Prepared by and upon recording return to:
John R. Grier, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
================================================================================
MASTER LEASE
dated as of August 22, 1997
between
LEASE PLAN NORTH AMERICA, INC.,
as the Lessor
and
QUANTUM CORPORATION,
as the Lessee
================================================================================
Specialty Storage Product Group Facilities
================================================================================
This Lease is superior to a deed of trust in favor of ABN AMRO Bank N.V., San
Francisco International Branch, as Agent (the "Agent") under the Participation
Agreement, dated as of August 22, 1997, among the Lessee, the Lessor, the Agent
and the Participants. This Lease has been executed in 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 the Agent on the signature page hereof.
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE FOR INCOME TAX PURPOSES.
SEE ARTICLE VII.
MASTER LEASE
THIS MASTER LEASE (including all Lease Supplements and
Equipment Schedules from time to time executed and delivered, this "Lease"),
dated as of August 22, 1997,
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TABLE OF CONTENTS
ARTICLE I.........................................................................................................2
1.1. Definitions; Interpretation.....................................................................2
ARTICLE II........................................................................................................2
2.1. Acceptance and Lease of Property................................................................2
2.2. Acceptance Procedure............................................................................3
2.3. Lease Term......................................................................................3
2.4. Title...........................................................................................3
ARTICLE III.......................................................................................................4
3.1. Rent............................................................................................4
3.2. Payment of Basic Rent...........................................................................4
3.3. Supplemental Rent...............................................................................4
3.4. Method of Payment...............................................................................4
ARTICLE IV........................................................................................................5
4.1. Utility Charges.................................................................................5
ARTICLE V.........................................................................................................5
5.1. Quiet Enjoyment.................................................................................5
ARTICLE VI........................................................................................................5
6.1. Net Lease.......................................................................................5
6.2. No Termination or Abatement.....................................................................6
ARTICLE VII.......................................................................................................7
7.1. Ownership of the Property.......................................................................7
ARTICLE VIII......................................................................................................9
8.1. Condition of the Property.......................................................................9
8.2. Possession and Use of the Property..............................................................9
ARTICLE IX........................................................................................................9
9.1. Compliance with Requirements of Law and Insurance Requirements..................................9
ARTICLE X........................................................................................................10
10.1. Maintenance and Repair; Return.................................................................10
ARTICLE XI.......................................................................................................11
11.1. Modifications, Substitutions and Replacements..................................................11
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ARTICLE XII......................................................................................................11
12.1. Warranty of Title..............................................................................11
12.2. Grants and Releases of Easements...............................................................12
ARTICLE XIII.....................................................................................................12
13.1. Permitted Contests Other Than in Respect of Indemnities........................................12
ARTICLE XIV......................................................................................................13
14.1. Public Liability and Workers' Compensation Insurance...........................................13
14.2. Hazard and Other Insurance.....................................................................14
14.3. Coverage.......................................................................................14
14.4. Indemnification................................................................................15
ARTICLE XV.......................................................................................................16
15.1. Casualty and Condemnation......................................................................16
15.2. Environmental Matters..........................................................................18
15.3. Notice of Environmental Matters................................................................18
ARTICLE XVI......................................................................................................19
16.1. Termination by the Lessee upon Certain Events..................................................19
16.2. Procedures.....................................................................................19
16.3. Termination by the Lessor upon Certain Events..................................................19
16.4. Purchase of Property...........................................................................20
ARTICLE XVII.....................................................................................................20
17.1. Lease Events of Default........................................................................20
17.2. Remedies.......................................................................................23
17.3. Waiver of Certain Rights.......................................................................25
17.4. Power of Sale and Foreclosure..................................................................26
17.5. Remedies Cumulative............................................................................26
17.6. Lessee's Right to Cure.........................................................................26
ARTICLE XVIII....................................................................................................27
18.1. The Lessor's Right to Cure the Lessee's Lease Defaults.........................................27
ARTICLE XIX......................................................................................................27
19.1. Provisions Relating to the Lessee's Termination of this Lease or Exercise of
Purchase Option or Obligation and Conveyance Upon Remarketing and
Conveyance Upon Certain Other Events...........................................................27
ARTICLE XX.......................................................................................................28
20.1. Purchase Option................................................................................28
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20.2. Expiration Date Purchase Obligation............................................................28
20.3. Acceleration of Purchase Obligation............................................................29
ARTICLE XXI......................................................................................................29
21.1. Renewal........................................................................................29
ARTICLE XXII.....................................................................................................30
22.1. Option to Remarket.............................................................................30
22.2. Certain Obligations Continue...................................................................33
22.3. Support Obligations............................................................................33
ARTICLE XXIII....................................................................................................33
23.1. Holding Over...................................................................................33
ARTICLE XXIV.....................................................................................................34
24.1. Risk of Loss...................................................................................34
ARTICLE XXV......................................................................................................34
25.1. Subletting and Assignment......................................................................34
ARTICLE XXVI.....................................................................................................35
26.1. Estoppel Certificates..........................................................................35
ARTICLE XXVII....................................................................................................35
27.1. Right to Inspect...............................................................................35
27.2. No Waiver......................................................................................35
ARTICLE XXVIII...................................................................................................35
28.1. Acceptance of Surrender........................................................................36
ARTICLE XXIX.....................................................................................................36
29.1. No Merger of Title.............................................................................36
ARTICLE XXX......................................................................................................36
30.1. Notices........................................................................................36
ARTICLE XXXI.....................................................................................................37
31.1. Miscellaneous..................................................................................37
31.2. Amendments and Modifications...................................................................37
31.3. Successors and Assigns.........................................................................37
31.4. Headings and Table of Contents.................................................................38
31.5. Counterparts...................................................................................38
31.6. GOVERNING LAW..................................................................................38
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31.7. Limitations on Recourse........................................................................38
31.8. Original Lease.................................................................................38
31.9. Usury Savings Clause...........................................................................39
iv
APPENDICES
SCHEDULE 1 Amortization of Property Improvements Cost
EXHIBITS
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Equipment Schedule
SCHEDULE
APPENDIX I Definitions and Interpretation
v
between LEASE PLAN NORTH AMERICA, INC., an Illinois corporation, having its
principal office at 135 S. LaSalle Street, Chicago, Illinois 60603, as the
lessor (the "Lessor"), and QUANTUM CORPORATION, a Delaware corporation, having a
principal office at 500 McCarthy Boulevard, Milpitas, California 95305, as the
lessee (the "Lessee").
W I T N E S S E T H:
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A. WHEREAS, the Lessor will purchase the Land Interest from the
Existing Owner on the Land Interest Acquisition Date;
B. WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee
desires to lease from the Lessor, such Property; and
C. WHEREAS, with respect to such Property the Lessee, as Construction
Agent, will construct certain Improvements which as constructed will be the
property of the Lessor and will become part of such Property and subject to the
terms of this Lease;
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1. Definitions; Interpretation. Capitalized terms used but not
otherwise defined in this Lease have the respective meanings specified in
Appendix 1 to this Lease; and the rules of interpretation set forth in Appendix
1 to this Lease shall apply to this Lease.
ARTICLE II
2.1. Acceptance and Lease of Property. Effective as of the Effective
Date, the Lessor, subject to the satisfaction or waiver of the conditions set
forth in Section 6 of the Participation Agreement, hereby agrees to accept
delivery of the Land Interest to be delivered on the Land Interest Acquisition
Date pursuant to the terms of the Participation Agreement, and simultaneously to
lease to the Lessee hereunder for the Term (as defined in Section 2.3), the
Lessor's interest in such Land Interest and the Lessor's interest in any
Improvements existing thereon, and to lease to the Lessee any Improvements which
thereafter may be constructed thereon and any Equipment, if any, which may be
purchased, utilizing proceeds of an Advance, for use in connection therewith
pursuant to the Construction Agency Agreement, this Lease or the Participation
Agreement, and the Lessee hereby agrees, expressly for the direct benefit of the
Lessor, to lease commencing on the Land Interest Acquisition Date from the
Lessor for the Term, the Lessor's interest in such Land Interest to be delivered
on such Land Interest Acquisition Date and any Improvements existing thereon and
to lease any Improvements which thereafter may be
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constructed thereon and such Equipment pursuant to the Construction Agency
Agreement, this Lease and the Participation Agreement.
2.2. Acceptance Procedure. (a) The Lessor hereby authorizes one or more
employees of the Lessee, to be designated by the Lessee, as the authorized
representative or representatives of the Lessor to accept delivery on behalf of
the Lessor of the Property identified on the Acquisition Request or an Equipment
Schedule.
(b) The Lessee hereby agrees that such acceptance of delivery by such
authorized representative or representatives and the execution and delivery by
the Lessee on the Land Interest Acquisition Date of a Lease Supplement in the
form of Exhibit A hereto (appropriately completed) shall, without further act,
constitute the irrevocable acceptance by the Lessee of the Property which is the
subject thereof for all purposes of this Lease and the other Operative Documents
on the terms set forth therein and herein, and that the Property (including the
Improvements constructed thereon) shall be deemed to be included in the
leasehold estate of this Lease and shall be subject to the terms and conditions
of this Lease as of the Land Interest Acquisition Date.
(c) The Lessee hereby agrees that such acceptance of delivery by such
authorized representative or representatives and the execution and delivery by
the Lessee of an Equipment Schedule in the form of Exhibit B hereto
(appropriately completed) on or prior to the applicable Funding Date with
respect to the acquisition of Equipment shall, without further act, constitute
the irrevocable acceptance of the Equipment which is the subject thereof for all
purposes of this Lease and the other Operative Documents on the terms set forth
therein and herein, and that the Equipment shall be deemed to be included in the
leasehold estate of this Lease and shall be subject to the terms and conditions
of this Lease as of such Funding Date.
2.3. Lease Term. The term of this Lease (the "Term") shall begin on the
Land Interest Acquisition Date and shall end on the fifth anniversary of the
Effective Date, unless the Term is renewed or earlier terminated in accordance
with the provisions of this Lease.
2.4. Title. The Property is leased to the Lessee without any
representation or warranty of title, condition of the Improvements or permitted
uses, express or implied, by the Lessor and subject to the rights of parties in
possession, the existing state of title (including, without limitation, the
Permitted Exceptions) and all applicable Requirements of Law. The Lessee shall
in no event have any recourse against the Lessor for any defect in or exception
to title to the Property, other than for any such defect or exception
constituting a Lessor Lien. The Lessee expressly waives and releases the Lessor
from any common law or statutory covenant of quiet enjoyment, provided that the
Lessor shall be obligated to remove Lessor Liens.
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ARTICLE III
3.1. Rent. (a) During the Term, the Lessee shall pay Basic Rent on each
Payment Date, on the date required under Section 22.1(i) in connection with the
Lessee's exercise of the Remarketing Option and on any date on which this Lease
shall terminate.
(b) Basic Rent shall be due and payable (i) during the Construction
Period, in the manner set forth in Section 3.8(d) of the Participation Agreement
and (ii) thereafter, in lawful money of the United States and shall be paid by
wire transfer of immediately available funds on the due date therefor to such
account or accounts at such bank or banks or to the Agent or in such other
manner as the Agent shall from time to time direct.
(c) Neither the Lessee's inability or failure to take possession of all
or any portion of the Property when delivered by the Lessor, nor the Lessor's
inability or failure to deliver all or any portion of the Property to the Lessee
on or before the Land Interest Acquisition Date or the applicable Funding Date,
whether or not attributable to any act or omission of the Lessee or any act or
omission of the Lessor, or for any other reason whatsoever, shall delay or
otherwise affect the Lessee's obligation to pay Rent for the Property from and
after commencement of the Term.
3.2. Payment of Basic Rent. Basic Rent shall be paid absolutely net to
the Lessor, so that this Lease shall yield to the Lessor the full amount
thereof, without setoff, deduction or reduction, whether or not the Lessee's
quiet possession of the Property is disturbed, except as otherwise expressed
herein and in Section 13.5(e) of the Participation Agreement.
3.3. Supplemental Rent. The Lessee shall pay to the Lessor or the
Person entitled thereto any and all Supplemental Rent promptly as the same shall
become due and payable, and if the Lessee fails to pay any Supplemental Rent,
the Lessor shall have all rights, powers and remedies provided for herein or by
law or equity or otherwise in the case of nonpayment of Basic Rent. The Lessee
shall pay to the Lessor, as Supplemental Rent, among other things, on demand, to
the extent permitted by Applicable Law, interest at the applicable Overdue Rate
on any installment of Basic Rent not paid when due for the period for which the
same shall be overdue and on any payment of Supplemental Rent not paid when due
or demanded by the Lessor for the period from the due date or the date of any
such demand, as the case may be, until the same shall be paid. The expiration or
other termination of the Lessee's obligations to pay Basic Rent hereunder shall
not limit or modify the obligations of the Lessee with respect to Supplemental
Rent. Unless expressly provided otherwise in this Lease, in the event of any
failure on the part of the Lessee to pay and discharge any Supplemental Rent as
and when due, the 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.
3.4. Method of Payment. Each payment of Rent shall be made by the
Lessee to the Agent by 12:00 noon, San Francisco time 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,
unless such scheduled date shall not be a Business Day,
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in which case such payment shall be made on the next succeeding Business Day or
as otherwise required by the definition of the term "Interest Period" set forth
in Appendix 1 hereto. Payments initiated after 12:00 noon, San Francisco time
shall be deemed received on the next succeeding Business Day.
ARTICLE IV
4.1. Utility Charges. The 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 Property during the
Term. The Lessee shall be entitled to receive any credit or refund with respect
to any utility charge paid by the Lessee and the amount of any credit or refund
received by the Lessor on account of any utility charges paid by the Lessee, net
of the costs and expenses reasonably incurred by the Lessor in obtaining such
credit or refund, shall be promptly paid over to the Lessee. All charges for
utilities imposed with respect to the Property for a billing period during which
this Lease expires or terminates shall be adjusted and prorated on a daily basis
between the Lessor and the Lessee, and each party shall pay or reimburse the
other for each party's pro rata share thereof, except that if the Lessee retains
possession of the Property after termination or expiration of this Lease, no
such adjustment and proration shall be made.
ARTICLE V
5.1. Quiet Enjoyment. Subject to the rights of the Lessor contained in
Section 17.2 and the other terms of this Lease and so long as no Event of
Default shall have occurred and be continuing, the Lessee shall peaceably and
quietly have, hold and enjoy the property for the Term, free of any claim or
other action by the Lessor or anyone rightfully claiming by, through or under
the Lessor (other than the Lessee) with respect to any matters arising from and
after the first day of the Lease Term.
ARTICLE VI
6.1. Net Lease. This Lease shall constitute a net lease. It is the
further express intent of Lessor and Lessee that the obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
that the Basic Rent and Supplemental Rent, and all other charges and sums
payable by Lessee hereunder, shall commence at the times provided herein and
shall continue to be payable in all events unless the obligations to pay the
same shall be terminated pursuant to an express provision in this Lease. Any
present or future law to the contrary notwithstanding, this Lease shall not
terminate, nor shall the Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent,
nor shall the obligations of the Lessee hereunder be affected (except as
expressly herein permitted and by performance of the obligations in connection
therewith) by reason of: (i) any defect in the condition, merchantability,
design, construction, quality or fitness for use of the Property or any part
thereof, or the failure of the Property to comply with all Requirements of Law,
including any inability to occupy or use the Property by reason of such
non-compliance; (ii) any damage to, removal, abandonment, salvage, loss,
contamination of or Release from, scrapping or destruction of or any requisition
or taking of the Property or any part thereof; (iii) any restriction, prevention
or curtailment of or interference with any use of the
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Property or any part thereof including eviction; (iv) any defect in title to or
rights to the Property or any Lien on such title or rights or on the Property
(other than Lessor Liens); (v) any change, waiver, extension, indulgence or
other action or omission or breach in respect of any obligation or liability of
or by the Lessor, the Agent or any Participant; (vi) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceedings relating to the Lessee, the Lessor, the Agent, any Participant, or
any other Person, or any action taken with respect to this Lease by any trustee
or receiver of the Lessee, the Lessor, the Agent, any Participant or any other
Person, or by any court, in any such proceeding; (vii) any claim that the Lessee
has or might have against any Person, including without limitation the Lessor,
any vendor, manufacturer, contractor of or for the Property, the Agent or any
Participant; (viii) any failure on the part of the Lessor to perform or comply
with any of the terms of this Lease, any other Operative Document or any other
agreement; (ix) any invalidity or unenforceability or illegality or
disaffirmance of this Lease or against or by the Lessee or any provision hereof
or any of the other Operative Documents or any provision of any thereof; (x) the
impossibility or illegality of performance by the Lessee, the Lessor or both;
(xi) any action by any court, administrative agency or other Governmental
Authority; (xii) any restriction, prevention or curtailment of or interference
with the construction on or any use of the Property or any part thereof; or
(xiii) any other cause or circumstances whether similar or dissimilar to the
foregoing and whether or not the Lessee shall have notice or knowledge of any of
the foregoing. The parties intend that the obligations of the Lessee hereunder
shall be covenants and agreements that are separate and independent from any
obligations of the Lessor hereunder or under any other Operative Documents and
the obligations of the Lessee shall continue unaffected unless such obligations
shall have been modified or terminated in accordance with an express provision
of this Lease.
