THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
Document 10
Exhibit 10.27
CONFIDENTIAL AND PROPRIETARY
LEASE AGREEMENT
Dated as of November 18, 1993
BETWEEN
Virtual Funding, Limited Partnership
as Lessor
AND
Silicon Graphics Real Estate, Inc.
as Lessee
THIS LEASE HAS BEEN ASSIGNED AS SECURITY
FOR INDEBTEDNESS OF THE LESSOR. SEE SECTION 21.
This Lease has been manually executed in 8 counterparts, numbered
consecutively from 1 through 8, of which this is No. . To the extent, if
any, that this Lease constitutes chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction) no
security interest in this Lease may be created or perfected through the
transfer or possession of any counterpart other than the original executed
counterpart which shall be the counterpart identified as counterpart No. 1.
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
CONFIDENTIAL
LEASE AGREEMENT
Lease Agreement, dated as of November 18, 1993 (as the same may be
amended, restated, modified or supplemented from time to time, "this Lease"),
between Virtual Funding, Limited Partnership, a Delaware limited partnership,
Lessor (the "Lessor"), and Silicon Graphics Real Estate, Inc., a Delaware
corporation, Lessee (the "Lessee").
1. Defined Terms.
Unless the context otherwise requires, each term defined in this
Section 1 shall, when used in this Lease, have the meaning indicated:
"ACCRUED DEFAULT OBLIGATIONS" has the meaning set forth in Section
19 hereof.
"ACQUISITION COST" means, (i) in the case of a Parcel of Property
acquired and built pursuant to the Agreement for Lease, an amount equal to
Unit Acquisition Cost of such Parcel as defined in the Agreement for Lease;
(ii) with respect to any Unit of Equipment, an amount equal to the sum of (a)
the vendor's invoice price therefor, including any progress payments, costs
of labor, delivery or installation, sales, use, excise or similar taxes and
any other charges included in such invoice, after deduction for any
refundable fleet or other discounts or credits actually used by the Lessor,
(b) similar amounts paid or payable with respect to such Unit to parties
other than the vendor of such Unit, (c) similar costs incurred with respect
to such Unit by the Lessee, and (d) legal, printing, reproduction, closing
and other normally capitalizable administrative fees and epenses paid by the
Lessee and approved by the Lessor; and (iii) with respect to any Parcel of
Property not acquired and built pursuant to the Agreement for Lease, an
amount equal to the amounts included in (ii)(d) above which are applicable to
such Parcel plus (a) the vendor's contract price therefor or, if an appraisal
shall have been provided in accordance herewith, the appraised value thereof,
(b) vendee's closing costs, including, without limitation, title insurance
premiums, survey and survey inspection charges, recording and filing fees,
title closer fees, vendee's attorneys' fees and brokerage commissions, (c)
other costs related to the acquisition, including, without limitation,
appraisal, architectural, engineering, soil analysis, environmental analysis
and market analysis fees, and (d) any amounts paid by vendee on behalf of
vendor in addition to, and not as a credit against the contract price,
including, without limitation, payments made in satisfaction of prior liens,
and payment of any transfer, transfer gains or similar taxes imposed in
respect of the conveyance of such Property.
"ADDITIONAL RENT" has the meaning set forth in paragraph (d) of
Section 7 hereof.
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AND PROPRIETARY
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"ADJUSTED ACQUISITION COST" means, at any time, with respect to
any Parcel of Property or Unit of Equipment, its Acquisition Cost less the
aggregate amount of all Monthly Rent Components paid as portions of Basic
Rent for such Parcel of Property or Unit of Equipment as of the time of
determination.
"AFFILIATE" of any Person means any other Person controlling,
controlled by or under direct or indirect common control with such Person.
For the purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AFL UNIT LEASING RECORD" means an instrument, substantially in
the form of Exhibit C hereto, evidencing the lease or sublease under this
Lease of a Parcel of Property (and related Equipment, if any, included
therein) acquired and built pursuant to the Agreement for Lease. The terms
"lease" or "leased" when used in this Lease shall be deemed to mean
"sublease" or "subleased" when referenced to the Property subleased pursuant
to the AFL Unit Leasing Record.
"AGREEMENT FOR LEASE" means the Agreement for Lease, dated as of
the date hereof, between the Lessor, as owner, and the Lessee, as agent,
providing for the acquisition of a fee or leasehold interest in certain
parcels of real property and the construction of improvements on such parcels
of real property, as the same may be amended, restated, modified or
supplemented from time to time.
"APPRAISAL PROCEDURE" means the following procedure whereby an
independent appraiser shall be appointed by the Lessor and the Lessee, with
the consent of the Assignee, to determine (i) the amount of wear and tear in
excess of that attributable to normal use of any Property or Equipment to
which the provisions of Section 12(b)(iii), Section 12(c)(iii) or Section
12(d)(iii) apply or (ii) the fair market value of any Property or Equipment
to be purchased, if such determination is required under paragraph (c) of
Section 13 of this Lease. If no such appraiser is appointed by the Lessor and
the Lessee within ten (10) days of the written request of either the Lessor
or the Lessee that an appraiser be appointed, the Lessor and the Lessee shall
each appoint an independent appraiser within fifteen (15) days thereafter,
and the two appraisers so appointed shall appoint a third independent
appraiser. Each appraiser appointed pursuant to the foregoing procedure
shall, within ten (10) days after appointment of the last appraiser,
independently determine the amount of wear and tear in excess of that
attributable to normal use or the fair market value, as the case may be.
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AND PROPRIETARY
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If the Lessor or the Lessee shall fail to appoint an independent appraiser
within the above-mentioned fifteen (15) day period, the appraiser appointed
by the other party shall determine such amount or value. If a single
appraiser is appointed, such appraiser's determination shall be final. If
three appraisers are appointed, the amounts or values determined by the three
appraisers shall be averaged, the amount or value which differs the most from
such average shall be excluded, the remaining two amounts or values shall be
averaged and such average shall be final. The expenses of all appraisers
shall be paid by the Lessee.
"ASSIGNEE" means each Person to which any part of the Lessor's
interest under this Lease or in any Parcel of Property or Unit of Equipment
shall at the time have been assigned, conditionally or otherwise, by the
Lessor in accordance with Section 21 of this Lease. For purposes of
paragraph (h) of Section 2, clauses (i), (iv) and (v) of paragraph (f) of
Section 10, Section 11, and Section 33 hereof, the term "Assignee" shall
include any lender to the lessor or other Person providing credit support to
the Lessor pursuant to the Credit Agreement.
"ASSIGNMENT" means each assignment agreement referred to in
Section 21 hereof, between the Lessor and a third party, pursuant to which
the Lessor assigns certain of its rights under this Lease to such third
party, as the same may be amended, restated, modified or supplemented from
time to time.
"BASIC RENT" means, with respect to any Parcel of Property or Unit
of Equipment:
(a) for each calendar month during the Lease Term of such Parcel
or Unit, the sum of the Monthly Rent Component for such Parcel or Unit plus
an amount (the "Variable Component of Basic Rent") computed by multiplying
the following:
(i) the Adjusted Acquisition Cost of such Parcel or Unit
before payment of Basic Rent for such month, by
(ii) a fraction having a numerator equal to the number of
days in such month and a denominator of 365, or in a leap
year, 366, by
(iii) the decimal equivalent of a percentage (which
percentage will be based upon the Guarantor's senior debt
rating or, if the Guarantor has no senior debt rating,
Implied Senior Debt Rating levels (as defined herein) as
follows: if the Guarantor's senior debt rating or Implied
Senior Debt Rating is Level 1, the percentage shall be 0.63%
during the Initial Term and 0.625% during the Extended Term;
if the Guarantor's senior debt rating or Implied Senior Debt
Rating is Level 2, the percentage shall be 0.68% during the
Initial Term and 0.675% during the Extended Term; if the
Guarantor's senior debt rating or Implied Senior Debt Rating
is Level 3, the percentage shall be 0.785% during the Initial
Term and 0.775% during the Extended Term; if the Guarantor's
senior debt rating or Implied Senior Debt Rating is Level 4,
the percentage shall be 0.992% during the Initial Term and
0.975%
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AND PROPRIETARY
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during the Extended Term; if the Guarantor's senior debt
rating or Implied Senior Debt Rating is Level 5, the
percentage shall be 1.412% during the Initial Term and
1.375% during the Extended Term), plus (A) the weighted
average bond yield equivalent percentage cost per annum
(including as part of such cost any fees for a letter or
letters of credit, any facility, commitment or other fees
under a revolving credit agreement and any dealer discount
or placement agency commission payable by the Lessor in
respect of its Commercial Paper) on all Commercial Paper of
the Lessor issued to finance or refinance the acquisition
and ownership of Property and Equipment outstanding at any
time during the period from and including the 16th day of
the preceding calendar month to and including the 15th day of
the calendar month for which Basic Rent is being computed
(the "Computation Period"), or (B) if no such Commercial
Paper of the Lessor is outstanding during the Computation
Period, the Lessor's weighted average percentage cost per
annum (including, without duplication, any interest accruing
at a default rate, any facility, commitment or other fees
under a revolving credit agreement) of other borrowings
outstanding at any time during the Computation Period for
which Basic Rent is being computed to finance or refinance
the acquisition and ownership of Property or Equipment or
(C) if both Commercial Paper and other borrowings are
outstanding at any time during the Computation Period for
which Basic Rent is being computed, a weighted average
blended rate based on the calculations referred to in
clauses (A) and (B) above;
(b) for any partial first calendar month during the Lease Term
of such Parcel or Unit, an amount computed by multiplying the following:
(i) the Acquisition Cost of such Parcel or Unit, by
(ii) a fraction having a numerator equal to the number of
days such Parcel or Unit is under lease during such partial
first month and a denominator of 365, or in a leap year,
366, by
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AND PROPRIETARY
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(iii) the decimal referred to in paragraph (a)(iii) above;
provided, that if the Effective Date for such Parcel or Unit
falls on or after the Lease Rate Date during such partial
first calendar month such decimal shall be the decimal
determined as of the next succeeding Lease Rate Date; and
(c) for each calendar month during the Renewal Term, if any, of
such Parcel or Unit, an amount equal to the fair market value rental thereof,
determined as provided in paragraph (c) of Section 13 hereof.
"BASIC RENT PAYMENT DATE" means the 25th day of any calendar month
during the Lease Term or Renewal Term of any Property or Equipment or, if
such day is not a Business Day, the next succeeding Business Day.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which banking institutions in the City of New York or San Francisco,
California are authorized by law to close.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMERCIAL PAPER" means all promissory notes of the Lessor issued
pursuant to a Credit Agreement maturing not more than ninety (90) days from
the date of issuance thereof.
"COMPUTATION PERIOD" has the meaning set forth in subclause
(a)(iii)(A) of the definition of Basic Rent in Section 1 hereof.
"CONSENT" means each consent of the Lessee to an Assignment,
pursuant to which the Lessee consents to the terms of such Assignment insofar
as they relate to this Lease, as the same may be amended, restated, modified
or supplemented from time to time.
CONSOLIDATED TANGIBLE NET WORTH means the total shareholder equity
for the Guarantor, less goodwill and any intangible assets (other than
intangibles for capitalized software, prepaid royalties, patents and other
intellectual property), all as determined on a consolidated basis in
accordance with generally accepted accounting principles.
"CONTRACTUAL REQUIREMENTS" means all material agreements,
covenants, conditions and restrictions applicable to each Parcel or Unit
and/or the construction, ownership, operation or use thereof.
