Exhibit 10.20
EXECUTION COPY
MASTER LEASE
THIS DOCUMENT SECURES FUTURE ADVANCES
Dated as of December 29, 1999
between
ELECTRONICS FOR IMAGING, INC.,
as the Lessee,
and
SOCIETE GENERALE FINANCIAL CORPORATION,
as the Lessor.
This Master Lease is subject to a lien in favor of the Lender under the
Loan Agreement. This Master Lease has been executed in several counterparts. To
the extent, if any, that this Master Lease constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no lien on this Master Lease may be created through the transfer
or possession of any counterpart other than the original counterpart containing
the receipt therefor executed by SOCIETE GENERALE, acting through its New York
Branch, as the Lender, on or following the signature page hereof.
This counterpart is not the original counterpart.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions; Interpretation.........................................................................1
ARTICLE II
MASTER LEASE
2.1 Acceptance and Lease of Property....................................................................2
2.2 Acceptance Procedure................................................................................2
2.3 Lease Term..........................................................................................2
2.4 Title...............................................................................................2
ARTICLE III
PAYMENT OF RENT
3.1 Rent................................................................................................3
3.2 Payment of Rent.....................................................................................3
3.3 Supplemental Rent...................................................................................3
3.4 Method of Payment...................................................................................3
3.5 Certain Payments....................................................................................4
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
4.1 Quiet Enjoyment.....................................................................................4
4.2 Right to Inspect....................................................................................4
ARTICLE V
NET LEASE, ETC.
5.1 Net Lease...........................................................................................4
5.2 No Termination or Abatement.........................................................................5
ARTICLE VI
SUBLEASES
6.1 Subletting..........................................................................................6
i
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
7.1 Condition of the Properties.........................................................................7
7.2 Risk of Loss........................................................................................7
ARTICLE VIII
POSSESSION AND USE OF THE PROPERTIES, ETC.
8.1 Utility Charges.....................................................................................8
8.2 Possession and Use of the Property..................................................................8
8.3 Compliance with Requirements of Laws and Insurance Requirements.....................................8
8.4 Assignment by Lessee................................................................................8
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
9.1 Maintenance and Repair; Return.....................................................................9
ARTICLE X
MODIFICATIONS, ETC.
10.1 Modifications, Substitutions and Replacements......................................................10
ARTICLE XI
WARRANT OF TITLE; EASEMENTS
11.1 Warrant of Title...................................................................................11
11.2 Grants and Releases of Easements; Lessor's Waivers.................................................11
ARTICLE XII
PERMITTED CONTESTS
12.1 Permitted Contests in Respect of Applicable Law Other Than Impositions.............................13
ARTICLE XIII
INSURANCE
13.1 Public Liability and Workers' Compensation Insurance...............................................13
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
ii
14.1 Casualty and Condemnation..........................................................................14
14.2 Environmental Matters..............................................................................16
14.3 Notice of Environmental Matters....................................................................17
ARTICLE XV
TERMINATION OF LEASE
15.1 Partial Termination upon Certain Events............................................................17
15.2 Termination Procedures.............................................................................18
ARTICLE XVI
EVENTS OF DEFAULT
16.1 Lease Events of Default............................................................................18
16.2 Remedies...........................................................................................21
16.3 Waiver of Certain Rights...........................................................................26
ARTICLE XVII
LESSOR'S RIGHT TO CURE
17.1 The Lessor's Right to Cure the Lessee's Lease Defaults.............................................26
ARTICLE XVIII
PURCHASE PROVISIONS
18.1 Purchase of the Properties.........................................................................27
ARTICLE XIX
EXTENSION OF EXPIRATION DATE
19.1 Extension of Expiration Date.......................................................................28
ARTICLE XX
REMARKETING OPTION
20.1 Option to Remarket.................................................................................28
20.2 Certain Obligations Continue.......................................................................31
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
iii
21.1 Provisions Relating to the Exercise of Purchase Option or Obligation and
Conveyance Upon Remarketing and Conveyance Upon Certain Other
Events...........................................................................................31
ARTICLE XXII
ESTOPPEL CERTIFICATES
22.1 Estoppel Certificates..............................................................................32
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
23.1 Acceptance of Surrender............................................................................32
ARTICLE XXIV
NO MERGER OF TITLE
24.1 No Merger of Title.................................................................................33
ARTICLE XXV
INTENT OF THE PARTIES
25.1 Nature of Transaction..............................................................................33
ARTICLE XXVI
MISCELLANEOUS
26.1 Survival; Severability; Etc........................................................................34
26.2 Amendments and Modifications.......................................................................34
26.3 No Waiver..........................................................................................34
26.4 Notices............................................................................................35
26.5 Successors and Assigns.............................................................................35
26.6 Headings and Table of Contents.....................................................................35
26.7 Counterparts.......................................................................................35
26.8 GOVERNING LAW......................................................................................35
26.9 Liability Limited..................................................................................35
26.10 Original Lease.....................................................................................36
iv
MASTER LEASE
THIS DOCUMENT SECURES FUTURE ADVANCES
THIS MASTER LEASE (this "Master Lease"), dated as of December 29, 1999,
between SOCIETE GENERALE FINANCIAL CORPORATION, a Delaware corporation, as
Lessor (in such capacity, the "Lessor") and ELECTRONICS FOR IMAGING, INC., a
Delaware corporation, as Lessee (in such capacity, the "Lessee").
W I T N E S S E T H:
WHEREAS, pursuant to the Participation Agreement dated as of the date
hereof (as amended, modified, restated or supplemented from time to time, the
"Participation Agreement"), among the Lessee, as Lessee and Construction Agent,
the Lessor and Societe Generale, acting through its New York Branch, as Lender
(the "Lender") under the Loan Agreement, the Lender and the Lessor have agreed
to finance the Construction of Improvements on the Properties;
WHEREAS, the Lessor, on each Funding Date, will finance the
Construction of Improvements on the Properties;
WHEREAS, the Lessee, as Construction Agent for the Lessor, will cause
the Construction of said Improvements to be effected on the Properties;
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee
desires to lease from the Lessor, the Lessor's interest in the Land and the
Improvements constructed thereon; and
WHEREAS, each Property will be subject to the terms of this Master
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
DEFINITIONS
I.1 Definitions; Interpretation. Capitalized terms used but not
otherwise defined in this Master Lease have the respective meanings specified in
Appendix A to this Master Lease (as the same may be amended, supplemented,
amended and restated or otherwise modified from time to
1
time, "Appendix A to this Master Lease"); and the rules of interpretation set
forth in Appendix A to this Master Lease shall apply to this Master Lease.
ARTICLE II
MASTER LEASE
II.1 Acceptance and Lease of Property. Subject to the conditions set
forth in the Participation Agreement, including without limitation the
satisfaction or waiver of the conditions set forth in Article VI thereof, the
Lessor hereby covenants and agrees to acquire a leasehold interest in and
simultaneously to lease to the Lessee hereunder and under the Lease Supplements
for the Lease Term, the Lessor's interest in the Land together with any
Improvements which thereafter may be constructed on such Land pursuant to the
Construction Agency Agreement or this Master Lease, and the Lessee hereby
agrees, expressly for the direct benefit of the Lessor, to lease from the Lessor
for the Lease Term, the Lessor's interest in such Parcels of Land and in such
Improvements together with any Improvements so acquired by Lessor, which
thereafter may be constructed on such Land pursuant to the Construction Agency
Agreement and this Master Lease.
II.2 Acceptance Procedure. The Lessee hereby agrees that the execution
and delivery by the Lessee on each applicable Funding Date of an appropriately
completed Lease Supplement in the form of Exhibit A-1 hereto covering any
Property shall, without further act, constitute the acceptance by the Lessee of
the Property which is the subject of such Lease Supplement for all purposes of
this Master Lease and the other Operative Documents on the terms set forth
therein and herein.
II.3 Lease Term. Unless otherwise specified in the Lease Supplement,
the Basic Lease Term (the "Basic Lease Term") of this Master Lease with respect
to any Property shall begin on the Completion Date for such Property and shall
end on the Expiration Date. In the event the Basic Lease Term commences on any
day other than the day following the last day of the then effective Interest
Period, the Lessee shall pay any Break Costs associated with the early
termination of the Interest Period.
II.4 Title. Each Property is leased to the Lessee without any
representation or warranty, express or implied, by the Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, all Liens other than Lessor Liens) 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 any Property other than resulting from
Lessor Liens.
2
ARTICLE III
PAYMENT OF RENT
III.1 Rent.
(a) During the Basic Lease Term for a Property, the Lessee
shall pay Basic Rent for such Property to the Lessor on each Basic Rent
Payment Date, on the date required under Section 20.1(g) in connection
with the Lessee's exercise of the Remarketing Option and on any date on
which this Master Lease shall terminate with respect to such Property.
At least 10 days prior to each Basic Rent Payment Date, the Lessor
shall deliver to the Lessee a notice of the amount of the Basic Rent
due on such date (the "Invoice"). For the purposes of this Section 3.1,
delivery of the Invoice by facsimile transmission, receipt confirmed,
will be sufficient.
(b) The Lessee's inability or failure to take possession of
all or any portion of any Property upon Completion shall not delay or
otherwise affect the Lessee's obligation to pay Rent for such Property
in accordance with the terms of this Master Lease.
III.2 Payment of Rent. Rent shall be paid absolutely net to each Person
entitled thereto, so that this Master Lease shall yield to such Person the full
amount thereof, without setoff, deduction or reduction.
III.3 Supplemental Rent. The Lessee shall pay to the Lessor or any
other 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 and such other Persons entitled to the receipt of such payment
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise. The Lessee shall pay to the Lessor, as Supplemental Rent,
among other things, on demand, to the extent permitted by applicable
Requirements of 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 Master 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 to
which Lessee is a party or which is authorized in writing by the Lessee with a
third party for nonpayment or late payment of such Supplemental Rent, all of
which shall also constitute Supplemental Rent.