6.2. No Termination or Abatement. The Lessee shall remain obligated
under this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting the Lessor, the Agent or any Participant, or any action
with respect to this Lease or any Operative Document which may be taken by any
trustee, receiver or liquidator of the Lessor, the Agent or any Participant or
by any court with respect to the Lessor, the Agent or any Participant. The
Lessee hereby waives all right (i) to terminate or surrender this Lease (except
as provided herein) or (ii) except as otherwise provided in this Lease or the
Participation Agreement with regard to withholding taxes, to avail itself of any
abatement, suspension, deferment, reduction, setoff, counterclaim or defense
(other than the defense of payment) with respect to any Rent. The Lessee shall
remain obligated under this Lease in accordance with its terms and the Lessee
hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, the Lessee shall be
bound by all of the terms and conditions contained in this Lease.
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ARTICLE VII
7.1. Ownership of the Property. (a) It is the intent of the parties
hereto that: (i) this Lease constitutes an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, for purposes of
Lessee's financial reporting, and (ii) for purposes of federal, state, and local
income or franchise taxes and for any other tax imposed on or measured by
income, the transaction contemplated hereby is a financing arrangement and
preserves ownership in the Property in the Lessee. Nevertheless, the Lessee and
the Lessor acknowledge and agree that none of the Lessee, the Agent, the Lessor
nor any Participant has made any representations or warranties to the Lessee
concerning the tax, accounting or legal characteristics of the Operative
Documents and that they have obtained and relied upon such tax, accounting and
legal advice concerning the Operative Documents as they deem appropriate.
Accordingly, and notwithstanding any provision of this Lease to the contrary,
the Lessor and the Lessee agree and declare that: (i) the transactions
contemplated hereby are intended to have a dual, rather than a single, form; and
(ii) all references in this Lease to the "lease" of the Property which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of the Lessor and the Lessee as to the true form of such
arrangements.
(b) Anything to the contrary in the Operative Documents
notwithstanding, the Lessor and the Lessee intend and agree that with respect to
the nature of the transactions evidenced by this Lease in the context of the
exercise of remedies under the Operative Documents, including, without
limitation, in the case of any insolvency or receivership proceedings or a
petition under the United States bankruptcy laws or any other applicable
insolvency laws or statute of the United States of America or any State or
Commonwealth thereof affecting the Lessee, the Lessor, or any Participant or any
enforcement or collection actions, (i) the transactions evidenced by this Lease
are loans made by the Lessor and the Participants as unrelated third party
lenders to the Lessee secured by the Property, (ii) the obligations of the
Lessee under this Lease to pay Basic Rent and Supplemental Rent or Asset
Termination Value in connection with a purchase of the Property pursuant to this
Lease shall be treated as payments of interest on and principal of,
respectively, loans from the Lessor and the Participants to the Lessee, and
(iii) this Lease grants a security interest and mortgage or deed of trust or
lien, as the case may be, in the Property and the collateral described in the
Mortgage to the Lessor, the Agent and the Participants to secure the Lessee's
performance under and payment of all amounts under this Lease and the other
Operative Documents.
(c) Specifically, without limiting the generality of subsection (b) of
this Section 7.1, the Lessor and the Lessee further intend and agree that, for
the purpose of securing the Lessee's obligations for the repayment of the
above-described loans from the Lessor and the Participants to the Lessee, (i)
this Lease shall also be deemed to be a security agreement and financing
statement within the meaning of Article 9 of the Uniform Commercial Code (and
specifically, a construction mortgage, as said term is defined in Section
9-313(1)(c) of the Uniform Commercial Code) and a real property mortgage or deed
of trust; (ii) the conveyance provided for in Article II shall be deemed to be a
grant by the Lessee to the Lessor, the Agent and the Participants of a mortgage
lien and security interest in all of the Lessee's right, title and interest
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in and to the Property and the collateral described in the Mortgage and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, investments, securities or other property, whether in the form of cash,
investments, securities or other property (it being understood that the Lessee
hereby mortgages and warrants and grants a security interest in the Property and
the collateral described in the Mortgage to the Lessor, the Agent and the
Participants to secure such loans); (iii) the possession by the Lessor or any of
its agents of notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the Uniform Commercial Code; and (iv) all Accounts
established with Defeasance Deposit Depositary Bank pursuant to the Cash
Collateral Agreement shall be "Security Accounts" within the meaning of Section
8501 of the UCC, all Collateral from time to time on deposit in any such Account
shall be deemed to be a "Financial Asset" within the meaning of Section
8102(a)(9) of the UCC, and the execution and delivery by Lessee and Agent of the
Notice of Security Interest attached to the Cash Collateral Agreement as
Attachment No. 2 and the execution and delivery of the Acknowledgement and
Agreement of Depositary Bank attached to the Notice of Security Interest shall
be deemed to grant to Agent "control" of the Collateral within the meaning of
Section 8106 of the UCC for the purpose of perfecting a security interest in a
Financial Asset pursuant to Section 9115(1)(e) of the UCC; provided however, if
any Account is determined to be a deposit account within the meaning of Section
9302(1)(g) of the UCC, the Notice of Security Interest delivered pursuant to the
Cash Collateral Agreement constitutes notice for the purpose of perfecting a
security interest in a deposit account pursuant to that Section. The Lessor and
the Lessee shall, to the extent consistent with this Lease, take such actions
and execute, deliver, file and record such other documents, financing
statements, mortgages and deeds of trust as may be necessary to ensure that, if
this Lease were deemed to create a security interest in the Property in
accordance with this Section, such security interest would be deemed to be a
perfected security interest of first priority under Applicable Law and will be
maintained as such throughout the Term.
(d) Specifically, without limiting the generality of anything contained
in this Section 7.1, the Lessor and the Lessee further intend and agree that,
for purposes of filing federal, state and local returns, reports and other
statements relating to income or franchise taxes, or any other taxes imposed
upon or measured by income, (i) the Lessee shall be entitled to take any
deduction, credit, allowance or other reporting position consistent with its
status as owner of the Property; and (ii) neither the Lessor nor the
Participants shall take a position on their respective federal, state and local
returns, reports and other statements relating to income or franchise taxes that
is inconsistent with the Lessee's status as owner of the Property, provided that
the Lessor and any Participant may take a position that is inconsistent with the
Lessee's status as owner of the Property if: (x) there has been a change in law
or regulation so requiring as supported by an opinion of counsel reasonably
acceptable to the Lessee that there is not substantial authority for such a
consistent reporting position; or (y) (A) there has been an administrative or
judicial holding that the Lessee is not the owner of the Property for such tax
purposes, (B) the Lessee has no right to contest such holding pursuant to
Section 13.5 of the Participation Agreement, and (C) the Lessee's lack of right
to contest is not the result of an Indemnitee's waiver of its right to
indemnification pursuant to Section 13.5(f)(iii) of the Participation Agreement
or failure of
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the amount at issue to exceed the minimum amount set forth in Section
13.5(f)(iv)(B) of the Participation Agreement.
ARTICLE VIII
8.1. Condition of the Property. THE LESSEE ACKNOWLEDGES AND AGREES THAT
ALTHOUGH THE LESSOR WILL HOLD FEE TITLE TO THE PROPERTY, THE LESSEE IS SOLELY
RESPONSIBLE FOR THE IMPROVEMENTS AND ANY ALTERATIONS OR MODIFICATIONS. THE
LESSEE FURTHER ACKNOWLEDGES AND AGREES THAT IT IS LEASING THE PROPERTY "AS IS"
WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR,
THE AGENT OR ANY PARTICIPANT AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE
OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF
FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND (D)
VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE HEREOF. NEITHER
THE LESSOR, THE AGENT NOR ANY PARTICIPANT HAS MADE OR SHALL BE DEEMED TO HAVE
MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) OR SHALL BE
DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (INCLUDING BUT NOT
LIMITED TO ANY IMPLIED LIABILITY RELATING TO A COVENANT OF QUIET ENJOYMENT,
WHICH THE LESSEE HEREBY EXPRESSLY WAIVES), VALUE, HABITABILITY, USE, CONDITION,
DESIGN, OPERATION, OR FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR
ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND NEITHER THE LESSOR, THE
AGENT NOR ANY PARTICIPANT SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREIN OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY REQUIREMENT OF LAW. THE FOREGOING IS SUBJECT TO THE PROVISIONS OF
SECTION 5.1 HEREOF AND SECTION 10.3(a) OF THE PARTICIPATION AGREEMENT.
8.2. Possession and Use of the Property. The Property may be used only
for such purposes as are permitted by Applicable Law and consistent with all
Insurance Requirements and in compliance with any covenants, conditions and
restrictions of record and any ordinance or law affecting the use and occupancy
of the Property; and provided that such uses do not Materially increase the
liability, directly or indirectly, of the Lessor or Materially adversely affect
the value, utility or remaining useful life of the Property from that which
would obtain if the Property were to be used as administration, manufacturing,
design, research and development and warehouse facilities. The Lessee shall pay,
or cause to be paid, all charges and costs required in connection with the use
of the Property as contemplated by this Lease and the Construction Agency
Agreement. The Lessee shall not commit or permit any waste of the Property or
any part thereof (provided, that waste shall not include ordinary wear and tear
and damage by fire or other peril).
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ARTICLE IX
9.1. Compliance with Requirements of Law and Insurance Requirements.
Subject to the terms of Article XIII relating to permitted contests, the Lessee,
at its sole cost and expense, shall (a) comply with all Requirements of Law
(including all Environmental Laws) and comply with all Insurance Requirements
relating to the Property, including the construction, use, operation,
maintenance, repair and restoration thereof and the remarketing thereof pursuant
to Article XXII, whether or not compliance therewith shall require structural or
extraordinary changes in the Improvements or interfere with the use and
enjoyment of the Property, and (b) procure, maintain and comply with all
licenses, permits, orders, approvals, consents and other authorizations required
for the construction, use, maintenance and operation of the Property and for the
use, operation, maintenance, repair and restoration of the Improvements.
ARTICLE X
10.1. Maintenance and Repair; Return. (a) Except for ordinary wear and
tear, the Lessee, at its sole cost and expense, shall maintain the Property in
good working order, mechanical condition and repair and make all necessary
repairs thereto, of every kind and nature whatsoever, whether interior or
exterior, ordinary or extraordinary, structural or nonstructural or foreseen or
unforeseen, in each case as required by all Requirements of Law and Insurance
Requirements and on a basis consistent with the operation and maintenance of
commercial properties comparable in type and location to the Property and in
compliance with prudent industry practice.
(b) The Lessor shall under no circumstances be required to build any
improvements on the Property, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease (except for Advances required under the
Participation Agreement) or maintain the Property in any way. The Lessor shall
not be required to maintain, repair or rebuild all or any part of the Property,
and the Lessee waives any right to (i) require the Lessor to maintain, repair,
or rebuild all or any part of the Property, or (ii) make repairs at the expense
of the Lessor pursuant to any Requirement of Law, Insurance Requirement,
contract, agreement, or covenant, condition or restriction in effect at any time
during the Term.
(c) The Lessee shall, upon the expiration or earlier termination of
this Lease, vacate and surrender the Property to the Lessor in its then-current,
"AS IS" condition, subject to Sections 9.1, 10.1(a), 11.1, 12.1, 15.1(e), 15.2,
20.1, 22.1 and 23.1.
(d) The Lessee warrants that it shall cause the Improvements currently
under construction or currently planned to be constructed on the Property to be
designed and constructed in a workmanlike manner and in accordance with all
Requirements of Law, prior to the Outside Completion Date so that, prior to such
date, such Improvements will be fit for their intended purpose.
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ARTICLE XI
11.1. Modifications, Substitutions and Replacements. (a) The Lessee, at
its sole cost and expense, may at any time and from time to time make
alterations, renovations, improvements and additions to the Property or any part
thereof and substitutions and replacements therefor (collectively,
"Modifications"); provided that: (i) no Modification shall Materially impair the
value, utility or useful life of the Property or any part thereof from that
which existed immediately prior to such Modification; (ii) the Modification
shall be done expeditiously and in a good and workmanlike manner; (iii) subject
to the provisions of Article XIII concerning contests, the Lessee shall comply
with all Requirements of Law (including all Environmental Laws) and comply with
all Insurance Requirements applicable to the Modification, including the
obtaining of all permits and certificates of occupancy, and the structural
integrity of the Property shall not be adversely affected; (iv) subject to the
terms of Article XIII relating to permitted contests, the Lessee shall pay all
costs and expenses and shall discharge (or cause to be insured or bonded over)
within sixty (60) days after the same shall be filed (or otherwise become
effective) any Liens arising with respect to the Modification; and (v) such
Modifications shall comply with Sections 8.2 and 10.1. All Modifications
required to be made pursuant to a Requirement of Law generally applicable to
buildings comparable to the Property or an Insurance Requirement ("Required
Modification") and all Modifications which are replacements or substitutions of
the Property, all Modifications of the utility and building services Equipment
and sections of the Improvements which are not readily removable without
impairing the utility or remaining useful life of the Property shall remain part
of the realty and shall be subject to this Lease, and title thereto shall
immediately vest in the Lessor. All other Modifications and all trade fixtures,
machinery, equipment or other tangible personal property (other than Equipment
or replacements or substitutions for Equipment) shall at all times be Lessee's
property ("Lessee's Property") and Lessee may remove the same at any time during
the Term, subject, however, to the terms of Section 10.1(a); provided that such
trade fixtures, machinery, equipment or other property do not impair the value,
utility or remaining useful life of the Property; provided, further, that the
Lessee shall keep and maintain at the Property and shall not remove from the
Property any Equipment.
(b) The Lessee shall deliver to the Lessor and the Agent a brief
written narrative of any Modification, other than as described in the Plans and
Specifications delivered by the Lessee to the Lessor and the Agent on the Land
Interest Acquisition Date, to be done in connection with any Modification to the
Property the cost of which is anticipated to exceed $500,000 in the aggregate.
ARTICLE XII
12.1. Warranty of Title. (a) The Lessee agrees that except as otherwise
provided herein and subject to the terms of Article XIII relating to permitted
contests, the 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 Property (or the
Lessor's interest therein) or any Modifications or any Lien, attachment, levy or
claim with respect
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to the Rent or with respect to any amounts held by the Agent pursuant to the
Participation Agreement or the other Operative Documents, other than Permitted
Exceptions and Lessor Liens.
(b) Nothing contained in this Lease shall be construed as constituting
the consent or request of the 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 the Property
or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR, ANY
PARTICIPANT NOR THE AGENT IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE OR TO ANYONE HOLDING THE
PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE AND THAT NO MECHANIC'S
OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF THE LESSOR IN AND TO THE PROPERTY.
