over
and pledges to Lessor for the benefit of the Participants a mortgage and Lien
against all of Lessee's right, title and interest, whether now or hereafter
existing or acquired, in the Leased Property and the other Lease Collateral
to secure the payment and performance of all obligations of Lessee now or
hereafter existing under this Lease or any other Operative Document, TO HAVE
AND TO HOLD the Lease Collateral and the rights and privileges hereby
mortgaged unto Lessor, its successors and assigns for the uses and purposes
set forth, until all the obligations hereunder and under such other Operative
Documents are paid, performed and satisfied in full. Lessee shall, at its
expense, do any further act and execute, acknowledge, deliver, file, register
and record any further documents (including the Deed of Trust) which Lessor
or Agent may reasonably request in order to protect its title to and
perfected Lien in the Leased Property and the other Lease Collateral, subject
to no Liens other than Permitted Liens, and Lessor's rights and benefits
under this Lease. Lessee shall promptly and duly execute and deliver to
Lessor such documents and assurances (including the Deed of Trust) and take
such further actions as Lessor or Agent may from time to time reasonably
request in order to carry out more effectively the intent and purpose of this
Lease and the other Operative Documents, to establish and protect the rights
and remedies created or intended to be created in favor of Lessor hereunder
and thereunder, and to establish, perfect and maintain the right, title and
interest of Lessor in and to the Leased Property and the other Lease
Collateral, subject to no Lien other than Permitted Liens, or of such Deed of
Trust, financing statements or fixture filings or other documents with
respect hereto as Lessor or Agent may from time to time reasonably request,
and Lessee agrees to execute and deliver promptly such of the foregoing Deed
of Trust, financing statements and fixture filings or other documents as may
require execution by Lessee. To the extent permitted by Applicable Laws,
Lessee hereby authorizes any such Deed of Trust, financing statements and
fixture filings to be filed without the necessity of the signature of Lessee,
and Lessor agrees to provide Lessee with copies of any such documents so
filed. Lessor shall at such time as all of the obligations of Lessee under
this Lease or any other Operative Documents have been paid or performed in
full (other than Lessee's contingent obligations, if any, under Article VII
of the Participation Agreement) execute and deliver termination statements,
cancellations of lease or memoranda, quit claim deeds and other appropriate
documentation reasonably requested by Lessee, all at Lessee's expense, to
evidence Lessor's release of its Lien against the Lease Collateral.
15.2. ATTORNEY-IN-FACT. Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact, with full authority in the place and stead of
Lessee and in the name of Lessee or otherwise, from time to time in Lessor's
discretion, to execute any instrument and/or to take any action (including
any action that Lessee is entitled to take), which, in either case, Lessor
may deem necessary or advisable to accomplish the purposes of this Lease
(subject to any limitations set forth in the Operative Documents), including,
without limitation:
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(1) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for money due and to become due
under or in connection with the Leased Property and the other Lease
Collateral;
(2) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with the foregoing
CLAUSE (a);
(3) to file any claim or take any action or institute any
proceedings which Lessor may deem to be necessary or advisable for the
collection thereof or to enforce compliance with the terms and conditions of
the Lease; and
(4) to perform any affirmative obligations of Lessee hereunder,
including the execution of mortgages, financing statements and other
documents.
Lessee hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this SECTION 15.2 is irrevocable and coupled with an
interest. Notwithstanding anything contained herein to the contrary, the
rights and powers presently granted Lessor by this SECTION 15.2 may be
exercised by Lessor only upon the occurrence and during the continuance of a
Lease Event of Default and the exercise of any remedy pursuant to ARTICLE
XVIII.
ARTICLE XVI
LEASE EVENTS OF DEFAULT
The occurrence of any one or more of the following events, whether any
such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body, shall constitute a "LEASE EVENT OF DEFAULT":
(a) Lessee shall fail to make any payment of (i) Base Rent
when due, (ii) any Supplemental Rent when due and such failure
shall continue for two (2) Business Days after written demand
therefor, or (iii) amounts payable pursuant to the exercise of
the Sale Option when due, or (iv) amounts payable pursuant to
ARTICLES XIV or XIX, SECTION 20.1(b) or SECTION 21.3 when due; or
(b) the failure to pay when due any amount under any
Material Indebtedness of Lessee or any of its Material
Subsidiaries; or the default or breach by Lessee or any of its
Material Subsidiaries under any agreement under which any such
Material Indebtedness was created or is governed arising with
respect to any covenant concerning the maintenance of financial
ratios or amounts of indebtedness, or restricting investments,
payments, dividends, distributions, or the incurrence of Liens;
or any Material Indebtedness of Lessee or any of its Material
Subsidiaries shall be declared to be due and payable or required
to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to the stated maturity thereof; or
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(c) Lessee shall default in the performance or observance
of any term, covenant, condition or agreement on its part to be
performed or observed under SECTIONS 11.1 or 12.1 hereof or
SECTIONS 5.7 THROUGH 5.11, INCLUSIVE, 5.14, 5.16 AND 5.18 THROUGH
5.24, INCLUSIVE of the Participation Agreement; or
(d) Subject to Lessee's rights under SECTION 21.4, Lessee
shall fail to offer the Leased Property for sale in accordance
with and satisfy each of the terms, covenants, conditions and
agreements set forth at ARTICLES XX and XXI in connection with
and following its exercise of the Sale Option, including each of
Lessee's obligations at SECTIONS 21.1 and 21.2;
(e) Any representation or warranty by Lessee in any
Operative Document or in any certificate or document delivered to
any Party pursuant to any Operative Document shall have been
incorrect in any material respect when made, deemed made or
reaffirmed, as the case may be;
(f) Lessee shall fail in any material respect to timely
perform or observe any covenant, condition or agreement (not
included in any other clause of this ARTICLE XVI) to be performed
or observed by Lessee hereunder or under any other Operative
Document and such failure shall continue for a period of 30 days
(but not later than the Lease Expiration Date) after the earlier
to occur of: (i) written notice thereof from any Party, or (ii) a
Responsible Officer of Lessee has knowledge thereof, PROVIDED,
HOWEVER, in the case of a failure to comply with the requirements
of SECTION 9.1(a), (b), (d), (e), or (f) or SECTION 9.2 of this
Lease, if such failure cannot in Lessor's reasonably exercised
judgment be cured in 30 days but can in Lessor's reasonably
exercised judgment be cured in 90 days, Lessee may have an