"CREDIT AGREEMENT" means each credit or loan agreement which has
been entered into between the Lessor and a lender or lenders and approved by
the Lessee related
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to the financing of Property or Equipment, as the same may be amended,
restated, modified or supplemented from time to time with the approval of the
Lessee.
"DUFF & XXXXXX" has the meaning set forth in the definition of
"Level 1" in this Section 1.
"EFFECTIVE DATE" means, with respect to any Parcel of Property or
Unit of Equipment, the date on which such Parcel or Unit becomes subject to
this Lease, as evidenced by execution by the Lessee and the Lessor of an AFL
Unit Leasing Record or a Unit Leasing Record, as the case may be, or a Unit
Leasing Record with respect to such Unit.
"EQUIPMENT" means personal property of any type, leased or to be
leased hereunder and, when leased, evidenced by Unit Leasing Records or AFL
Unit Leasing Records, and all related appliances, appurtenances, accessions,
furnishings, materials and parts leased or to be leased by the Lessor to the
Lessee as provided herein and including all replacements and subsequent
replacements of such related appliances, appurtenances, accessions,
furnishings, materials and parts. "UNIT", when referring to the personal
property leased under this Lease, means a particular item of Equipment, as
the context may require.
"EVENT OF DEFAULT" has the meaning set forth in Section 18 hereof.
"EXTENDED TERM" has the meaning set forth in paragraph (b) of
Section 6 hereof.
"GOVERNMENTAL ACTION" has the meaning set forth in paragraph (d)
of Section 2 hereof.
"GROUND LEASE" has the meaning set forth in Section 29 hereof.
"GUARANTEE" means the guarantee agreement, dated as of the date
hereof, by and between the Guarantor and the Lessor, as the same may be
amended, restated, modified or supplemented from time to time.
"GUARANTOR" means Silicon Graphics, Inc., a Delaware corporation
(the parent of Lessee), and its successors.
"IMPLIED SENIOR DEBT RATING" means with respect to any debt
ratings, if in existence, of the Guarantor's subordinated debt from any or
all of Duff & Xxxxxx, S&P and Moody's, two rating notches higher than such
subordinated debt rating.
"INDEMNIFIED PERSON" has the meaning set forth in Section 11
hereof.
"INITIAL TERM" has the meaning set forth in paragraph (a) of
Section 6 hereof.
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"INSURANCE REQUIREMENTS" means all terms of any insurance policy
required by this Lease covering or applicable to any Property or Equipment,
all requirements of the issuer of any such policy, all statutory requirements
and all orders, rules, regulations and other requirements of any governmental
body related to insurance applicable to any Property or Equipment.
"LEASE RATE DATE" has the meaning set forth in paragraph (b) of
Section 7 hereof.
"LEASE TERM" means, with respect to any Parcel of Property or Unit
of Equipment, the Initial Term plus the Extended Term thereof.
"LEGAL REQUIREMENTS" means all laws, judgments, decrees,
ordinances and regulations and any other governmental rules, orders and
determinations and all requirements having the force of law, now or
hereinafter enacted, made or issued, whether or not presently contemplated,
including, without limitation, all requirements of labor laws and
environmental statutes, compliance with which is required at any time from
the date hereof through the Lease Term and any Renewal Term, whether or not
such compliance shall require structural, unforeseen or extraordinary changes
to any Property or Equipment or the operation, occupancy or use thereof.
"LESSEE" has the meaning set forth in the first paragraph of this
Lease.
"LESSOR" means Virtual Funding, Limited Partnership or any
successor or successors to all of its rights and obligations as the Lessor
hereunder and, for purposes of Section 11 hereof, shall include any
partnership (general or limited), corporation, trust, in-dividual or other
entity which computes its liability for income or other taxes on a
consolidated basis with Virtual Funding, Limited Partnership or the income of
which for purposes of such taxes is, or may be, determined or affected
directly or indirectly by the income of the Lessor or its successor or
successors.
"LEVEL 1" means when the Guarantor's senior debt rating or, if the
Guarantor has no senior debt rating, when the Guarantor's Implied Senior Debt
Rating is AAA by Duff & Xxxxxx Ratings Corporation, or any successor
corporation thereto ("Duff & Xxxxxx") or if the Guarantor has no senior debt
rating or Implied Senior Debt Rating from Duff & Xxxxxx, AAA by Standard &
Poor's Corporation, or any successor corporation thereto ("S&P"), or if the
Guarantor has no senior debt rating or Implied Senior Debt Rating from either
Duff & Xxxxxx or S&P, Aaa by Xxxxx'x Investors Service, Inc. or any successor
corporation thereto ("Moody's").
"LEVEL 2" means when the Guarantor's senior debt rating or, if the
Guarantor has no senior debt rating, when the Guarantor's Implied Senior Debt
Rating is not Level 1 and when the Guarantor's senior debt rating, or if the
Guarantor has no senior debt rating, when the Guarantor's Implied Senior Debt
Rating is AA+, AA, AA-, A+, A or A- by Duff & Xxxxxx, and if
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the Guarantor has no senior debt rating or Implied Senior Debt Rating from
Duff & Xxxxxx, AA+, AA, AA-, A+, A or A- by S&P or if the Guarantor has no
senior debt rating or Implied Senior Debt Rating from either Duff & Xxxxxx or
S&P, Aa1, Aa2, Aa3, A1, A2 or A3 by Moody's and if the Guarantor's senior
debt or subordinated debt is not rated by any of Duff & Xxxxxx, S&P or
Moody's, when the Guarantor's private debt is rated NAIC 1 by the National
Association of Insurance Commissioners ("NAIC"), provided, however, that if
the Guarantor's private debt rating has not been reviewed and affirmed by the
NAIC within the previous 15 month period, then when Xxxxxxx Xxxxx Fixed
Income Research Rating is 7.0 or higher.
"LEVEL 3" means when the Guarantor's senior debt rating or, if the
Guarantor has no senior debt rating, when the Guarantor's Implied Senior Debt
Rating is not Level 1 or Level 2 and when the Guarantor's senior debt rating,
or if the Guarantor has no senior debt rating, when the Guarantor's Implied
Senior Debt Rating is BBB+, BBB or BBB- by Duff & Xxxxxx, and if the
Guarantor has no senior debt rating or Implied Senior Debt Rating from Duff &
Xxxxxx, BBB+, BBB, or BBB- by S&P or if the Guarantor has no senior debt
rating or Implied Senior Debt Rating from either Duff & Xxxxxx or S&P, Baa1,
Baa2 or Baa3 by Moody's and if the Guarantor's senior debt or subordinated
debt is not rated by any of Duff & Xxxxxx, S&P or Moody's, when the
Guarantor's private debt is rated NAIC 2 by the NAIC, provided, however, that
if the Guarantor's private debt rating has not been reviewed and affirmed by
the NAIC within the previous 15 month period, then when Xxxxxxx Xxxxx Fixed
Income Research Rating is 6.0 or higher but less than 7.0.
"LEVEL 4" means when the Guarantor's senior debt rating or, if the
Guarantor has no senior debt rating, when the Guarantor's Implied Senior Debt
Rating is not Xxxxx 0, Xxxxx 0, Xxxxx 0 or Level 4 and when the Guarantor's
senior debt rating, or if the Guarantor has no senior debt rating, when the
Guarantor's Implied Senior Debt Rating is BB+, BB or BB- by Duff & Xxxxxx,
and if the Guarantor has no senior debt rating or Implied Senior Debt Rating
from Duff & Xxxxxx, BB+, BB or BB- by S&P, or if the Guarantor has no senior
debt rating or Implied Senior Debt Rating from either Duff & Xxxxxx or S&P,
Ba1, Ba2 or Ba3 by Moody's and if the Guarantor's senior debt or subordinated
debt is not rated by any of Duff & Xxxxxx, S&P or Moody's, when the
Guarantor's private debt is rated NAIC 3 by the NAIC provided, however, that
if the Guarantor's private debt rating has not been reviewed and affirmed by
the NAIC within the previous 15 month period, then when Xxxxxxx Xxxxx Fixed
Income Research Rating is 5.0 or higher but less than 6.0.
"LEVEL 5" means when the Guarantor's senior debt rating or if the
Guarantor has no senior debt rating, when the Guarantor's Implied Senior Debt
Rating is not Xxxxx 0, Xxxxx 0, Xxxxx 0 or Level 4 and when the Guarantor's
senior debt rating, or if the Guarantor has no senior debt rating, when the
Guarantor's Implied Senior Debt Rating is B+ or below by Duff & Xxxxxx, and
if the Guarantor has no senior debt rating or Implied Senior Debt Rating from
Duff & Xxxxxx, B+ or below by S&P or if the Guarantor has no senior debt
rating or Implied Senior Debt Rating from either Duff & Xxxxxx or S&P, B1 or
below by Moody's and if the Guarantor's senior
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debt or subordinated debt is not rated by any of Duff & Xxxxxx, S&P or
Moody's when the Guarantor's private debt is rated NAIC 4 by the NAIC,
provided, however, that if the Guarantor's private debt rating has not been
reviewed and affirmed by the NAIC within the previous 15 month period, then
when Xxxxxxx Xxxxx Fixed Income Research Rating is below 5.0.
"LIEN" means any security interest, mortgage, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other), or other
security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing).
"XXXXXXX" means Xxxxxxx Xxxxx Money Markets Inc., a Delaware
corporation.
"Xxxxxxx Leasing" means ML Leasing Equipment Corp., a Delaware
corporation.
"Xxxxxxx Xxxxx" means Xxxxxxx Xxxxx & Co., Inc., a Delaware
corporation.
"MONTHLY RENT COMPONENT" means, (i) with respect to each Parcel of
Property (other than a Parcel acquired and built pursuant to the Agreement
for Lease) or Unit of Equipment, for each calendar month during the Lease
Term of such Parcel or Unit, the amount determined in accordance with
Schedule B, if any, to the Unit Leasing Record relating to such Parcel or
Unit, (ii) with respect to a Parcel of Property or Unit of Equipment acquired
and/or built pursuant to the Agreement for Lease, the amount determined in
accordance with Schedule B, if any, to the AFL Unit Leasing Record relating
to such Parcel of Property or Unit of Equipment. With respect to each Unit
of Equipment, if no amount for such Unit of Equipment shall be provided in
Schedule B to such Unit Leasing Record or AFL Unit Leasing Record, as the
case may be, the Acquisition Cost of such Unit of Equipment divided by the
number of calendar months in the Lease Term with respect to such Unit.
Schedule B to the Unit Leasing Record or AFL Unit Leasing Record shall be
completed as to the Acquisition Cost of the Parcel and the amortization
schedule for such Parcel, which schedule shall, unless otherwise agreed to in
writing by Lessor and Lessee, reflect mortgage amortization over the Lease
Term of the Acquisition Cost, as agreed upon by the Lessee and the Lessor,
provided that the Lessee shall not be required to amortize the Acquisition
Cost of the underlying land.
"MOODY'S" has the meaning set forth in the definition of "Level
1" in this Section 1.