12.2. Grants and Releases of Easements. Provided that no Lease Event of
Default shall have occurred and be continuing and subject to the provisions of
Articles VIII, IX, X and XI, the Lessor hereby consents in each instance to the
following actions by the Lessee, in the name and stead of the Lessor, but at the
Lessee's sole cost and expense: (a) the granting of easements, licenses,
rights-of-way and other rights and privileges in the nature of easements
reasonably necessary or desirable for the completion of construction of the
Improvements, use, repair, operation or maintenance of the Property as herein
provided; (b) the release of existing easements or other rights in the nature of
easements which are for the benefit of the Property; (c) the execution of
petitions to have the Property annexed to any municipal corporation or utility
district; and (d) the execution of amendments to any covenants and restrictions
affecting the Property; provided, however, in each case the Lessee shall have
delivered to the Lessor a Responsible Officer's Certificate stating that (i)
such grant, release, dedication or transfer does not materially impair the
value, utility and remaining useful life of the Property, (ii) such grant,
release, dedication or transfer is reasonably necessary in connection with the
completion of construction of the Improvements, use, operation maintenance,
alteration or improvement of the Property, (iii) the Lessee shall remain
obligated under this Lease and under any instrument executed by the Lessee
consenting to the assignment of the Lessor's interest in this Lease as security
for indebtedness, in each such case in accordance with their terms, as though
such grant, release, dedication or transfer, had not been effected, and (iv) the
Lessee shall pay and perform any obligations of the Lessor under such grant,
release, dedication or transfer, and (v) such easements, rights-of-way and other
rights shall be subordinate and subject to the Lien of the Mortgage. Without
limiting the effectiveness of the foregoing, provided that no Lease Event of
Default shall have occurred and be continuing, the Lessor shall, upon the
request of the Lessee, and at the Lessee's sole cost and expense, execute and
deliver any instruments necessary or appropriate to confirm any such grant,
release, dedication or transfer to any Person permitted under this Section 12.2.
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ARTICLE XIII
13.1. Permitted Contests Other Than in Respect of Indemnities. Except
to the extent otherwise provided for in Section 13 of the Participation
Agreement, the Lessee, on its own or on the Lessor's behalf but at the Lessee's
sole cost and expense, may contest, by appropriate administrative or judicial
proceedings conducted in good faith and with due diligence, the amount, validity
or application, in whole or in part, of any Requirement of Law, or utility
charges payable pursuant to Section 4.1 or any Lien, attachment, levy,
encumbrance or encroachment, and the Lessor agrees not to pay, settle or
otherwise compromise any such item, provided that (a) the commencement and
continuation of such proceedings shall suspend the collection thereof from, and
suspend the enforcement thereof against, the Property, the Lessor, the Agent and
the Participants or the Lessee shall have bonded or otherwise secured such
amount in a manner satisfactory to the Lessor and the Agent; (b) there shall be
no risk of the imposition of a Lien (other than Permitted Exceptions or Liens
for which adequate security (in the opinion of the Lessor) for payments in the
event of an unsuccessful contest has been posted) on the Property and no part of
the Property nor any Rent would be in any danger of being sold, forfeited, lost
or deferred; (c) at no time during the permitted contest shall there be a risk
of the imposition of criminal liability or material civil liability on the
Lessor, the Agent or any Participant for failure to comply therewith (unless, in
the case of civil liability, the Lessee shall have bonded or otherwise secured
such amount in a manner satisfactory to the Lessor and the Agent); and (d) in
the event that, at any time, there shall be a material risk of extending the
application of such item beyond the end of the Term, then the Lessee shall
deliver to the Lessor a Responsible Officer's Certificate certifying as to the
matters set forth in clauses (a), (b) and (c) of this Section 13.1. The Lessor,
at the Lessee's sole cost and expense, shall execute and deliver to the Lessee
such authorizations and other documents as may reasonably be required in
connection with any such contest and, if reasonably requested by the Lessee,
shall join as a party therein at the Lessee's sole cost and expense.
ARTICLE XIV
14.1. Public Liability and Workers' Compensation Insurance. During the
Term, the Lessee shall procure and carry, at the Lessee's sole cost and expense,
commercial general liability insurance, including contractual liability, for
claims for injuries or death sustained by persons or damage to property while on
the Property and such other public liability coverages as are ordinarily
procured by Persons who own or operate similar properties and consistent with
prudent business practice, which policies shall include contractual liability
endorsements covering the Lessee's indemnification obligations in Section 14.4.
Such insurance shall be on terms and in amounts (which shall be reasonably
acceptable to the Lessor and in the event of liability insurance shall not
require coverage in excess of $10,000,000) that are no less favorable than
insurance maintained by the Lessee with respect to similar properties that it
owns and that are in accordance with prudent business practice and may be
provided under blanket policies maintained by or on behalf of the Lessee. The
policy shall be endorsed to name the Lessor, the Agent and each Participant as
additional insureds. The policy shall also
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specifically provide that the policy shall be considered primary insurance which
shall apply to any loss or claim before any contribution by any insurance which
the Lessor, the Agent or the Participants may have in force. The Lessee shall,
in the construction of the Improvements and the operation of the Property
(including in connection with any Modifications thereof) comply with the
applicable workers' compensation laws and protect the Lessor, the Agent and the
Participants against any liability under such laws.
14.2. Hazard and Other Insurance. During the Term, the Lessee shall
keep, or cause to be kept, the Property insured against loss or damage by fire,
flood, and other risks typically included in policies in the state of Colorado
for facilities similar to the Property in an amount not less than the then
current replacement cost of the buildings and improvements on the Property
(provided, that the Lessee's flood insurance may have a sublimit of not less
than $50,000,000) and on terms that are no less favorable than insurance
covering other similar properties owned or leased by the Lessee or any of its
Affiliates and that are in accordance with prudent business practice. The Lessee
may provide such coverage under blanket policies maintained by the Lessee.
During the construction of any Improvements the Lessee shall also maintain
builders' risk insurance. Each policy of insurance maintained by the Lessee
pursuant to this Section 14.2 shall provide that all insurance proceeds in
respect of any loss or occurrence shall be paid to and adjusted solely by the
Lessee except from and after the date on which the insurer receives written
notice from the Lessor or the Agent that a Lease Event of Default exists (and
unless and until such insurer receives written notice from the Lessor or the
Agent that all Lease Events of Default have been cured), all losses shall be
adjusted solely by, and all insurance proceeds shall be paid solely to, the
Agent (or the Lessor if the Participation Interests have been fully paid) for
application pursuant to Article XV.
14.3. Coverage. (a) The Lessee shall furnish the Lessor and the Agent
with certificates showing the insurance required under Sections 14.1 and 14.2 to
be in effect and naming the Lessor, the Agent and each Participant as additional
insureds and, with respect to the insurance required under Section 14.2, loss
payees along with the Lessee, as their respective interests may appear, and
showing the mortgagee endorsement required by Section 14.3(c). All such
insurance shall be at the cost and expense of the Lessee. Such certificates
shall include a provision for thirty (30) days' advance written notice by the
insurer to the Lessor and the Agent in the event of cancellation of or any
reduction to less than 90% of Replacement Value (or, in the case of Flood
insurance, less than 90 percent of the sublimit specified in Section 14.2) in
the coverage provided by such insurance.
(b) The Lessee agrees that the insurance policy or policies required by
Sections 14.1 and 14.2 shall include (i) a clause in substantially the following
form pursuant to which such policy shall provide that it will not be invalidated
should the Lessee waive, in writing, prior to a loss, any or all rights of
recovery against any party for losses covered by such policy, and that the
insurance in favor of the Lessor, the Agent and the Participants, and their
respective rights under and interests in said policies shall not be invalidated
or reduced by any act or omission or negligence of the Lessee or any other
Person having any interest in the Property, and (ii) a so-called "Waiver of
Subrogation Clause". The Lessee hereby waives any and all such rights against
the Lessor, the Agent and the Participants to the extent of payments
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made under such policies. The Lessor, the Agent and the Participants hereby
waive all such rights against the Lessee to the extent of payments made to the
Lessor under any of such policies.
(c) All 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 the Lessee which is rated in Best's
Key Rating Guide or any successor thereto (or if there be none, an organization
having a similar national reputation) shall have a general policyholder rating
of "A-" and a financial rating of at least 10 in Best's Key Rating Guide or be
otherwise acceptable to the Lessor, the Agent and the Required Participants. All
insurance policies required by Section 14.2 shall include a standard form
mortgagee endorsement in favor of the Agent.
(d) The Lessor shall not carry separate insurance concurrent in kind or
form or contributing in the event of loss with any insurance required under this
Article XIV except that the Lessor may carry separate liability insurance (at
its sole cost) so long as (i) the Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance the Lessor may have in
force which would apply to a loss covered under the Lessee's policy and (ii)
each such insurance policy will not cause the Lessee's insurance required under
this Article XIV to be subject to a coinsurance exception of any kind.
(e) The Lessee shall pay as they become due all premiums for the
insurance required by Section 14.1 and Section 14.2, and shall renew or replace
each policy prior to the expiration date thereof. Throughout the Term, at the
time each of the Lessee's insurance policies is renewed (but in no event less
frequently than once each year), the Lessee shall deliver to the Lessor and the
Agent certificates of insurance evidencing that all insurance required by this
Article XIV is being maintained by the Lessee with respect to the Property and
is in effect.
(f) Notwithstanding the other provisions of this Article XIV, the
Lessee may provide the insurance coverage required under this Article XIV
through its self-insurance program, so long as the Lessee remains in compliance
with the Tangible Net Worth covenant in Section 10.1(r)(ii) of the Participation
Agreement.
(g) Notwithstanding anything to the contrary contained in the Operative
Documents: (A) the Lessee hereby waives, releases and discharges the Lessor, the
Agent and each Participant and their agents and employees from all claims
whatsoever arising out of loss, claim, expense or damage to or destruction
covered or coverable by insurance required under this Article XIV
notwithstanding that such loss, claim, expense or damage may have been caused by
the Lessor, the Agent or any Participant or any of their agents or employees,
and the Lessee agrees to look to the insurance coverage only in the event of
such loss; and (B) the Lessor, the Agent and the Participants hereby waive,
release and discharge the Lessee and its agents and employees from all claims
whatsoever arising out of loss, claim, expense, or damage to or destruction
covered by insurance required under this Article XIV to the
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extent of payments made to the Lessor notwithstanding that such loss, claim,
expense or damage may have been caused by the Lessee or any of its agents or
employees.
14.4. Indemnification. In addition to the indemnification provisions
provided for in Section 13 of the Participation Agreement, to the fullest extent
allowed by law, the Lessee shall at all times during the Term, and to the extent
resulting from acts or events occurring prior to or during the Term or during
any other period when the Lessee is in possession and control of the Property,
indemnify, defend and hold each Indemnitee harmless against and from any and all
Claims by or on behalf of any Person arising from the construction of the
Improvements or conduct or management, or from any work or things whatsoever
done in or about the Property, and will further indemnify, defend and hold each
Indemnitee harmless against and from any and all Claims arising during the Term
of this Lease, from any condition of the Property, the Improvements or any
street, curb or sidewalk adjoining the Property, or of any passageways or space
therein or appurtenant thereto, or arising from any breach or default on the
part of the Lessee in the performance of any covenant or agreement on the part
of the Lessee to be performed, pursuant to the terms of this Lease or the
Construction Agency Agreement, or arising from any act or negligence of the
Lessee, its agents, servants, employees or licensees, or arising from any
accident, injury or damage whatsoever caused to any Person occurring during the
term of this Lease, in or about the Property, or upon the sidewalk and the land
adjacent thereto, other than in any of the foregoing cases (a) any Claim
resulting from a voluntary act or omission of the Indemnitee not in compliance
with any of the terms of the Operative Documents not caused by or attributable
to acts or omissions of the Lessee or any third party who is not an Affiliate or
an employee, agent or contractor of an Indemnitee or its Affiliates, and (b) any
Claim resulting from the gross negligence or willful misconduct of an
Indemnitee. Any action, suit or proceeding in respect of any such Claim shall be
handled in the manner set forth in Section 13.4 of the Participation Agreement.
ARTICLE XV
15.1. Casualty and Condemnation. (a) Subject to the provisions of this
Article XV and Article XVI (in the event the Lessee delivers, or is obligated to
deliver, a Termination Notice), and except during the occurrence and
continuation of a Lease Default, the Lessee shall be entitled to receive (and
the Lessor shall pay over to the Lessee, if received by the Lessor, and hereby
irrevocably assigns to the Lessee all of the Lessor's right, title and interest
in) any award, compensation or insurance proceeds to which the Lessee or the
Lessor may become entitled by reason of their respective interests in the
Property (i) if all or a portion of the Property is damaged or destroyed in
whole or in part by a Casualty or (ii) if the use, access, occupancy, easement
rights or title to the Property or any part thereof, is the subject of a
Condemnation; provided, however, if a Lease Default shall have occurred and be
continuing, such award, compensation or insurance proceeds shall be paid
directly to the Agent or, if received by the Lessee, shall be held in trust for
the Agent, and shall be paid over by the Lessee to the Agent (or, if the
Participation Interests have been fully paid, to the Lessor) and held in
accordance with the terms of this paragraph (a). If, contrary to such
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provision, any such award, compensation or insurance proceeds are paid to the
Lessor or the Lessee, rather than to the Agent, the Lessor and the Lessee, as
the case may be, hereby agree to transfer any such payment to the Agent. All
amounts held by the Lessor or the Agent when a Lease Default exists hereunder on
account of any award, compensation or insurance proceeds either paid directly to
the Lessor or the Agent or turned over to the Lessor or the Agent shall either
be (i) paid to the Lessee for the repair of damage caused by such Casualty or
Condemnation in accordance with paragraph (e) of this Section 15.1, or (ii) held
in an interest bearing account reasonably acceptable to the Lessor and the
Lessee until applied to the purchase price of the Property on the Termination
Date, with any Excess Proceeds being payable to the Lessee.
(b) The Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof. At the Lessee's reasonable request, and at the Lessee's sole
cost and expense, the Lessor and the Agent shall participate in any such
proceeding, action, negotiation, prosecution or adjustment. The Lessor and the
Lessee agree that this Lease shall control the rights of the Lessor and the
Lessee in and to any such award, compensation or insurance payment.
(c) If the Lessor or the Lessee shall receive notice of a Casualty or
of an actual, pending or threatened Condemnation of the Property or any interest
therein, the Lessor or the Lessee, as the case may be, shall give notice thereof
to the other and to the Agent promptly after the receipt of such notice.
(d) In the event of a Casualty or receipt of notice by the Lessee or
the Lessor of a Condemnation, the Lessee may deliver to the Lessor and the Agent
a Termination Notice with respect to the Property pursuant to Section 16.1. If
the Lessee does not deliver a Termination Notice within seventy-five (75) days
after such occurrence, then this Lease shall (subject to the terms and
conditions thereof) remain in full force and effect, and the Lessee shall, at
the Lessee's sole cost and expense, promptly and diligently restore the Property
pursuant to paragraph (e) of this Section 15.1 and otherwise in accordance with
this Lease. If the Lessee delivers a Termination Notice within seventy-five (75)
days after such occurrence, a Significant Event shall irrevocably be deemed to
have occurred with respect to the Property, and, in such event, this Lease shall
terminate and the Lessee shall purchase the Property on the next Payment Date
(but in no event later than seventy-five (75) days after such occurrence) (a
"Termination Date") pursuant to Article XVI hereof.
(e) If pursuant to this Section 15.1 this Lease shall continue in full
force and effect following a Casualty or Condemnation, the Lessee shall, at its
sole cost and expense (and, without limitation, if any award, compensation or
insurance payment is not sufficient to restore the Property in accordance with
this paragraph, the Lessee shall pay the shortfall), promptly and diligently
repair any damage to the Property caused by such Casualty or Condemnation or
substitute new Equipment for the affected Equipment in conformity with the
requirements of Sections 10.1 and 11.1 using the as-built Plans and
Specifications for the Property (as modified to give effect to any subsequent
Modifications, any Condemnation
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affecting the Property and all applicable Requirements of Law) so as to restore
the Property to at least the same condition, operation, function and value as
existed immediately prior to such Casualty or Condemnation; provided, the
substitution of any Equipment for any such affected Equipment previously
financed with an Advance shall, at the Lessor's reasonable request, be subject
to delivery of an independent third-party appraisal reasonably satisfactory to
the Lessor and the Required Participants by an appraiser satisfactory to the
Lessor and the Required Participants showing both (i) a current Fair Market
Sales Value and (ii) expected Fair Market Sales Value as of the then current
Expiration Date and the dates on which any potential Renewal Term would expire,
in each case equal to or greater than such values at such dates for the
Equipment being replaced. In the event of such restoration, title to the
Property shall remain with the Lessor; provided, that (i) title to any such
substituted equipment shall vest in the Lessor in the event that such equipment
replaces Equipment previously financed with an Advance and such equipment shall
constitute Equipment thereafter for all purposes of this Lease, and (ii) the
Lessor shall assign all of its right, title and interest to the Lessee in any
such replaced equipment in the event that such equipment replaces Equipment
previously financed with an Advance without representation or warranty of any
kind other than that such equipment is free of Lessor Liens. Upon completion of
such restoration, the Lessee shall furnish the Lessor an architect's certificate
of substantial completion and a Responsible Officer's Certificate confirming
that such restoration has been completed pursuant to this Lease.