additional 60 days in which to cure such failure provided that
Lessee begins to cure such failure within 30 days following
notice or knowledge thereof as provided above and thereafter
continues diligent efforts to cure such failure;
(g) (i) Lessee shall generally fail to pay, or admit in
writing its general inability to pay, its debts as they become
due, or shall voluntarily commence any case or proceeding or file
any petition under any bankruptcy, insolvency or similar law or
seeking dissolution, liquidation or reorganization or the
appointment of a receiver, trustee, custodian or liquidator for
itself or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its
creditors, or shall file any answer admitting the jurisdiction of
the court and the material allegations of any involuntary
petition filed against it in any bankruptcy, insolvency or
similar case or proceeding, or shall be adjudicated bankrupt, or
shall make a general assignment for the benefit or creditors, or
shall consent to, or acquiesce in the appointment of, a receiver,
trustee, custodian or liquidator for itself or a substantial
portion of its property, assets or business, or (ii) corporate
action shall be taken by Lessee for the purpose of effectuating
any of the foregoing;
(h) involuntary proceedings or an involuntary petition
shall be commenced or filed against Lessee under any bankruptcy,
insolvency or similar law or seeking the dissolution, liquidation
or reorganization of any such Person or the appointment of a
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receiver, trustee, custodian or liquidator for Lessee or of a
substantial part of the property, assets or business of any such
Person, or any writ, judgment, warrant of attachment, execution
or similar process shall be issued or levied against a
substantial part of the property, assets or business of Lessee
and such proceedings or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded, within 60
days after commencement, filing or levy, as the case may be;
(i) any one or more judgments, writs or warrants of
attachment, executions or similar processes involving an
aggregate amount in excess of $1,000,000 (after taking into
account the actual amounts of third party insurance recoveries,
offsets and contributions received, and amounts thereof not yet
received but which the insurer thereon has acknowledged in
writing its obligation to pay, without material conditions) shall
be entered or filed against Lessee or its Subsidiaries, and all
such judgments and processes shall not be dismissed, vacated,
stayed, discharged or bonded for a period of forty-five (45)
days;
(j) any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $1,000,000
which it shall have become liable to pay under Title IV of ERISA;
or notice of intent to terminate a Material Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment
obligation in excess of $50,000,000;
(k) any Operative Document to which Lessee is a party or
the security interest and lien granted under this Lease (except
in accordance with its terms), in whole or in part, terminates,
ceases to be effective or ceases to be the legal, valid and
binding enforceable obligation of Lessee or the security interest
or lien securing Lessee's obligations under the Operative
Documents, in whole or in part, ceases to be a perfected first
priority security interest and lien, in each case unless due to
any act or failure to act on the part of Lessor or Agent or
Lessee or any of its affiliates shall directly or indirectly
contest the effectiveness, validity, binding nature or
enforceability of any Operative Document or any Lien granted
under any Operative Document; or
(l) a Change of Control occurs.
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MASTER LEASE
ARTICLE XVII
ENFORCEMENT
17.1. REMEDIES. Upon the occurrence of any Lease Event of Default and the
declaration thereof (but a Lease Event of Default shall be automatically deemed
to occur, and no declaration thereof shall be required, upon the occurrence of a
Lease Event of Default pursuant to CLAUSE (g) or (h) of ARTICLE XVI), the Lease
Balance due hereunder without further act shall be accelerated and be deemed to
be due and payable hereunder, and at any time thereafter, the Lessor may, and so
long as such Lease Event of Default is continuing, do one or more of the
following as Lessor in its sole discretion shall determine, without limiting any
other right or remedy Lessor may have on account of such Lease Event of Default.
(a) By notice to Lessee, Lessor may terminate Lessee's
right to possession of the Leased Property subject to Lessee's
right to purchase the Leased Property under SECTION 19.1 of this
Lease; PROVIDED, HOWEVER (i) no reletting, reentry or taking of
possession of the Leased Property (or any portion thereof) by
Lessor will be construed as an election on Lessor's part to
terminate this Lease unless a written notice of such intention is
given to Lessee, (ii) notwithstanding any reletting, reentry or
taking of possession, Lessor may at any time thereafter elect to
terminate this Lease for a continuing Lease Event of Default and
(iii) no act or thing done by Lessor or any of its agents,
representatives or employees and no agreement accepting a
surrender of the Leased Property shall be valid unless the same
be made in writing and executed by Lessor. A notice given in
connection with unlawful detainer proceedings specifying a time
within which to cure a default shall terminate Lessee's right to
possession if Lessee fails to cure the default within the time
specified in the notice. Upon termination of Lessee's right to
possession and without further demand or notice, Lessee shall
surrender possession and vacate the Leased Property and deliver
possession thereof, and Lessor may re-enter the Leased Property
and remove any persons in possession thereof. Upon such
termination of Lessee's right to possession, the Lease shall
terminate and Lessor may recover from Lessee:
(i) The worth at the time of award of the unpaid Rent
under the Lease (including Basic Rent, the Purchase Amount
and all other Supplemental Rent) which had been earned at
the time of termination;
(ii) The worth at the time of award of the amount by
which the unpaid Rent under the Lease (including Basic Rent,
the Purchase Amount and all other Supplemental Rent) which
would have been earned after termination until the time of
award exceeds the amount of such rental loss that Lessee
proves could have been reasonably avoided;
(iii) The worth at the time of award of the amount by
which the unpaid Rent (including Basic Rent, the Purchase
Amount and all other Supplemental Rent) for the balance of
the Term after the time of award exceeds the amount of such
rental loss that Lessee proves could be reasonably avoided;
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(iv) Any other amount necessary to compensate Lessor
for all the detriment proximately caused by Lessee's failure
to perform Lessee's obligation under the Lease or which in
the ordinary course of things would be likely to result
therefrom, including the costs and expenses (including
reasonable attorneys' fees, advertising costs and brokers'
commissions) of recovering possession of the Leased
Property, removing persons or property therefrom, placing
the Leased Property in good order, condition, and repair,
preparing and altering the Leased Property for reletting,
and all other costs and expenses of reletting; and
(v) Such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by
applicable California law.