3
III.4 Method of Payment. Each payment of Rent payable by the Lessee to
the Lessor under this Lease or any other Operative Document shall be made by the
Lessee to the Lender as assignee of the Lessor under the Assignment of Lease
(or, if all Loans and all other amounts owing to the Lender under the Loan
Agreement and the other Operative Documents have been paid in full and all
Commitments of the Lender have been permanently terminated, to the Lessor) prior
to 2:00 p.m., New York City time, to the Account in immediately available funds
consisting of lawful currency of the United States of America on the date when
such payment shall be due. Payments received after 2:00 p.m., New York City
time, on the date due shall for the purpose of Section 16.1 hereof be deemed
received on such day; provided, however, that for the purposes of the second
sentence of Section 3.3 hereof, such payments shall be deemed received on the
next succeeding Business Day and, unless the Lender (or the Lessor, as
applicable) is otherwise able to invest or employ such funds on the date
received, subject to interest at the Overdue Rate as provided in such Section
3.3.
III.5 Certain Payments. Payments of Basic Rent, Supplemental Rent and
other amounts hereunder are, as applicable, subject to netting and offset as
provided pursuant to Section 7.12 of the Participation Agreement.
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
IV.1 Quiet Enjoyment. Subject to Sections 2.4 and 4.2, and subject to
the rights of the Lessor contained in Article XV and the other terms of the
Operative Documents to which the Lessee is a party, the Lessee shall peaceably
and quietly have, hold and enjoy the Property for the Lease Term, free of any
claim or other action by the Lessor or anyone claiming by, through or under the
Lessor (other than the Lessee) with respect to any matters arising from and
after the applicable Completion Date. Such right of quiet enjoyment is
independent of, and shall not affect the Lessor's rights otherwise to initiate
legal action to enforce the obligations of the Lessee under this Master Lease.
IV.2 Right to Inspect. During the Lease Term, the Lessee shall upon
reasonable notice from the Lessor, permit the Lessor, the Lender, and their
respective authorized representatives to inspect any Property subject to this
Master Lease during normal business hours, provided that such inspections shall
not unreasonably interfere with the Lessee's business operations at such
Property.
ARTICLE V
NET LEASE, ETC.
4
V.1 Net Lease. This Master Lease shall constitute a net lease. Any
present or future law to the contrary notwithstanding, this Master 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 any Property or any part
thereof, or the failure of any Property to comply with all Requirements of Law,
including any inability to occupy or use such 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 any Property or any part thereof; (iii) any restriction, prevention
or curtailment of or interference with the construction on or any use of any
Property or any part thereof including eviction; (iv) any defect in title to or
rights to any Property or any Lien on such title or rights or on any 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 or the Lender; (vi) to the extent permitted by Applicable Law,
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceedings relating to the Lessee, the
Lessor, the Lender or any other Person, or any action taken with respect to this
Master Lease by any trustee or receiver of the Lessee, the Lessor, the Lender 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, the Lender, or any vendor, manufacturer, contractor of or for any
Property; (viii) any failure on the part of the Lessor to perform or comply with
any of the terms of this Master Lease (other than performance by the Lessor of
its obligations set forth in Section 2.1 hereof), of any other Operative
Document or of any other agreement; (ix) any invalidity or unenforceability or
illegality or disaffirmance of this Master Lease 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; or (xii) 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 Lessee's agreement in the
preceding sentence shall not affect any claim, action or right the Lessee may
have against the Lessor or any other Participant, and notwithstanding the
foregoing provisions, nothing contained in this Section 5.1 shall provide Lessor
with any right to payment by the Lessee with respect to any Property prior to
the Completion Date for such Property which is contrary to Lessor's rights under
the Construction Agency Agreement including the limitations set forth in Section
5.4 thereof; it being the express intention of the parties to this Master Lease
that Lessee shall have no liability hereunder with respect to any Construction
Period Property. 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
5
shall have been modified or terminated in accordance with an express provision
of this Master Lease.
V.2 No Termination or Abatement. The Lessee shall remain obligated
under this Master Lease in accordance with its terms and shall not take any
action to terminate, rescind or avoid this Master Lease (except as provided
herein), notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting the Lessor or any
Participant, or any action with respect to this Master Lease which may be taken
by any trustee, receiver or liquidator of the Lessor or any Participant or by
any court with respect to the Lessor or any Participant. The Lessee hereby
waives all right to terminate or surrender this Master Lease (except as provided
herein) or except as a consequence of a reduction in the Lease Balance as a
result of Casualty or Condemnation proceeds pursuant to the terms of Section
14.1 of this Master Lease, or as a result of a purchase of any or all of the
Properties pursuant to Section 18.1 of this Master Lease, to avail itself of any
abatement, suspension, deferment, reduction, setoff, counterclaim or defense
with respect to the Lease Balance. The Lessee shall remain obligated under this
Master 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 Master Lease and the
Operative Documents. Notwithstanding any such statute or otherwise, the Lessee
shall be bound by all of the terms and conditions contained in this Master
Lease.
ARTICLE VI
SUBLEASES
VI.1 Subletting. (a) The Lessee may from time to time, sublease any
Property or any portion thereof to any Person and extend, modify or renew any
sublease without the approval of Lessor or Lender; provided, however, that: (i)
no sublease or other relinquishment of possession of any 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
Master Lease as to the Properties, or portion thereof, so sublet and (ii) each
sublease to an Affiliate of the Lessee shall be made subject and subordinate to
this Master Lease and to the rights of the Lessor hereunder.
(b) Lessor hereby agrees, that, in the event of the early termination
of this Master Lease from any cause whatsoever, and while any sublease is in
full force and effect, such termination of this Master Lease shall not act as a
merger or other termination of such sublease, and Lessee's interest as sublessor
in such sublease shall be deemed automatically assigned, transferred, and
conveyed to Lessor; and, from and after such termination, Lessor shall be bound
by the provisions of the sublease then in full force and effect on the part of
the Lessee, as sublessor; and that the sublessee shall be deemed thereupon and
without further act to have attorned to Lessor.
6
It is the intention hereof to provide that the termination of this Lease while
such sublease is in full force and effect shall not, in any way, by reason
thereof, terminate such sublease or affect the rights of such sublessee. The
foregoing is subject to the right of Lessee (or Lessor, if this Master Lease has
terminated) to terminate any sublease which is in default (notice thereof, if
any required, having been given and the time for curing such default having
expired) and any other rights and remedies reserved to Lessee in such sublease,
and any other rights and remedies afforded to a lessor of real property against
a defaulting lessee.
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
VII.1 Condition of the Properties. THE LESSEE ACKNOWLEDGES AND AGREES
THAT ALTHOUGH THE LESSOR WILL OWN AND HOLD TITLE TO THE IMPROVEMENTS, THE
LESSEE, ACTING AS CONSTRUCTION AGENT, IS SOLELY RESPONSIBLE UNDER THE TERMS OF
THE CONSTRUCTION AGENCY AGREEMENT FOR THE DESIGN, DEVELOPMENT, BUDGETING AND
CONSTRUCTION OF THE IMPROVEMENTS AND ANY ALTERATIONS OR MODIFICATIONS. THE
LESSEE FURTHER ACKNOWLEDGES AND AGREES THAT IT IS LEASING EACH PROPERTY AND EACH
OF THE IMPROVEMENTS CONSTRUCTED THEREON "AS IS" WITHOUT REPRESENTATION, WARRANTY
OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR OR THE LENDER AND IN EACH CASE
SUBJECT TO (A) THE EXISTING STATE OF TITLE (EXCLUDING LESSOR LIENS), (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 NOR
THE LENDER 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 (OTHER THAN FOR LESSOR LIENS), VALUE, HABITABILITY,
USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF ANY PROPERTY (OR ANY
PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT (EXCEPT SECTION
4.1 HEREOF) WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY
PART THEREOF) AND NEITHER THE LESSOR NOR THE LENDER SHALL BE LIABLE FOR ANY
LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS) OR THE
FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY REQUIREMENT OF
LAW.
VII.2 Risk of Loss. Subject to the terms of Section 14.1 of this Master
Lease, during the Lease Term the risk of loss of or decrease in the enjoyment
and beneficial use of the Properties
7
as a result of the damage or destruction thereof by fire, earthquake, the
elements, casualties, thefts, riots, wars or otherwise is assumed by the Lessee,
and except for loss or damages arising from the gross negligence or willful
misconduct of Lessor or Lender or their respective agents, employees or
contractors, neither the Lessor nor the Lender shall in any event be answerable
or accountable to Lessee therefor.
ARTICLE VIII
POSSESSION AND USE OF THE PROPERTIES, ETC.
VIII.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 Properties during
the Lease 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.
VIII.2 Possession and Use of the Property. After the Completion Date
for each Property, each Property shall be used in a manner consistent with this
Master Lease for any lawful purpose in accordance with Applicable Law now or
hereafter in effect; provided, that such use does not (i) result in a diminution
in the value of the Property from that projected in the original Appraisal
delivered with respect to such Property or (ii) violate any restriction with
respect to Hazardous Materials as they relate to such Property pursuant to the
Operative Documents. The Lessee shall pay, or cause to be paid, all charges and
costs required in connection with the use of the Properties as contemplated by
this Master Lease. The Lessee shall not commit or permit any waste of the
Properties or any part thereof.
VIII.3 Compliance with Requirements of Laws and Insurance Requirements.
Subject to the terms of Article XII relating to permitted contests, the Lessee,
at its sole cost and expense, shall (a) comply in all material respects with all
Requirements of Law (including all Hazardous Materials Laws) and Insurance
Requirements relating to the Properties, including the use, construction,
operation, maintenance, repair and restoration thereof and the remarketing
thereof pursuant to Article XX, whether or not compliance therewith shall
require structural or extraordinary changes in the Improvements or interfere
with the use and enjoyment of the Properties, 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 Properties and for the use, operation, maintenance, repair and restoration
of the Improvements. Notwithstanding the preceding sentence, the Lessee shall be
deemed to be in compliance with all Hazardous Materials Laws for purposes of
this Master Lease notwithstanding any Environmental Violation if the severity of
such Environmental Violation is less
8
than Federal, state or local standards requiring remediation or removal or, if
such standards are exceeded, remediation or removal is proceeding in accordance
with all applicable Hazardous Materials Laws.