"MORTGAGEABLE GROUND LEASE" means a Ground Lease for a Parcel of
Property to be subleased to the Lessee which is delivered to the Lessor for
execution by the Lessor, or assigned to the Lessor by an assignment in form
and substance satisfactory to the Lessor, and having such terms and
characteristics as may be required by the Lessor and any Assignee, which
terms and characteristics shall include, without limitation, the following:
(a) free assignability of the ground lessee's interest to (i) any lender as
security for a borrowed money obligation of the
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Lessor and, upon foreclosure of such security, freely assignable by such
lender to any third party, and (ii) any purchaser in connection with a sale
of such Parcel of Property pursuant to the provisions of this Lease or the
Agreement for Lease (the Lessor and any Assignee being released from
liability upon such assignment); (b) a term (including renewals) of at least
ten (10) years in excess of the Lease Term of the Parcel of Property to which
such Ground Lease relates; (c) no provisions for percentage or variable rent;
(d) permit any lawful use; (e) no provision for a security deposit; (f) a
requirement that any Assignee or any lender will receive copies of all
notices of default delivered under or pursuant to such Ground Lease; (g) a
provision that any Assignee or any lender shall have the right to cure any
defaults thereunder (whether monetary or nonmonetary in nature), and in the
event of such cure to receive a new ground lease on the same terms as the
original Ground Lease; (h) a recourse limitation section in accordance with
the language set forth in Section 31 hereof; (i) a prohibition of any
mortgages or other Liens on the underlying fee, except Permitted Liens; and
(j) no provision requiring the Lessor to indemnify any Person. A
Mortgageable Ground Lease shall be delivered with such estoppel certificates,
recognition and attornment agreements, or confirmation of customary mortgagee
protection as are reasonably acceptable to the Lessor and any Assignee.
"NAIC" has the meaning set forth in the definition of "Level 1" of
this Section 1.
"NORTH SHORELINE PROPERTY" means the Parcel of Property located
at 0000-0000 Xxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx.
"PERMITTED CONTEST" has the meaning set forth in paragraph (a) of
Section 28 hereof.
"PERMITTED LIENS" means the following Liens and other matters
affecting the title of any Parcel of Property or Unit of Equipment: (a)
Liens securing the payment of taxes, assessments and other governmental
charges or levies which are either not delinquent or, if delinquent, are
being contested by the Lessee in good faith as a Permitted Contest; (b)
zoning and planning restrictions, subdivision and platting restrictions,
easements, rights-of-way, licenses, reservations, covenants, conditions,
waivers, restrictions on the use of any Parcel of Property, now or
hereinafter enacted, minor encroachments or minor irregularities of title,
none of which materially impairs the intended use or value of such Parcel of
Property by the Lessee; (c) reservations of mineral interests; (d) the Lien
created pursuant to a Credit Agreement; (e) leases and licenses in effect
with respect to any Parcel of Property which are permitted by this Lease or
which are delivered to and accepted by the Lessor prior to such Parcel's
Effective Date; and (f) such other or additional matters as may be approved
in writing by the Lessor and any applicable Assignee.
(x)
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"PERSON" means any individual, corporation, partnership, joint
venture, association joint-stock company, trust, unincorporated organization
of government or any agency or political subdivision thereof.
"POTENTIAL DEFAULT" means any event which, but for the lapse of
time, or giving of notice, or both, would constitute an Event of Default.
"PROPERTY" means any and all parcels of land together with all
buildings and other improvements (including, without limitation, the
attachments, appliances, equipment, machinery and other affixed property
which, in each case, would constitute "fixtures" under Section 9-313(1)(a) of
the Uniform Commercial Code) now or hereafter located on such parcels of
land, leased or to be leased hereunder and when leased, evidenced by Unit
Leasing Records or AFL Unit Leasing Records, and the respective easements,
rights and appurten-ances relating to such parcels of land, buildings and
improvements. "PARCEL" or "PARCEL OF PROPERTY" means a specific parcel or
parcels of Property.
"RECONCILIATION AMOUNT" has the meaning set forth in paragraph (f)
of Section 7 hereof.
"REMOVABLE PROPERTY" has the meaning set forth in paragraph (e) of
Section 9 hereof.
"RENEWAL TERM" has the meaning set forth in paragraph (b) of
Section 13 hereof.
"RESPONSIBLE OFFICER" shall mean the President, Vice President,
Secretary or Treasurer of the particular entity referenced, or any other
officer or similarly authorized person responsible for the administration of
the obligations of the Lessee, in the case of the Lessee, or the Guarantor,
in the case of the Guarantor, with respect to this Lease or the Guarantee,
respectively.
"S&P" has the meaning set forth in the definition of "Level 1" in
this Section 1.
"TAKING" has the meaning set forth in paragraph (a) of Section 16
hereof.
"UNIT LEASING RECORD" means an instrument, substantially in the
form of Exhibit C hereto, evidencing, except in the case of any Parcel or
Parcels of Property acquired and built pursuant to the Agreement for Lease,
the lease of any Parcel or Parcels of Property or Unit or Units of Equipment
under this Lease.
(xi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
"VARIABLE COMPONENT OF BASIC RENT" has the meaning set forth in
the definition of Basic Rent in Section 1 hereof.
2. Representations, Warranties and Agreements of Lessee.
The Lessee represents, warrants and covenants to the Lessor:
(a) Corporate Matters. The Lessee (i) has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the State of Delaware, (ii) has full power, authority and legal
right to own and operate its properties and to conduct its business as
presently conducted and to execute, deliver and perform its obligations under
this Lease and any Consent, and (iii) is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which its
ownership or leasing of properties or the conduct of its business requires
such qualification.
(b) Binding Agreement. This Lease has been duly authorized,
executed and delivered by the Lessee and, assuming the due authorization,
execution and delivery of this Lease by the Lessor, this Lease is a legal,
valid and binding obligation of the Lessee, enforceable according to its
terms.
(c) Compliance with Other Instruments. The execution,
delivery and performance by the Lessee of this Lease and any Consent will not
result in any violation of any term of the articles of incorporation or the
by-laws of the Lessee, do not require stockholder approval or the approval or
consent of any trustee or holders of indebtedness of the Lessee except such
as have been obtained prior to the date hereof and will not conflict with or
result in a breach of any terms or provisions of, or constitute a default
under, or result in the creation or imposition of any Lien (other than a
Permitted Lien) upon any property or assets of the Lessee under, any
indenture, mortgage or other agreement or instrument to which the Lessee is a
party or by which it or any of its property is bound, or any existing
ap-plicable law, rule, regulation, license, judgment, order or decree of any
government, governmental body or court having jurisdiction over the Lessee or
any of its activities or properties.
(d) Governmental Consents. There are no consents, licenses,
orders, authorizations, approvals, waivers, extensions or variances of, or
notices to or registrations or filings with (each a "Governmental Action"),
any governmental or public body or authority which are or will be required in
connection with the valid execution, delivery and performance of this Lease,
except for customary governmental licenses, permits and approvals in
connection with the use and occupancy of any Parcel of Property or the use of
any Unit of Equipment by Lessee in the conduct of its business each of which
will be timely obtained by the Lessee, or any Governmental Action (i) which
is or will be required in connection with any participation by the Lessor in
the transaction contemplated by any xxxx of sale, deed, assignment,
assumption,
(xii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
ownership agreement, operating agreement, or other agreement relating to any
Property or Equipment or (ii) which is or will be required to be obtained by
the Lessor, the Lessee, Xxxxxxx, Xxxxxxx Leasing, any Assignee or any
Affiliate of the fore-going, during the term of this Lease, with respect to
any Property or Equipment except such Governmental Actions, (A) as have been
duly obtained, given or accomplished, with true copies thereof delivered to
the Lessor, and (B) as may be required by applicable law not now in effect.
(e) Financial Statements. The Lessee has furnished to the
Lessor copies of the Guarantor's Annual Report on Form 10-K for the year
ended June 30, 1993 and its Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993. The financial statements contained in such
documents fairly present the financial position, results of operations and
statements of cash flow of the Guarantor as of the dates and for the periods
indicated therein and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis.
(f) Changes. Since September 30, 1993, there has been no
material adverse change in the financial condition or business of the
Guarantor nor any change which would materially impair the ability of the
Lessee to perform its obligations under this Lease or materially impair the
ability of the Guarantor to perform its obligations under the Guarantee.
(g) Litigation. There is no action, suit, proceeding or
investigation at law or in equity by or before any court, governmental body,
agency, commission or other tribunal now pending or, to the best knowledge of
Lessee threatened, against or affecting the Lessee or the Guarantor or any
property or rights of the Lessee or the Guarantor which questions the
enforceability of this Lease, which affects any Parcel of Property or Unit of
Equipment which had not been subject to the Agreement for Lease or which, if
adversely determined, would (i) affect the Lessor's title to any Parcel of
Property or Unit of Equipment, (ii) have a material adverse impact on the
value or use of any Parcel of Property or Unit of Equipment, or (iii) have a
material adverse impact on the financial condition or business of the Lessee
and the Guarantor, taken as a whole, or, which if adversely determined, would
materially impair the ability of the Lessee to perform its obligations
hereunder or of the Guarantor to perform its obligations under the Guarantee.
(h) Delivery of Information. The Lessee shall deliver to the
Lessor from time to time, (i) promptly, and in any event not more than 100
days after the end of the fiscal year of the Guarantor, copies of the
Guarantor's Annual Reports on Form 10-K, and promptly, and in any event not
more than 60 days after the end of each fiscal quarter of the Guarantor,
copies of the Guarantor's Quarterly Reports on Form 10-Q, in each case
accompanied by a certificate of a Responsible Officer of the Guarantor
setting forth a calculation of the Guarantor's Consolidated Tangible Net
Worth and promptly, any reports on Form 8-K the Guarantor files with the
Securities and Exchange Commission, (ii) promptly upon request, such other
information with
(xiii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
respect to the Lessee's and Guarantor's operations, business, properties,
assets, financial condition or litigation as the Lessor shall reasonably
request, (iii) promptly after a Responsible Officer of the Lessee obtains
knowledge of any Event of Default or any Potential Default hereunder, a
certificate of a Responsible Officer of the Lessee specifying the nature and
period of existence of such Event of Default or Potential Default, and what
action, if any, the Lessee has taken, is taking, or proposes to take with
respect thereto and (iv) promptly after a Responsible Officer of the Lessee
obtains knowledge of any litigation of the type described in paragraph (g) of
this Section 2, a certificate of a Responsible Officer of the Lessee
describing such change or litigation as the case may be.
(i) Organization. Silicon Graphics Real Estate, Inc., a
California corporation ("SGREI-CA") was organized on May 6, 1993, for
purposes unrelated to this transaction. The Lessee was organized on November
12, 1993 to effect a reincorporation of SGREI-CA as a Delaware corporation.
SGREI-CA will be merged into the Lessee no later than March 31, 1994,
whereupon the Lessee will, by operation of law succeed to all of SGREI-CA's
rights and obligations.
(j) Accuracy of Appraisal. The information furnished by the
Lessee to any appraiser in connection with any appraisal report, if any,
furnished by the Lessee to the Lessor with respect to any Parcel of Property
or Unit of Equipment is accurate and complete in all material respects.
(k) Compliance with Contractual Requirements, Legal
Requirements and In-surance Requirements. The operation, use and physical
condition of the Property and Equipment are in compliance with all
Contractual Requirements, Legal Requirements and Insurance Requirements,
except any Contractual Requirements and Legal Requirements, the noncompliance
with which, individually or in the aggregate, (i) will not place either the
Lessor or any Assignee in any danger of civil liability which the Lessor or
any Assignee is not adequately indemnified for (the Lessee's obligations
under Section 11 of this lease shall be deemed to be adequate indemnification
if no Event of Default exists and if such civil liability is reasonably
likely to be less than $5,000,000) or subject the Lessor or any Assignee to
any criminal liability as a result of failure to comply therewith, (ii) will
not result in a material diminution in the value of any Property or
Equipment, and (iii) is consistent with prudent business practices.