The "worth at the time of award" of the amounts referred to in
clauses (i) and (ii) above, is computed by allowing interest at
the Overdue Rate. The "worth at the time of award" of the amount
referred to in clause (iii) above is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%);
(b) Subject to Lessee's right to purchase pursuant to
SECTION 19.1, as more fully set forth in each Lease Supplement,
Lessor may sell all or any portion of the Leased Properties at
public or private sale, as Lessor maydetermine;
(c) Lessor may, at its option, elect not to terminate this
Lease with respect to the Leased Property and continue to collect
all Basic Rent, Supplemental Rent, and all other amounts due to
Lessor (together with all costs of collection) and enforce
Lessee's obligations under this Lease as and when the same become
due, or are to be performed, and at the option of Lessor, upon
any abandonment of the Leased Property by Lessee or re-entry of
same by Lessor, Lessor may enforce, by suit or otherwise, all
other covenants and conditions hereof to be performed or complied
with by Lessee hereunder and to exercise all other remedies
permitted by Section 1951.4 of the California Civil Code or any
amendments thereof or any successor laws which replace such
Section 1951.4;
(d) Unless all of the Leased Property has been sold in its
entirety, Lessor may, whether or not Lessor shall have exercised
or shall thereafter at any time exercise any of its rights under
CLAUSE (b), (c) or (d) of this SECTION 17.1 with respect to the
Leased Property or any portion thereof, demand, by written notice
to Lessee specifying a date (a "TERMINATION DATE") not earlier
than five (5) days after the date of such notice, that Lessee
purchase, on such Termination Date for a price equal to the
Purchase Amount, the Leased Property subject to this Lease, in
accordance with the provisions of SECTION 19.2;
(e) Lessor may exercise any other right or remedy that may
be available to it under Applicable Laws, including any and all
rights or remedies under any other Operative Document, or proceed
by appropriate court action (legal or equitable) to enforce the
terms hereof or to recover damages for the breach hereof.
Separate suits may be brought to collect any such damages for any
period(s), and such suits shall not
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in any manner prejudice Lessor's right to collect any such
damages for any subsequent period(s), or Lessor may defer any
such suit until after the expiration of the Lease Term, in which
event such suit shall be deemed not to have accrued until the
expiration of the Lease Term;
(f) Lessor may retain and apply against the Lease Balance
or any other amounts payable under the Operative Documents all
sums which Lessor would, absent such Lease Event of Default, be
required to pay to, or turn over to, Lessee pursuant to the terms
of this Lease; or
(g) If a Lease Event of Default shall have occurred
and be continuing, Lessor, to the extent permitted by Applicable
Laws, as a matter of right and with notice to Lessee, shall have
the right to apply to any court having jurisdiction to appoint a
receiver or receivers of the Leased Property or any portion
thereof, and Lessee hereby irrevocably consents to any such
appointment. Any such receiver(s) shall have all of the usual
powers and duties of receivers in like or similar cases and all
of the powers and duties of Lessor in case of entry, and shall
continue as such and exercise such powers until the date of
confirmation of the sale of such Property unless such
receivership is sooner terminated.
(h) To the maximum extent permitted by Applicable Laws,
Lessee hereby waives the benefit of any appraisement, valuation,
stay, extension, reinstatement and redemption laws now or
hereafter in force and all rights of marshaling upon any sale of
the Leased Property, any portion thereof or any interest therein.
(i) Lessor shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby
and to exercise all rights and powers under this instrument or
under any of the other Operative Documents or other agreement or
any Applicable Laws now or hereafter in force, notwithstanding
some or all of the obligations secured hereby may now or
hereafter be otherwise secured, whether by mortgage, security
agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this instrument nor its enforcement, shall
prejudice or in any manner affect Lessor's right to realize upon
or enforce any other security now or hereafter held by Lessor, it
being agreed that Lessor shall be entitled to enforce this
instrument and any other security now or hereafter held by Lessor
in such order and manner as Lessor may determine in its absolute
discretion. No remedy herein conferred upon or reserved to
Lessor is intended to be exclusive of any other remedy herein or
by law provided or permitted, but each shall be cumulative and
shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Operative Documents to Lessor
or to which Lessor may otherwise be entitled, may be exercised,
concurrently or independently, from time to time and as often as
may be deemed expedient by Lessor. In no event shall Lessor, in
the exercise of the remedies provided in this Lease (including in
connection with the assignment of rents to Lessor, or the
appointment of a receiver and the entry of such receiver onto the
Leased Property or any portion thereof), be deemed a "mortgagee
in possession", and the Lessor shall not in any way be made
liable for any act, either of commission or omission, in
connection with the exercise of such remedies, except for
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the exercise of the remedies set forth SECTIONS 17.1(c) and
(j), within thirty (30) days after the declaration of the
occurrence of a Lease Event of Default in contravention of
Lessee's purchase right set forth in SECTION 19.1.
(j) FORECLOSURE; POWER OF SALE. Lessee hereby grants to
Chicago Title Company, as trustee (together with all successor
trustees, the "TRUSTEE"), IN TRUST for the benefit of Lessor as
security for the obligations hereunder A SECURITY INTEREST AND
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
Applicable Laws, after proper notice and lapse of such time as
may be required by Applicable Laws, to cause the Trustee to sell
the Leased Property, or any portion thereof, at the time and
place of sale fixed by Lessor in said notice of sale, either as a
whole, or in separate lots or parcels or items and in such order
as Lessor may elect, at auction to the highest bidder for cash in
lawful money of the United States payable at the time of sale;
accordingly, it is acknowledged that A POWER OF SALE HAS BEEN
GRANTED IN THIS INSTRUMENT; A POWER OF SALE MAY ALLOW LESSOR TO
TAKE THE APPLICABLE LEASED PROPERTY AND SELL IT WITHOUT GOING TO
COURT IN A FORECLOSURE ACTION UPON DEFAULT BY LESSEE UNDER THIS
INSTRUMENT, and (ii) upon the occurrence of a Lease Event of
Default, Lessor, in lieu of or in addition to exercising any
power of sale hereinabove given, may proceed by a suit or suits
in equity or at law, whether for a foreclosure hereunder, or for
the sale of the Leased Property, or against Lessee on a recourse
basis for the Lease Balance and all accrued and unpaid interest
on the Loans, all accrued and unpaid Yield on the Certificate
Amounts, and all other amounts owing by Lessee under the
Operative Documents with respect to such Leased Property, or for
the specific performance of any covenant or agreement herein
contained or in aid of the execution of any power herein granted,
or for the appointment of a receiver pending any foreclosure
hereunder or the sale of the Leased Property, or for the
enforcement of any other appropriate legal or equitable remedy.
Lessee acknowledges and agrees that upon the declaration of a Lease Event of
Default the amount due and owing by it to Lessor hereunder shall be the Lease
Balance and that to the maximum extent permitted by Applicable Laws, Lessee
waives any right to contest the Lease Balance as the liquidated sum due upon
acceleration of this Lease.