VIII.4 Assignment by Lessee. The Lessee may not assign this Master
Lease or any of its rights or obligations hereunder in whole or in part to any
Person. Notwithstanding the foregoing sentence, the Lessee may, so long as no
Event of Default has occurred and is continuing or would result therefrom, upon
prior written notice to each of the Lessor and the Lender, assign this Master
Lease and all of the Lessee's rights and obligations hereunder to an Affiliate
of the Lessee pursuant to an assignment and assumption agreement and such other
documentation, including opinions of counsel, all in form and substance
reasonably satisfactory to the Lessor and the Lender; provided, that, in any
event of such assignment, the Lessee shall deliver a guaranty of such
Affiliate's obligation hereunder in form and substance and in all respects
satisfactory to the Lessor and the Lender.
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
IX.1 Maintenance and Repair; Return.
(a) From and after the Completion Date for a Property, the
Lessee, at its sole cost and expense, shall maintain such Property in
good condition (ordinary wear and tear excepted) and make all necessary
repairs thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or nonstructural or
foreseen or unforeseen, in each case as required by all Requirements of
Law and Insurance Requirements and in no event less than the standards
applied by the Lessee in the operation and maintenance of other
comparable properties owned or leased by the Lessee or its Affiliates.
(b) The Lessor shall under no circumstances be required to
build any improvements on any Property, make any repairs, replacements,
alterations or renewals of any nature or description to any Property,
make any expenditure whatsoever in connection with this Master Lease
(other than for Advances made in accordance with and pursuant to the
terms of the Participation Agreement and the Construction Agency
Agreement) or maintain any Property in any way. The Lessee waives any
right to (i) require the Lessor to maintain, repair, or rebuild all or
any part of any 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 Lease Term.
9
(c) The Lessee shall, upon the expiration or earlier
termination of this Master Lease with respect to any Property (other
than as a result of the Lessee's purchase of such Property from the
Lessor as provided herein), vacate and surrender such Property to the
Lessor in its then-current, "AS IS" condition, without any express or
implied warranty subject to the Lessee's obligations under Sections
8.3, 9.1(a), 10.1, 11.1, 14.1, 14.2 and 20.1. Title to all
improvements, furnishings, furniture, fixtures and any personal
property of the Lessee which were not funded by the Lessor and the
Lender pursuant to the Participation Agreement, located on or about a
Property whether or not affixed to the realty, shall, subject to the
following sentence, be and remain the property of the Lessee throughout
the Lease Term, and at any time during the Lease Term, and within
thirty (30) days following the expiration or earlier termination date,
may be removed by the Lessee or, at the Lessee's election surrendered
with the Property, in which event title to such surrendered property
shall, if the Lessor so elects, be deemed transferred to the Lessor.
Notwithstanding the foregoing, any fixture constituting part of the
Property which is required by Applicable Law or which cannot be removed
without causing Material damage to or the diminution in the Fair Market
Sales Value of the applicable Property shall at all times remain part
of the Property.
ARTICLE X
MODIFICATIONS, ETC.
X.1 Modifications, Substitutions and Replacements. During the Lease
Term, the Lessee, at its sole cost and expense, may at any time and from time to
time make alterations, renovations, improvements and additions to any Property
or any part thereof and substitutions and replacements therefor (collectively,
"Modifications"); provided, however, that:
(i) except for any Modification required to be made
pursuant to a Requirement of Law (a "Required Modification"),
no Modification shall adversely affect the Fair Market Sales
Value of such Property below the Property Balance of such
Property as a whole following the completion of such
Modification;
(ii) such Modifications shall be (and shall be done
in a manner) consistent with the Plans and Specifications for
such Property;
(iii) such Modifications shall comply with Sections
8.3 and 9.1(a); and
(iv) the Lessee shall have provided notice to the
Lessor of any structural Modification the cost of which
exceeds 10% of the Improvements Budget for such Property.
10
All Modifications shall remain part of the realty and shall be subject
to this Master Lease; provided, however, that Modifications that (x) are not
Required Modifications, (y) were not financed by the Participants and (z) can be
removed without causing material damage to or diminution in the Fair Market
Sales Value of the Property below the Property Balance shall be the property of
the Lessee or other third party and may be removed by Lessee during the Lease
Term and up to 30 days following the expiration or earlier termination thereof
and shall not be subject to this Master Lease. The Lessee may place upon the
Properties any trade fixtures, machinery, equipment, inventory or other property
belonging to the Lessee or third parties and may remove the same, subject,
however, to the terms of Section 9.1(a); provided, however, that such trade
fixtures, machinery, equipment, inventory or other property can be removed
without causing material damage to or diminution in the Fair Market Sales Value
of the Property below the Property Balance; provided, further, however, that the
Lessee shall keep and maintain at the Properties and shall not remove from the
Properties any Equipment financed or otherwise paid for by the Participants
pursuant to the Participation Agreement.
ARTICLE XI
WARRANT OF TITLE; EASEMENTS
XI.1 Warrant of Title.
(a) The Lessee agrees that except as otherwise provided herein
and subject to the terms of Article 12 relating to permitted contests,
the Lessee shall not directly or indirectly create or allow to remain,
and shall (subject to the limitations of Section 5.4 of the
Construction Agency Agreement which shall apply to Lessee's liability
under this Section 11.1 prior to the Completion Date) promptly
discharge at its sole cost and expense, any Lien (other than any Lessor
Lien or any Permitted Property Lien), defect, attachment, levy, title
retention agreement or claim upon any Property or any Lien, attachment,
levy or claim with respect to the Rent or with respect to any amounts
held by the Lessor or the Lender pursuant to the Loan Agreement or the
other Operative Documents, other than Permitted Property Liens and
Liens on machinery, equipment, general intangibles and other personal
property not financed by the proceeds of the Loans or the Lessor
Amounts.
(b) Nothing contained in this Master Lease shall be construed
as constituting the consent or request of the Lessor or any other
Participant, expressed or implied, to or for the performance by any
contractor, mechanic, laborer, materialman, supplier or vendor of any
labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to any
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE
LESSOR NOR THE LENDER IS
11
OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO
BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING A 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 OR THE LENDER IN AND TO ANY PROPERTY.
XI.2 Grants and Releases of Easements; Lessor's Waivers.
(a) Provided that no Lease Event of Default shall have
occurred and be continuing, and subject to the provisions of Articles
VII, IX and X and Section 8.3, the Lessor hereby consents in each
instance to the following actions by the Lessee as the Lessor's agent,
and the Lessor hereby appoints the Lessee the Lessor's
attorney-in-fact, with full authority in the place and stead of the
Lessor to take such action or actions from time to time during the
Lease Term, but at the Lessee's sole cost and expense: (i) the granting
of easements, licenses, rights-of-way and other rights and privileges
in the nature of easements reasonably necessary or desirable for the
use, repair, or maintenance of any Property as herein provided; (ii)
the release of existing easements or other rights in the nature of
easements which are for the benefit of any Property; (iii) if required
by applicable Governmental Authority in connection with the
Construction, the dedication or transfer of unimproved portions of any
Property for road, highway or other public purposes; (iv) the
imposition of and the execution of amendments to any covenants and
restrictions; (v) the filing and processing of Site Development Permit
Amendments, Parcel Maps, Tentative Maps, Development Agreements and any
and all other permit applications, authorizations, entitlement,
agreements with any government or regulatory agency or amendments
thereof, or other documents reasonably required or beneficial for
construction or Modification of the Improvements, or amendments to
Permitted Property Liens or governmental permits or approvals affecting
any Property; and (vi) the execution and filing of tract or parcel maps
subdividing the Land into lots or parcels or reconfiguring existing
lots or parcels; provided, however, that in each case (A) such grant,
release, dedication, transfer, imposition or amendment does not reduce
the Fair Market Sales Value of the applicable Property, (B) such grant,
release, dedication, transfer or amendment that in the Lessee's
judgment is reasonably necessary or beneficial in connection with the
use, maintenance, alteration or improvement of the applicable Property,
(C) such grant, release, dedication, transfer, imposition or amendment
will not cause the applicable Property or any portion thereof to fail
to comply with the provisions of this Master Lease or any other
Operative Documents and all Requirements of Law (including, without
limitation, all applicable zoning, planning, building and subdivision
ordinances, all applicable restrictive covenants and all applicable
architectural approval requirements); (D) any and all governmental
consents or approvals required prior to such grant, release,
dedication, transfer, imposition, annexation or amendment have been
obtained, and any and all filings required prior to
12
such action have been made; (E) the Lessee shall remain obligated under
this Master Lease and under any instrument executed by the Lessee
consenting to the assignment of the Lessor's interests in this Master
Lease as security for indebtedness, in each such case in accordance
with their terms, substantially as though such grant, release,
dedication, transfer or amendment had not been effected and (F) the
Lessee shall pay and perform any obligations of the Lessor under such
grant, release, dedication, transfer, imposition or amendment. Without
limiting the effectiveness of the foregoing, 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, transfer, imposition or amendment
to any Person permitted under this Section 11.2(a) including landlord
waivers with respect to any of the foregoing.
(b) The Lessor acknowledges the Lessee's (and any permitted
sublessee's) right to finance and to secure under the Uniform
Commercial Code, inventory, furnishings, furniture, equipment,
machinery, leasehold improvements and other personal property located
at the Properties other than Equipment, and the Lessor agrees to
execute Lessor waiver forms and release of Lessor Liens in favor of any
purchase money seller, lessor or lender which has financed or may
finance in the future such items.