(f) In no event shall a Casualty or Condemnation with respect to which
this Lease remains in full force and effect under this Section 15.1 affect the
Lessee's obligations to pay Rent pursuant to Section 3.1 or to perform its
obligations and pay any amounts due on the Expiration Date or pursuant to
Articles XIX and XX.
(g) Any Excess Proceeds received by the Lessor or the Agent in respect
of a Casualty or Condemnation shall be turned over to the Lessee, provided that
no Lease Event of Default or Lease Default has occurred and is continuing. Any
Excess Proceeds which are not turned over to the Lessee due to the existence of
a Lease Event of Default or a Lease Default shall be applied against the
Lessee's obligations under the Lease, and any excess remaining after such
obligations have been satisfied shall be paid to the Lessee.
15.2. Environmental Matters. Promptly upon the Lessee's actual
knowledge of the presence of Hazardous Substances in any portion of the Property
in concentrations and conditions that constitute an Environmental Violation, the
Lessee shall notify the Lessor in writing of such condition. In the event of
such Environmental Violation, the Lessee shall, not later than thirty (30) days
after the Lessee has actual knowledge of such Environmental Violation, either,
if such Environmental Violation is a Significant Event, deliver to the Lessor
and the Agent a Responsible Officer's Certificate and a Termination Notice with
respect to the Property pursuant to Section 16.1, or, if such Environmental
Violation is not a Significant Event, at the Lessee's sole cost and expense,
promptly and diligently commence any Response Actions necessary to investigate,
remove, clean up or remediate the Environmental Violation in accordance with the
terms of Section 9.1. If the Lessee does not deliver a Termination Notice with
respect to the Property pursuant to Section 16.1, the Lessee shall, upon
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completion of Response Actions by the Lessee, cause to be prepared by an
environmental consultant reasonably acceptable to the Lessor a report describing
the Environmental Violation and the Response Actions taken by the Lessee (or its
agents) for 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 Law. Each such Environmental Violation
shall be remedied prior to the Expiration Date. Nothing in this Article XV shall
reduce or limit the Lessee's obligations under Sections 13.1, 13.2 or 13.3 of
the Participation Agreement.
15.3. Notice of Environmental Matters. Promptly, but in any event
within the thirty (30) Business Days from the date the Lessee has actual
knowledge thereof, the Lessee shall provide to the Lessor written notice of any
material pending or threatened claim, action or proceeding involving any
Environmental Law or any Release on or in connection with the Property. All such
notices shall describe in reasonable detail the nature of the claim, action or
proceeding and the Lessee's proposed response thereto. In addition, the Lessee
shall provide to the Lessor, within thirty (30) Business Days of receipt, copies
of all material written communications with any Governmental Authority relating
to any Environmental Law in connection with the Property. The Lessee shall also
promptly provide such detailed reports of any such Material environmental claims
as may reasonably be requested by the Lessor and the Agent.
ARTICLE XVI
16.1. Termination by the Lessee upon Certain Events. If either: (i) the
Lessee or the Lessor shall have received notice of a Condemnation, and the
Lessee shall have delivered to the Lessor a Responsible Officer's Certificate
that such Condemnation is a Significant Condemnation; or (ii) a Casualty occurs,
and the Lessee shall have delivered to the Lessor a Responsible Officer's
Certificate that such Casualty is a Significant Casualty; or (iii) an
Environmental Violation occurs or is discovered and the Lessee shall have
delivered to the Lessor a Responsible Officer's Certificate stating that, in the
reasonable, good-faith judgment of the Lessee, the cost to remediate the same
will cause the same to be a Significant Event, or (iv) if the Lessee shall not
have delivered a Termination Notice with respect to such Environmental Violation
described in clause (iii) but the requirements of Section 16.4 are met with
respect to such Environmental Violation; then, (A) the Lessee shall,
simultaneously with the delivery of the Responsible Officer's Certificate
pursuant to the preceding clause (i), (ii) or (iii) deliver a written notice in
the form described in Section 16.2(a) (a "Termination Notice"), or (B) if clause
(iv) is applicable, the Lessor may deliver a Termination Notice pursuant to
Section 16.4; provided, that if such Environmental Violation was not caused by
nor within the control of the Lessee, the Lessee may exercise either its
Purchase Option or Remarketing Option pursuant to Section 17.2(h).
16.2. Procedures. (a) A Termination Notice shall contain: (i) notice of
termination of this Lease with respect to the Property or the affected portion
thereof on a date that is no later than thirty (30) days after the occurrence of
the applicable event described in clause (i), (ii) or
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(iii) of Section 16.1 (the "Termination Date"), such termination to be effective
upon the Lessee's payment of the Asset Termination Value (or portion thereof
representing the Property Cost of the affected portion of the Property); and
(ii) a binding and irrevocable agreement of the Lessee to pay the Asset
Termination Value and purchase the Property on the Termination Date.
(b) On the Termination Date, the Lessee shall pay to the Lessor the
Asset Termination Value (or such portion thereof, as applicable), plus all other
amounts owing in respect of Rent for the Property (including Supplemental Rent)
theretofore accruing, and the Lessor shall convey the Lessor's interest in the
Property or such portion thereof to the Lessee (or the Lessee's designee) all in
accordance with Section 19.1, as well as any Net Proceeds with respect to the
Casualty or Condemnation giving rise to the termination of this Lease with
respect to the Property theretofore received by the Lessor.
16.3. Termination by the Lessor upon Certain Events. If the Lessor
reasonably determines that any change in, or change by a Governmental Authority
in the interpretation of, any applicable law after the date hereof would result
in it or any Participant being unable to continue to hold legal or beneficial
title to all or any portion of the Property or, except as provided in Section
16.4 hereof, subject it or any Participant to onerous regulations or onerous
liability on account thereof, the Lessor may deliver a Termination Notice with
respect to the Lease to the Agent, the Participants and the Lessee, such
termination to be effective on the Termination Date specified therein, which
date shall not be earlier than 30 days following the date the notice is
delivered to the Lessee. In the event the Lessor exercises its termination
option, the Lessee may exercise the Remarketing Option provided in Section 22.1
hereof by giving notice to the Lessor within ten (10) Business Days of receipt
of the notice from the Lessor. If the Lessee does not exercise its Remarketing
Option, the Lessee shall be obligated to purchase the Property in accordance
with Section 20.2 hereof on the Termination Date for the purchase price set
forth therein.
16.4. Purchase of Property. Upon receipt of any notice pursuant to
Section 15.2 or 15.3, the Lessor or the Required Participants, at the Lessee's
expense, shall have the right to select an independent environmental consultant
acceptable to the Lessee, which acceptance shall not be unreasonably withheld or
delayed, to determine the estimated cost of conducting any clean-up or
remediation required as a result of the Environmental Violation disclosed in
such notice. If such independent environmental consultant determines that the
cost of any such clean-up or remediation would exceed $5,000,000, the Lessor
shall, subject to the proviso at the end of Section 16.1, at the direction of
the Required Participants, by written notice require the Lessee to purchase, or
arrange for an Affiliate or other third party to purchase, the Property on the
Expiration Date by delivering a Termination Notice following the requirements of
Section 16.2 hereof, unless the Environmental Violation was not caused by nor
within the control of the Lessee, in which later case the provisions of Section
17.2(h) shall apply.
ARTICLE XVII
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17.1. Lease Events of Default. The occurrence of any one or more of the
following events (whether 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) the Lessee shall fail to make payment of (i) any Basic Rent (other
than a payment of Basic Rent due on the Expiration Date or Termination Date)
within five (5) Business Days after the same has become due and payable or (ii)
Basic Rent, Purchase Option Price, Asset Termination Value or Residual Value
Guarantee Amount or other amounts due on the Expiration Date or the Termination
Date, including, without limitation, amounts due pursuant to Sections 16.2,
16.3, 16.4, 20.1, 20.2, 20.3 or 22.1, after the same has become due and payable;
(b) the Lessee shall fail to make payment of any Supplemental Rent
(other than Supplemental Rent referred to in clause (a) of this Section) due and
payable within thirty (30) days after written notice thereof;
(c) the Lessee shall fail to maintain insurance as required by Article
XIV of this Lease, and such failure is either a failure to have in force a
policy of insurance substantially meeting the requirements of Article XIV, or if
such policy is in effect, then any deviation of such policy from the
requirements of Article XIV is not cured within twenty(20) days after the
earlier of (i) receipt of written notice thereof or (ii) the Lessee having
knowledge thereof;
(d) the Lessee shall fail to observe or perform any term, covenant or
condition of the Lessee under this Lease, the Participation Agreement or any
other Operative Document to which it is a party (other than those described in
Section 17.1(a), (b),or (c) hereof), or any representation or warranty set forth
in this Lease or in any other Operative Document or in any document entered into
in connection herewith or therewith or in any document, certificate or financial
or other statement delivered in connection herewith or therewith shall be false
or inaccurate in any Material way, and such failure or misrepresentation or
breach of warranty shall remain uncured for a period of thirty (30) days after
receipt of written notice thereof; provided, that if such failure to perform is
not capable of being cured within such period but is capable of being cured
within one hundred eighty (180) days after the occurrence of such default and
the Lessee is proceeding diligently to cure such default, the Lessee shall be
entitled to request an additional period (not to exceed one hundred eighty (180)
days from the date of such default) to cure such default;
(e) the Lessee or any of the Lessee's Subsidiaries (A) shall fail to
make a payment or payments in an aggregate amount of $2,500,000 or more when due
under the terms of any Funded Debt to be paid by such Person (excluding this
Lease or any intercompany indebtedness between the Lessee and any of its
Subsidiaries, but including any other evidence of indebtedness of the Lessee or
any of its Subsidiaries to any Participant) and such failure shall continued
beyond any period of grace provided with respect thereto, or (B) shall fail to
make any other payment or payments when due under or otherwise default in the
observance
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or performance of any other agreement, term or condition contained in any such
Funded Debt, and the effect of such failure or default is to cause, or permit
the holder or holders thereof to cause, indebtedness in an aggregate amount of
$10,000,000 or more to become due prior to its stated date of maturity; or (ii)
there shall occur to exist any other event or condition which causes, or permits
the holder or holders of such indebtedness to cause, indebtedness in an
aggregate amount of $10,000,000 or more to become due prior to its stated date
of maturity (whether through holder puts, mandatory redemptions or prepayments
or otherwise);
(f) the Lessee or any of Lessee's Material Subsidiaries (except with
respect to clause (v) below) shall (i) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in writing its
inability, to pay its debts generally as they mature, (iii) make a general
assignment for the benefit of it or any of its creditors, (iv) be dissolved or
liquidated in full or in part, (v) no longer be Solvent; (vi) commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or consent to any such relief or to
the appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vii) take any
action for the purpose of effecting any of the foregoing;
(g) proceedings for the appointment of a receiver, trustee, liquidator
or custodian of the Lessee or any of the Lessee's Material Subsidiaries or of
all or a substantial part of the property thereof, or an involuntary case or
other proceedings seeking liquidation, reorganization or other relief with
respect to the Lessee or any of the Lessee's Material Subsidiaries or the debts
thereof under any bankruptcy, insolvency or other similar law now or hereafter
in effect shall be commenced and an order for relief entered or such proceeding
shall not be dismissed or discharged within sixty (60) days of commencement;
(h) a final nonappealable judgment or order for the payment of money in
excess of $10,000,000 (exclusive of amounts which are covered by insurance
issued by an insurer satisfying the requirements set forth in Section 10.1(d) of
the Participation Agreement) shall be rendered against the Lessee or any of its
Subsidiaries and the same shall remain undischarged and unpaid for a period of
thirty (30) days during which execution shall not be effectively stayed;
(i) any Reportable Event occurs which constitutes grounds for the
termination of any Employee Benefit Plan by the PBGC or for the appointment of a
trustee by the PBGC to administer any Employee Benefit Plan, or any Employee
Benefit Plan shall be terminated with unfunded liabilities within the meaning of
Title IV of ERISA or a trustee shall be appointed by the PBGC to administer any
Employee Benefit Plan, in each case which could reasonably be expected to have a
Material Adverse Effect;
(j) any Change of Control shall occur;
(k) a Guarantee Event of Default shall have occurred and be continuing;
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(l) if the Lessee shall not have exercised its Purchase Option pursuant
to Section 20.1 hereof and the Lessee shall have validly exercised its
Remarketing Option pursuant to Section 22.1 hereof, the Lessee shall have failed
(A) to consummate a sale of the Property in the manner provided therein on the
Expiration Date and to pay to the Agent (or such other Person as the Agent may
direct) pursuant to such Section the Residual Value Guarantee Amount and the
other amounts required thereby, or (B) to purchase the Lessor's interest in the
Property on the Expiration Date as provided in Section 20.2 hereof and to pay to
the Lessor the Asset Termination Value therefor on the Expiration Date as
required thereby;
(m) a Construction Agency Agreement Event of Default shall have
occurred and be continuing;
(n) the Lessee shall have abandoned or constructively abandoned all or
any material portion of the Property for a period of thirty (30) consecutive
days; or
(o) an Environmental Violation shall occur that, in the reasonable
opinion of the Lessor and the Required Participants, based on an Environmental
Audit, constitutes a Significant Event and the Lessee shall not, within thirty
(30) days after notice from the Lessor, have delivered a Termination Notice with
respect thereto pursuant to Section 16.1 hereof or, if so delivered, repurchase
of the Property shall not have been consummated on the Termination Date pursuant
to Section 16.2 hereof; or
(p) the Lessee shall have elected to or be required to purchase the
Property pursuant to Sections 16.3 or 16.4 hereof and such purchase shall not
have been consummated on the Termination Date pursuant to either such Section.
17.2. Remedies. Upon the occurrence of any Lease Event of Default and
at any time thereafter, the Lessor may, so long as such Lease Event of Default
is continuing, do one or more of the following as the Lessor in its sole
discretion shall determine, without limiting any other right or remedy the
Lessor may have on account of such Lease Event of Default (including, without
limitation, the obligation of the Lessee to purchase the Property as set forth
in Section 20.3) upon notice to the Lessee (if not otherwise provided for
below):
(a) The Lessor may, by notice to the Lessee, rescind or terminate this
Lease only as to all of the Property as of the date specified in such notice;
however, (i) no reletting, reentry or taking of possession of the Property (or
any portion thereof) by the Lessor will be construed as an election on the
Lessor's part to terminate this Lease unless a written notice of such intention
is given to the Lessee, (ii) notwithstanding any reletting, reentry or taking of
possession, the Lessor may at any time thereafter elect to terminate this Lease
for a continuing Lease Event of Default, (iii) no act or thing done by the
Lessor or any of its agents, representatives or employees and no agreement
accepting a surrender of the Property shall be valid unless the same be made in
writing and executed by the Lessor and (iv) no termination pursuant to this
Section shall terminate Lessee's right to cure such Lease Event of
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Default set forth in Section 17.6 hereof by purchasing the Property pursuant to
Section 20.1 hereof prior to such time as a foreclosure upon or sale of the
Property has been completed.