17.2. PROCEEDS OF SALE; DEFICIENCY. All payments received and amounts
held or realized by Lessor at any time when a Lease Event of Default shall
exist and after the Lease Balance shall have been accelerated pursuant to
this ARTICLE XVII as well as all payments or amounts then held or thereafter
received by Lessor and the proceeds of sale pursuant to SECTION 17.1(j) or
pursuant to either Lease Supplement shall be distributed forthwith upon
receipt by Lessor in accordance with Article III of the Loan Agreement.
17.3. DEED OF TRUST REMEDIES. Without limiting any other remedies set
forth in this Lease, Lessor and Lessee agree that upon the occurrence of a
Lease Event of Default (irrespective of whether a Loan Event of Default has
occurred or is occurring), Lessor and Agent shall have all the rights and may
pursue any of the remedies provided to Agent in the Deed of
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Trust, the terms and provisions of which Deed of Trust are incorporated
herein by this reference.
17.4. REMEDIES CUMULATIVE; NO WAIVER; CONSENTS. To the extent
permitted by, and subject to the mandatory requirements of, Applicable Laws,
each and every right, power and remedy herein specifically given to Lessor or
otherwise in this Lease shall be cumulative and shall be in addition to every
other right, power and remedy herein specifically given or now or hereafter
existing at law, in equity or by statute, and each and every right, power and
remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy.
Without limiting the foregoing, Lessee acknowledges that Lessor may proceed
against all or any part of the Leased Property in exercising any remedies in
respect of real property or personal property, or both. No delay or omission
by Lessor in the exercise of any right, power or remedy or in the pursuit of
any remedy shall impair any such right, power or remedy or be construed to be
a waiver of any default on the part of Lessee or be an acquiescence therein.
Lessor's consent to any request made by Lessee shall not be deemed to
constitute or preclude the necessity for obtaining Lessor's consent, in the
future, to all similar requests. No express or implied waiver by Lessor of
any Lease Event of Default shall in any way be, or be construed to be, a
waiver of any future or subsequent Lease Default or Lease Event of Default.
To the extent permitted by Applicable Laws and subject to the provisions of
SECTION 17.1, Lessee hereby waives any rights now or hereafter conferred by
statute or otherwise that may require Lessor to sell, lease or otherwise use
the Leased Property, the other Lease Collateral or any part thereof in
mitigation of Lessor's damages upon the occurrence of a Lease Event of
Default or that may otherwise limit or modify any of Lessor's rights or
remedies under this ARTICLE XVII.
ARTICLE XVIII
RIGHT TO PERFORM FOR LESSEE
If Lessee shall fail to perform or comply with any of its agreements
contained herein and in Lessor's reasonably exercised judgment Lessee is not
acting diligently and appropriately to perform or comply with such agreements,
Lessor may, but shall not be obligated to, on five (5) Business Days' prior
notice to Lessee (except that in the case of an Emergency, Lessee shall permit
Lessor so to perform or comply on less than five (5) Business Days' notice
unless Lessee has a good faith reason not to permit Lessor to do so), perform or
comply with such agreement, and Lessor shall not thereby be deemed to have
waived any default caused by such failure, and the amount of such payment and
the amount of the out-of-pocket and reasonably allocated internal expenses of
Lessor (including reasonable attorneys' fees and expenses) incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Overdue
Rate, shall be deemed Supplemental Rent, payable by Lessee to Lessor upon
demand.
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ARTICLE XIX
EARLY TERMINATION OPTION AND OBLIGATION TO PURCHASE
19.1. EARLY TERMINATION OPTION. Without limitation of Lessee's purchase
obligation pursuant to SECTION 19.2, on any Business Day, Lessee may, at its
option, purchase all of the Leased Property (the "EARLY TERMINATION OPTION") at
a price equal to the Purchase Amount; Lessee's right to purchase all the Leased
Property pursuant to this SECTION 19.1 shall terminate automatically upon: (i)
occurrence of a Lease Event of Default pursuant to CLAUSES (g) or (h) of ARTICLE
XVI, or (ii) the occurrence of any other Lease Event of Default, unless in the
case of a Lease Event of Default described in this SECTION 19.1(II) Lessee
delivers a written notice of its election to exercise this option to purchase
all of the Leased Property not less than five (5) days prior to the date of the
purchase and consummates the purchase within thirty (30) days following the
occurrence and declaration of such Lease Event of Default described in this
SECTION 19.1(ii) (except that if a Lease Event of Default pursuant to CLAUSE (g)
or (h) of ARTICLE XVI has also occurred, then such 30 Business Day period shall
be deemed to commence on the earlier of (x) the date of the entry of order for
relief or (y) the date of such declaration). In order to exercise its option to
purchase all or a portion of the Leased Property pursuant to this SECTION 19.1
and except as provided for in ITEM (ii) of the foregoing sentence, Lessee shall
give to Lessor not less than thirty (30) days' prior written notice of such
election to exercise, which election shall become irrevocable if not revoked or
extended by written notice to Lessor not later than ten (10) days prior to the
end of such thirty (30) day period. Upon receipt of the Purchase Amount, Lessor
shall transfer the Leased Property to Lessee, or its assigns, pursuant to
SECTION 22.15, on the date set forth in the written notice delivered by Lessee
pursuant to this SECTION 19.1.
19.2. REQUIRED PURCHASE. Lessee shall be obligated to purchase for the
Purchase Amount all of Lessor's interest in the Leased Property: (a)
automatically and without notice upon the occurrence of any Lease Event of
Default specified in CLAUSES(g) or (h) of ARTICLE XVI, or (b) immediately upon
written demand of Lessor upon: (i) the occurrence of any other Lease Event of
Default pursuant to and for the amount described in SECTION 17.1(d), or (ii) any
Significant Condemnation or Significant Casualty occurs with respect to the
Leased Property.