ARTICLE XII
PERMITTED CONTESTS
XII.1 Permitted Contests in Respect of Applicable Law Other Than
Impositions. Except to the extent otherwise provided in Section 13.5(b) of the
Participation Agreement regarding Taxes and other Impositions, if, to the extent
and for so long as (a) a test, challenge, appeal or proceeding for review of any
Applicable Law relating to any Property shall be prosecuted diligently and in
good faith in appropriate proceedings by the Lessee or (b) compliance with such
Applicable Law shall have been excused or exempted by a valid nonconforming use,
variance permit, waiver, extension or forbearance, the Lessee shall not be
required to comply with such Applicable Law but only if and so long as any such
test, challenge, appeal, proceeding, waiver, extension, forbearance or
noncompliance shall not, in the reasonable opinion of the Lessor and the Lender,
involve (A) any risk of criminal liability being imposed on the Lessor or the
Lender or (B) any risk of (1) foreclosure, forfeiture or loss of such Property,
or any material part thereof, or (2) the nonpayment of Rent or (C) any
substantial risk of (1) the sale of, or the creation of any Lien (other than a
Permitted Property Lien) on, any part of such Property, (2) civil liability
being imposed on the Lessor, the Lender, or such Property, or (3) enjoinment of,
or interference with, the use, possession or disposition of such Property in any
material respect. Lessor, at Lessee's sole cost and expense, shall execute and
deliver to Lessee such authorizations and other documents as may reasonably be
required in connection with any such permitted contest.
13
The Lessor will not be required to join in any proceedings pursuant to
this Section 12.1 unless a provision of any Applicable Law requires that such
proceedings be brought by or in the name of the Lessor; and in that event the
Lessor will join in the proceedings or permit them or any part thereof to be
brought in its name if and so long as (i) the Lessee has not elected the
Remarketing Option and (ii) the Lessee pays all related expenses and indemnifies
the Lessor and the Lender with respect to such proceedings.
ARTICLE XIII
INSURANCE
XIII.1 Public Liability and Workers' Compensation Insurance.
(a) During the Lease Term, the Lessee shall procure and carry, at the
Lessee's sole cost and expense, commercial general liability insurance for
claims for injuries or death sustained by persons or damage to property while on
the Properties and such other public liability coverages as are ordinarily
procured by the Lessee or its Affiliates who own or operate similar properties,
but in any case shall provide liability coverage of at least $2,000,000 per
person and $1,000,000 for property damage per occurrence. Such insurance shall
be on terms and in amounts that are no less favorable than insurance maintained
by the Lessee or such Affiliates with respect to similar properties that they
own and that are in accordance with normal industry practice. The policy shall
be endorsed to include the Lessor and the Lender as additional insureds. The
policy shall also 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 or the Lender may have in force.
(b) During the Basic Lease Term, the Lessee shall have the right to
self-insure with respect to any of the insurance required under this Master
Lease so long as (i) the Lessee is a publicly traded domestic corporation whose
stock is traded on a nationally recognized exchange; (ii) the Lessee has not
assigned this Master Lease; (iii) the Lessee maintains a consolidated net worth
(determined as provided in Section 10.2.1 of the Participation Agreement) of at
least $400 million according to its most recent audited financial statement; and
(iv) the Lessee governs and manages its self-insurance program in a manner
consistent with programs managed by prudent businesses whose stock is publicly
traded on nationally recognized exchanges. Upon request, the Lessee shall supply
the Lessor from time to time with evidence reasonably satisfactory to the Lessor
of the Lessee's net worth and the satisfaction of the condition set forth above.
If the Lessee elects to self-insure, the Lessee shall be responsible for losses
or liabilities which would have been assumed by the insurance companies which
would have issued the insurance required of the Lessee under the Master Lease.
The Lessee will notify the Lessor in advance of any period for which it intends
to self-insure and shall provide Lessor with satisfactory evidence that it
complies with these requirements in order to give the Lessor an opportunity to
confirm the
14
satisfaction of the conditions set forth above. For so long as the Lessee
self-insures, the Lessee, for applicable periods, shall and does hereby
indemnify and hold harmless the Lessor, its officers, directors, agents,
employees and representatives from and against all costs, damages, or expenses
(including reasonable attorneys' fees) incurred or paid by the Lessor as a
result of any claim customarily covered by a broad-form policy of commercial
general liability insurance, including a contractual liability endorsement.
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
XIV.1 Casualty and Condemnation.
(a) Subject to the provisions of this Article XIV, if all or
a portion of any Property is damaged or destroyed in whole or in part
by a Casualty or if the use, access, occupancy, easement rights or
title to any Property or any part thereof, is the subject of a
Condemnation, then
(i) any insurance proceeds payable with respect to
such Casualty shall be paid directly to the Lessee (or if
received by the Lessor, shall be paid over to the Lessee) for
the sole purpose of reconstruction, refurbishment and repair
of such Property; provided, that such reconstruction,
refurbishment or repair can be completed prior to the end of
the Lease Term; provided, further, that in the event that
either (i) such reconstruction, refurbishment or repair cannot
be completed prior to the end of the Lease Term or (ii) the
Lessee shall elect not to use such proceeds for the
reconstruction, refurbishment or repair of such Property, then
all such insurance proceeds payable with respect to such
Casualty shall be paid to the Lessor to be applied towards the
payment of the Lease Balance in accordance with Section 7.2 of
the Participation Agreement, and
(ii) (x) in the case of a Condemnation (that is not a
Significant Condemnation) of any part of any Land (not
including the applicable Improvements), any award or
compensation relating thereto shall be paid to the Lessee for
the sole purpose of restoration of such Property (provided,
that such restoration can be completed prior to the end of the
Lease Term) or else shall be paid to the Lessor to be applied
in the Lessor's and the Lender's reasonable discretion to the
partial restoration of such Property or towards the payment of
the applicable Lease Balance, and (y) in the case of a
Significant Condemnation, such award or compensation shall be
paid to the Lessor to be applied in the Lessor's and the
Lender's reasonable discretion to the restoration of such
Property or
15
toward the payment of the applicable Lease Balance in
accordance with Article VII of the Participation Agreement;
provided, however, that, in each case, if a Lease Event of Default
shall have occurred and be continuing, such award, compensation or
insurance proceeds shall be paid directly to the Lessor or, if received
by the Lessee, shall be held in trust for the Lessor and the Lender,
and shall be paid by the Lessee to the Account to be distributed in
accordance with Article VII of the Participation Agreement. All amounts
held by the Lessor or the Lender when a Lease Event of Default exists
hereunder on account of any award, compensation or insurance proceeds
either paid directly to the Lessor or the Lender or turned over to the
Lessor or the Lender shall at the option of the Lessor either be (i)
paid to the Lessee for the repair of damage caused by such Casualty or
Condemnation in accordance with clause (d) of this Section 14.1, or
(ii) applied to the repayment of the Lease Balance of such Property on
the Termination Date with respect to such Property in accordance with
Article XV.
(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 Lender shall participate in any such proceeding, action,
negotiation, prosecution or adjustment. The Lessor and the Lessee agree
that this Master 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 any
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 Lender
promptly after the receipt of such notice.
(d) If pursuant to this Section 14.1 and Section 15.1 this
Master Lease shall continue in full force and effect following a
Casualty or Condemnation with respect to any Property, the Lessee
shall, at its sole cost and expense (and, without limitation, if any
award, compensation or insurance payment is not sufficient to restore
such Property in accordance with this clause (d), the Lessee shall pay
the shortfall), promptly and diligently repair any damage to such
Property caused by such Casualty or Condemnation in conformity with the
requirements of Sections 8.3 and 9.1, to restore such Property to at
least the same condition, operative value and useful life as existed
immediately prior to such Casualty or Condemnation. Upon completion of
such restoration, the Lessee shall furnish to the Lessor (which, in
turn, shall furnish to the Lender) an architect's certificate of
substantial completion and a Responsible Officer's Certificate
confirming that such restoration has been completed pursuant to this
Master Lease.
16
(e) In no event shall a Casualty or Condemnation 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 XVIII and XXI.
(f) Any Excess Casualty/Condemnation Proceeds received by the
Lessor or the Lender in respect of a Casualty or Condemnation shall be
turned over to the Lessee.
XIV.2 Environmental Matters. Promptly upon the Lessee's knowledge of
the existence of an Environmental Violation with respect to any Property, the
Lessee shall notify the Lessor in writing of such Environmental Violation. If
the Lessor elects not to terminate this Master Lease with respect to such
Property pursuant to Section 15.1, at the Lessee's sole cost and expense, the
Lessee shall promptly and diligently commence any response, clean up, remedial
or other action necessary to remove, clean up or remediate the Environmental
Violation in accordance with the terms of Section 8.3 (including the last
sentence thereof). The Lessee shall, upon completion of remedial action by the
Lessee, cause to be prepared by an environmental consultant reasonably
acceptable to the Lessor a report describing the Environmental Violation and the
actions taken by the Lessee (or its agents) in response to such Environmental
Violation, and a statement by the consultant that the Environmental Violation
has been remedied in compliance in all material respects with applicable
Hazardous Materials Laws. Each such Environmental Violation shall be remedied
prior to the Expiration Date unless each Property with respect to which an
Environmental Violation has occurred but has not been remedied has been
purchased by the Lessee in accordance with Section 18.1. Nothing in this Article
XIV shall reduce or limit the Lessee's obligations under Sections 13.1, 13.2 or
13.3 of the Participation Agreement.
XIV.3 Notice of Environmental Matters. Promptly, but in any event
within thirty (30) Business Days from the date the Lessee has actual knowledge
thereof pursuant to written notice from any Governmental Authority, the Lessee
shall provide to the Lessor written notice of any pending or threatened claim,
action or proceeding involving any Hazardous Materials Laws or any Release on or
in connection with any 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 written communications with
any Governmental Authority relating to any Environmental Violation in connection
with any Property. The Lessee shall also promptly provide such detailed reports
of any such material environmental claims. In the event that the Lessor receives
written notice of any pending or threatened claim, action or proceeding
involving any Hazardous Materials Laws or any Release on or in connection with
the Property, the Lessor shall promptly give notice thereof to the Lessee. For
purposes of this paragraph, "actual knowledge" of the Lessee shall mean the
actual knowledge of the Lessee's Senior Director of Facilities and Real Estate,
who is responsible for the day to day operations of the Properties.