(l) Liens. No Property or Equipment is subject to any Lien,
except Permitted Liens.
(m) Agreement for Lease. The Property acquired and built
pursuant to the Agreement for Lease was acquired in accordance with the terms
of the Agreement for Lease and built in all material respects in accordance
with Unit Plans (as defined in the Agreement for
(xiv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
Lease) relating to such Property. The representations and warranties of the
Lessee, as agent, in the Agreement for Lease are true and correct in all
material respects.
(n) ERISA. The Lessee has not established and does not
maintain or contribute to any employee benefit plan that is covered by Title
IV of the Employee Retirement Income Security Act of 1974, as amended, from
time to time.
(o) Status of Lessee. Not less than 90% of the Lessee's common
stock is owned directly or indirectly by the Guarantor.
3. Lease of Property or Equipment.
(a) Subject to the terms and conditions hereof, the Lessor
shall lease to the Lessee, and the Lessee may lease from the Lessor pursuant
to this Lease, any Property or Equipment, when and as the Lessee has need of
such Property or Equipment; provided, that:
(i) such Property or Equipment is available for purchase
or, in the case of Property only, lease pursuant to a
Mortgageable Ground Lease;
(ii) except with respect to any Parcel of Property
acquired and built pursuant to the Agreement for Lease, the
Lessor has approved the purchase order or acquisition with
respect to such Equipment or the acquisition or ground
leasing with respect to such Property (which approval shall
be in the sole discretion of the Lessor);
(iii) at the time any such Property or Equipment is to be
ordered or leased hereunder there exists no Event of Default
or Potential Default;
(iv) with respect to any Property acquired and built
pursuant to the Agreement for Lease, Substantial Completion
(as defined in the Agreement for Lease) shall have occurred;
and
(v) the sum of (A) the Acquisition Cost of such Property
or Equipment and (B) the aggregate Adjusted Acquisition Cost
of all other Property or Equipment leased hereunder would
not, at the time any such Property or Equipment is to be
leased hereunder, exceed such amount as the Lessor and the
Lessee may from time to time agree.
(b) The lease hereunder of a Parcel of Property acquired and
built pursuant to the Agreement for Lease shall be evidenced by an AFL Unit
Leasing Record. Subject to the terms of paragraph (a) of Section 3 hereof,
upon Substantial Completion (as defined in the
(xv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
Agreement for Lease) of a Parcel of Property acquired and built pursuant to
the Agreement for Lease, the Lessee shall prepare an AFL Unit Leasing Record.
The AFL Unit Leasing Record shall give a full description of the Property,
its Acquisition Cost, its Initial Term, Extended Term and Renewal Term, the
Monthly Rent Component with respect to such Property, and such other details
as the Lessor and the Lessee may from time to time agree. Within seven (7)
Business Days of the Lessor's receipt of the Certificate of Substantial
Completion relating to a Parcel of Property to be leased hereunder,
satisfaction of the other requirements of the Agreement for Lease and receipt
of a completed and executed AFL Unit Leasing Record, the Lessor shall execute
the AFL Unit Leasing Record and deliver it to the Lessee. The AFL Unit
Leasing Record shall have an Effective Date of the date of execution by the
Lessor of the AFL Unit Leasing Record. Execution and delivery by the Lessee
of an AFL Unit Leasing Record shall constitute (i) acknowledgment by the
Lessee that the Property specified in such AFL Unit Leasing Record has been
delivered to the Lessee in good condition and has been accepted for lease
hereunder by the Lessee as of the Effective Date of such AFL Unit Leasing
Record, (ii) acknowledgment by the Lessee that the Property specified in such
AFL Unit Leasing Record is subject to all of the covenants, terms and
conditions of this Lease, and (iii) certification by the Lessee that the
representations and warranties contained in Section 2 of this Lease are true
and correct in all material respects on and as of the Effective Date of such
AFL Unit Leasing Record as though made on and as of such date and that there
exists on such date no Event of Default or Potential Default. Execution and
delivery by the Lessor of an AFL Unit Leasing Record shall constitute
acknowledgment by the Lessor that the Property specified in such AFL Unit
Leasing record is subject to all of the covenants, terms and conditions of
this Lease.
(c) The lease of each Parcel of Property, other than a Parcel
of Property acquired and built pursuant to the Agreement for Lease, or Unit
of Equipment to the Lessee under this Lease shall be evidenced by a Unit
Leasing Record. The Lessee shall prepare and execute a Unit Leasing Record
with respect to each Parcel of Property or Unit of Equipment (which Unit
Leasing Record may relate to more than one Unit of Equipment) and deliver it
promptly to the Lessor. Contemporaneously with the payment required by
paragraph (b) of Section 5 hereof, the Lessor shall execute the acceptance of
such Unit Leasing Record and promptly return one copy of such Unit Leasing
Record to the Lessee. Execution and delivery by the Lessor of a Unit Leasing
Record shall constitute an acknowledgment by the Lessor that the Property or
Unit specified in such Unit Leasing Record is subject to all of the
covenants, terms and conditions of this Lease.
(d) The Lessee shall prepare each Unit Leasing Record pursuant
to the procedures provided by the Lessor. Each Unit Leasing Record shall
give a full description of the Parcel or Parcels of Property or Unit or Units
of Equipment covered thereby, the Acquisition Cost of each such Parcel or
Unit, the Initial Term, Extended Term and Renewal Term for each such Parcel
or Unit, the Monthly Rent Component with respect to each such Parcel or Unit,
its location and such other details as the Lessor and the Lessee may from
time to time agree.
(xvi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(e) Execution by the Lessee of a Unit Leasing Record shall
constitute (i) acknowledgment by the Lessee that the Property or
Equipment specified in such Unit Leasing Record has been delivered to the
Lessee in good condition and has been accepted for lease hereunder by the
Lessee as of the Effective Date, (ii) acknowledgment by the Lessee that the
Property or Equipment specified in such Unit Leasing Record is subject to all
of the covenants, terms and conditions of this Lease, and (iii) certification
by the Lessee that the representations and warranties contained in Section 2
of this Lease are true and correct on and as of the Effective Date as though
made on and as of the Effective Date and that there exists on the Effective
Date no Event of Default or Potential Default.
(f) In connection with any Parcel of Property acquired and
built pursuant to the Agreement for Lease, within six (6) months of the
Effective Date of such Parcel, the Lessee may deliver to the Lessor a
Certificate of Increased Cost (as defined in the Agreement for Lease)
pursuant to the Agreement for Lease setting forth the actual amount expended
by the Lessee for items included in the Unit Budget (as defined in the
Agreement for Lease) with respect to such Parcel while it was subject to the
Agreement for Lease. If, based upon such Certificate of Increased Cost, a
Completion Advance (as defined in the Agreement for Lease) is to be made, the
Lessor shall execute within seven (7) Business Days of receipt of such
Certificate of Increased Cost from the Lessee a revised AFL Unit Leasing
Record to amend the Adjusted Acquisition Cost for such Parcel to reflect the
increase in the Acquisition Cost.
4. Operating Lease.
Without limiting the application of Section 22 hereof, the Lessor
and the Lessee hereby declare that it is their mutual intent that for
accounting and regulatory purposes this Lease be treated as an operating
lease and not an instrument or evidence of indebtedness, and that the
relationship between the Lessor and the Lessee under this Lease shall be that
of lessor and lessee only. Title to and ownership of any Property or
Equipment shall at all times remain in the Lessor and at no time become
vested in the Lessee except in accordance with an express provision of this
Lease. The Lessee does not hereby acquire any right, equity, title or
interest in or to any Property or Equipment except pursuant to the terms
hereof.
5. Delivery.
(a) The Lessee shall acquire or order and accept Property,
other than Property acquired and built pursuant to the Agreement for Lease,
or Equipment pursuant to the procedures provided by the Lessor. The Lessor
shall not be liable to the Lessee for any failure to obtain, or delay in
obtaining, any Property or Equipment or any delay in the delivery of title to
the Lessor or possession of the Property or Equipment to the Lessee.
(xvii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(b) Upon acceptance for lease of a Parcel of Property, other
than Property acquired and built pursuant to the Agreement for Lease, or Unit
of Equipment by the Lessee and the Lessor and receipt by the Lessor of (i)
the vendor's invoice or invoices for such Unit of Equipment and a contract of
sale and deed with respect to each Parcel of Property, (ii) invoices or
other evidence satisfactory to the Lessor for any amounts included in the
Acquisition Cost of such Parcel or Unit payable to parties other than the
vendor, (iii) invoices or other evidence satisfactory to the Lessor
(including an appraisal with respect to a Parcel of Property or Unit of
Equipment) for any amounts included in the Acquisition Cost of such Parcel
or Unit that have been paid to the vendor or other parties by the Lessee and
for any costs included in the Acquisition Cost of such Parcel or Unit
incurred by the Lessee, (iv) with respect to each Parcel of Property,
an ALTA form title insurance commitment from a title insurance company
satisfactory to the Lessor, subject to no title exceptions other than those
approved by the Lessor, and (v) such other documentation as the Lessor may
reasonably require, the Lessor shall (A) pay to such vendor the amount of the
vendor's invoice or invoices and/or contract of sale for such Parcel or Unit
except to the extent previously paid by the Lessee, (B) pay to such other
parties such amounts payable, except to the extent previously paid by the
Lessee and (C) reimburse or pay to the Lessee for such amounts paid to the
vendor or other parties by the Lessee, for such costs incurred by the Lessee
and, if agreed between the Lessor and the Lessee, for the appraised value of
the Property or Equipment; provided, however, that in no event shall the sum
of all payments made pursuant to clauses (A), (B) and (C) above exceed the
Acquisition Cost of such Property or Equipment.
(c) The requirements for acceptance for lease hereunder of the
Property acquired and built pursuant to the Agreement for Lease shall be the
requirements set forth in the Agreement for Lease.
(d) The Lessee shall ensure that the installation or erection
of any Equipment is in all material respects in accordance with the
specifications and requirements of the vendor thereof.
(e) The obligations of the Lessee to pay all amounts payable
pursuant to this Lease (including specifically and without limitation amounts
payable under Sections 7 and 11 hereof) shall be absolute and unconditional
under any and all circumstances of any character, and such amounts shall be
paid without notice (other than notice specifically required by this Lease),
demand (other than demand specifically required by this Lease), defense,
setoff, deduction or counterclaim and without abatement, suspension,
deferment, diminution or reduction of any kind whatsoever, except as herein
expressly otherwise provided. The obligation of the Lessee to lease and pay
Basic Rent for any and all Property or Equipment accepted for use pursuant to
this Lease is without any warranty or representation, express or implied, as
to any matter whatsoever on the part of the Lessor or any Assignee or any
Affiliate of either, or anyone acting on behalf of any of them.
(xviii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
THE LESSEE HAS SELECTED AND SHALL SELECT ALL PROPERTY OR EQUIPMENT
ACQUIRED OR ORDERED ON THE BASIS OF ITS OWN JUDGMENT. NEITHER THE LESSOR NOR
ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER, NOR ANYONE ACTING ON BEHALF OF ANY
OF THEM MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, AS TO THE SAFETY, TITLE,
CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY, CONFORMITY TO
SPECIFICATION, OR ANY OTHER CHARACTERISTIC, OF ANY PROPERTY OR EQUIPMENT, OR
AS TO WHETHER ANY PROPERTY OR EQUIPMENT OR THE OWNERSHIP, USE, OCCUPANCY OR
POSSESSION THEREOF COMPLIES WITH ANY LAWS, RULES, REGULATIONS OR REQUIREMENTS
OF ANY KIND.