(b) The Lessor may (i) demand that the Lessee, and the Lessee shall
upon the written demand of the Lessor, return the Property promptly to the
Lessor in the manner and condition required by, and otherwise in accordance with
all of the provisions of, Articles VIII, IX and X hereof as if the Property were
being returned at the end of the Term, and the Lessor shall not be liable for
the reimbursement of the Lessee for any costs and expenses incurred by the
Lessee in connection therewith and (ii) without prejudice to any other remedy
which the Lessor may have for possession of the Property, and to the extent and
in the manner permitted by Applicable Law, enter upon the Property and take
immediate possession of (to the exclusion of the Lessee) the Property or any
part thereof and expel or remove the Lessee and any other Person who may be
occupying the Property, by summary proceedings or otherwise, all without
liability to the Lessee for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such taking or
otherwise and, in addition to the Lessor's other damages, to the extent and in
the manner permitted by Applicable Law with respect to remedies for a breach of
a real estate lease, the Lessee shall be responsible for all costs and expenses
incurred by the Lessor and/or the Agent or the Participants in connection with
any reletting, including, without limitation, brokers' fees and all costs of any
alterations or repairs made by the Lessor;
(c) The Lessor may (i) sell all or any part of the Property at public
or private sale, as the Lessor may determine, free and clear of any rights of
the Lessee and without any duty to account to the Lessee with respect to such
action or inaction or any proceeds with respect thereto (except to the extent
required by clause (ii) below if the Lessor shall elect to exercise its rights
thereunder) in which event the Lessee's obligation to pay Basic Rent hereunder
for periods commencing after the date of such sale shall be terminated or
proportionately reduced, as the case may be; and (ii) if the Lessor shall so
elect, demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor, on the date of such sale, as liquidated damages for loss of a bargain
and not as a penalty (the parties agreeing that the Lessor's actual damages
would be difficult to predict, but the aforementioned liquidated damages
represent a reasonable approximation of such amount) (in lieu of Basic Rent due
for periods commencing on or after the Payment Date coinciding with such date of
sale (or, if the sale date is not a Payment Date, the Payment Date next
preceding the date of such sale)), an amount equal to (A) the excess, if any, of
(1) the Asset Termination Value calculated as of such Payment Date (including
all Rent due and unpaid to and including such Payment Date), over (2) the net
proceeds of such sale, if any (that is, after deducting all costs and expenses
incurred by the Lessor, the Agent and the Participants incident to such
conveyance, including, without limitation, repossession costs, brokerage
commissions, prorations, transfer taxes, fees and expenses for counsel, title
insurance fees, survey costs, recording fees, and any repair or alteration
costs); plus (B) interest at the Overdue Rate on the foregoing amount from such
Payment Date until the date of payment, and any excess of the sale proceeds over
such Asset Termination Value and any other sums owing by the Lessee under the
Operative Documents shall be remitted to the Lessee;
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(d) The Lessor may, at its option, not terminate the Lease with respect
to the Property, and continue to collect all Basic Rent, Supplemental Rent, and
all other amounts due the Lessor (together with all costs of collection) and
enforce the Lessee's obligations under this Lease as and when the same become
due, or are to be performed, and at the option of the Lessor, upon any
abandonment of the Property by the Lessee or re-entry of same by the Lessor, the
Lessor may, in its sole and absolute discretion, elect not to terminate this
Lease and may make such reasonable alterations and necessary repairs in order to
relet the Property, and relet the Property or any part thereof for such term or
terms (which may be for a term extending beyond the Term of this Lease) and at
such rental or rentals and upon such other terms and conditions as the Lessor in
its reasonable discretion may deem advisable; and upon each such reletting all
rentals actually received by the Lessor from such reletting shall be applied to
the Lessee's obligations hereunder and the other Operative Documents in such
order, proportion and priority as the Lessor may elect in the Lessor's sole and
absolute discretion. If such rentals received from such reletting during any
period be less than the Rent with respect to the Property to be paid during that
period by the Lessee hereunder, the Lessee shall pay any deficiency, as
calculated by the Lessor, to the Lessor on the next Payment Date;
(e) Unless the Property has been sold in its entirety, the Lessor may,
whether or not the Lessor shall have exercised or shall thereafter at any time
exercise any of its rights under paragraph (b), (c) or (d) of this Section 17.2
with respect to the Property or portions thereof, demand, by written notice to
the Lessee specifying a date (a "Termination Date") not earlier than 10 days
after the date of such notice, that the Lessee purchase, on such Termination
Date, the Property (or the remaining portion thereof) in accordance with the
provisions of Article XIX and Section 20.3;
(f) The Lessor may exercise any other right or remedy that may be
available to it under the Operative Documents or otherwise under Applicable Law,
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
in any manner prejudice the Lessor's right to collect any such damages for any
subsequent period(s), or the Lessor may defer any such suit until after the
expiration of the Term, in which event such suit shall be deemed not to have
accrued until the expiration of the Term; or
(g) The Lessor may retain and apply against the Lessor's damages all
sums which the Lessor would, absent such Lease Event of Default, be required to
pay to, or turn over to, the Lessee pursuant to the terms of this Lease.
(h) Notwithstanding anything contained in this Lease to the contrary,
in the event that (A) the Lease Event of Default resulting in the exercise of
remedies by the Lessor hereunder is solely the result of a Construction Agency
Agreement Event of Default pursuant to Section 5.1(b) or (c) of the Construction
Agency Agreement or is a Lease Event of Default under Section 17.1(o) where the
occurrence of such Environmental Violation was not caused by or within the
control of the Lessee or under Section 10.1(d) (each, a"Specified Event of
Default"), or (B) the
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proviso at the end of Section 16.1 applies, the Lessee shall have the option to
(i) remarket the Property for one hundred eighty (180) days after the occurrence
of such Specified Event of Default in accordance with Article XXII (which period
shall constitute the Remarketing Period), with the purchase of the Property to
be consummated no later than the date that is one hundred eighty (180) days
following the occurrence of such Specified Event of Default (which date shall
constitute the Expiration Date if such option is exercised), or (ii) exercise
its Purchase Option under Section 20.1, with the purchase of the Property by the
Lessee to be consummated, and the other payments required thereunder to be made
to the Lessor, on the next Payment Date following the occurrence of such
Specified Event of Default (which date shall constitute the Expiration Date if
such option is exercised). The Lessee shall notify the Lessor within ten (10)
days after the occurrence of such Specified Event of Default which option it is
exercising. If the Lessee elects to remarket the Property the Lessee shall pay
to the Lessor (i) the maximum Residual Value Guarantee Amount on the date it
furnishes such notice of exercise of the Remarketing Option (the "Option Notice
Date"), (ii) all breakage costs incurred by the Participants for the duration of
all then current Interest Periods under the Participation Agreement with respect
to the amount so paid following notices thereof by the Agent, (iii) Basic Rent
with respect to the Tranche A Participation Interests on the amount so paid
accrued to and payable on the Option Notice Date, (iv) Basic Rent when due with
respect to the unpaid portion of the Tranche B Participation Interests and/or
Tranche C Participation Interests to the date of sale of the Property and (v)
the other payments required under Section 22.1 when required thereunder and no
later than the Expiration Date. If the Lessee exercises neither of such options
or, if one of such options is exercised but the Lessor does not receive the
payments required above or by such Article or Section on the dates referred to
above, such failure to exercise or failure to receive payment shall constitute a
Lease Event of Default that is not a Specified Event of Default and the Lessor
shall be entitled to exercise any of its remedies set forth in Sections 17.2(a)
- - (g). If the Lessee properly exercises its Remarketing Option under this
Section 17.2(h), pays the Residual Value Guarantee Amount as required above and
is unable to arrange for the sale of the Property on the new Expiration Date,
such failure to sell the Property shall constitute a Lease Event of Default that
is not a Specified Event of Default and the Lessor shall be entitled to exercise
any of its remedies set forth in Sections 17.2(a) - (g); provided that in such
event the portion of Asset Termination Value which may be recovered from the
Lessee under any of such Sections shall not exceed, in addition to any other
payments required by such Sections, that portion of the Asset Termination Value
that remains unpaid after payment of the Residual Value Guarantee Amount as
provided in this Section 17.2(h).
17.3. Waiver of Certain Rights. If this Lease shall be terminated
pursuant to Section 17.2, the Lessee waives, to the fullest extent permitted by
law, (a) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (b) any right of redemption, re-entry or
repossession; (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt or limiting the Lessor with respect
to the election of remedies; and (d) any other rights which might otherwise
limit or modify any of the Lessor's rights or remedies under this Article XVII.
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17.4. Power of Sale and Foreclosure. In the event that a court of
competent jurisdiction rules that this Lease constitutes a mortgage, deed of
trust or other secured financing as is the intent of the parties pursuant to
Section 7.1, and subject to the availability of such remedy under applicable
law, then the Lessor and the Lessee agree that (i) the Lessee hereby grants a
Lien against the Property WITH POWER OF SALE, and that, upon the occurrence of
any Lease Event of Default the Lessor shall have the power and authority, to the
extent provided by law, after proper notice and lapse of such time as may be
required by law, to sell the Property at the time and place of sale fixed by the
Lessor in said notice of sale, either as a whole, or in separate lots or parcels
or items and in such order as the 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 THE LESSOR TO TAKE THE PROPERTY AND
SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE
LESSEE UNDER THIS INSTRUMENT, and (ii) upon the occurrence of a Lease Event of
Default, the Lessor, in lieu of or in addition to exercising any power of sale
hereinabove given, may proceed by a suit or suits in equity or at law, whether
for a foreclosure hereunder, or for the sale of the Property, or against the
Lessee on a recourse basis for the Asset Termination Value, or the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for the appointment of a receiver
pending any foreclosure hereunder or the sale of the Property, or for the
enforcement of any other appropriate legal or equitable remedy. The parties
hereto intend that, in addition to any other debt or obligation secured by the
Lien granted pursuant to this Section 17.4, such Lien shall secure unpaid
balances of Rent and Supplemental Rent and other extensions of credit made by
the Lessor to the Lessee after this Lease is delivered to the appropriate
recording offices of Colorado, whether made pursuant to an obligation of the
Lessee or otherwise, and such Rent and Supplemental Rent shall be secured to the
same extent as if such future payment obligations of Rent and Supplemental Rent
were on account of obligatory advances to be made under a construction loan;
provided such obligations secured hereby at any one time shall not exceed the
lesser of : (i) the maximum principal sum permitted by the laws of Colorado; or
(ii) one hundred thirty-two million Dollars ($132,000,000) together with
interest or Yield thereon calculated at the rates provided in the Participation
Agreement.
17.5. Remedies Cumulative. The remedies herein provided shall be
cumulative and in addition to (and not in limitation of) any other remedies
available at law, equity or otherwise, including, without limitation, any
mortgage foreclosure remedies.
17.6. Lessee's Right to Cure. Notwithstanding any provision contained
in the Lease or any other Operative Agreement, if a Lease Event of Default has
occurred and is continuing, the Lessee shall have the right to cure such Lease
Event of Default by exercising its Purchase Option at any time prior to such
time as a foreclosure upon or sale of the Property has been completed.
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ARTICLE XVIII
18.1. The Lessor's Right to Cure the Lessee's Lease Defaults. The
Lessor, without waiving or releasing any obligation or Lease Event of Default,
may (but shall be under no obligation to) remedy any Lease Default or Lease
Event of Default (other than those described in Sections 7.1(g), (h) and (i))for
the account and at the sole cost and expense of the Lessee, including the
failure by the Lessee to maintain the insurance required by Article XIV, and
may, to the fullest extent permitted by law, and notwithstanding any right of
quiet enjoyment in favor of the Lessee, enter upon the Property for such purpose
and take all such action thereon as may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of the Lessee. All out-of-pocket costs
and expenses so incurred (including fees and expenses of counsel), together with
interest thereon at the Overdue Rate from the date on which such sums or
expenses are paid by the Lessor, shall be paid by the Lessee to the Lessor on
demand, as Supplemental Rent.
ARTICLE XIX
19.1. Provisions Relating to the Lessee's Termination of this Lease or
Exercise of Purchase Option or Obligation and Conveyance Upon Remarketing and
Conveyance Upon Certain Other Events. (a) In connection with any termination of
this Lease pursuant to the terms of Article XVI (if the Lessee is obligated to
purchase the Property), or in connection with the Lessee's exercise of its
Purchase Option, Remarketing Option or Expiration Date Purchase Obligation, upon
the date on which this Lease is to terminate or upon the Expiration Date, and
upon tender by the Lessee of the amounts set forth in Sections 16.2(b), 17.2(h),
20.1, 20.2, 20.3, or 22.1 as applicable, the Lessor shall execute and deliver to
the Lessee (or to the Lessee's designee) at the Lessee's cost and expense a
quitclaim or warranty deed to the extent required by local custom and by the
Lessee's title insurance company to the extent necessary to enable the Lessee to
obtain customary title insurance at closing of the Lessor's right, title and
interest in the Property (which shall include a release, quitclaim and
assignment of all of the Lessor's right, title and interest in and to any Net
Proceeds not previously received by the Lessor), subject to the Permitted Liens
and the Permitted Exceptions (other than Lessor Liens) and any encumbrance
caused by the fault, neglect or intention of the Lessee, in recordable form and
otherwise in conformity with local custom and free and clear of the Mortgage and
any Lessor Liens attributable to the Lessor; provided that in the event a
warranty deed is required, the Lessee shall defend, indemnify and hold harmless
the Lessor from and against any and all Claims relating to title to the Property
other than Lessor Liens. The Improvements and the Equipment shall be conveyed to
the Lessee "AS IS" and in their then present condition of title and physical
condition.
(b) If the Lessee properly exercises the Remarketing Option, then the
Lessee shall, on the Expiration Date, and at its own cost, transfer possession
of the Property to the independent purchaser thereof, by surrendering the same
into the possession of the Lessor or such purchaser, as the case may be, free
and clear of all Liens other than Lessor Liens, in good condition (as modified
by Modifications permitted by this Lease), ordinary wear and tear
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excepted, in compliance with Applicable Law, and in "broom-swept clean"
condition. The Lessee shall cooperate reasonably with the Lessor and the
independent purchaser of the Property in order to facilitate the purchase by
such purchaser of the Property which cooperation shall include the following,
all of which the Lessee shall do on or before the Expiration Date: providing all
books and records regarding the maintenance and ownership of the Property and
all know-how, data and technical information relating thereto, providing a
current copy of the "as built" Plans and Specifications for the Property,
granting or assigning all licenses necessary for the operation and maintenance
of the Property and cooperating reasonably in seeking and obtaining all
necessary Governmental Action. The obligations of the Lessee under this
paragraph shall survive the expiration or termination of this Lease.
ARTICLE XX
20.1. Purchase Option. Without limitation of the Lessee's purchase
obligation pursuant to Sections 20.2 or 20.3, unless the Lessee shall have given
notice of its intention to exercise the Remarketing Option and the Lessor shall
have entered into a binding contract to sell the Property, the Lessee shall have
the option (exercisable by giving the Lessor irrevocable written notice (the
"Purchase Notice") of the Lessee's election to exercise such option) to
purchase, or to designate a third party to purchase, the Property on the date
specified in such Purchase Notice, which date shall be a Payment Date. The
purchase price shall be equal to the Asset Termination Value plus all other
amounts owing in respect of Rent (including Supplemental Rent) theretofore
accruing (the "Purchase Option Price"). The Lessee shall deliver the Purchase
Notice to the Lessor not less than thirty (30) days prior to the purchase date
or as otherwise provided pursuant to Section 17.2(h). If the Lessee exercises
its option to purchase the Property pursuant to this Section 20.1 (the "Purchase
Option"), the Lessor shall transfer to the Lessee all of the Lessor's right,
title and interest in and to the Property as of the date specified in the
Purchase Notice upon receipt of the Purchase Option Price and all Rent and other
amounts then due and payable under this Lease and any other Operative Document,
in accordance with Section 19.l(a). The Lessee may assign the Purchase Option to
a third party separately from any permitted assignment by the Lessee of its
rights and obligations under Section 25.1 hereof without the consent of the
Lessor; provided that the Lessee shall remain primarily liable for the
performance of any such assignees in connection with the exercise of the
Purchase Option in accordance with the provisions of Section 25.1 hereof.