ARTICLE XX
END OF TERM OPTIONS
20.1. END OF TERM OPTIONS. At least 270 days before the last day of the
Lease Term, Lessee shall, by delivery of written notice to Lessor and Agent,
exercise one of the following options:
(a) Renew this Lease with respect to all, but not less than all, of
the Leased Property for a Renewal Term of up to five (5) years (the "RENEWAL
OPTION") on the terms and conditions set forth herein and in the other Operative
Documents; PROVIDED, HOWEVER, such Renewal Option shall be available only at the
end of the Base Term and only if the conditions to the Extension Option set
forth in Section 2.14 of the Participation Agreement are satisfied; or
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(b) Purchase for cash for the Purchase Amount all, but not less than
all, of the Leased Property then subject to the Lease on the Lease Expiration
Date (the "PURCHASE OPTION"); and if Lessee shall have elected to purchase the
Leased Property, Lessor shall, upon the payment to Lessor of the Purchase Amount
then due and payable by Lessee under the Operative Documents, transfer all of
Lessor's right, title and interest in and to the Leased Property pursuant to
SECTION 22.15; or
(c) Sell on behalf of Lessor for cash to a purchaser all, but not
less than all, of the Leased Property then subject to the Lease (the "SALE
OPTION"). Lessee's right to sell the Leased Property pursuant to the Sale
Option shall be conditioned upon and subject to the fulfillment by Lessee of
each of the terms and conditions set forth in ARTICLE XXI.
20.2. ELECTION OF OPTIONS. If Lessee fails to make a timely election
pursuant to SECTION 20.1 at the end of the Lease Term, Lessee shall be deemed to
have elected the Purchase Option. In addition, the Sale Option shall
automatically be revoked if there exists a Lease Event of Default or Significant
Condemnation at any time after the Sale Option is properly elected or Lessee
fails to comply with any of the terms and conditions set forth at ARTICLE XXI
and Lessor shall be entitled to exercise all rights and remedies provided in
ARTICLE XVII. Lessee may not elect the Sale Option if there exists on the date
the election is made: (i) a Lease Default, Lease Event of Default or a
Significant Condemnation or Significant Casualty, or (ii) any sublease with
respect to any of the Leased Property.
ARTICLE XXI
SALE OPTION
21.1. SALE OPTION PROCEDURES. If Lessee elects the Sale Option, Lessee
shall use its best commercial efforts as nonexclusive agent for Lessor to obtain
the highest all cash purchase price for the purchase of all of the Leased
Property then subject to the Lease, and if Lessee receives any bid, Lessee
shall, within five (5) Business Days after receipt thereof, certify to Lessor in
writing the amount and terms of such bid (who shall not be Lessee or any
Affiliate of Lessee or any Person with whom Lessee has an understanding or
arrangement regarding the future use of the Leased Property by or for Lessee,
but who may be Lessor or a Participant, any Affiliate thereof, or any Person
contacted by any Participant) and the name and address of the party submitting
such bid. Unless pursuant to the terms of the bid submitted, the Net Sale
Proceeds shall exceed the aggregate outstanding Lease Balance as of the Lease
Expiration Date, any Participant may submit an all-cash bid to Lessee not later
than five (5) Business Days prior to expiration of the Lease Term. All costs and
expenses in connection with any such bidding and sale process pursuant to this
SECTION 21.1 shall be paid out of the Sale Proceeds; provided, however, that
Lessee shall obtain Lessor's consent for any costs of sale to the extent such
costs exceed 5% of the anticipated Sale Proceeds. All costs and expenses
incurred by any party (including a buyer or potential buyer) to place the Leased
Property in the condition required by SECTION 9.1 shall be paid by Lessee.
After Lessee shall have certified to Lessor all bids received, if all bids
received on an all cash basis are for less than the aggregate outstanding Lease
Balance as of the Lease Expiration Date, any Participant, any Affiliate thereof,
or any Person contacted by any Participant may submit a further all-cash bid or
bids to
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Lessee not later than five (5) Business Days prior to the Lease Expiration
Date. On or before the Lease Expiration Date, so long as no Lease Event of
Default shall have occurred and be continuing: (i) Lessee shall transfer all
of Lessee's right, title and interest in the Leased Property, or cause the
Leased Property to be transferred, to the bidder, if any, which shall have
submitted the highest all cash bid therefor at least twenty (20) (or in the
case of a Participant, any Affiliate thereof or Person contacted by a
Participant, five (5)) Business Days prior to such Lease Expiration Date, in
the same manner and in the same condition and otherwise in accordance with
all of the terms of this Lease; (ii) subject to the prior or current payment
by Lessee of all amounts due under CLAUSE (iii) of this sentence, Lessor
shall comply with any conditions to transfer set forth in SECTION 21.2 and
the transfer provisions of SECTION 22.15 in order to transfer Lessor's right,
title and interest in and to the Leased Property for cash to such bidder,
such transfer to be made on the Lease Expiration Date with respect to any bid
accepted prior to such date or on the date provided for at SECTION 21.4; and
(iii) Lessee shall pay to Lessor on the earlier of the Lease Expiration Date
or immediately prior to such sale all of the amounts required pursuant to
SECTION 21.3. All costs related to a sale and delivery pursuant to this
SECTION 21.1, including the cost of sales agents retained by Lessee, delivery
of documents, filing and documentary transfer fees, Taxes relating to or
arising as a result of such transfer, title insurance, certification and
testing of the Leased Property, environmental audits, legal costs, costs of
notices, any advertisement or other similar costs shall be borne entirely by
Lessee, without regard to whether such costs were incurred by Lessor, Lessee
or any potentially qualified buyer. No Party shall have any responsibility
for procuring or financing any purchaser.
21.2. SALE. Lessee shall, on the Lease Expiration Date at Lessee's own
expense, transfer the Leased Property to the independent purchaser(s) thereof
free and clear of all Liens other than Permitted Exceptions, in as good
condition as it was on the Document Closing Date, ordinary wear and tear
excepted, and in compliance with all Applicable Laws and Regulations (and in any
event without (x) any asbestos installed or maintained in any part of the Leased
Property, (y) any polychlorinated biphenyls (PCBs) in, on or used, stored or
located at the Leased Property, and (z) any other Hazardous Materials). As a
condition to Lessee's rights hereunder, Lessee shall obtain and make all
necessary Governmental Actions required by Lessee or Lessor in connection with
any third party sale. Lessee shall cooperate with the independent purchaser of
the Leased Property in order to facilitate the ownership and operation of the
Leased Property by such purchaser after the date of the sale or transfer,
including providing all books, reports and records regarding the maintenance,
repair and ownership of the Leased Property and granting or assigning all
licenses necessary for the operation of the Leased Property and cooperating in
seeking and obtaining all necessary Governmental Action. As a further
condition to Lessee's rights hereunder, Lessee shall pay the total cost for the
completion of all alterations commenced prior to the Lease Expiration Date. All
alterations shall be completed prior to the date of Lessee's election of the
Sale Option. Prior to the Lease Expiration Date, Lessee shall furnish to the
Certificate Trustee, the Agent, the Participants and the independent purchaser
hereunder a reasonably current Environmental Audit dated no earlier than 45 days
prior to the Lease Expiration Date and addressed to each such party in form and
substance satisfactory in the sole discretion of such purchaser, the Certificate
Trustee, the Agent and the Required Participants. The obligations of Lessee
under this SECTION 21.2 shall survive the expiration or termination of this
Lease. Unless Lessee shall have exercised or been deemed to have exercised its
Purchase Option, Lessor shall at Lessee's expense be entitled to perform such
investigation, including obtaining reports of engineers and other experts
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as to the condition and state of repair and maintenance of the Leased
Property required by this SECTION 21.2 and as to the compliance of the Leased
Property with Applicable Laws and Regulations including Environmental Laws,
as it deems appropriate. Lessee, at its sole cost and expense, shall cause
the repair or other remediation of any discrepancies between the actual
condition of the Leased Property and the condition required under this Lease,
such repair or remediation to be completed not later than the Lease
Expiration Date.