17
ARTICLE XV
TERMINATION OF LEASE
XV.1 Partial Termination upon Certain Events. If any of the following
occurs during the Basic Lease Term with respect to any Parcel of Land or related
Improvements:
(i) a Significant Casualty occurs;
(ii) a Significant Condemnation occurs; or
(iii) an Environmental Violation occurs or is
discovered the cost of remediation of which would exceed
$5,000,000 (x) and such violation has not been remediated
within 180 days after the occurrence or discovery or (y) the
Lessee has notified the Lessor prior to the expiration of such
180 day period that the violation will not be remediated
within such period;
and the Lessor shall have given written notice (a
"Termination Notice") to the Lessee that, as a consequence of
such event (x) the Lease Supplement relating to such Parcel of
Land and related Improvements is to be terminated and (y) this
Master Lease is to be terminated with respect to such Parcel
of Land and related Improvements, then the Lessee shall be
obligated to purchase the Lessor's interest in such affected
Parcel of Land and related Improvements within 30 days after
Lessee's receipt of the Termination Notice, by paying to the
Lessor an amount equal to the Lease Balance allocable to such
affected Parcel of Land and related Improvements.
XV.2 Termination Procedures. On the date of the payment by the Lessee
of the portion of the Lease Balance allocable to the affected Parcel of Land and
related Improvements in accordance with Section 15.1 (such date, the
"Termination Date"), the Lease Supplement relating to each such affected Parcel
of Land and related Improvements shall terminate and this Master Lease shall
terminate with respect to each such Parcel of Land and related Improvements and,
concurrent with the Lessor's receipt of such payment,
(a) each such Parcel of Land and related Improvements shall be
conveyed to the Lessee (or to the Lessee's designee) "AS IS" and in its
then present physical condition free of Lessor Liens and the Lessor
shall execute and deliver a termination of Ground Lease and an
assignment of the Lessor's entire interest in the Parcel of Land and
the Improvements thereon with respect to such Land in recordable form;
and
(b) in the case of a termination pursuant to clause (i) or
(ii) of Section 15.1, the Lessor shall convey to the Lessee any Net
Proceeds with respect to the Significant
18
Casualty or Significant Condemnation giving rise to the termination of
this Master Lease with respect to such Parcel of Land and related
Improvements theretofore received by the Lessor or, at the request of
the Lessee, such amounts shall be applied towards payment of the Lease
Balance allocable to the affected Parcel of Land and related
Improvements.
ARTICLE XVI
EVENTS OF DEFAULT
XVI.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 within three (3) Business Days after the same shall be due and
payable, (ii) any Supplemental Rent due and payable within five (5)
Business Days after receipt of written notice thereof, or (iii) any
Property Balance, Lease Balance, Purchase Option Price or Maximum
Recourse Amount on the date due therefor; or
(b) the Lessee shall fail to deposit with the Collateral
Agent, on the Business Day next succeeding the occurrence of a
Deficiency Date, the Deficiency Collateral;
(c) the Lessee shall not be in compliance with Section 10.2 of
the Participation Agreement (which breach shall constitute an Event of
Default hereunder even if the Basic Lease Term has not commenced with
respect to any Property);
(d) the Lessee shall fail to observe or perform any term,
covenant or condition of the Lessee under this Master Lease or the
other Operative Documents to which it is party other than those
described in the foregoing clauses (a), (b) or (c) of this Section
16.1, and, in each such case, such failure shall have continued
unremedied for thirty (30) days after written notice; provided, that
such cure period shall be extended from thirty (30) days to one-hundred
and twenty (120) days if such term, covenant or condition is, without
prejudice to the Lessor and/or the Lender, curable or remediable and
the Lessee is at all times during such extended period diligently
taking action reasonably satisfactory to the Lessor and the Lender to
so cure or remedy default; provided, further, that failure by the
Lessee to fully comply with the requirements of Section 20.1 hereof
shall not be subject to any cure period; provided, further, that, for
purposes of clarification, the failure by the Lessee to comply with the
foregoing clauses (a), (b) or (c) of this Section 16.1 shall not be
subject to any cure period except as expressly set forth in such
clauses (a), (b) or (c);
19
(e) any representation or warranty made or deemed made by the
Lessee herein or in any Operative Document or which is contained in any
certificate, document or financial or other statement furnished at any
time under or in connection with any Operative Document shall prove to
have been incorrect, false or misleading in any material respect on or
as of the date made or deemed made, unless the fact or condition which
made such representation of warranty incorrect, false or misleading is,
without prejudice to the Lessor and/or the Lender, curable or
remediable and the Lessee is at all times diligently taking action
reasonably satisfactory to the Lessor and the Lender to so cure or
remedy such fact or condition in order to make such representation
and/or warranty true and correct in all material respects, in which
event the Lessee shall have one-hundred and eighty (180) days from the
date such representation or warranty was made or deemed made to cure or
remedy such default;
(f) a Construction Agency Agreement Event of Default for which
the Lessor shall have full recourse against the Lessee in its capacity
as Construction Agent shall have occurred and be continuing:
(g) any Operative Document or any Lien granted under any
Operative Document shall, taken as a whole, terminate, cease to be
effective against, or cease to be the legal, valid, binding and
enforceable obligation of the Lessee;
(h) the Lessee shall directly or indirectly contest the
effectiveness, validity, binding nature of enforceability of any
Operative Document or any Lien granted under any Operative Document;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice of intent
to terminate a Material plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or a condition
shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there
shall occur a complete or partial withdrawal from, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or
more Multiemployer plans which could cause one or more members of the
ERISA Group to incur a current payment obligation in excess of
$5,000,000;
(j) any judgements or orders for the payment of money, in any
case not covered by insurance, individually or in the aggregate in
excess of $10,000,000 shall be rendered
20
against the Lessee and such judgment or order shall continue
unsatisfied and unstayed (pursuant to laws, rules or court orders) for
a period of thirty (30) days;
(k) a default shall occur in the payment when due (subject to
any applicable grace period), whether by acceleration or otherwise, of
any Indebtedness of the Lessee or any of its Consolidated Subsidiaries
having a principal amount, individually or in the aggregate, in excess
of $10,000,000, or a default shall occur in the performance or
observance of any obligation or condition with respect to such
Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or such default shall continue
unremedied for any applicable period of time sufficient to permit the
holder or holders of such Indebtedness, or any trustee or agent for
such holders, to cause such Indebtedness to become due and payable
prior to its expressed maturity;
(l) [Intentionally Omitted]
(m) the Lessee shall fail to maintain the insurance required
under Article XIII hereof or shall fail to observe or perform any term,
covenant on condition to be performed by it under Section 20.1 of this
Master Lease;
(n) the Lessee shall (i) admit in writing its inability to pay
its debts generally as they become due, (ii) file a petition under the
United States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof, (iii) make a general assignment for the benefit of its
creditors, (iv) consent to the appointment of a receiver of itself or
the whole or any substantial part of its property, (v) fail to cause
the discharge of any custodian, trustee or receiver appointed for the
Lessee or the whole or a substantial part of its property within sixty
(60) days after such appointment, or (vi) file a petition or answer
seeking or consenting to reorganization under the United States
bankruptcy laws or any other applicable insolvency law or statute of
the United States of America or any State or Commonwealth thereof; or
(o) insolvency proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof shall be filed against the Lessee and not dismissed within
sixty (60) days from the date of its filing (provided, that the Lessee,
hereby expressly authorizes the Lessor and each Lender to appear in any
court conducting any such proceeding during such sixty (60) day period
to preserve, protect and defend their respective rights under the
Operative Documents), or a court of competent jurisdiction shall enter
an order or decree appointing, without the consent of the Lessee, a
receiver of the Lessee or the whole or a substantial part of any of its
property, and such order or decree shall not be vacated or set aside
within sixty (60) days from the date of the entry thereof.
21
XVI.2 Remedies. Upon the occurrence of any Lease Event of Default and
the declaration thereof, the Lease Balance due hereunder without further act
shall be accelerated and be deemed to be due and payable hereunder, and at any
time thereafter, the Lessor may, subject to the last three paragraphs of this
Section 16.2 and 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.