20.2. Expiration Date Purchase Obligation. Unless (a) the Lessee shall
have properly exercised the Purchase Option pursuant to Section 20.1 and
purchased the Property pursuant thereto, (b) the Lessee shall have properly
exercised the Remarketing Option and shall have fulfilled all of the conditions
of clauses (a) through (k) of Section 22.1 hereof and the Lessor shall have sold
its interest in the Property pursuant thereto, or (c) the Lessee shall have
properly exercised the Renewal Option pursuant to Section 21.1 and the terms and
conditions of a Renewal Term shall have been agreed upon pursuant to such
Section, then, subject to the terms, conditions and provisions set forth in this
Article, and in accordance with the terms of Section 19.1(a), the Lessee shall
purchase from the Lessor, and the Lessor shall assign to the
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Lessee without recourse, on the Expiration Date of the Term (as such Term may be
renewed pursuant to Section 21.1) all of the Lessor's right, title and interest
in the Property (subject to all existing Liens, other than the Mortgage and
Lessor Liens) for an amount equal to the Asset Termination Value. The Lessee may
designate, in a notice given to the Lessor not less than ten (10) Business Days
prior to the closing of such purchase (time being of the essence), the
transferee or transferees to whom the conveyance shall be made (if other than to
the Lessee), in which case such conveyance shall (subject to the terms and
conditions set forth herein) be made to such designee; provided, however, that
such designation of a transferee or transferees shall not cause the Lessee to be
released, fully or partially, from any of its obligations under this Lease,
including, without limitation, the obligation to pay the Lessor an amount equal
to the Asset Termination Value that was not fully and finally paid by such
designee on such Expiration Date.
20.3. Acceleration of Purchase Obligation. (a) The Lessee shall be
obligated to purchase for an amount equal to the Asset Termination Value, the
Lessor's interest in the Property (notwithstanding any prior election to
exercise its Purchase Option pursuant to Section 20.1) (i) automatically and
without notice upon the occurrence of any Lease Event of Default specified in
clause (f) or (g) of Section 17.1, and (ii) as provided for at Section 17.2(e)
immediately upon written demand of the Lessor upon the occurrence of any other
Lease Event of Default.
(b) The Lessee shall be obligated to purchase for an amount equal to
the Asset Termination Value (plus all other amounts owing in respect of Rent
(including Supplemental Rent) theretofore accruing), immediately upon written
demand of the Lessor, the Lessor's interest in the Property at any time during
the Term when the Lessor's interest in the Property is foreclosed due to an
event arising out of a violation of the warranty of title contained in Section
12.1 hereof and the Lessor ceases to have title as contemplated by Section 12.1.
20.4. Cash Collateral. To the extent the Depository Bank holds any
Collateral pursuant to the Cash Collateral Agreement and if, under the Cash
Collateral Agreement or any Attachment thereto or Notice thereunder, the Lessor
is entitled to give notice to the Depository Bank to apply such Collateral to
any of its obligations hereunder or under the Operative Documents, whether in
connection with the exercise of its Purchase Option, any purchase obligation or
the exercise of its Remarketing Option, the Lessor or the Agent shall, upon
receipt of such notice from the Lessee, direct the Depository Bank to apply such
Cash Collateral to such obligations of the Lessee to the extent so directed by
the Lessee.
ARTICLE XXI
21.1. Renewal.
(a) Subject to the conditions set forth herein, the Lessee, at any time
after the first anniversary of the Effective Date, shall have the option (the
"Renewal Option") by written
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request (the "Renewal Request") to the Lessor, each Participant and the Agent
given not later than 90 days prior to the then Expiration Date to renew the Term
for a one-year period commencing on the date following the Expiration Date then
in effect. No later than the date (the "Renewal Response Date") which is thirty
(30) days after such request has been delivered to each of the Lessor, each
Participant and the Agent, the Lessor will notify the Lessee in writing (with a
copy to the Agent) whether or not it consents to such Renewal Request (which
consent may be granted or denied in its sole discretion and may be conditioned
on receipt of such financial information or other documentation as may be
specified by the Lessor including without limitation a satisfactory appraisal of
the Property), provided that if the Lessor shall fail to notify the Lessee on or
prior to the Renewal Response Date, it shall be deemed to have denied such
Renewal Request. The renewal of the Term contemplated by any Renewal Request
shall become effective as of the Expiration Date then in effect on or after the
Renewal Response Date on which the Lessor shall have consented to such Renewal
Request; provided that such renewal shall be subject to and conditioned upon the
following:
(A) on both the Expiration Date then in effect and the date of
the Renewal Request, (i) no Lease Default or Lease Event of Default
shall have occurred and be continuing, and (ii) the Lessor and the
Agent shall have received a Responsible Officer's Certificate of the
Lessee as to the matters set forth in clause (i) above,
(B) the Lessee shall not have exercised the Remarketing
Option, and
(C) the Participants shall have agreed to extend the Maturity
Date contemporaneously therewith pursuant to Section 3.6 of the
Participation Agreement such that the Renewal Term will expire on the
same date as the extended Maturity Date.
(b) The renewal of this Lease shall be on the same terms and conditions
as are set forth in this Lease for the original Term, with such modifications
thereto, if any, as the parties hereto and to the other Operative Documents may
negotiate based upon the current credit information regarding the Lessee,
interest rates and such other factors as the Lessor may consider relevant.
ARTICLE XXII
22.1. Option to Remarket. Subject to the fulfillment of each of the
conditions set forth in this Section 22.1, the Lessee shall have the option (the
"Remarketing Option") to market for the Lessor and complete the sale of all, but
not less than all, of the Lessor's interest in the Property on the Expiration
Date for the Lessor or in the event the conditions specified in Section 17.2(h)
have occurred.
The Lessee's effective exercise and consummation of the Remarketing
Option shall be subject to the due and timely fulfillment of each of the
following provisions as of the dates set forth below.
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(a) Not later than one hundred eighty (180) days prior to the
Expiration Date, the Lessee shall give to the Lessor written notice of the
Lessee's exercise of the Remarketing Option, which exercise shall be irrevocable
(except by delivery of a Purchase Notice and consummation of the exercise of the
Purchase Option prior to the earlier of (i) the Expiration Date or (ii) the date
on which the Lessor enters into a binding contract to sell the Property pursuant
to the exercise of the Remarketing Option).
(b) The Lessee shall deliver to the Lessor an Environmental Audit of
the Property together with its notice of exercise of the Remarketing Option.
Such Environmental Audit shall be prepared by an environmental consultant
selected by the Lessor in the Lessor's reasonable discretion and shall contain
conclusions reasonably satisfactory to the Lessor as to the environmental status
of the Property. If such Environmental Audit indicates any material exceptions
reasonably requiring remedy or further investigation, the Lessee shall have also
delivered a Phase Two environmental assessment by such environmental consultant
prior to the Expiration Date showing the completion of the remedying of such
exceptions in compliance with Applicable Law.
(c) On the date of the Lessee's notice to the Lessor of the Lessee's
exercise of the Remarketing Option (other than pursuant to Section 17.2(h)), no
Lease Event of Default or Lease Default shall exist, and thereafter, no uncured
Lease Event of Default or Lease Default shall exist.
(d) The Lessee shall have completed in all Material respects all
Modifications, restoration and rebuilding of the Property pursuant to Sections
11.1 and 15.1 (as the case may be) and shall have fulfilled in all Material
respects all of the conditions and requirements in connection therewith pursuant
to said Sections, in each case by the date on which the Lessor receives the
Lessee's notice of the Lessee's exercise of the Remarketing Option (time being
of the essence), regardless of whether the same shall be within the Lessee's
control. The Lessee shall have also paid the cost of all Modifications commenced
prior to the Expiration Date. The Lessee shall not have been excused pursuant to
Section 13.1 from complying with any Applicable Law that involved the extension
of the ultimate imposition of such Applicable Law beyond the last day of the
Term. Any Liens (other than Lessor Liens) on the Property that were contested by
the Lessee shall have been removed before the Expiration Date.
(e) During the Marketing Period, the Lessee shall, as nonexclusive
agent for the Lessor, use commercially reasonable efforts to sell the Lessor's
interest in the Property on or prior to the Expiration Date (without diminishing
the Lessee's obligation to consummate the sale on the Expiration Date) and will
attempt to obtain the highest purchase price therefor and for not less than the
Fair Market Sales Value. The Lessee will be responsible for hiring and
compensating brokers and making the Property available for inspection by
prospective purchasers. The Lessee shall promptly upon request permit inspection
of the Property and any maintenance records relating to the Property by the
Lessor, any Participant and any potential purchasers, and shall otherwise do all
things necessary to sell and deliver possession of the Property to any
purchaser. All such marketing of the Property shall be at the Lessee's
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sole expense. The Lessee shall allow the Lessor and any potential qualified
purchaser reasonable access to the Property for the purpose of inspecting the
same.
(f) The Lessee shall submit all bids to the Lessor, the Agent and the
Participants, and the Lessor will have the right to review the same and the
right to submit any one or more bids. All bids shall be on an all-cash basis
unless the Lessor, the Agent and the Participants shall otherwise agree in their
sole discretion. The Lessee shall procure bids from one or more bona fide
prospective purchasers and shall deliver to the Lessor, the Agent and the
Participants not less than ninety (90) days prior to the Expiration Date a
binding written unconditional (except as set forth below), irrevocable offer by
such purchaser or purchasers offering the highest bid to purchase the Property.
No such purchaser shall be the Lessee, or any Subsidiary or Affiliate of the
Lessee. The written offer must specify the Expiration Date as the closing date
unless the Lessor, the Agent and the Participants shall otherwise agree in their
sole discretion.
(g) In connection with any such sale of the Property, the Lessee will
provide to the purchaser all customary "seller's" indemnities, representations
and warranties regarding title, absence of Liens (except Lessor Liens) and the
condition of the Property, as well as such other terms and conditions as may be
negotiated between the Lessee and the purchaser. The Lessee shall have obtained,
at its cost and expense, all required governmental and regulatory consents and
approvals and shall have made all filings as required by Applicable Law in order
to carry out and complete the transfer of the Property and the Lessor shall
reasonably cooperate, at the Lessees's expense, with the Lessee to obtain said
items. As to the Lessor, any such sale shall be made on an "as is, with all
faults" basis without representation or warranty by the Lessor other than the
absence of Lessor Liens. Any agreement as to such sale shall be made subject to
the Lessor's rights under this Section 22.1.
(h) The Lessee shall pay directly, and not from the sale proceeds, all
prorations, credits, costs and expenses of the sale of the Property, whether
incurred by the Lessor or the Lessee, including without limitation, the cost of
all title insurance, surveys, environmental reports, appraisals, transfer taxes,
the Lessor's and the Agent's reasonable attorneys' fees, the Lessee's attorneys'
fees, commissions, escrow fees, recording fees, and all applicable documentary
and other transfer taxes.
(i) The Lessee shall pay to the Agent on or prior to the Expiration
Date (or to such other Person as the Agent shall notify the Lessee in writing,
or in the case of Supplemental Rent, to the Person entitled thereto) an amount
equal to the Residual Value Guarantee Amount, plus all Rent and all other
amounts under this Lease and the other Operative Documents which have accrued or
will accrue prior to or as of the Expiration Date, in the type of funds
specified in Section 3.4 hereof.
(j) If the selling price of the Property is less than the difference
between (A) the Asset Termination Value minus (B) the Residual Value Guarantee
Amount, then the Lessee shall have caused to be delivered to the Lessor, the
Agent and each Participant the appraisal required by Section 13.2 of the
Participation Agreement thirty (30) Business Days prior to the
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Expiration Date and shall pay to the Agent on or prior to the Expiration Date
(or to such other person as the Agent shall notify the Lessee in writing) the
amounts required to be paid pursuant to Section 13.2 of the Participation
Agreement.
(k) The purchase of the Property shall be consummated on the Expiration
Date following the payment by the Lessee pursuant to paragraphs (i) and (j)
above and contemporaneously with the Lessee's surrender of the Property pursuant
to Section 19.1(b) and the gross proceeds (the "Gross Proceeds") of the sale of
the Property (i.e., without deduction for any marketing, closing or other costs,
prorations or commissions) shall be paid directly to the Agent; provided,
however, that if the sum of the Gross Proceeds from such sale plus the Residual
Value Guarantee Amount paid by the Lessee pursuant to paragraph (i) above and
the proceeds of the collateral applied thereto under Section 20.4 exceeds the
Asset Termination Value, then the excess shall be paid to the Lessee on the
Expiration Date.
(l) The Lessee shall not be entitled to exercise or consummate the
Remarketing Option if a circumstance that would permit the Lessor to require the
Lessee to repurchase the Property under Section 16.3 exists and is continuing.
If one or more of the foregoing provisions shall not be fulfilled as of
the date set forth above, or the Property is not purchased as aforesaid, then
the Lessor shall declare by written notice to the Lessee the Remarketing Option
to be null and void as to the Property, in which event all of the Lessee's
rights under this Section 22.1 shall immediately terminate and the Lessee shall
be obligated to purchase all of the Lessor's interest in the Property pursuant
to Section 20.2 on the Expiration Date. Notwithstanding the foregoing, the
Lessee may at any time during the Marketing Period exercise its Purchase Option
in accordance with Section 20.2 hereof, provided, that the Lessee shall bear all
costs arising out of or attributable to the cessation of remarketing efforts,
including any costs, expenses, damages or liability which may be alleged by any
prospective purchaser of the Property.
Except as expressly set forth herein, the Lessee shall have no right,
power or authority to bind the Lessor in connection with any proposed sale of
the Property.
22.2. Certain Obligations Continue. During the Marketing Period, the
obligation of the Lessee to pay Rent (including the installment of Basic Rent
due on the fifth anniversary of the Effective Date or at the end of a Renewal
Term, or on the Expiration Date, as the case may be) shall continue undiminished
until payment in full to the Agent of the Gross Proceeds, the Residual Value
Guarantee Amount, and all other amounts due to the Lessor with respect to the
Property under the Operative Documents. The Lessor shall have the right, but
shall be under no duty, to solicit bids, to inquire into the efforts of the
Lessee to obtain bids or otherwise to take action in connection with any such
sale, other than as expressly provided in this Article XXII.
22.3. Support Obligations. In the event that the Lessee does not elect
to purchase the Property on the Expiration Date or, pursuant to the Lessor's
exercise of remedies under Article XVII, this Lease is terminated, the Lessee
shall provide the Lessor, effective on the
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Expiration Date, with (i) all permits, certificates of occupancy, governmental
licenses and authorizations necessary to use and operate the Property for its
intended purposes (to the extent such items are transferable or may be obtained
by the Lessee on behalf of another party), (ii) such easements, licenses,
rights-of-way and other rights and privileges in the nature of an easement as
are reasonably necessary or desirable in connection with the use, repair, access
to or maintenance of the Property as the Lessor shall request, and (iii) a
services agreement covering such services as the Lessor may request in order to
use and operate the Property for its intended purposes at such rates (not in
excess of arm's length fair market rates) as shall be acceptable to the Lessor
and the Lessee. All assignments, licenses, easements, agreements and other
deliveries required by clauses (i) and (ii) of this Section 22.3 shall be in
form satisfactory to the Lessor and shall be fully assignable (including both
primary assignments and assignments given in the nature of security) without
payment of any fee, cost or other charge.
ARTICLE XXIII
23.1. Holding Over. If the Lessee shall for any reason remain in
possession of the Property after the expiration or earlier termination of this
Lease (unless the Property is conveyed to the Lessee), such possession shall be
as a tenancy at sufferance during which time the Lessee shall continue to pay
Supplemental Rent that would be payable by the Lessee hereunder were the Lease
then in full force and effect and the Lessee shall continue to pay Basic Rent at
an annual rate equal to 110% of the average rate of Basic Rent payable hereunder
during the Term. Such Basic Rent shall be payable from time to time upon demand
by the Lessor. During any period of tenancy at sufferance, the Lessee shall,
subject to the second preceding sentence, be obligated to perform and observe
all of the terms, covenants and conditions of this Lease, but shall have no
rights hereunder other than the right, to the extent given by law to tenants at
sufferance, to continue its occupancy and use of the Property. Nothing contained
in this Article XXIII shall constitute the consent, express or implied, of the
Lessor to the holding over of the Lessee after the expiration or earlier
termination of this Lease (unless the Property is conveyed to the Lessee), and
nothing contained herein shall be read or construed to relieve the Lessee of its
obligations to purchase or remarket the Property on the Expiration Date pursuant
to Article XX or Article XXII or as preventing the Lessor from maintaining a
suit for possession of the Property or exercising any other remedy available to
the Lessor at law or in equity or hereunder.
ARTICLE XXIV
24.1. Risk of Loss. During the Term the risk of loss of or decrease in
the enjoyment and beneficial use of the Property as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by the Lessee, and the Lessor shall in no event be
answerable or accountable therefor.