21.3. APPLICATION OF NET SALE PROCEEDS AND RECOURSE PAYMENTS. In
connection with the exercise of the Sale Option.
(a) On the Lease Expiration Date, Lessee shall pay to Lessor all
Rent then due and then apply the Land Proceeds and Improvements Proceeds and
make such payments as set forth below:
(i) Lessee shall pay to Lessor, as Supplemental Rent,
from the Land Proceeds the Land Balance as of the Lease
Expiration Date (as determined after the payment of all Rent due
on such date). If the Land Proceeds are less than the Land
Balance, Lessee shall pay or shall cause to be paid to Lessor, as
Supplemental Rent, on the Lease Expiration Date, in addition to
the Land Proceeds an additional amount equal to the amount by
which the Land Balance exceeds the Land Proceeds. If the Land
Proceeds exceed the Land Balance as of the Lease Expiration Date,
Lessee shall retain the portion of the Land Proceeds in excess
thereof.
(ii) Lessee shall pay to Lessor, as Supplemental Rent,
the Improvements Proceeds (but not in excess of the Improvements
Balance as of the Lease Expiration Date (as determined after the
payment of all Rent due on such date)) which payment shall be
applied to reduce the Improvement Balance. If the Improvements
Proceeds are less than the Improvements Balance (prior to the
application of the Improvements Proceeds thereto), Lessee shall
pay or shall cause to be paid to Lessor, as Supplemental Rent, on
the Lease Expiration Date, in addition to the Improvements
Proceeds, an amount equal to the lesser of the Sale Recourse
Amount and the Improvements Balance (after taking into account
all payments of Rent and the application of the Improvements
Proceeds against the aggregate outstanding Improvement Balance on
the Lease Expiration Date). If the Improvements Proceeds exceed
the Improvements Balance (prior to the application of the
Improvements Proceeds thereto), Lessee will retain the portion of
the Improvements Proceeds in excess thereof.
(b) The obligation of Lessee to pay the amounts determined pursuant
to SECTION 21.3(a)(i) and 21.3(a)(ii) shall be a recourse obligation of Lessee,
and such payments by Lessee shall not limit any other obligation of Lessee under
the Operative Documents, including pursuant to Article VII of the Participation
Agreement. In no event shall any Land Proceeds in excess of the Land Balance be
applied to reduce the Improvements Balance, nor shall any Improvements Proceeds
in excess of the Improvements Balance be applied to reduce the Land Balance, it
being understood that any such excess Land Proceeds or Improvements Proceeds
shall be paid over to and be retained by Lessee.
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21.4. APPRAISAL. If the sum of the Land Balance and the aggregate
outstanding Improvements Proceeds plus the Sale Recourse Amount will be less
than the outstanding Lease Balance, Lessor (upon direction from any Participant)
shall engage one or more appraisers, at Lessee's sole cost and expense, to
determine (by appraisal methods satisfactory to the Required Participants) the
Fair Market Value of the Leased Property. Such Appraisal may also be prepared
for the purposes of the indemnities set forth at Section 7.8 of the
Participation Agreement. If the Appraisal concludes that the Fair Market Value
of the Leased Property is in excess of the Sale Proceeds received therefor,
Lessee shall promptly pay to Agent, as Supplemental Rent, an amount equal to the
product of such excess multiplied by the Improvements Percentage, which together
with the Improvements Proceeds and the Sale Option Recourse Amount so paid to
Agent shall not exceed the Improvements Balance determined immediately before
the application of the foregoing amounts.
ARTICLE XXII
MISCELLANEOUS
22.1. BINDING EFFECT; SUCCESSORS AND ASSIGNS; SURVIVAL. The terms and
provisions of this Lease, and the respective rights and obligations hereunder of
Lessor, Arranger and the Parties shall be binding upon them and their respective
successors, legal representatives and assigns (including, in the case of Lessor,
any Person to whom Lessor may transfer the Leased Property or any interest
therein in accordance with the provisions of the Operative Documents), and inure
to their benefit and the benefit of their respective permitted successors, legal
representatives and assigns.
22.2. SEVERABILITY. Any provision of this Lease that shall be
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction, and Lessee
shall remain liable to perform its obligations hereunder except to the extent
of such unenforceability. To the extent permitted by Applicable Laws, Lessee
hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
22.3. NOTICES. Unless otherwise specified herein, all consents,
notices, requests, demands or other communications to or upon the respective
parties hereto shall be in writing and shall be delivered and shall be deemed
to have been given in accordance with Section 9.3 of the Participation
Agreement.
22.4. AMENDMENT; COMPLETE AGREEMENTS. Neither this Lease nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification shall be sought. This Lease, together with the
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other Operative Documents, is intended by the parties as a final expression
of their agreement and as a complete and exclusive statement of the terms
thereof, all negotiations, considerations and representations between the
parties having been incorporated herein and therein. No course of prior
dealings between the parties or their officers, employees, agents or
Affiliates shall be relevant or admissible to supplement, explain, or vary
any of the terms of this Lease or any other Operative Document. Acceptance
of, or acquiescence in, a course of performance rendered under this or any
prior agreement between the parties or their Affiliates shall not be relevant
or admissible to determine the meaning of any of the terms of this Lease or
any other Operative Document. No representations, undertakings, or
agreements have been made or relied upon in the making of this Lease other
than those specifically set forth in the Operative Documents.
22.5. HEADINGS. The Table of Contents and headings of the various
Articles and Sections of this Lease are for convenience of reference only and
shall not modify, define or limit any of the terms or provisions hereof.