(a) The Lessor may, by notice to the Lessee, rescind or
terminate this Master Lease as to any Property or all of the Properties
as of the date specified in such notice; provided, however (i) no
reletting, reentry or taking of possession of any Property (or any
portion thereof) by the Lessor will be construed as an election on the
Lessor's part to terminate this Master 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 Master Lease for a continuing Lease
Event of Default and (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 Properties shall be valid unless the same be made in
writing and executed by the Lessor;
(b) The Lessor may (i) demand that the Lessee, and the Lessee
shall upon the written demand of the Lessor, return any Property
promptly to the Lessor in the manner and condition required by, and
otherwise in accordance with all of the provisions of, Articles VII and
IX and Section 8.3 hereof as if such Property were being returned at
the end of the Lease 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 any Property, and to
the extent and in the manner permitted by Applicable Law, enter upon
such Property and take immediate possession of (to the exclusion of the
Lessee) such Property or any part thereof and expel or remove the
Lessee and any other Person who may be occupying such 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, the Lessee shall be
responsible for all costs and expenses incurred by the Lessor and/or
the Lender in connection with any reletting, including, without
limitation, reasonable brokers' fees and all costs of any alterations
or repairs made by the Lessor or the Lender;
(c) As more fully set forth in each Lease Supplement, the
Lessor may sell all or any part of any one or more Properties, subject
in each case to the Ground Lease, at public or private sale, as the
Lessor may determine and upon any such sale the Lessee's obligation to
pay Basic Rent with respect to the Property sold shall terminate;
22
(d) The Lessor may, at its option, elect not to terminate this
Master Lease with respect to any Property or all of the Properties and
continue to collect all Basic Rent, Supplemental Rent, and all other
amounts due to the Lessor (together with all costs of collection) and
enforce the Lessee's obligations under this Master Lease as and when
the same become due, or are to be performed, and at the option of the
Lessor, upon any abandonment of any Property by the Lessee or re-entry
of same by the Lessor, the Lessor may enforce, by suit or otherwise,
all other covenants and conditions hereof to be performed or complied
with by the Lessee hereunder and to exercise all other remedies
permitted by Section 1951.4 of the California Civil Code or any
amendments thereof or any successor laws which replace such Section
1951.4;
(e) Unless all of the Properties have been sold in their
entirety, the Lessor may, whether or not the Lessor shall have
exercised or shall thereafter at any time exercise any of its rights
under clause (b), (c) or (d) of this Section 16.2 with respect to the
Properties or any portions thereof, demand, by written notice to the
Lessee specifying a date (a "Termination Date") not earlier than five
(5) days after the date of such notice, that the Lessee purchase, on
such Termination Date for a price equal to the Lease Balance the
Properties subject to the Master Lease, in accordance with the
provisions of Article XXI;
(f) The Lessor may exercise any other right or remedy that may
be available to it under Applicable Law, including any and all rights
or remedies under the Pledge Agreement, 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 Lease Term, in which event such suit shall be
deemed not to have accrued until the expiration of the Lease Term;
(g) The Lessor may retain and apply against the Lease Balance
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 Master Lease and upon payment in full of the Lease Balance from
such sums, the Properties shall be conveyed to Lessee in accordance
with Section 21.1 of the Master Lease;
(h) If a Lease Event of Default shall have occurred and be
continuing, the Lessor, to the extent permitted by Applicable Law, as a
matter of right and with notice to the Lessee, shall have the right to
apply to any court having jurisdiction to appoint a receiver or
receivers of any Property, and the Lessee hereby irrevocably consents
to any such appointment. Any such receiver(s) shall have all of the
usual powers and duties of receivers in like or similar cases and all
of the powers and duties of the Lessor in case of
23
entry, and shall continue as such and exercise such powers until the
date of confirmation of the sale of such Property unless such
receivership is sooner terminated;
(i) To the maximum extent permitted by law, the Lessee hereby
waives the benefit of any appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale of any Property or any
interest therein;
(j) The Lessor shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby and to
exercise all rights and powers under this instrument or under any of
the other Operative Documents or other agreement or any laws now or
hereafter in force, notwithstanding some or all of the obligations
secured hereby may now or hereafter be otherwise secured, whether by
mortgage, security agreement, pledge, lien, assignment or otherwise.
Neither the acceptance of this instrument nor its enforcement, shall
prejudice or in any manner affect the Lessor's right to realize upon or
enforce any other security now or hereafter held by the Lessor, it
being agreed that the Lessor shall be entitled to enforce this
instrument and any other security now or hereafter held by the Lessor
in such order and manner as the Lessor may determine in its absolute
discretion. No remedy herein conferred upon or reserved to the Lessor
is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy given
by any of the Operative Documents to the Lessor or to which it may
otherwise be entitled, may be exercised, concurrently or independently,
from time to time and as often as may be deemed expedient by the
Lessor. In no event shall the Lessor, in the exercise of the remedies
provided in this instrument (including, without limitation, in
connection with the assignment of rents to Lessor, or the appointment
of a receiver and the entry of such receiver onto all or any part of
the Properties), be deemed a "mortgagee in possession", and the Lessor
shall not in any way be made liable for any act, either of commission
or omission, in connection with the exercise of such remedies, except
for the exercise of the remedies set forth in clauses (c), (j) or (k)
of this Section 16.2 within thirty (30) days after the declaration of
the occurrence of an Event of Default in contravention of Lessee's
purchase right set forth in the last paragraph of this Section 16.2;
(k) Foreclosure; Power of Sale. The Lessee hereby grants to
Chicago Title Insurance Company, as trustee (together with all
successor trustees, the "Trustee"), IN TRUST, WITH POWER OF SALE, all
of the Lessee's right, title and interest in and to the Properties and,
upon the occurrence of a Lease Event of Default and following
termination of this Master Lease by the Lessor, the Lessor shall have
the power and authority, after proper notice and lapse of such time as
may be required by law and by the
24
Master Lease, to cause the Trustee to sell any Property or the
Properties by notifying the Trustee of that election and depositing
with the Trustee this instrument and receipts and evidence of
expenditures made and secured hereby as the Trustee may reasonably
require. Upon receipt of any such notice from the Lessor, the Trustee
shall cause to be recorded, published and delivered to Lessee such
Notice of Default and Election to Sell as is then required by
applicable statutory authority and by this instrument, which notice
shall set forth, among other things, the nature of the breach(es) or
default(s), the action(s) required to effect a cure thereof and the
time period within which that cure may be effected. If no cure is
effected within the statutory time limits following recordation of the
Notice of Default and Election to Sell and after Notice of Sale has
been given as required by the above-referenced statutes, the Trustee
may without further notice or demand sell and convey any Property or
the Properties in accordance with the above-referenced statutes. Each
Property may be sold as a whole or in separate lots, parcels or items
and in such order as the Lessor may direct, at public auction to the
highest bidder for cash in lawful money of the United States payable at
the time of sale. The Trustee shall deliver to such purchaser(s) a good
and sufficient deed or deeds conveying the property so sold, but
without any covenant or warranty express or implied. The recitals in
such deed of any matter or fact shall be conclusive proof of the
truthfulness thereof. Any Person, including the Lessee, the Trustee or
the Lessor, may purchase at any sale. After deducting all costs, fees
and expenses of the Lessor and the Trustee, including costs of evidence
of title in connection with any sale, the Lessor shall apply the
proceeds of sale, in the following order of priority, to payment of the
following (collectively referred to herein as the "Obligated Amounts"):
(i) first, all amounts expended by or for the account of the Lessor
under the terms hereof and not then repaid, with accrued interest at
the Overdue Rate; and (ii) second, all other amounts then due and owing
hereunder including, without limitation, all Basic Rent, Supplemental
Rent, the full amount of the Lease Balance as of the date of sale as if
this Lease had been terminated with respect to all of the Properties
then subject to this Lease under Section 18.1, and all other amounts
then payable by the Lessee under this Lease and the other Operative
Documents, with the Lessor having the right to apply the proceeds of
sale to the amounts described above in this clause (ii) in such order,
proportion and priority as the Lessor may elect in its sole and
absolute discretion. To the extent permitted by applicable statutes,
the Trustee may postpone the sale of all or any portion of any Property
or the Properties by public announcement at the time and place of sale,
and from time to time thereafter may again postpone that sale by public
announcement or subsequently noticed sale, and without further notice
may make such sale at the time fixed at the last postponement or may,
in its discretion, give a new notice of sale. A sale of less than all
of any Property or the Properties or any defective or irregular sale
made hereunder shall not exhaust the power of sale provided for herein,
and subsequent sales may be made hereunder until all of the Obligated
Amounts have been satisfied or all the Properties have been sold,
without defect or irregularity. No action of the Lessor or the Trustee
based upon the provisions contained herein or contained in the
applicable statutes, including, without limitation, the giving of the
Notice of Default and
25
Election to Sell or the Notice of Sale, shall constitute an election of
remedies which would preclude the Lessor from pursuing judicial
foreclosure before a completed sale pursuant to the power of sale
contained herein. The Lessor shall have the right, with the irrevocable
consent of the Lessee hereby given and evidenced by the execution of
this instrument, to obtain appointment of a receiver by any court of
competent jurisdiction without further notice to the Lessee, which
receiver shall be authorized and empowered to enter upon and take
possession of any Property or the Properties, including all personal
property used upon or in connection with the real property herein
conveyed, to let any Property or the Properties, to receive all the
rents, issues and profits, if any, which may be due or become due in
respect to the leasing of any Property or the Properties to another
party (herein, "Property Rents"), and apply the Property Rents after
payment of all necessary charges and expenses to reduction of the
Obligated Amounts in such order, proportion and priority as the Lessor
may elect. At the option of the Lessor, the receiver shall accomplish
entry and taking possession of any Property or the Properties by actual
entry and possession or by notice to the Lessee. The receiver so
appointed by a court of competent jurisdiction shall be empowered to
issue receiver's certificates for funds advanced by the Lessor for the
purpose of protecting the value of any Property or the Properties as
security for the Obligated Amounts. The amounts evidenced by receiver's
certificates shall bear interest at the Overdue Rate and may be added
to the Obligated Amounts if the Lessee or a junior lienholder purchases
any Property or the Properties at the trustee's sale. The Trustee or
any successor acting hereunder may resign and thereupon be discharged
of the trusts hereunder upon thirty (30) days' prior written notice to
the Lessor. Regardless of whether the Trustee resigns, the Lessor may,
from time to time, substitute a successor or successors to any Trustee
named herein or acting hereunder in accordance with any statutory
procedure for such substitution; or if Lessor, in its sole and absolute
discretion, so elects, and if permitted by law, the Lessor may
substitute such successors or successors by recording, in the office of
the recorder of the county or counties where such Property is located,
a document executed by the Lessor and containing the name of the
original Lessee and Lessor hereunder, the book and page where this
instrument (or a memorandum hereof) is recorded (and/or instrument
number, as applicable) and the name of the new Trustee, which
instrument shall be conclusive proof of proper substitution of such
successor Trustee or Trustees, who shall, without conveyance from the
predecessor Trustee, succeed to the rights, powers and duties
hereunder. It is acknowledged that A POWER OF SALE HAS BEEN GRANTED IN
THIS INSTRUMENT; A POWER OF SALE MAY ALLOW LESSOR TO TAKE THE
PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION
UPON DEFAULT BY THE LESSEE UNDER THIS INSTRUMENT.