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ARTICLE XXV
25.1. Subletting and Assignment. The Lessee may assign with recourse
this Lease or any of its rights or obligations hereunder in whole or in part to
any Person, in which case the Lessee shall guarantee performance of the
obligations of such assignee under this Lease by a guaranty in form and
substance reasonably acceptable to the Lessor and the Required Participants. The
Lessee may, without the consent of the Lessor, sublease the Property or portion
thereof to any Person, provided, that no such sublease shall, materially and
adversely affect any of the Lessor's interests, rights or remedies under the
Lease or the Lessor's title to the Property. No assignment, sublease or other
relinquishment of possession of the Property shall in any way discharge or
diminish any of the Lessee's obligations to the Lessor hereunder and the Lessee
shall remain directly and primarily liable under this Lease as to the Property,
or portion thereof, so assigned or sublet. Any sublease of the Property shall be
made subject to and subordinated to this Lease and to the rights of the Lessor
hereunder, and shall expressly provide for the surrender of the Property (or
portion thereof) if, after a Lease Event of Default has occurred, the Lease is
terminated. All such subleases shall expressly provide for termination at or
prior to the earlier of the applicable Expiration Date or other date of
termination of this Lease unless either (x) the Lessee shall purchase the
Property pursuant to Article XX or (y) the Lessor shall have (i) received a true
and correct copy of the relevant sublease agreement which shall be in form and
substance, and on terms and conditions, acceptable to the Lessor, and (ii)
received an agreement of the Lessee, in form and substance reasonably acceptable
to the Lessor, to remain liable for any diminution of the market value in the
Property as a consequence of the sublease between the Expiration Date or other
date of termination of this Lease and the later expiration of the sublease
agreement. If requested by the Lessee, the Lessor and the applicable sublessee
shall, at the Lessee's expense, execute and deliver a subordination,
nondisturbance and attornment agreement with respect to any such sublease
extending beyond the Expiration Date or other date of termination of this Lease
in form reasonably satisfactory to the Lessor, the Lessee and the sublessee. No
assignee or sublessee shall be permitted to engage in any activities on the
Property to the extent they are substantially different from those engaged in by
the Lessee without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld, except that any Assignee or Sublessee may use the
Property for light manufacturing, research and development, office, storage,
warehouse and related uses and for any other lawful use that is not more
burdensome than Lessee's intended use as administration, manufacturing, design
research and development and warehouse facilities so long as such use is
permitted by Applicable Law, is approved by Lessor, which approval shall not be
unreasonably withheld, and does not adversely affect the value, utility or
remaining useful life of the Property.
ARTICLE XXVI
26.1. Estoppel Certificates. At any time and from time to time upon not
less than twenty (20) days' prior request by the Lessor or the Lessee (the
"Requesting Party"), the other party (whichever party shall have received such
request, the "Certifying Party") shall furnish to the Requesting Party (but not
more than four times per year unless required to satisfy the
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requirements of any sublessees and only to the extent that the required
information has been provided to the Certifying Party by the other party) a
certificate signed by an individual having the office of vice president or
higher in the Certifying Party certifying that this Lease is in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications); the dates to which the Basic Rent and Supplemental
Rent have been paid; to the best knowledge of the signer of such certificate,
whether or not the Requesting Party is in default under any of its obligations
hereunder (and, if so, the nature of such alleged default); and such other
matters under this Lease as the Requesting Party may reasonably request. Any
such certificate furnished pursuant to this Article XXVI may be relied upon by
the Requesting Party, and any existing or prospective mortgagee, purchaser or
lender, and any accountant or auditor, of, from or to the Requesting Party (or
any Affiliate thereof).
ARTICLE XXVII
27.1. Right to Inspect. During the Term, the Lessee shall upon
reasonable notice from the Lessor (except that no notice shall be required if a
Lease Event of Default has occurred and is continuing), permit the Lessor, the
Agent and their respective authorized representatives to inspect the Property
during normal business hours, provided that such inspections shall not
unreasonably interfere with the Lessee's business operations at the Property.
27.2. No Waiver. No failure by the Lessor or the Lessee to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
ARTICLE XXVIII
28.1. Acceptance of Surrender. No surrender to the Lessor of this Lease
or of all or any portion of any Property or of any part of any thereof or of any
interest therein shall be valid or effective unless agreed to and accepted in
writing by the Lessor and, prior to the payment or performance of all
obligations owed to the Participants under the Participation Agreement or the
other Operative Documents and termination of the Participants' Commitments, the
Agent, and no act by the Lessor or the Agent or any representative or agent of
the Lessor or the Agent, other than a written acceptance, shall constitute an
acceptance of any such surrender.
ARTICLE XXIX
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29.1. No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly, in whole or in part, (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate, or (b) the fee estate in the Property, except as may
expressly be stated in a written instrument duly executed and delivered by the
appropriate Person.
ARTICLE XXX
30.1. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and delivered (i) personally,
(ii) by a nationally recognized overnight courier service, (iii) by mail (by
registered or certified mail, return receipt requested, postage prepaid) or (iv)
by facsimile, addressed to the respective parties, as follows:
If to the Lessee:
Quantum Corporation
500 McCarthy Boulevard
Milpitas, California 95305
Attention: Ed McClammy
Telephone: (408) 894-5703
Facsimile: (408) 894-4562
If to the Lessor:
Lease Plan North America, Inc.
135 S. LaSalle Street, Suite 711
Chicago, Illinois 60603
Attention: David M. Shipley
Telephone: (312) 904-2183
Facsimile: (312) 904-6217
If to the Agent:
ABN AMRO Bank N.V., San Francisco International Branch
101 California Street
Suite 4550
San Francisco, California 94111
Attention: Robin Yim
Telephone: (415) 984-3712
Facsimile: (415) 362-3524;
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or such additional parties and/or other address as such party may hereafter
designate (provided, however, in no event shall either party be obligated to
notify, in the aggregate, more than five (5) designees of the other party), and
shall be effective upon receipt or refusal thereof.
ARTICLE XXXI
31.1. Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of the Lessee or the Lessor
arising from events commencing prior to the expiration or earlier termination of
this Lease shall survive such expiration or earlier termination. If any term or
provision of this Lease or any application thereof shall be declared invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any right or option of the
Lessee provided in this Lease, including any right or option described in
Articles XV, XVI, XX, XXI or XXII, would, in the absence of the limitation
imposed by this sentence, be invalid or unenforceable as being in violation of
the rule against perpetuities or any other rule of law relating to the vesting
of an interest in or the suspension of the power of alienation of property, then
such right or option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of the
descendants of Franklin D. Roosevelt, the former president of the United States,
Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the
founder of the Standard Oil Company, known to be alive on the date of the
execution, acknowledgment and delivery of this Lease.
31.2. Amendments and Modifications. Subject to the requirements,
restrictions and conditions set forth in the Participation Agreement, neither
this Lease, any Lease Supplement nor any provision hereof may be amended,
waived, discharged or terminated except by an instrument in writing in
recordable form signed by the Lessor and the Lessee. In the event of any
conflict or inconsistency between the terms hereof and the terms of the
Participation Agreement, the Participation Agreement shall control.
31.3. Successors and Assigns. All the terms and provisions of this
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
31.4. Headings and Table of Contents. The headings and table of
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
31.5. Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
31.6. GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
-39-
STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT AS TO
MATTERS RELATING TO THE CREATION OF THE LEASEHOLD ESTATE HEREUNDER AND THE
EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH SUCH ESTATE IS
LOCATED. WITHOUT LIMITING THE FOREGOING, IN THE EVENT THAT THIS LEASE IS DEEMED
TO CONSTITUTE A FINANCING, WHICH IS THE INTENTION OF THE PARTIES, THE LAWS OF
THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, SHALL
GOVERN THE CREATION, TERMS AND PROVISIONS OF THE INDEBTEDNESS EVIDENCED HEREBY,
BUT THE LIEN CREATED HEREBY AND THE ENFORCEMENT OF SAID LIEN SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH SUCH ESTATE IS
LOCATED.
31.7. Limitations on Recourse. The parties hereto agree that the Lessor
shall have no personal liability whatsoever to the 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 the Lessor shall be
liable in its individual capacity (a) for its own willful misconduct or gross
negligence (or negligence in the handling of funds), (b) for liabilities that
may result from the incorrectness of any representation or warranty expressly
made by it in Section 8.1 of the Participation Agreement or (c) for any Taxes
based on or measured by any fees, commission or compensation received by it for
acting as the Lessor as contemplated by the Operative Documents. It is
understood and agreed that, except as provided in the preceding proviso: (i) the
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; (ii) all obligations of the Lessor to the Lessee are solely
nonrecourse obligations except to the extent that it has received payment from
others and are enforceable solely against the Lessor's interest in the Property;
and (iii) all such personal liability of the Lessor is expressly waived and
released as a condition of, and as consideration for, the execution and delivery
of the Operative Documents by the Lessor. Notwithstanding anything contained
herein, the restriction stated in the preceding provisions of this Section 31.7
shall not apply to liability of the Lessor arising because of a breach of the
Lessor's obligation to remove Lessor Liens or because of its receiving Advances
and failing to disburse Advances to Lessee in accordance with the Operative
Documents, or failure to disburse proceeds from sale of the Property in
accordance with this Lease.
31.8. Original Lease. The single executed original of this Lease marked
"THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page
thereof and containing the receipt of the Agent therefor on or following the
signature page thereof shall be the Original Executed Counterpart of this Lease
(the "Original Executed Counterpart"). To the extent that this Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Lease may be
created through the transfer or possession of any counterpart other than the
Original Executed Counterpart.
-40-
31.9. Usury Savings Clause. Nothing continued in this Lease or the
other Operative Documents shall be deemed to require the payment of interest or
other charges by the Lessee or any other Person in excess of the amount which
may lawfully be charged under any applicable usury laws. In the event that the
Lessor or any other Person shall collect moneys under this Lease or any other
Operative Document which are deemed to constitute interest (including, without
limitation, the Basic Rent or Supplemental Rent) which would increase the
effective interest rate to a rate in excess of that permitted to be charged by
applicable law, all such sums deemed to constitute interest in excess of the
legal rate shall, upon such determination, at the option of the Person to whom
such payment was made, be returned to the Person making such payment or credited
against other amounts owed by the person making such payment.
[signature page follows]
-41-
IN WITNESS WHEREOF, the parties have caused this Lease be duly executed
and delivered as of the date first above written.
LEASE PLAN NORTH AMERICA, INC.,
an Illinois corporation, as Lessor
By: /s/ DAVID M. SHIPLEY
______________________________________
Name: DAVID M. SHIPLEY
Title: VICE PRESIDENT
STATE OF ILLINOIS )
) SS.:
COUNTY OF COOK )
Before me, the undersigned, a Notary Public within and for the
State and County aforesaid, personally appeared David Shipley, with whom I am
personally acquainted (or proved to me on the basis of satisfactory evidence),
and who, upon oath, acknowledged himself to be a Vice President of LEASE PLAN
NORTH AMERICA, INC., the within named bargainor, a corporation, and that he as
such Vice President, being duly authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such Vice President.
WITNESS my hand and seal, at office, on this the 21 day of
August, 1997.
- ---------------------------------
"OFFICIAL SEAL"
CHARLES A. DERBIGNY IV
Notary Public, State of Illinois
My Commission Expires 9-4-2000
- ---------------------------------
/s/ Charles A. Derbigny IV
------------------------------
Notary Public
My Commission Expires:
9/4/00
- ----------------------------
QUANTUM CORPORATION,
a Delaware corporation, as Lessee
By: /s/ G.E. McCLAMMY
______________________________________
Name: G.E. McCLAMMY
Title: V.P. Finance & Treasurer
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
================================================================================
State of California
County of Santa Clara
On August 20, 1997 before me, Kim L. Armstrong
------------------- -----------------------------------------------
DATE NAME, TITLE OF OFFICER - E.G., JANE DOE, NOTARY PUBLIC
personally appeared G.E. McClammy
------------------------------------------------------------
NAME(S) OF SIGNER(S)
[X] proved to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal
/s/ Kim L. Armstrong
-------------------------------------------------------
SIGNATURE OF NOTARY
=============================== OPTIONAL =======================================
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[ ] INDIVIDUAL
[X] CORPORATE OFFICER
VP FINANCE & TREASURER MASTER LEASE
------------------------------- -----------------------------------
TITLE(S) TITLE OR TYPE OF DOCUMENT
[ ] PARTNER(S) [ ] LIMITED
[ ] GENERAL -----------------------------------
[ ] ATTORNEY-IN-FACT NUMBER OF PAGES
[ ] TRUSTEE(S)
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER: 8/22/97
--------------------------- -----------------------------------
--------------------------- DATE OF DOCUMENT
---------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
QUANTUM CORPORATION
------------------------------- -----------------------------------
------------------------------- SIGNER(S) OTHER THAN NAMED ABOVE
================================================================================
(C) 1993 NATIONAL NOTARY ASSOCIATION-8236 REMMET AVE, P.O. BOX 7184-CANOGA PARK,
CA 91309-7184
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of August 22, 1997
ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH, as Agent
By: /s/ Robin S. Yim
------------------------------------
Name: Robin S. Yim
Title: Group Vice President
By: /s/ Robert N. Hartinger
------------------------------------
Name: Robert N. Hartinger
Title: Senior Vice President
SCHEDULE 1
TO THE LEASE
Amortization of Property Improvements Cost
None
Prepared by and upon recording return to:
John R. Grier, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
EXHIBIT A TO
THE LEASE
LEASE SUPPLEMENT NO. 1
(And Memorandum of Lease)
THIS LEASE SUPPLEMENT NO. 1 (And Memorandum of Lease) (this "Lease
Supplement") dated as of August 22, 1997, between Lease Plan North America,
Inc., an Illinois corporation, not in its individual capacity but solely as
lessor (the "Lessor"), and Quantum Corporation, a Delaware corporation, as
lessee (the "Lessee").
WHEREAS, the Lessor is the fee owner of the Land Interest described on
Schedule 1 hereto and wishes to lease the Land Interest and all Improvements
thereon or which may thereafter be constructed thereon pursuant to the
Construction Agency Agreement or the Lease to the Lessee (the Land Interest and
such Improvements being collectively called the "Property");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions; Interpretation. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix 1 to the Master Lease, dated as
of August 22, 1997, between the Lessee and the Lessor; and the rules of
interpretation set forth in Appendix 1 to the Lease shall apply to this Lease
Supplement.
SECTION 2. The Property. Attached hereto as Schedule I is the
description of a certain Land Interest. Effective upon the execution and
delivery of this Lease Supplement by the Lessor and the Lessee, the Property
shall be subject to the terms and provisions of the Lease. Subject to the terms
and conditions of the Lease, the Lessor hereby leases to the Lessee for the Term
(as defined below) of the Lease, the Lessor's interest in the Property, and the
Lessee hereby agrees, expressly for the direct benefit of the Lessor, to lease
from the Lessor for the Term, the Lessor's interest in the Property.
SECTION 3. Parties and Addresses. The Lease is dated as of August 22,
1997, between the Lessor, whose principal office is at 135 S. LaSalle Street,
Chicago, Illinois 60603 and the Lessee, whose principal office is 500 McCarthy
Boulevard, Milpitas, California 95305.
SECTION 4. Lease Term. The term of this Lease (the "Term") shall begin
on August 22, 1997, and shall end on August 22, 2002, unless the Term is renewed
or earlier terminated in accordance with the provisions of the Lease. The Lease
contains option periods of one year each, which give Lessee the right, subject
to the terms thereof, to extend the term of the Lease.
SECTION 5. Ownership of the Property. (a) It is the intent of the
parties hereto that: (i) the Lease constitutes an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, for purposes of
Lessee's financial reporting, and (ii) for purposes of Federal and state income
tax, the transaction contemplated hereby and by the Lease is a financing
arrangement and preserves ownership in the Property in the Lessee. Nevertheless,
the Lessee acknowledges and agrees that neither the Agent, the Lessor nor any
Participant has made any representations or warranties to the Lessee concerning
the tax, accounting or legal characteristics of the Operative Documents and that
the Lessee has obtained and relied upon such tax, accounting and legal advice
concerning the Operative Documents as it deems appropriate. Accordingly, and
notwithstanding any provision of this Lease to the contrary, the Lessor and the
Lessee agree and declare that: (i) the transactions contemplated hereby are
intended to have a dual, rather than a single, form; and (ii) all references in
this Lease to the "lease" of the Property which fail to reference such dual form
do so as a matter of convenience only and do not reflect the intent of the
Lessor and the Lessee as to the true form of such arrangements.