22.6. GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF,
THE STATE OF CALIFORNIA.
22.7. DISCHARGE OF LESSEE'S OBLIGATIONS BY ITS AFFILIATES. Lessor agrees
that performance of any of Lessee's obligations hereunder by one or more of its
Affiliates or one or more sublessees of the Leased Property or any part thereof
shall constitute performance by Lessee of such obligations to the same extent
and with the same effect hereunder as if such obligations were performed by
Lessee, but no such performance shall excuse Lessee from any obligation not
performed by it or on its behalf under the Operative Documents.
22.8. LIABILITY OF LESSOR LIMITED. The parties hereto agree that
Lessor in its individual capacity shall have no personal liability whatsoever
to Lessee or its respective successors and assigns for any Claim based on or
in respect of this Lease or any of the other Operative Documents or arising
in any way from the transactions contemplated hereby or thereby; PROVIDED,
HOWEVER, that Lessor shall be liable in its individual capacity (1) for its
own willful misconduct or gross negligence (or negligence in the handling of
funds), (2) for liabilities that may result from the incorrectness of any
representation or warranty expressly made by Lessor in its individual
capacity in Section 4.3 of the Participation Agreement or from the failure of
Lessor to perform Lessor's covenants and agreements set forth in Section 6.4
of the Participation Agreement, or (3) for any Tax based on or measured by
any fees, commission or compensation received by Lessor for acting as Bank as
contemplated by the Operative Documents. It is understood and agreed that,
except as provided in the preceding proviso: (a) Lessor shall have no
personal liability under any of the Operative Documents as a result of acting
pursuant to and consistent with any of the Operative Documents; (b) all
obligations of Lessor to Lessee are solely nonrecourse obligations except to
the extent that Lessor has received payment from others; (c) all such
personal liability of Lessor is expressly waived and released as a condition
of, and as consideration for, the execution and delivery of the Operative
Documents by Lessor; and (d) this Lease is executed and delivered by Lessor
solely in the exercise of the powers expressly conferred upon Lessor as
Certificate Trustee under the Trust
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Agreement. In no event shall Lessor, in its individual capacity, be liable
for any indirect, special, consequential, incidental or punitive damages.
22.9. ESTOPPEL CERTIFICATES. Each party hereto agrees that at any time
and from time to time during the Lease Term, it will promptly, but in no
event later than thirty (30) days after request by the other party hereto,
execute, acknowledge and deliver to such other party or to any prospective
purchaser (if such prospective purchaser has signed a commitment letter or
letter of intent to purchase the Leased Property or any part thereof or to
purchase any Note or Certificate), assignee or mortgagee or third party
designated by such other party, a certificate stating (a) that this Lease is
unmodified and in force and effect (or if there have been modifications, that
this Lease is in force and effect as modified, and identifying the
modification agreements); (b) the date to which Basic Rent has been paid; (c)
in the case of an estoppel certificate to be given by Lessee, whether or not
there is any existing default by Lessee in the payment of Basic Rent or any
other sum of money hereunder, and whether or not there is any other existing
Lease Default or Lease Event of Default with respect to which a notice of
default has been served, and, if there is any such default, specifying the
nature and extent thereof; (d) in the case of an estoppel certificate to be
given by Lessee, whether or not, to the knowledge of Lessee after due inquiry
and investigation, there are any purported setoffs, defenses or counterclaims
against enforcement of the obligations to be performed hereunder existing in
favor of Lessee; and (e) other items that may be reasonably requested;
PROVIDED, that no such certificate may be requested unless the requesting
party has a good faith reason for such request. In addition, Lessee,
promptly, but in no event later than thirty (30) days after request by any
other party hereto, shall obtain and deliver to such other party or to any
prospective purchaser (if such prospective purchaser has signed a commitment
letter or letter of intent to purchase the Leased Property or any part
thereof or to purchase any Note or Certificate), assignee, mortgagee or third
party designated by such other party, an estoppel certificate from each
subtenant under each sublease containing such items as reasonably requested
by the party requesting the same; PROVIDED, that no such certificate may be
requested unless the requesting party has a good faith reason for such
request.
22.10. NO JOINT VENTURE. Any intention to create a joint venture or
partnership relation hereunder or pursuant to any other Operative Document
between Lessor and Lessee is hereby expressly disclaimed.
22.11. NO ACCORD AND SATISFACTION. The acceptance by Lessor of any
sums from Lessee (whether as Basic Rent or otherwise) in amounts which are
less than the amounts due and payable by Lessee hereunder is not intended,
nor shall be construed, to constitute an accord and satisfaction of any
dispute between Lessor and Lessee regarding sums due and payable by Lessee
hereunder, unless the Required Participants specifically deem it as such in
writing.
22.12. NO MERGER. In no event shall the leasehold estate of Lessee
hereunder or the rights and interests of the holder of any Notes or
certificates secured by a Lien in this Lease, merge with any interests,
estates or rights of Lessor in or to the Leased Property, it being understood
that such leasehold estate of Lessee hereunder and, the rights and interests
of the holder of any Notes or certificates secured by a Lien in this Lease,
shall be deemed to be separate and distinct from Lessor's interests, estates
and rights in or to the Leased Property,
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notwithstanding that any such interests, estates or rights shall at any time
or times be held by or vested in the same Person.
22.13. SUCCESSOR LESSOR. Lessee agrees that, in the case of the
appointment of any successor certificate trustee pursuant to the Trust
Agreement, such successor certificate trustee shall, upon written notice by
such successor certificate trustee to Lessee, succeed to all the rights,
powers and title of Lessor hereunder and shall be deemed to be Lessor for all
purposes hereof and without in any way altering the terms of this Lease or
Lessee's obligations hereunder.
22.14. SURVIVAL. The obligations of Lessee: (i) to be performed under
this Lease prior to the Lease Expiration Date, (ii) pursuant to SECTIONS 4.1,
4.2, 4.4, ARTICLE V, ARTICLE VI (the last sentence thereof), ARTICLE XVII,
ARTICLE XVIII, ARTICLE XX, ARTICLE XXI and ARTICLE XXII hereof and (iii) under
the other Operative Documents which by their terms survive, shall survive the
expiration or termination of this Lease. The extension of any applicable
statute of limitations by Lessee, any Party or any other Indemnitee shall not
affect such survival.