The Lessor acknowledges and agrees that upon the declaration of an
Event of Default, to the maximum extent permitted by law, the Lessee waives any
right to contest the sum of the
26
Lessor Balance and the Loan Balance as the liquidated sum due upon acceleration
of this instrument.
If, pursuant to the exercise by the Lessor of its remedies pursuant to
this Section 16.2, the Lease Balance and all other amounts due and owing from
the Lessee under this Master Lease and the other Operative Documents have been
paid in full, then the Lessor shall remit to the Lessee any excess amounts
received by the Lessor. The obligation to deliver such excess to the Lessee
shall survive this Master Lease.
The Lessor agrees that for thirty (30) days after the declaration of
the occurrence of an Event of Default, Lessor shall forebear from exercising the
remedies set forth in clauses (c), (j) or (k) of this Section 16.2 during which
time Lessee may tender to the Lessor in immediately available funds the Lease
Balance and all past due and accrued and unpaid Rent upon the receipt of which
Lessor shall transfer all Parcels of Land and related Improvements to the Lessee
or its designee in accordance with Article XXI hereof.
XVI.3 Waiver of Certain Rights. Subject to the foregoing, if this
Master Lease shall be terminated pursuant to Section 16.2, 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 except as expressly provided herein; (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 XVI.
ARTICLE XVII
LESSOR'S RIGHT TO CURE
XVII.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 Event of Default 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 XIII, and
may, to the fullest extent permitted by law, and notwithstanding any right of
quiet enjoyment in favor of the Lessee, enter upon any 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 reasonable
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 as Supplemental Rent.
27
ARTICLE XVIII
PURCHASE PROVISIONS
XVIII.1 Purchase of the Properties.
(a) Subject to the conditions contained herein, the Lessee
shall have the irrevocable option on any Business Day to purchase all
or subject, however, to clause (b) of this Section 18.1, certain of the
Properties subject to this Master Lease at a price (the "Purchase
Price") equal to that portion of the Lease Balance allocable to the
applicable Property or Properties on the date of such purchase, plus
Break Costs (if any). The Lessee's exercise of its option pursuant to
this Section 18.1 shall be subject to the following conditions:
(i) the Lessee shall have delivered a Purchase Notice
to the Lessor not less than thirty (30) days prior to such
purchase, specifying the date of such purchase;
(ii) the Lessee shall not have given notice of its
intention to exercise the Remarketing Option;
(iii) notwithstanding any other provision contained
herein, if any Environmental Violation shall not be remedied
by the Lessee with respect to any Property in accordance with
Section 14.2, the Lessee shall be deemed to have made a timely
election of its option to purchase such Property in accordance
with this Section 18.1.
(b) If the Lessee elects to purchase less than all of the
Properties, it may do so provided that if only two buildings are
subject to separate Lease Supplements, the Lessee may purchase only one
such building together with the parking garage, if any, then subject to
a separate Lease Supplement. If three buildings have been constructed
and are subject to separate Lease Supplements, the Lessee may purchase
one building with or without the parking garage or any two building
together with the parking garage; provided, however, that in each case
the Lessee must demonstrate to the reasonable satisfaction of the
Lessor that adequate adjacent parking complying with Applicable Law
remains available for the building(s) retained by the Lessor and that
such partial purchase has not materially diminished the Fair Market
Sales Value of such retained building(s).
(c) If the Lessee exercises its option pursuant to this
Section 18.1 then, upon the Lessor's receipt of all amounts due in
connection therewith, the Lessor shall transfer to the Lessee or its
designee all of the Lessor's right, title and interest in and to the
applicable Properties in accordance with the procedures set forth in
Section 21.1(a), such transfer to be effective as of the date specified
in the Purchase Notice. The Lessee may
28
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 Master Lease,
including, without limitation, the obligation to pay to the Lessor that
portion of the Lease Balance allocable to the applicable Properties on
the date specified in the applicable Purchase Notice. The Lessee shall
have the right to elect by written notice to the Lessor and the Lender
to have all or part of any such Purchase Price paid by liquidation of
the Collateral so long as, in the case of a purchase of less than all
the Properties, Sufficient Collateral remains subject to the Pledge
Agreement.
ARTICLE XIX
EXTENSION OF EXPIRATION DATE
XIX.1 Extension of Expiration Date. The Lessee may extend the
Expiration Date subject to, and in accordance with, the terms and conditions of
Section 11.2 of the Participation Agreement.
ARTICLE XX
REMARKETING OPTION
XX.1 Option to Remarket. Subject to the fulfillment of each of the
conditions set forth in this Section 20.1, the Lessee shall have the option (the
"Remarketing Option") to market all of the Property on behalf of the Lessor.
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 to the Property as of the dates set forth below:
(a) No earlier than twelve months and not later than six
months prior to the Scheduled Basic Lease Term Termination Date, the
Lessee shall give to the Lessor written notice of the Lessee's exercise
of the Remarketing Option, which exercise shall be irrevocable. Failure
by the Lessee to give timely notice shall be deemed to be an election
by the Lessee, without further act thereby, of its Purchase Option for
all of the Properties.
29
(b) Not later than ninety (90) days prior to the Scheduled
Basic Lease Term Termination Date, the Lessee shall deliver to the
Lessor an Environmental Audit for the Properties. 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 Properties. If any such Environmental Audit
indicates any exceptions, the Lessee shall have also delivered prior to
the Scheduled Basic Lease Term Termination Date, a Phase Two
environmental assessment by such environmental consultant and a written
statement by such environmental consultant indicating that all such
exceptions have been remedied in compliance with Applicable Law. As of
the Scheduled Basic Lease Term Termination Date, any Permitted Property
Liens (other than (x) Liens of the type described in clause (iii) of
the definition of "Permitted Property Liens" to the extent, but only to
the extent, the Lessor is in its opinion fully indemnified therefrom,
and (y) Liens of the type described in clause (vii) of the definition
of "Permitted Property Liens") on any Property that were contested by
the Lessee shall have been removed.
(c) No Event of Default shall have occurred and be continuing
that shall not have been cured on or prior to the Expiration Date.
(d) During the Marketing Period, the Lessee shall, as
nonexclusive agent for the Lessor, use reasonable commercial efforts to
sell the Lessor's interest in the Properties on or before the Scheduled
Basic Lease Term Termination Date and will attempt to obtain the
highest purchase price therefor and for not less than the Fair Market
Sales Value.
(e) 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 each of the Properties. 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.
(f) The Lessee shall pay directly, and not from the sale
proceeds, all prorations and credits, whether incurred by the Lessor or
the Lessee, including without limitation, the cost of all environmental
reports, appraisals required under Section 13.2 of the Participation
Agreement and the Lessee's attorneys' fees.
(g) The Lessee shall pay to the Lessor on or prior to the
Scheduled Basic Lease Term Termination Date (or in the case of
Supplemental Rent, to the Person entitled thereto) an amount equal to
the Maximum Recourse Amount plus all accrued and unpaid Rent and all
other amounts hereunder which have accrued or will accrue prior to or
as of the Scheduled Basic Lease Term Termination Date, in the type of
funds specified in Section 3.1(b) hereof;
30
(h) The gross proceeds (the "Gross Remarketing Proceeds") of
the sale of the Properties (less any marketing, closing or other costs,
prorations or commissions related to the marketing of the Properties),
shall be paid directly to the Lessor; provided, however, that if the
sum of (x) the Gross Remarketing Proceeds from such sale plus (y) the
Maximum Recourse Amount received by the Lessor pursuant to Section
20.1(g) creates an excess over the Lease Balance, then the excess shall
be paid to the Lessee promptly after receipt thereof by the Lessor. The
obligations of the Lessor under this paragraph shall survive the
expiration or termination of this Master Lease.
(i) No subleases affecting any Property shall be in effect on
the Scheduled Basic Lease Term Termination Date.
If the Lessee effectively elects the Remarketing Option and the sale of
any Property is not consummated prior to the end of the Marketing
Period, the Lessee shall, in addition to making the payment required
pursuant to Section 20.1(g) above, at its own cost and expense, do each
of the following:
(i) execute and deliver to the Lessor and the
Lessor's title insurance company an affidavit as to the
absence of any Liens (other than Permitted Property Liens of
the type described in clause (i), (vii), (viii), (ix) or (x)
Liens for taxes not yet due and Lessor Liens), and shall
execute and deliver to the Lessor a statement of termination
of this Master Lease to the extent relating to such Property;
(ii) on the Expiration Date, transfer possession of
such Property to the Lessor or any Person designated by the
Lessor, by surrendering the same into the possession of the
Lessor or such Person, as the case may be, in the condition
required by this Section 20.1 and in compliance with
Applicable Law; and
(iii) for a period of up to one year after the
Expiration Date, cooperate reasonably with the Lessor and/or
any Person designated by the Lessor to receive such Property,
which cooperation shall include reasonable efforts with
respect to the following, all of which the Lessee shall do on
or before the Expiration Date for such Property or as soon
thereafter as is reasonably practicable: providing copies of
all books and records regarding the maintenance and ownership
of such Property and all know-how, data and technical
information relating thereto, providing a current copy of the
applicable Plans and Specifications, granting or assigning all
assignable licenses necessary for the operation and
maintenance of such 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 Master Lease.
31
Lessor shall have no obligation to approve any bid for the Properties
except for bona fide all-cash bids which, together with amounts payable by the
Lessee under clause (g) hereof, in the aggregate is at least equal to the Lease
Balance and the acceptance of which will not subject the Lessor to any
additional liability. Except as expressly set forth herein, the Lessee shall
have no right, power or authority to bind the Lessor or any Participant in
connection with any proposed sale of any Property.