AS BETWEEN THE LESSEE AND THE LESSOR, ANY ASSIGNEE OR ANY
INDEMNIFIED PERSON, THE LESSEE ASSUMES ALL RISKS AND WAIVES ANY AND ALL
DEFENSES, SET-OFFS, DEDUCTIONS, COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR
FUTURE, AS TO THE LESSEE'S OBLIGATION TO PAY BASIC RENT AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY RELATING TO:
(A) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR
USE, MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF ANY PROPERTY OR EQUIPMENT, LATENT OR NOT;
(B) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR
OTHER RIGHT WHICH THE LESSEE MAY HAVE AGAINST THE LESSOR, ANY ASSIGNEE OR ANY
INDEMNIFIED PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER
TRANSACTION OR MATTER;
(C) ANY DEFECT IN TITLE OR OWNERSHIP OF PROPERTY OR EQUIPMENT OR
ANY TITLE ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE PROPERTY
OR EQUIPMENT;
(D) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR
DESTRUCTION OF, OR DAMAGE TO, ANY PROPERTY OR EQUIPMENT, IN WHOLE OR IN PART,
OR CESSATION OF THE USE OR POSSESSION OF ANY PROPERTY OR EQUIPMENT BY THE
LESSEE FOR ANY REASON WHATSOEVER AND OF WHATEVER DURATION, OR ANY
CONDEMNATION, CONFISCATION, REQUISITION, SEIZURE, PURCHASE, TAKING OR
FORFEITURE OF ANY PROPERTY OR EQUIPMENT, IN WHOLE OR IN PART;
(xix)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(E) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE,
OWNERSHIP, OCCUPANCY OR POSSESSION OF THE PROPERTY OR EQUIPMENT BY THE LESSEE;
(F) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR
PROCEEDING BY OR AGAINST THE LESSEE OR THE LESSOR OR ANY ASSIGNEE;
(G) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER
TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(H) THE INVALIDITY OR UNENFORCEABILITY OF ANY XXXX OF SALE OF
ANY PROPERTY OR EQUIPMENT EXECUTED IN CONNECTION WITH THIS LEASE OR ANY OTHER
INFIRMITY THEREIN OR LACK OF POWER OR AUTHORITY OF ANY PARTY THERETO TO ENTER
INTO SUCH XXXX OF SALE; OR
(I) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER, WHETHER OR
NOT SIMILAR TO ANY OF THE FOREGOING.
THE LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER
MAY BE CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL,
QUIT, RESCIND OR SURRENDER THIS LEASE EXCEPT IN ACCORDANCE WITH THE EXPRESS
TERMS HEREOF. Each payment of Basic Rent, Additional Rent and any other
amount due hereunder made by the Lessee shall be final, and the Lessee,
without waiving any other remedies it may have, will not seek or have any
right to recover all or any part of such payment from the Lessor or any
Assignee for any reason whatsoever. The making of payments under this Lease
by the Lessee shall not be deemed a waiver of any claim or claims that the
Lessee may assert against the Lessor or any other Person. The Lessor agrees
to repay the Lessee amounts paid to the Lessor to the extent such payments
were made in error and were not required by any of the terms or provisions
hereof.
(f) Notwithstanding any other provision contained in this
Lease, it is specifically understood and agreed that neither the Lessor nor
any Assignee nor any Affiliate of either, nor anyone acting on behalf of any
of them makes any warranties or representations or has any responsibility to
disclose any relevant information, or has any other responsibility or duty,
nor, except as set forth in Section 22 of this Lease, has the Lessor or any
Assignee or any Affiliate of either, or anyone acting on behalf of any of
them made any covenants or
(xx)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
undertakings, as to the accounting treatment to be accorded the Lessee or as
to the U.S. Federal or any state income or any other tax consequences, if
any, to the Lessee as a result of or by virtue of the transactions
contemplated by this Lease.
(g) In the event the title insurance policy insuring the
Lessor's interest in any Parcel of Property would not, in the absence of
special insurance by the Lessee, become effective until the date of
recordation of the deed, then the Lessee shall furnish such indemnity to the
title insurance company as it shall require in order to insure the Lessor's
interest in such Parcel of Property, effective as of the date of the
Effective Date.
6. Initial Term; Extended Term.
(a) The "Initial Term" with respect to any Parcel of Property
or Unit of Equipment leased hereunder shall commence on the Effective Date
set forth in the Unit Leasing Record or the AFL Unit Leasing Record for such
Parcel of Property or Unit of Equipment and shall continue for any partial
first calendar month plus the number of calendar months set forth opposite
such Parcel of Property or type of Equipment under the heading "Initial Term"
in Exhibit A hereto, unless terminated earlier pursuant to Section 12, 13,
14, 15, 16, 19 or 20 hereof. Notwithstanding the preceding sentence, if any
Ground Lease is terminated prior to the expiration of the then current term
of such Ground Lease, then, as provided in paragraph (d) of Section 29
hereof, the lease of any Parcel of Property subject to such Ground Lease
shall terminate on the date of termination of such Ground Lease and all of
the other terms and provisions of paragraph (d) of Section 29 hereof shall
apply to such termination.
(b) The "Extended Term" with respect to any Parcel of Property
or Unit of Equipment shall commence on the first day of the calendar month
following the last day of the Initial Term of such Parcel or Unit and shall
continue for the number of calendar months set forth opposite such Parcel of
Property or type of Equipment under the heading "Extended Term" in Exhibit A
hereto and specified in the Unit Leasing Record or the AFL Unit Leasing
Record for such Parcel of Property or Unit of Equipment, unless terminated
earlier pursuant to Section 12, 13, 14, 15, 16, 19 or 20 hereof.
Notwithstanding the preceding sentence, if any Ground Lease is terminated
prior to the expiration of the then current term of such Ground Lease, then,
as provided in paragraph (d) of Section 29 hereof, the lease of any Parcel of
Property subject to such Ground Lease shall terminate on the date of
termination of such Ground Lease and all of the other terms and provisions of
paragraph (d) of Section 29 hereof shall apply to such termination.
(c) With respect to each Unit of Equipment or Parcel of
Property, it is understood and agreed that the Initial Term of each Parcel of
Property or Unit of Equipment shall in no event exceed 75% of its economic
useful life.
(xxi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(d) Notwithstanding anything contained in this Section 6, the
provisions of Sections 10 and 11 hereof and paragraph (a) of Section 15
hereof shall apply with respect to any Property or Equipment from the time
such Property or Equipment is ordered by the Lessee, with the approval of the
Lessor, pursuant to procedures supplied by the Lessor.
7. Rent and Other Payments.
(a) The Lessee hereby agrees to pay the Lessor (i) on each
Basic Rent Payment Date, Basic Rent for the calendar month (or part thereof)
in which such Basic Rent Payment Date falls, with respect to each Parcel of
Property or Unit of Equipment leased during any part of such calendar month
hereunder for which the Effective Date is before the Lease Rate Date for such
calendar month, and (ii) on the Basic Rent Payment Date in the next
succeeding calendar month, Basic Rent for any partial first calendar month,
with respect to each Parcel of Property or Unit of Equipment for which the
Effective Date is on or after the Lease Rate Date for such calendar month.
(b) The Lessor shall furnish to the Lessee on the 16th day of
each calendar month (i) the percentage referred to in paragraph (a)(iii) of
the definition of "Basic Rent" in Section 1 hereof for such calendar month,
(ii) a summary of the calculations of Basic Rent and (iii) an invoice for
Basic Rent payable on such Basic Rent Payment Date or, if such day is not a
Business Day, on the next succeeding Business Day (the "Lease Rate Date").
(c) The Lessee hereby agrees to pay within five (5) Business
Days after demand all amounts (other than Basic Rent) payable hereunder,
including, without limitation, all amounts payable to any Indemnified Person
pursuant to Section 11 hereof.
(d) Without prejudice to the full exercise by the Lessor of
its rights under Sections 18 and 19 hereof, the Lessee shall pay to the
Lessor from time to time, on demand, as additional rent ("Additional Rent")
(i) amounts required to reimburse the Lessor for its obligations, costs and
expenses (not previously included in Basic Rent) incurred in acquiring,
financing (including equity financing) and leasing the Property or Equipment,
and (ii) under circumstances where any portion of an amount payable by the
Lessee to the Lessor hereunder is required to be paid to a lender under a
Credit Agreement and a "default rate" or interest factor would be applied to
the amount owed under the Credit Agreement in respect of any such amounts,
and to the extent legally enforceable, an amount computed by multiplying (A)
all sums not paid by the Lessee to the Lessor as provided in this Lease on or
before the date such payments are due by (B) the decimal equivalent of the
percentage referred to in paragraph (a)(iii) of the definition of "Basic
Rent" as most recently furnished by the Lessor, and by (C) a fraction having
a numerator equal to the number of days in the period from and including the
date such default rate became applicable under such Credit Agreement, to but
excluding the date of payment thereof and a denominator of 365, or in a leap
year, 366. The Lessee shall also pay to
(xxii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
the Lessor on demand an amount equal to any expenses incurred by the Lessor
in collecting such unpaid sums.
(e) Basic Rent and Additional Rent and any other amount
payable by the Lessee to the Lessor shall be paid such that immediately
available funds in the full amount due are available on the date due, to the
account of the Lessor at such bank, or to such account of such other Person
at such bank, or otherwise as the Lessor may from time to time designate in
writing to the Lessee.
(xxiii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(f) During the Lease Term of any Parcel of Property or Unit of
Equipment, the Lessor shall calculate, on each Lease Rate Date (except the
first Lease Rate Date hereunder), the difference, if any, between (i) the
Variable Component of Basic Rent paid by the Lessee for the previous calendar
month and (ii) an amount equal to what the Variable Component of Basic Rent
would have been for such calendar month had the Variable Component of Basic
Rent been calculated using the weighted average bond yield equivalent
percentage cost per annum on all Commercial Paper of the Lessor outstanding
at any time or the weighted average percentage cost per annum of other
borrowings outstanding at any time or a blended rate if both Commercial Paper
and other borrowings are outstanding at any time (as specified in clauses
(A), (B) and (C), respectively, in subparagraph (a)(iii) of the definition of
Basic Rent) during the previous calendar month (rather than during the
applicable Computation Period); provided, that with respect to the Variable
Component of Basic Rent for the last month of the Lease Term, such
calculation shall occur on the last day of the Lease Term. On or about
August 16, 1994 (or such other date that the Lessor so chooses), and
thereafter on or about August 16 of each year, and on the last day of the
Lease Term, the Lessor shall furnish to the Lessee a calculation of the
aggregate difference between the amounts determined under clause (i) above
and the correlating amounts determined under clause (ii) above (the
"Reconciliation Amount") for each calendar month since the date of this Lease
or each calendar month since the last time the Reconciliation Amount was
calculated, whichever is later. The Lessor and the Lessee agree that if the
Reconciliation Amount is a positive number, then such amount shall be
credited against the amount of Basic Rent that the Lessee is required to pay
on the next Basic Rent Payment Date (or Basic Rent Payment Dates, if such
amount shall exceed the amount of Basic Rent payable in the next succeeding
month), and if the Reconciliation Amount is a negative number, then such
amount shall be payable by the Lessee on the next Basic Rent Payment Date in
addition to the amount of Basic Rent due and payable on such Basic Rent
Payment Date, except that with respect to the Reconciliation Amount computed
on the last day of the Lease Term, such amount shall be paid by the Lessor to
the Lessee (in the case of a positive number) or by the Lessee to the Lessor
(in the case of a negative number) on the last day of the Lease Term. Any
notices required by this paragraph (f) which are furnished to the Lessee by
the Lessor shall be conclusive, absent manifest error, as to the contents
thereof.