22.15. TRANSFER OF LEASED PROPERTY.
(a) Whenever pursuant to any provision of this Lease Lessor is
required to transfer the Leased Property to Lessee or to an independent third
party, such transfer shall be made at Lessee's expense by the transfer by a deed
without covenants or warranties of title, except for matters arising by, through
or under Lessor, of all of Lessor's interest in and to the Leased Property on an
"as is, where is, with all faults" basis free and clear of all Lessor Liens and
otherwise without recourse, representation or warranty of any kind, and together
with the due assumption by Lessee (or such third party) of, and due release of
Lessor from, all obligations relating to the Leased Property or any of the
Operative Documents. In connection with any transfer to an independent third
party, Lessee shall execute and deliver such customary and reasonable documents,
certificates and estoppels as may be required to facilitate the transfer of the
Leased Property. Any provision in this Lease or any other Operative Document to
the contrary notwithstanding, Lessor shall not be obligated to make any such
transfer until Lessor and the Participants have received all Rent and other
amounts due and owing hereunder and under the other Operative Documents
including any Break Funding Amount. At or subsequent to the transfer or return
of the Leased Property, Lessee will provide Lessor with such lien and title
searches as Lessor may reasonably request to demonstrate to Lessor's
satisfaction that the Leased Property is subject to no Liens for which Lessor
would be liable under any warranties of title.
(b) Lessee may assign to another Person its right, upon a purchase by
Lessee, to take title to the Leased Property pursuant to SECTION 20.1(b);
PROVIDED, that (i) Lessee shall exercise any option, (ii) such assignee shall be
bound by the provisions of SECTION 20.1(b), (iii) Lessee shall have represented
by an instrument in writing and delivered to Lessor that all necessary
Governmental Actions with respect to such transfer, including the purchase of
the Leased Property by any other Person as contemplated herein, have been
obtained or made, as applicable, and (iv) no such assignment shall release
Lessee from its obligations under the Operative Documents, and Lessee shall
remain personally liable to Lessor for the payment of all amounts due under any
such Section and this SECTION 22.15.
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22.16. ENFORCEMENT OF CERTAIN WARRANTIES.
(a) Unless a Lease Event of Default shall have occurred and be
continuing, Lessor authorizes Lessee (directly or through agents), at Lessee's
expense, to assert, during the Lease Term, all of Lessor's rights (if any) under
any applicable warranty and any other claim that Lessee or Lessor may have under
the warranties provided to Lessor in connection with the Leased Property and
Lessor agrees to cooperate, at Lessee's expense, with Lessee and its agents in
asserting such rights. Any amount recovered by Lessee under any such warranties
shall be paid to Lessee, subject to SECTION 22.17.
(b) Notwithstanding the foregoing provisions of this SECTION 22.16,
so long as a Lease Event of Default or Lease Default shall have occurred and be
continuing, any amount that would otherwise be retained by Lessee pursuant to
SECTION 22.16(a), shall be paid to Lessor as security for the obligations of
Lessee under this Lease, shall be invested by Lessor in accordance with SECTION
23.17 in Permitted Investments and, if a Lease Event of Default is continuing,
may be applied to the obligations of Lessee hereunder, and, at such time
thereafter as no Lease Event of Default or Lease Default shall be continuing,
such amount and gain thereon shall be paid promptly to Lessee to the extent not
previously applied in accordance with the terms of this Lease.
22.17. SECURITY INTEREST IN FUNDS. As long as a Lease Event of Default or
Lease Default shall have occurred and be continuing, any amount that would
otherwise be payable to Lessee under the Operative Documents shall be paid to or
retained by Lessor (including amounts to be paid to Lessee pursuant to ARTICLE
XIII or SECTION 22.16) as security for the performance by Lessee in full of its
obligations under this Lease and the other Operative Documents and, if a Lease
Event of Default is continuing, it may be applied to the obligations of Lessee
hereunder and under the other Operative Documents. At such time as no Lease
Event of Default or Lease Default shall be continuing, such amounts, net of any
amounts previously applied to Lessee's obligations hereunder or under any other
Operative Documents, shall be paid to Lessee. Any such amounts which are held
pending payment to Lessee or application hereunder shall be invested by Lessor
as directed from time to time in writing by Lessee (PROVIDED, HOWEVER, that if a
Lease Event of Default has occurred and is continuing, it will be directed by
Agent), and at the expense and risk of Lessee, in Permitted Investments. Any
gain (including interest received) realized as the result of any such investment
(net of any fees, commissions and other expenses, if any, incurred in connection
with such investment) shall be applied from time to time in the same manner as
the principal invested. Lessee will promptly pay to Lessor on demand, the
amount of any loss realized as the result of any such investment (together with
any fees, commissions and other expenses, if any, incurred in connection with
such investment), such amount to be held, paid and applied in the same manner as
other amounts subject to this SECTION 22.17.
22.18. RECORDING OF DEED OF TRUST AND MEMORANDUM OF LEASE. Concurrently
with the execution and delivery of this Lease, Lessor and Lessee shall
execute, acknowledge and cause to be recorded a Memorandum of Lease and Deed
of Trust for the Leased Property in the official records of San Diego County,
California and in such other places as Lessor deems necessary to perfect the
Liens granted pursuant to this Lease and the other Operative Documents.
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22.19. NATURE OF TRANSACTION. Lessor and Lessee acknowledge and agree
that the intent of the parties with respect to the nature of the transaction is
as set forth in Section 2.7 of the Participation Agreement.
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IN WITNESS WHEREOF, the undersigned have each caused this Lease to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.
UNION BANK OF CALIFORNIA, N.A., not in its
individual capacity except as expressly stated
herein, but solely as Certificate Trustee
By: /s/ Andrew R. Ball
----------------------------------
Name Printed: Andrew R. Ball
Title: Vice President
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REMEC, INC., as Lessee
By: /s/ Michael McDonald
--------------------------------------
Name Printed: Michael McDonald
Title: Chief Financial Officer
S-2
SCHEDULE I
TO LEASE SUPPLEMENT
LEGAL DESCRIPTION OF LAND
Name: 9404 Chesapeake Drive
Legal Description: LOT 45 OF HAZARD COMMERCIAL PARK, IN THE CITY OF SAN DIEGO,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP
THEREOF NO. 8503, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY ON FEBRUARY 25, 1977.
Name: 5775, 5785, and 5788 Roscoe Court
Legal Description: LOT 46 AND 47 OF HAZARD COMMERCIAL PARK, IN THE CITY OF SAN
DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING
TO MAP THEREOF NO. 8503, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY ON FEBRUARY 25, 1977.
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