If one or more of the foregoing provisions (a) through (i) shall not
be fulfilled as of the Expiration Date with respect to any Property, then the
Remarketing Option shall be null and void (whether or not it has been
theretofore exercised by the Lessee) as to all of the Properties, in which event
all of the Lessee's rights under this Section 20.1 shall immediately terminate
and the Lessee shall purchase from the Lessor, and the Lessor shall convey to
the Lessee, on the Expiration Date all of the Lessor's interest in all of the
Properties for an amount equal to the Lease Balance.
XX.2 Certain Obligations Continue. During the Marketing Period, the
obligation of the Lessee to pay Rent with respect to each Property (including
the installment of Rent due on the Expiration Date) shall continue undiminished
until payment in full of the Loan Balance plus any unpaid Supplemental Rent due
to the Lessor with respect to the Properties under the Operative Documents to
which the Lessee is a party. 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.
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
XXI.1 Provisions Relating to the Exercise of Purchase Option or
Obligation and Conveyance Upon Remarketing and Conveyance Upon Certain Other
Events.
(a) In connection with any termination of this Master Lease
with respect to any Property pursuant to the terms of Article XV, in
connection with any purchase or in connection with the Lessee's
purchase of any Property in accordance with Section 18.1 or in
connection with the Lessee's exercise of the purchase right under
Section 16.2, then, upon the date on which this Master Lease is to
terminate with respect to the applicable Property and upon the payment
of all amounts due under Section 5.1 of the Construction Agency
Agreement, as applicable, and upon tender by the Lessee of the amounts
set forth in Article XV, Sections 16.2 or 18.1, as applicable:
(i) the Lessor shall execute and deliver to the
Lessee (or to the Lessee's designee) at the Lessee's cost and
expense an instrument of transfer relating to the Lessor's
entire interest in such Property or Properties (which shall
include a
32
termination of the Ground Lease and an assignment of all of
the Lessor's right, title and interest in and to any Net
Proceeds with respect to such Property or Properties not
previously received by the Lessor and an assignment of leases
of the Properties), in each case in recordable form and
otherwise in conformity with local custom and free and clear
of the Lien of the Lessor Mortgage and any Lessor Liens;
(ii) such Property or Properties shall be conveyed to
the Lessee "AS IS" and in its then present physical condition;
and
(iii) the Lessor shall execute and deliver to Lessee
and the Lessee's title insurance company an affidavit as to
the Lessor's title and release Lessor Liens and the Lessor
Mortgage and shall execute and deliver to Lessee a statement
of termination of this Master Lease to the extent this Master
Lease relates to such Property or Properties.
(b) If the Lessee properly exercises the Remarketing Option
and the Properties are sold, then the Lessee shall, on the Expiration
Date, and at its own cost, transfer possession of all of the Properties
to the independent purchaser(s) thereof, in each case by surrendering
the same into the possession of the Lessor or such purchaser(s), as the
case may be, free and clear of all Liens, in good condition (as
modified by Modifications permitted by this Master Lease), ordinary
wear and tear excepted, and in compliance with Applicable Law.
ARTICLE XXII
ESTOPPEL CERTIFICATES
XXII.1 Estoppel Certificates. At any time and from time to time upon
not less than thirty (30) Business 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 a certificate signed by an individual having the office of vice president
or higher in the Certifying Party certifying that this Master Lease is in full
force and effect (or that this Master 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 Master Lease as the Requesting Party may
reasonably request. Any such certificate furnished pursuant to this Article XXII
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).
33
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
XXIII.1 Acceptance of Surrender. No surrender to the Lessor of this
Master Lease or of all or any of the Properties 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 under the Loan Agreement and termination of the Commitments, the
Lender, and no act by the Lessor or the Lender or any representative or agent of
the Lessor or the Lender, other than a written acceptance, shall constitute an
acceptance of any such surrender.
ARTICLE XXIV
NO MERGER OF TITLE
XXIV.1 No Merger of Title. There shall be no merger of this Master
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 Master Lease or the leasehold estate created hereby or any
interest in this Master Lease or such leasehold estate, (b) the fee or ground
leasehold estate in any Property, except as may expressly be stated in a written
instrument duly executed and delivered by the appropriate Person or (c) a
beneficial interest in the Lessor.
34
ARTICLE XXV
INTENT OF THE PARTIES
XXV.1 Nature of Transaction.
(a) It is the intent of the parties that: (i) the Lease
constitutes an operating lease from Lessor to the Lessee for purposes
of the Lessee's financial reporting, (ii) the Lease and other
transactions contemplated will result in the Lessee being recognized as
the owner of the Properties for Federal and state income tax and
bankruptcy purposes, (iii) each Lease Supplement grants to Lessor a
Lien on the Lessee's interest in the Property (exclusive of Lessee's
fee interest in the Land) covered thereby, and (iv) the obligations of
the Lessee to pay Basic Rent and any part of the Lease Balance shall be
treated as payments of interest and principal, respectively, for
Federal and state income tax and bankruptcy purposes. The Lessor shall
be deemed to have a valid and binding security interest in and Lien on
the Lessee's interest in the Properties, free and clear of all Liens
other than Permitted Property Liens, as security for the obligations of
the Lessee under the Operative Documents (it being understood and
agreed that the Lessee does hereby ▇▇▇▇▇ ▇ ▇▇▇▇, and convey, transfer,
assign, mortgage and warrant to Lessor and its successors, transferees
and assigns, for the benefit of the Lessor and its successors,
transferees and assigns, the Properties and any proceeds or products
thereof, to have and hold the same as collateral security for the
payment and performance of the obligations of the Lessee under the
Operative Documents), each of the parties hereto agrees that it will
not, nor will it permit any Affiliate to at any time, take any action
or fail to take any action with respect to the preparation or filing of
any income tax return, including an amended income tax return, to the
extent that such action or such failure to take action would be
inconsistent with the intention of the parties expressed in this
Section 25.1.
(b) Specifically, without limiting the generality of clause
(a) of this Section 25.1, the parties hereto intend and agree that in
the event of any insolvency or receivership proceedings or a petition
under the United States bankruptcy laws or any other applicable
insolvency laws or statute of the United States of America or any State
or Commonwealth thereof affecting Lessee, Lessor, any Participant or
any collection actions, the transactions evidenced by the Operative
Documents shall be regarded as loans made by the Participants to the
Lessee.
35
ARTICLE XXVI
MISCELLANEOUS
XXVI.1 Survival; Severability; Etc. Anything contained in this Master
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 Master Lease shall survive such expiration or
earlier termination for a period of one year except as to indemnification which
shall continue to survive. If any term or provision of this Master Lease or any
application thereof shall be declared invalid or unenforceable, the remainder of
this Master 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
Master Lease, including any right or option described in Article XIV, XV, XVIII
or XX, 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
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the former President of the United States, ▇▇▇▇▇ ▇▇▇▇,
the deceased automobile manufacturer, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, the founder of
the Standard Oil Company, known to be alive on the date of the execution,
acknowledgment and delivery of this Master Lease.
XXVI.2 Amendments and Modifications. Subject to the requirements,
restrictions and conditions set forth in the Participation Agreement, neither
this Master Lease 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.
XXVI.3 No Waiver. No failure by the Lessor, any Participant 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
Master Lease, and this Master Lease shall continue in full force and effect with
respect to any other then existing or subsequent default.
XXVI.4 Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and directed to the address
described in, and deemed received in accordance with the provisions of, Section
15.3 of the Participation Agreement.
XXVI.5 Successors and Assigns. All the terms and provisions of this
Master Lease shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
36
XXVI.6 Headings and Table of Contents. The headings and table of
contents in this Master Lease are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.
XXVI.7 Counterparts. This Master 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.
XXVI.8 GOVERNING LAW. THIS MASTER LEASE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO
THE CREATION OF THE LEASEHOLD ESTATES 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 OF CALIFORNIA. WITHOUT LIMITING THE
FOREGOING, IN THE EVENT THAT THIS MASTER LEASE IS DEEMED TO CONSTITUTE A
FINANCING WHICH IS THE INTENTION OF THE PARTIES, THE LAWS OF THE STATE OF NEW
YORK, 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 CREATION AND THE ENFORCEMENT OF SAID LIEN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATES IN WHICH SUCH ESTATES ARE
LOCATED.
XXVI.9 Liability Limited. The parties hereto agree that except as
specifically set forth in this Master Lease or in any other Operative Document,
the Lessor shall have no personal liability whatsoever to the Lessee or the
Lender or their respective successors and assigns for any claim based on or in
respect of this Master Lease or any of the other Operative Documents or arising
in any way from the transactions contemplated hereby or thereby and the recourse
shall be solely had against the Lessor's interest in the Properties; provided,
however, that Lessor shall be liable in its individual capacity (a) for its own
willful misconduct or gross negligence, (b) breach of any of its
representations, warranties or covenants under the Operative Documents, or (c)
for any Tax based on or measured by any fees, commission or compensation
received by it for acting as the Lessor as contemplated by the Operative
Documents; and further provided nothing therein shall impair or limit the rights
of Lessee against the Lender or Lessor relating to any Collateral held by either
of them from time to time under the Operative Documents.
XXVI.10 Original Lease. The single executed original of this Master
Lease marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the
signature page thereof and containing the receipt thereof of Societe Generale,
New York Branch, as the Lender therefor on or following the signature page
thereof shall be the Original Executed
37
Counterpart of this Master Lease (the "Original Executed Counterpart"). To the
extent that this Master Lease constitutes chattel paper, as such term is defined
in the Uniform Commercial Code as in effect in any applicable jurisdiction, no
security interest in this Master Lease may be created through the transfer or
possession of any counterpart other than the Original Executed Counterpart.
38
IN WITNESS WHEREOF, the parties have caused this Master Lease be duly executed
and delivered as of the date first above written.
ELECTRONICS FOR IMAGING, INC.,
as Lessee
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CFO
39
SOCIETE GENERALE FINANCIAL
CORPORATION, as Lessor
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
Title: First Vice President
40
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of the date hereof.
SOCIETE GENERALE, acting through its New York Branch,
as Lender
By /s/ ▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Managing Director
41