(b) Anything to the contrary in the Operative Documents
notwithstanding, the Lessor and the Lessee intend and agree that with respect to
the nature of the transactions evidenced by the Lease in the context of the
exercise of remedies under the Operative Documents, including, without
limitation, in the case of any insolvency or receivership proceedings or a
petition under the United States bankruptcy laws or any other applicable
insolvency laws or statute of the United States of America or any State or
Commonwealth thereof affecting the Lessee, the Lessor or any Participant or any
enforcement or collection actions, (i) the transactions evidenced by the Lease
are loans made by the Lessor and the Participants as unrelated third party
lenders to the Lessee secured by the Property, (ii) the obligations of the
Lessee under the Lease to pay Basic Rent and Supplemental Rent or Asset
Termination Value in connection with any purchase of the Property pursuant to
the Lease shall be treated as payments of interest on and principal of,
respectively, loans from the Lessor and the Participants to the Lessee, and
(iii) the Lease grants a security interest and mortgage or deed of trust or
lien, as the case may be, in the Property and the collateral described in the
Mortgage to the Lessor, the Agent and the Participants to secure the Lessee's
performance under and payment of all amounts under the Lease and the other
Operative Documents.
(c) Specifically, but without limiting the generality of subsection (b)
of this Section 5, the Lessor and the Lessee further intend and agree that, for
the purpose of securing the Lessee's obligations for the repayment of the
above-described loans from the Certificate Purchaser and the Lenders to the
Lessee, (i) the Lease shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the Uniform Commercial
Code and a real property mortgage or deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Lease shall be deemed to be a grant by the
Lessee to the Lessor, the Agent
-2-
and the Participants of a mortgage lien and security interest in all of the
Lessee's right, title and interest in and to the Property and the collateral
described in the Mortgage and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other property
(it being understood that the Lessee hereby mortgages and warrants and grants a
security interest in the Property and the collateral described in the Mortgage
to the Lessor, the Agent and the Participants to secure the loans); (iii) the
possession by the Lessor or any of its agents of notes and such other items of
property as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the Uniform
Commercial Code; and (iv) notifications to Persons holding such property, and
acknowledgments, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of the Lessee shall be deemed to have been
given for the purpose of perfecting such security interest under Applicable Law.
The Lessor and the Lessee shall, to the extent consistent with the Lease, take
such actions and execute, deliver, file and record such other documents,
financing statements, mortgages and deeds of trust as may be necessary to ensure
that, if the Lease and this Lease Supplement were deemed to create a security
interest in the Property in accordance with this Section, such security interest
would be deemed to be a perfected security interest of first priority under
Applicable Law and will be maintained as such throughout the Term.
(d) Specifically, without limiting the generality of anything contained
in this Section 5, the Lessor and the Lessee further intend and agree that, for
purposes of filing federal, state and local returns, reports and other
statements relating to income or franchise taxes, or any other taxes imposed
upon or measured by income, (i) the Lessee shall be entitled to take any
deduction, credit, allowance or other reporting position consistent with its
status as owner of the Property; and (ii) neither the Lessor nor the
Participants shall take a position on their respective federal, state and local
returns, reports and other statements relating to income or franchise taxes that
is inconsistent with the Lessee's status as owner of the Property, provided that
the Lessor and any Participant may take a position that is inconsistent with the
Lessee's status as owner of the Property if: (x) there has been a change in law
or regulation so requiring as supported by an opinion of counsel reasonably
acceptable to the Lessee that there is not substantial authority for such a
consistent reporting position; or (y) (A) there has been an administrative or
judicial holding that the Lessee is not the owner of the Property for such tax
purposes, (B) the Lessee has no right to contest such holding pursuant to
Section 13.5 of the Participation Agreement, and (C) the Lessee's lack of right
to contest is not the result of an Indemnitee's waiver of its right to
indemnification pursuant to Section 13.5(f)(iii) of the Participation Agreement
or failure of the amount at issue to exceed the minimum amount set forth in
Section 13.5(f)(iv)(B) of the Participation Agreement.
SECTION 6. Remedies. Without limiting any other remedies set forth in
the Lease, in the event that a court of competent jurisdiction rules that the
Lease constitutes a mortgage, deed or trust or other secured financing as is the
intent of the parties, then the Lessor and the Lessee agree that (i) the Lessee
hereby grants a Lien against the Property WITH POWER OF SALE, and that upon the
occurrence of a Lease Event of Default, the Lessor shall have the power and
authority, to the extent provided by law, after proper notice and lapse of such
time as may be
-3-
required by law, to sell the Property at the time and place of sale fixed by the
Lessor in said notice of sale, either as a whole, or in separate lots or parcels
or items and in such order as the 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 THE LESSOR TO TAKE THE PROPERTY AND
SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE
LESSEE UNDER THIS INSTRUMENT, and (ii) upon the occurrence of a Lease Event of
Default, the Lessor, in lieu of or in addition to exercising any power of sale
hereinabove given, may proceed by a suit or suits in equity or at law, whether
for a foreclosure hereunder, or for the sale of the Property, or against the
Lessee on a recourse basis for the Asset Termination Value, or for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for the appointment of a receiver
pending any foreclosure hereunder or the sale of the Property, or for the
enforcement of any other appropriate legal or equitable remedy. The parties
hereto intend that, in addition to any other debt or obligation secured by the
Lien granted pursuant to this Section 6, such Lien shall secure unpaid balances
of Rent and Supplemental Rent and other extensions of credit made by the Lessor
to the Lessee after this Lease is delivered to the appropriate recording offices
of Colorado, whether made pursuant to an obligation of the Lessee or otherwise,
and such Rent and Supplemental Rent shall be secured to the same extent as if
such future payment obligations of Rent and Supplemental Rent were on account of
obligatory advances to be made under a construction loan; provided such
obligations secured hereby at any one time shall not exceed the lesser of : (i)
the maximum principal sum permitted by the laws of Colorado; or (ii) [one
hundred thirty-two million dollars ($132,000,000)] together with interest or
Yield thereon calculated at the rates provided in the Participation Agreement.
SECTION 7. Purchase Option. Sections 17.2(h), 19 and 20 of the Lease
contain various purchase options which may be exercised by Lessee during the
term of the Lease subject to the terms and conditions of said Sections 19 and 20
of the Lease.
SECTION 8. Liens. (a) THIS LEASE IS SUPERIOR TO A DEED OF TRUST IN
FAVOR OF ABN AMRO BANK N.V., SAN FRANCISCO INTERNATIONAL BRANCH, AS AGENT (THE
"AGENT") UNDER THE PARTICIPATION AGREEMENT, DATED AS OF AUGUST 22, 1997, AMONG
THE LESSEE, THE LESSOR, THE AGENT AND THE PARTICIPANTS, EXCEPT AS AMENDED OR
SUPPLEMENTED.
(b) NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR, ANY PARTICIPANT NOR
THE AGENT IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED
OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE PROPERTY OR ANY PART
THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANICS'S OR OTHER LIENS FOR
ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
THE LESSOR IN AND TO THE PROPERTY.
SECTION 9. Ratification. Except as specifically modified hereby, the
terms and provisions of the Lease are hereby ratified and confirmed and remain
in full force and effect.
-4-
SECTION 10. Original Lease Supplement. The single executed original of
this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED
COUNTERPART" on the signature page thereof and containing the receipt of the
Agent therefor on or following the signature page thereof shall be the Original
Executed Counterpart of this Lease Supplement (the "Original Executed
Counterpart"). To the extent that this Lease Supplement constitutes chattel
paper, as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
Original Executed Counterpart.
SECTION 11. GOVERNING LAW. THE LEASE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO
THE CREATION OF THE LEASEHOLD ESTATE THEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE IN WHICH THE ESTATE IS LOCATED. WITHOUT
LIMITING THE FOREGOING, IN THE EVENT THAT THE LEASE IS DEEMED TO CONSTITUTE A
FINANCING, WHICH IS THE INTENTION OF THE PARTIES, THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, SHALL GOVERN THE
CREATION, TERMS AND PROVISIONS OF THE INDEBTEDNESS EVIDENCED HEREBY, BUT THE
LIEN CREATED HEREBY AND THE ENFORCEMENT OF SAID LIEN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH THE ESTATE IS
LOCATED.
SECTION 12. Counterpart Execution. This Lease Supplement may be
executed in any number of counterparts and by each of the parties hereto in
separate counterparts, all such counterparts together constituting but one and
the same instrument.
[signature page follows]
-5-
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
LEASE PLAN NORTH AMERICA, INC.,
an Illinois corporation, as Lessor
By: /s/ David M. Shipley
------------------------------
Name: David M. Shipley
Title: Vice President
STATE OF ILLINOIS )
) SS.:
COUNTY OF COOK )
Before me, the undersigned, a Notary Public within and for the
State and County aforesaid, personally appeared David Shipley, with whom I am
personally acquainted (or proved to me on the basis of satisfactory evidence),
and who, upon oath, acknowledged himself to be a Vice President of LEASE PLAN
NORTH AMERICA, INC., the within named bargainor, a corporation, and that he as
such Vice President, being duly authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such Vice President.
WITNESS my hand and seal, at office, on this the 21 day of
August, 1997.
- ---------------------------------
"OFFICIAL SEAL"
CHARLES A. DERBIGNY IV
Notary Public, State of Illinois
My Commission Expires 9-4-2000
- ---------------------------------
/s/ Charles A. Derbigny IV
------------------------------
Notary Public
My Commission Expires:
9/4/00
- ----------------------------
QUANTUM CORPORATION,
a Delaware corporation, as Lessee
By: /s/ G. E. McClammy
-----------------------------------
Name: G. E. McClammy
Title: VP Finance & Treasurer
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
================================================================================
State of California
County of Santa Clara
On August 20, 1997 before me, Kim L. Armstrong
------------------- -----------------------------------------------
DATE NAME, TITLE OF OFFICER - E.G., JANE DOE, NOTARY PUBLIC
personally appeared G.E. McClammy
------------------------------------------------------------
NAME(S) OF SIGNER(S)
[X] proved to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal
/s/ Kim L. Armstrong
-------------------------------------------------------
SIGNATURE OF NOTARY
=============================== OPTIONAL =======================================
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[ ] INDIVIDUAL
[X] CORPORATE OFFICER
VP FINANCE & TREASURER LEASE SUPPLEMENT NO. 1
------------------------------- -----------------------------------
TITLE(S) TITLE OR TYPE OF DOCUMENT
[ ] PARTNER(S) [ ] LIMITED
[ ] GENERAL -----------------------------------
[ ] ATTORNEY-IN-FACT NUMBER OF PAGES
[ ] TRUSTEE(S)
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER: 8/22/97
--------------------------- -----------------------------------
--------------------------- DATE OF DOCUMENT
---------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
QUANTUM CORPORATION
------------------------------- -----------------------------------
------------------------------- SIGNER(S) OTHER THAN NAMED ABOVE
================================================================================
(C) 1993 NATIONAL NOTARY ASSOCIATION-8236 REMMET AVE, P.O. BOX 7184-CANOGA PARK,
CA 91309-7184
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of August 22, 1997.
ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH, as Agent
By: /s/ Robin S. Yim
------------------------------------
Name: Robin S. Yim
Title: Group Vice President
By: /s/ Robert N. Hartinger
------------------------------------
Name: Robert N. Hartinger
Title: Senior Vice President
SCHEDULE I
TO THE LEASE SUPPLEMENT NO. 1
Property Description
[SEE ATTACHED]
S-1
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
A portion of the Southwest 1/4 of Section 21 and a portion of the Northwest
Quarter of Section 28 and a portion of the Northeast Quarter of Section 29,
Township 12 South, Range 66 West of the 6th P.M., El Paso County, Colorado, more
particularly described as follows:
BEGINNING, at the northeast corner of Lot 1, Fairlane Technology Park Filing No.
3, as recorded in Plat Book H-6 at Page 35 of the records of said El Paso
County, thence S82 degrees 54'39"E on the south Right-of-Way line of Federal
Drive, a distance of 319.33 feet to a point of curve; thence continuing on said
south Right-of-Way line on said curve to the left having a central angle of 48
degrees 00'00", a radius of 732.00 feet for a distance of 613.24 feet; thence
continuing on said south Right-of-Way line N49 degrees 05'21"E for a distance of
380.00 feet to a point of curve; thence continuing on said south Right-of-Way
line on said curve to the left having a central angle of 15 degrees 33'55", a
radius of 1632.00 feet for a distance of 443.36 feet; thence S47 degrees 30'55"E
a distance of 795.09 feet to the north Right-of-Way line of Kettle Creek Road as
shown on the plat of Pendleton Subdivision recorded in Plat Book N-2 at Page 31
of the records of said El Paso County; thence S42 degrees 29'05"W on said north
Right-of-Way line of Kettle Creek Road, a distance of 1411.35 feet to the north
Right-of-Way line of Old Ranch Road; thence S87 degrees 21'45"W on the north
Right-of-Way line of said Old Ranch Road, a distance of 945.63 feet; thence S89
degrees 13'55"W on said north Right-of-Way line, a distance of 147.13 feet to
the southeast corner of said Fairlane Technology Park Filing No. 3; thence N00
degrees 26'11"W on the east line of said Filing No. 3, a distance of 908.64 feet
to the Point of Beginning.
EXHIBIT B TO THE LEASE
[FORM OF EQUIPMENT SCHEDULE]
EQUIPMENT SCHEDULE NO.
Forming a part of Master Lease dated as of August 22, 1997 (the "Lease"),
between Lease Plan North America, Inc., as Lessor (the "Lessor"), and Quantum
Corporation, a Delaware corporation, as Lessee (the "Lessee").
1. EQUIPMENT. The Equipment leased hereunder shall be as set forth in
the schedule attached hereto as Annex A.
TOTAL PROPERTY IMPROVEMENTS COST: $____________
2. TERM. Upon and after the date of execution hereof, the Equipment
shall be subject to the terms and conditions provided herein and in the Lease
(which is incorporated herein by reference).
3. RENT. From and after the date hereof, the Basic Rent for said
Equipment during the Basic Lease Term shall be payable on the dates and in the
amounts set forth in Article III of the Lease which is incorporated herein by
reference.
4. LESSEE CONFIRMATION. Lessee hereby confirms and warrants to Lessor
that the Equipment: (a) was duly delivered to Lessee on or prior to the date
hereof at the locations specified in Section 5 hereof; (b) has been received,
inspected and determined to be in compliance with all applicable specifications
and that the Equipment is hereby accepted for all purposes of the Lease; and (c)
is a part of the "Equipment" referred to in the Lease and is taken subject to
all terms and conditions therein and herein provided.
5. LOCATION OF EQUIPMENT. The locations of the Equipment are specified
on the Schedule of Equipment attached hereto as Annex A.
6. FINANCING STATEMENTS. Annex B attached hereto specifies the location
of all UCC financing statements or other similar documents under applicable law
covering the Equipment.
Date of Execution: ____________, ____
LEASE PLAN NORTH AMERICA, INC., QUANTUM
an Illinois corporation CORPORATION, a Delaware corporation
By: ______________________ By: _________________________
Name: ______________________ Name: _________________________
Title: _________________________ Title: _________________________
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ANNEX A TO
EQUIPMENT SCHEDULE
EQUIPMENT
Approved by _____________________________ Page No. ___ of ___ total pages
(Lessee to initial each
page)
Attached Bill of Sale dated Equipment located at:
_______________, _________
______________________
and Street No.
________________ ____________ _______________ __________
Equipment Schedule No. ___. City County State Zip
This location is ____ owned, _x_ leased, _x_ mortgaged.
Manufacturer and/or
Vendor Name & Description Equipment Cost
Invoice No.
See Schedule 1 Attached
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ANNEX B TO
EQUIPMENT SCHEDULE
FINANCING STATEMENTS COVERING
EQUIPMENT
Secured Party Statement No. Filing Date Filing Location
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