8. Restricted Use; Compliance with Laws.
(a) The Lessee may, subject to the terms of this Lease, use
the Property or Equipment in the regular course of its business for any
lawful purpose.
(b) The Lessee shall promptly and duly execute, deliver, file
and record, at the Lessee's expense, all such documents, statements, filings
and registrations, and take such further action, as the Lessor shall from
time to time reasonably request in order to establish, perfect and maintain
the Lessor's title to and interest in the Property or Equipment and any
Assignee's interest in this Lease or any Property or Equipment as against the
Lessee or any third party in any
(xxiv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
applicable jurisdiction. The Lessee may, at the Lessee's own cost and
expense, change the place of principal location of any Equipment.
Notwithstanding the foregoing, no change of location shall be undertaken
unless and until all Legal Requirements shall have been met. At least once
each year prior to the anniversary of the date of this Lease, and upon
request after the occurrence of a Potential Default, the Lessee shall advise
the Lessor in writing where all Equipment leased hereunder as of such date is
principally located.
(c) The Lessee shall use commercially reasonable precautions
to prevent loss or damage to Property or Equipment and to prevent injury to
third persons or property of third persons. The Lessee shall cooperate fully
with the Lessor and all insurance companies providing insurance pursuant to
Section 10 hereof in the investigation and defense of any claims or suits
arising from the ownership, operation or use of any Equipment or ownership,
use, or occupancy of the Property; provided, that nothing contained in this
paragraph (c) shall be construed as imposing on the Lessor any duty to
investigate or defend any such claims or suits. The Lessee shall comply and
shall cause all Persons using or operating Equipment or using or occupying
Property to comply with all Contractual Requirements, Insurance Requirements
and Legal Requirements applicable to such Property or Equipment and to the
acquiring, titling, registering, leasing, insuring, using, occupying,
operating and disposing of Property or Equipment, and the licensing of
operators thereof, except any Contractual Requirements and Legal
Requirements, the noncompliance with which, individually or in the aggregate,
(i) will not place either the Lessor or any Assignee in any danger of civil
liability which the Lessor or any Assignee is not adequately indemnified for
(the Lessee's obligations under Section 11 of this Lease shall be deemed to
be adequate indemnification if no Event of Default exists and if such civil
liability is reasonably likely to be less than $5,000,000) or subject the
Lessor or any Assignee to any criminal liability as a result of failure to
comply therewith, (ii) will not result in a material diminution in the value
of any Property or Equipment, and (iii) is consistent with prudent business
practices.
(d) Upon reasonable prior notice and upon compliance with such
procedures as the Lessee may reasonably request to assure confidentiality and
security, the Lessor or any Assignee or any authorized representative of
either may during reasonable business hours from time to time inspect
Property or Equipment and deeds, registration certificates, certificates of
title and related documents covering Property or Equipment wherever the same
may be located, but neither the Lessor nor any Assignee shall have any duty
to make any such inspection.
(e) The Lessee shall not, without the prior written consent of
the Lessor, permit, or suffer to exist, any Lien, including mechanics' liens,
in respect of any Property or Equipment or this Lease or which might
interfere with the due and timely payment of any sum payable, or the exercise
of any rights, or the performance of any obligations hereunder, other than
Permitted Liens or those Liens placed thereon by, or arising from, the
Lessor's own actions or which are subject to a Permitted Contest, and shall
take such action, by bonding, deposit or payment, to remove or satisfy of
record within sixty (60) days of the placing thereof, any such
(xxv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
Lien, nor may it assign any right or interest herein or in any Property or
Equipment unless such assignment is made in accordance with Section 33 of
this Lease. The Lessee shall not, without the prior written consent of the
Lessor, sublease or otherwise relinquish possession of any Property or
Equipment, except that (i) the Lessee may relinquish possession of Property
or Equipment to any contractor for use in performing work for the Lessee on
such Property or Equipment; provided, that such relinquishment of possession
shall in no way affect the obligations of the Lessee or the rights of the
Lessor hereunder and with respect to the Property or Equipment and (ii) the
Lessee may sublease any Parcel of Property or Unit of Equipment; provided,
that (A) (unless the sublease is to the Guarantor or an Affiliate of the
Guarantor) the terms of the instrument of sublease and the identity of the
sublessee shall be subject to the prior written approval of the Lessor and
any Assignee, which approval shall not be unreasonably withheld or delayed,
(B) each such sublease shall expressly be made subject and subordinate to the
provisions hereof and shall, at the sole option of the Lessor, by its terms
be subject to termination upon the termination for any reason of this Lease,
(C) no such sublease shall modify or limit any right or power of the Lessor
hereunder or affect or reduce any obligation of the Lessee hereunder, and all
such obligations shall continue in full force and effect as obligations of a
principal and not of a guarantor or surety, as though no such subletting had
been made, and (D) any such sublease made otherwise than as expressly
permitted by this paragraph (e) shall be void and of no force and effect. As
additional security to the Lessor for the performance of the Lessee's
obligations under this Lease, the Lessee hereby assigns to the Lessor all of
its right, title and interest in and to all subleases permitted hereby. The
Lessor shall have the present and continuing right to collect and enjoy all
rents and other sums of money payable under any such sublease, and the Lessee
hereby irrevocably assigns such rents and other sums to the Lessor for the
benefit and protection of the Lessor; provided, that unless an Event of
Default shall have occurred and be continuing hereunder, the Lessee shall be
entitled to collect and enjoy such rents and other sums. The Lessee shall,
within thirty (30) days after the execution of any such sublease, deliver a
conformed copy thereof to the Lessor. Nothing contained in this Lease shall
be construed as constituting the consent or request of the Lessor, express or
implied, to or for the performance by any contractor, laborer, materialman or
vendor of any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or to any
Property or Equipment or any part thereof. Notice is hereby given that the
Lessor will not be liable for any labor, services or materials furnished or
to be furnished to the Lessee, or to anyone holding any Property or Equipment
or any part thereof through or under the Lessee, and that no mechanics' or
other liens for any such labor, services or materials shall attach to or
affect the interest of the Lessor in and to the Property or Equipment.
(f) The Lessee shall register and title all automotive
Equipment in the name of the Lessor except that, where required or permitted
by law or regulation, Equipment may, with the written approval of the Lessor
be registered (but not titled) in the name of the Lessee. If requested by
the Lessor, the Lessee shall cause one of its officers to hold in his custody
and control all registration certificates and certificates of title covering
automotive Equipment, as
(xxvi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
custodian for the Lessor. The Lessee agrees to cause such officer to furnish
to the Lessor, upon reasonable request, a certificate to the effect that all
registration certificates and certificates of title pursuant to any Legal
Requirement have been obtained and are being held on behalf of the Lessor.
(g) On or prior to the pertinent Effective Date, the Lessee
shall affix or cause to be affixed to each Unit of Equipment, except for
motor vehicles in states with documents of title, in the place designated by
the Lessor (or, if no such place shall have been designated, in a prominent
place), labels, plates or other markings stating that such Unit of Equipment
is owned by the Lessor. The Lessee shall not without the prior permission of
the Lessor change or remove (or permit to be changed or removed or otherwise
permit a decrease in the visibility of) any insignia or lettering which is on
any Equipment at the time of delivery thereof or which is thereafter placed
thereon indicating the Lessor's ownership thereof.
9. Maintenance, Improvement and Repair
of Property or Equipment.
(a) Upon request of the Lessee, the Lessor will, so long as no
Event of Default shall have occurred and be continuing, assign or otherwise
make available to the Lessee any and all rights or claims the Lessor may have
under any vendor's or manufacturer's warranties or undertakings with respect
to any Property or Equipment.
(b) The Lessee shall pay all costs, expenses, fees and charges
incurred in connection with the ownership, use or occupancy of any Parcel of
Property or ownership, use and operation of any Unit of Equipment. Except as
otherwise provided in Section 15 hereof, the Lessee shall at all times, at
its own expense, and subject to reasonable wear and tear, keep Property or
Equipment in good operating order, repair, condition and appearance. The
foregoing undertaking to maintain Property or Equipment in good repair shall
apply regardless of the cause necessitating repair, and as between the Lessor
and the Lessee all risks of damage to Property or Equipment are assumed by
the Lessee. With respect to any Parcel of Property, the undertaking to
maintain in good repair shall include, without limitation, all interior and
exterior repairs, whether structural or nonstructural, foreseen or
unforeseen, ordinary or extraordinary and all common area maintenance
including, without limitation, removal of dirt, snow, ice, rubbish and other
obstructions and maintenance of sidewalks and landscaping.
(c) With respect to any Parcel of Property, the Lessee shall
pay: (i) all taxes, assessments, levies, fees, water and sewer rents and
charges, and all other governmental charges, general and special, ordinary
and extraordinary, foreseen and unforeseen, which are, at any time, imposed
or levied upon or assessed against (A) the Parcel, (B) any Basic Rent, any
Additional Rent or other sum payable hereunder or (C) this Lease, the
leasehold estate hereby created, or which arises in respect of the ownership,
operation, occupancy, possession or use of the Parcel;
(xxvii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(ii) all gross receipts or similar taxes (i.e., taxes based upon gross income
which fail to take into account all customary deductions (e.g., ordinary
operating expenses and interest) relating to the Parcel) imposed or levied
upon, assessed against or measured by any Basic Rent, or any Additional Rent
or other sum payable hereunder; (iii) all sales, value added, use and similar
taxes at any time levied, assessed or payable on account of the acquisition,
leasing or use of the Parcel; and (iv) all charges of utilities and
communications services serving the Parcel. The Lessee shall not be required
to pay any franchise, unincorporated business, estate, inheritance, transfer,
income or similar tax of the Lessor (other than any tax referred to in clause
(ii) above) unless the Lessee receives written notice from the Lessor that
such tax is imposed, levied or assessed in substitution for any other tax,
assessment, charge or levy which the Lessee is required to pay pursuant to
this paragraph (c); provided, however, that if at any time during the term of
this Lease, the method of taxation shall be such that there shall be levied,
assessed or imposed on the Lessor a capital levy or other tax directly on the
rents received therefrom, or upon the value of any Parcel or any present or
any future improvement or improvements on any Parcel, then all such taxes,
assessments, levies or charges or the part thereof so measured or based,
shall be payable by the Lessee, but only to the extent that such taxes would
be payable if the Property affected were the only property of the Lessor, and
the Lessee shall pay and discharge the same as herein provided. The Lessee
will furnish to the Lessor, promptly after demand therefor, proof of payment
of all items referred to above which are payable by the Lessee. If any such
assessments may legally be paid in installments, the Lessee may pay such
assessment in installments.
(d) The Lessee shall not make any material alterations to any
Equipment without the prior written consent of the Lessor, which consent
shall not be withheld or delayed, unless such alteration would materially
adversely affect the value of the applicable Equipment, in which case the
Lessor may withhold consent to such alteration. Any improvements or
additions to any Equipment shall become and remain the property of the
Lessor, except that any addition to Equipment made by the Lessee shall remain
the property of the Lessee if it can be removed from such Equipment without
impairing the functioning of such Equipment or its resale value, excluding
such addition. Any improvements or additions which do not remain property of
the Lessee shall be evidenced by a revised Unit Leasing Record.
(e) So long as no Event of Default shall have occurred and be
continuing, the Lessee may, at its expense, make additions to and alterations
to any Parcel of Property; provided, that upon completion of such additions
or alterations (i) neither the fair market value of the Parcel of Property
shall be materially reduced thereby nor the condition of such Parcel of
Property materially impaired, below the value, utility or condition thereof
immediately prior to such action (assuming such Parcel of Property was then
of a condition and repair required to be maintained pursuant to paragraph (b)
of Section 9 hereof, (ii) such additions or alterations shall not result in a
change of use of such Parcel of Property, which change shall, in the
reasonable judgment of the Lessor, materially increase the risk of liability
to third parties, (iii) such work shall be completed in a good and
workmanlike manner and in compliance with all applicable
(xxviii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
Contractual Requirements, Legal Requirements and Insurance Requirements and
(iv) no exterior walls of any building or other improvement constituting a
part of a Parcel of Property shall be demolished unless the Lessee has made
adequate provision according to nationally recognized sound and prudent
engineering and architectural standards to preserve and maintain the
structural integrity of the Parcel of Property and for the restoration of
such Parcel of Property to a structurally sound architectural whole and,
except with respect to the North Shoreline Property, if such addition or
alteration costs more than five (5%) of Acquisition Cost, the obligations of
the Lessee to preserve, maintain and restore are reasonably assured to the
Lessor's satisfaction. With respect to the North Shoreline Property, the
Lessee presently intends to use and occupy such Unit for general, executive
and administrative offices, light manufacturing, operation of training
facilities, research and development and similar uses (and uses ancillary or
accessory to the foregoing), in all cases in compliance with all applicable
zoning and land use restrictions applicable to the Unit Premises. The Lessee
will not undertake any additional uses of any portion of the North Shoreline
Property without the prior written consent of the Lessor, which consent shall
not be withheld unless the proposed additional use, in the reasonable
judgment of the Lessor, will (i) be reasonably likely to result in a material
diminution of the value of the North Shoreline Property or (ii) entail
greater risks of civil or criminal liability to the Lessor, as owner of the
Unit. Any and all such additions and alterations shall be and remain part of
the Parcel of Property and shall be subject to this Lease, excluding,
however, additions and alterations comprised of partitions, floor covering,
moveable furniture and equipment, trade fixtures or other personal property
(other than the Equipment) which (A) were not installed at the expense of the
Lessor, (B) are not necessary for the operation of the applicable Parcel of
Property for its intended use and (C) can be removed without causing damage
to the remaining portion of the Property or, although their removal would
cause damage to the remaining portion of the Property, are removed only upon
the Lessee's repairing such damage with no resulting reduction in the fair
market value of the Property (collectively, "Removable property").
(f) Equipment, if any, included under an AFL Unit Leasing
Record shall be maintained, repaired, refurbished or replaced by the Lessee
when necessary in order to ensure that the Equipment located at the Parcel of
Property included in such AFL Unit Leasing Record will include the Equipment
listed on such AFL Unit Leasing Record or replacements for such Equipment of
the kind, quality and in the quantities included in such AFL Unit Leasing
Record and shall be maintained in good operating order, repair, condition and
appearance (provided that the Lessee may replace such Equipment with
equipment of different kind, quality and in different quantities if such
replacement equipment is of equal or greater value in the Lessor's good faith
judgment and is included in the FF&E Specifications, as defined in the
Agreement for Lease, which relate to such Parcel of Property). As equipment
is substituted for Equipment subject to the Lease, title to such substitute
equipment shall automatically be transferred to the Lessor and such equipment
shall be subject to this Lease and title to the existing Equipment for which
such equipment is being substituted shall be released by the Lessor.
(xxix)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
10. Insurance.
(a) Public Liability Insurance with Respect to Equipment. The
Lessee will carry at its own expense public liability insurance and property
damage insurance with respect to all Equipment (i) in amounts which are not
less than the public liability and property damage insurance applicable to
similar equipment owned, leased or held by the Lessee; provided, that in no
event shall such amounts be less than $5,000,000 per occurrence, (ii) of the
types usually carried by corporations engaged in the same or a similar
business, similarly situated with the Lessee, and owning or operating similar
equipment and which cover risk of the kind customarily insured against by
such corporations, and (iii) which are maintained in effect with insurers of
recognized responsibility rated "Very Good" or better by Best's Key Rating
Guide. The insurance required by this paragraph (a) may be subject to such
deductibles and the Lessee may self-insure with respect to the required
coverage only to the extent approved in writing by the Lessor. Except to the
extent otherwise so approved, self-insurance and deductibles aggregating not
more than $5,000,000 are hereby approved so long as the Guarantor's senior
debt rating or, if the Guarantor has no senior debt rating, Implied Senior
Debt Rating is BB+ or better by Duff & Xxxxxx, BB+ or better by S&P, Ba1 or
better by Xxxxx'x or, if the Guarantor has no senior debt rating or Implied
Senior Debt Rating from any of Duff & Xxxxxx, S&P or Xxxxx'x, NAIC 2 or
better by the NAIC; provided, however, that if the Guarantor's private debt
rating has not been reviewed by the NAIC within the prior 15 months, than
when Xxxxxxx Xxxxx Fixed Income Research Rating is 5.5 or higher; in all
other cases self-insurance and deductibles aggregating not more than
$1,000,000 are approved.
(b) Insurance Against Loss or Damage to Equipment. The Lessee
will maintain in effect with insurers of recognized responsibility rated
"Good" or better by Best's Key Rating Guide, at its own expense, physical
damage insurance with respect to all Equipment, which is of the type,
including with respect to deductibles and limits of self-insurance usually
carried by corporations engaged in the same or similar business, similarly
situated with the Lessee, and owning or operating similar equipment and which
cover risk of the kind customarily insured against by such corporations, and
in substantially the amount applicable to similar equipment owned, leased or
held by the Lessee; provided, that such insurance shall at all times be in an
amount not less than the replacement cost of all Equipment. The insurance
required by this paragraph (b) may be subject to such deductibles and the
Lessee may self-insure with respect to the required coverage only to the
extent approved in writing by the Lessor. Except to the extent otherwise so
approved, self-insurance and deductibles aggregating not more than $5,000,000
are hereby approved so long as the Guarantor's senior debt rating or, if the
Guarantor has no senior debt rating, Implied Senior Debt Rating is BB+ or
better by Duff & Xxxxxx, BB+ or better by S&P, Ba1 or better by Xxxxx'x or,
if the Guarantor has no senior debt rating or Implied Senior Debt Rating from
any of Duff & Xxxxxx, S&P or Xxxxx'x, NAIC 2 or better by the NAIC; provided,
however, that if the Guarantor's private debt rating has not been reviewed by
the NAIC within the prior 15 months, than when Xxxxxxx Xxxxx Fixed Income
Research Rating is 5.5 or
(xxx)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
higher; in all other cases self-insurance and deductibles aggregating not
more than $1,000,000 are approved.
(c) Insurance with respect to Property. The Lessee will
maintain or cause to be maintained insurance of the following character, on
each Parcel of Property:
(i) All risk insurance coverage against losses by fire
and lightning and other risks for the full insurable
replacement value of each Parcel of Property, with agreed
amount endorsement or endorsements providing equivalent
protection, including loss by windstorm, hail, explosion,
riot (including riot attending a strike), civil commotion,
aircraft, vehicles, smoke damage, and vandalism and malicious
mischief, in amounts not less than the full insurable
replacement value of all buildings and other improvements
on each Parcel of Property, but in no event less than the
replacement cost of each Parcel of Property. The term "full
insurable replacement value" as used herein means the
actual replacement cost, including the costs of debris
removal, but excluding the cost of constructing foundation
and footings.
(ii) Comprehensive general public liability insurance
covering the legal liability of the Lessor and the Lessee
against claims for bodily injury, death or property damage,
occurring on, in or about each Parcel of Property or
occurring as a result of ownership of facilities located on
each Parcel of Property or as a result of the use of products
or materials manufactured, stored, processed, constructed or
sold, or services rendered, on each Parcel of Property, in
the minimum amount of $5,000,000 with respect to any one
occurrence, accident or disaster or incidence of negligence.
(iii) The Lessee shall comply with applicable workers'
compensation laws of the states where each Parcel of
Property is located, and shall maintain such insurance if
and to the extent necessary for such compliance.
(iv) Explosion insurance in respect of any boilers and
similar apparatus located on each Parcel in the minimum
amount of $250,000 or in such greater amounts as are then
customary for property similar in use to each Parcel.
(v) Such other insurance, in such amounts and against
such risks, as is customarily maintained by operators of
similar properties; provided,
(xxxi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
however, that in no event shall the Lessee be requested to
maintain earthquake, errors and omissions, pollution or
professional liability insurance.
The insurance required under this paragraph (c) shall be maintained in effect
with insurers of recognized responsibility rated "Very Good" or better by
Best's Key Rating Guide in the case of subsection (ii) and "Good" or better
by such Guide in the case of the other subsections. Such insurance may
provide for such deductibles and the Lessee may self-insure with respect to
the required coverage only to the extent approved in writing by the Lessor.
Except to the extent otherwise so approved, self-insurance and deductibles
aggregating not more than $5,000,000 are hereby approved so long as the
Guarantor's senior debt rating or, if Guarantor has no senior debt rating,
Implied Senior Debt Rating is BB+ or better by Duff & Xxxxxx, BB+ or better
by S&P, Ba1 or better by Xxxxx'x or, if the Guarantor has no senior debt
rating or Implied Senior Debt Rating from any of Duff & Xxxxxx, S&P or
Xxxxx'x, NAIC 2 or better by the NAIC; provided, however, that if the
Guarantor's private debt rating has not been reviewed by the NAIC within the
prior 15 months, than when Xxxxxxx Xxxxx Fixed Income Research Rating is 5.5
or higher; in all other cases self-insurance and deductibles aggregating not
more than $1,000,000 are approved.
Insurance claims by reason of damage or destruction to any Parcel
of Property shall be adjusted by the Lessee, subject to the approval of the
Lessor if the amount claimed exceeds $1,000,000, which approval the Lessor
agrees not to unreasonably withhold or delay; provided, that the Lessor may
participate at the Lessee's cost in the adjustment of any insurance claim in
connection with a casualty to a Parcel of Property resulting in a termination
of this Lease with respect to such Parcel.
(d) The insurance required by this Section 10 may be provided
by means of a so-called "blanket" or "umbrella" policy, provided that if such
a blanket or umbrella policy is utilized by the Lessee to provide the
insurance coverage required by subsections (a) or (c)(ii) hereof, such policy
shall be issued by an insurer of recognized responsibility rated "Very Good"
or better by Best's Key Rating Guide.
(e) No separate insurance not otherwise required by this
Section 10 shall be deemed required as a result of Lessee's obligations under
Section 11.
(f) Additional Insureds; Notice. Any policies of insurance
carried in accordance with this Section 10 and any policies taken out in
substitution or replacement for any such policies (i) shall name the Lessor,
Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general partner of the Lessor
and its shareholders, officers and directors, the limited partners of the
Lessor, and each Assignee as additional insureds, as their respective
interests may appear (but without imposing upon any such Person any
obligation imposed on the insured, including, without limitation, the
liability to pay the premium for any such policy), (ii) with respect to
(xxxii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
insurance carried in accordance with the preceding paragraphs (b), (c)(i),
(c)(iv), (c)(v) and (e) shall name the Assignee, if any, or the Lessor, if no
Assignment has been made, as loss payee, (iii) with respect to insurance
carried in accordance with the preceding paragraphs (b), (c) and (e), shall
provide that as against the Lessor the insurers shall waive any rights of
subrogation, (iv) shall provide that if the insurers cancel such insurance
for any reason whatsoever, or any substantial change is made in the coverage
or the same is allowed to lapse for nonpayment of premium or such insurance
coverage is reduced, such cancellation, change, lapse or reduction shall not
be effective as to the Lessor, Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the
general partner of the Lessor and its shareholders, officers and directors,
the limited partners of the Lessor, or any Assignee for thirty (30) days
after receipt by the Lessor, Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the
general partner of the Lessor and its shareholders, officers and directors,
the limited partners of the Lessor, or such Assignee, as the case may be, of
written notice by such insurers of such cancellation, change, lapse or
re-duction, and (v) shall provide that in respect of the interest of the
Lessor, Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the general partner of the
Lessor and its shareholders, officers and directors, the limited partners of
the Lessor, and each Assignee in such policies the insurance shall not be
invalidated by any action or inaction of the Lessee or any other Person
(other than of the Lessor, Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Leasing, the
general partner of the Lessor and its shareholders, officers and directors,
the limited partners of the Lessor, or any such Assignee in respect of its
own interest) and shall insure the interests of the Lessor, Xxxxxxx, Xxxxxxx
Xxxxx, Xxxxxxx Leasing, the general partner of the Lessor and its
shareholders, officers and directors, the limited partners of the Lessor, and
each such Assignee, as they appear, regardless of any breach or violation of
any warranties, declarations or conditions contained in such policies by the
Lessee or any other Person. Each liability policy (A) shall be primary
without right of contribution from any other insurance which is carried by
the Lessor with respect to its interest as such in the Property or Equipment
and (B) shall expressly provide that all of the provisions thereof, except
the limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured.
(g) Application of Insurance Proceeds for Loss or Taking. As
between the Lessor and the Lessee it is agreed that any insurance payments
received as the result of the occurrence of (i) any event of loss described
in paragraph (c) of Section 15 hereof with respect to any Parcel of Property
or Unit of Equipment, or (ii) any event of Taking described in Section 16
hereof shall be paid to an account of the Lessor and paid out, as set forth
in paragraph (c) of Section 15 hereof.
(h) Application of Insurance Proceeds for Other than Loss or
Taking. As between the Lessor and the Lessee, the insurance proceeds of any
property damage loss to any Property or Equipment, but, in the case of
Property, only if in excess of $1,000,000 will be held in an account of the
Lessor and applied in payment (or to reimburse the Lessee) for repairs or
replacement in accordance with the terms of paragraph (b) of Section 15
hereof. The Lessee shall be entitled (i) to receive the amounts so deposited
against certificates, invoices or bills
(xxxiii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
reasonably satisfactory to the Lessor, delivered to the Lessor from time to
time as such work or repair progresses, and (ii) to direct the investment of
the amounts so deposited as provided in paragraph (i) of this Section 10. To
the extent that the Lessor estimates that the cost of such work or repair
shall exceed the amount of proceeds, the Lessee shall make adequate
provisions for the payment thereof, which provisions shall be reasonably
acceptable to the Lessor. Any moneys remaining in the aforesaid account
after final payment for repairs has been made shall be paid to the Lessee.
To the extent that the insurance proceeds with respect to any property damage
loss to any Property are less than $1,000,000, such proceeds shall be paid
over to the Lessee by the Lessor for application to the cost of repairing or
replacing the Property.
(i) Investment. The Lessor, at the Lessee's instruction, may
invest the amounts deposited with the Lessor pursuant to paragraph (h) of
this Section 10 in any investments permitted under a Credit Agreement. Such
investments shall mature in such amounts and on such dates so as to provide
that amounts shall be available on the draw dates sufficient to pay the
amounts requested by and due to the Lessee. Any interest earned on
investments of such funds shall be paid to the Lessee. The Lessor shall not
be liable for any loss resulting from the liquidation of each and every such
investment and the Lessee shall bear the risk of such loss, if any.
(j) Application in Default. Any amount referred to in
paragraphs (f), (g) or (h) of this Section 10 which is payable to the Lessee
shall not be paid to the Lessee or, if it has been previously paid to the
Lessee, shall not be retained by the Lessee, if at the time of such payment
an Event of Default shall have occurred and be continuing. In such event,
all such amounts shall be paid to and held by the Lessor as security for the
obligations of the Lessee hereunder or, at the Lessor's option, applied by
the Lessor toward payment of any of such obligations of the Lessee at the
time due hereunder as the Lessor may elect. At such time as there shall not
be continuing any Event of Default, all such amounts at the time held by the
Lessor in excess of the amount, if any, which the Lessor shall have elected
to apply as above provided shall be paid to the Lessee.
(k) Certificates. On or before the execution of this Lease,
on the Effective Date with respect to any Parcel of Property or Unit of
Equipment, and annually on or within 15 days after the anniversary of the
date of this Lease, the Lessee will furnish to the Lessor certificates or
other evidence reasonably acceptable to the Lessor certifying that the
insurance then carried and maintained on each Parcel of Property or Unit of
Equipment complies with the terms hereof.
(xxxiv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(l) Use or Operation of Property and Equipment. The Lessee
covenants that it will not use or operate any Equipment or use or occupy any
Property or permit the use or occupancy of any Property or the use or
operation of any Equipment at a time when the insurance required by this
Section 10 is not in force with respect to such Property or Equipment.
(m) Prosecution of Claims. The Lessee may, at its cost and
expense, prosecute any claim against any insurer or contest any settlement
proposed by any insurer, and the Lessee may bring any such prosecution or
contest in the name of the Lessor, the Lessee, or both, and the Lessor will
join therein at the Lessee's request; provided, that the Lessee shall
indemnify the Lessor against any losses, costs or expenses (including
reasonable attorneys' fees) which the Lessor may incur in connection with
such prosecution or contest.
11. Indemnities.
The Lessee shall indemnify and hold harmless the Lessor, Xxxxxxx,
Xxxxxxx Xxxxx, Xxxxxxx Leasing, any Assignee, any successor or successors,
and any Affiliate of each of them, and their respective officers, directors,
incorporators, shareholders, partners (general and limited, including,
without limitation, the general and limited partners of the Lessor),
employees, agents and servants (each of the foregoing an "Indemnified
Person") from and against all liabilities (including, without limitation,
strict liability in tort), taxes (to the extent provided in paragraph (c) of
this Section 11), losses, obligations, claims (including, without limitation,
strict liability in tort), damages, penalties, causes of action, suits, costs
and expenses (including, without limitation, attorneys' and accountants' fees
and expenses) or judgments of any nature relating to or in any way arising
out of:
(a) The ordering, delivery, acquisition, construction, title
on acquisition, rejection, installation, possession, titling, retitling,
registration, reregistration, custody by the Lessee of title and registration
documents, ownership, use, non-use, misuse, financing, operation,
transportation, repair, control or disposition, including, without
limitation, disposition at the end of any Extended or Renewal Term, of any
Property or Equipment, or the past, present or future presence or the release
of hazardous substances on, under, to or from, or the generation on or
transportation of hazardous substances to or from, or the failure to report,
disclose or remediate the foregoing with respect to, any Property, leased or
to be leased hereunder, (i) except to the extent that such costs are included
in the Acquisition Cost of such Property or Equipment within the limitations
provided in paragraph (a)(v) of Section 3 hereof (or within any change of
such limitations agreed to in writing by the Lessor and the Lessee), (ii)
except for any general administrative expenses of the Lessor, and (iii)
except that this indemnity shall not increase any payment required to be made
by the Lessee pursuant to paragraphs (b)(iii)(A), (c)(iii)(A) or (d)(iii)(A)
of Section 12 of this Lease;
(xxxv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(b) The assertion of any claim or demand based upon any
infringement or alleged infringement of any patent or other right, by or in
respect of any Property or Equipment; provided, however, that upon request of
the Lessee, the Lessor will make available to the Lessee the Lessor's rights
under any similar indemnification arising from any manufacturer's or vendor's
warranties or undertakings with respect to any Property or Equipment;
(c) All U.S. Federal, state, county, municipal, foreign or
other fees and taxes of whatsoever nature, including but not limited to
license, qualification, franchise, sales, use, gross income, gross receipts,
ad valorem, business, personal property, real estate, value added, excise,
motor vehicle, occupation fees and stamp or other taxes or tolls of any
nature whatsoever, and penalties and interest thereon, whether assessed,
levied against or payable by the Lessor or otherwise, with respect to any
Property or Equipment or the acquisition, pur-chase, sale, rental, use,
operation, control, ownership or disposition of any Property or Equipment
(including, without limitation, any claim by any Governmental Authority for
transfer tax, transfer gains tax, mortgage recording tax, filing or other
similar taxes or fees in connection with the acquisition of any Property by
the Lessor or otherwise in connection with this Lease) or measured in any way
by the value thereof or by the business of, investment in, or ownership by
the Lessor with respect thereto; provided, that this indemnity shall not
apply to (i) Federal net income taxes, (ii) to state and local taxes based on
or measured by net income or imposed in lieu of a net income tax, including,
without limitation, any such franchise tax, minimum and alternative minimum
tax measured by items of tax preference, and any such similar tax based on
doing business, capital, receipts, or net worth (hereinafter an "Income
Tax"), except that such indemnity shall apply to Income Taxes (A) to the
extent imposed by reason in whole or in part of (1) a relation or asserted
relation of any such taxing jurisdiction to the Property or Equipment or to
the transactions contemplated herein or (2) the actual or deemed use by any
Person of the Property or Equipment in such taxing jurisdiction, other than
in the case of both clauses (1) and (2), taxes to the extent such taxes would
have been imposed by a taxing jurisdiction because of a relationship between
the Lessor and such taxing jurisdiction without regard to the circumstances
described in clauses (1) and (2), and (B) to the extent imposed by Delaware,
New York or any State in which Property or Equipment is located as a result
of the inability to claim, disallowance or other loss by Virtual Funding,
Limited Partnership of deductions customarily allowed in computing net income
(e.g., interest expense, financing, administrative, ordinary operating
expenses and other fees and expenses, but not depreciation as the tax owner
of the Property or Equipment), (iii) taxes imposed because the Indemnified
Person is not a United States person within the meaning of section 7701(a)
(30) of the Code, and (iv) taxes arising upon a disposition by the Lessor in
violation of its obligations set forth in the first sentence of Section 21(a)
hereof or upon any assignment of the type set forth in the second sentence of
Section 21(a) hereof except for any such assignment contemplated by a Credit
Agreement; or
(d) Any violation, or alleged violation by the Lessee, of this
Lease or of any contracts or agreements to which the Lessee is a party or by
which it is bound or of any laws,
(xxxvi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
rules, regulations, orders, writs, injunctions, decrees, consents, approvals,
exemptions, authorizations, licenses and withholdings of objection, of any
governmental or public body or authority and all other Legal Requirements.
The indemnification obligations set forth in this Section with
respect to the parties herein named shall include, without limitation, all
liabilities, taxes, losses, obligations, claims, damages, penalties, causes
of action, suits, and to the extent reasonably incurred, costs and expenses
(including, without limitation, attorneys', environmental consultants, and
accountants' fees and expenses) or judgments of any nature relating to or in
any way arising out of Hazardous Substances (as defined in Exhibit J to the
Agreement for Lease) at, on, under, and/or migrating from or toward the North
Shoreline Property or affecting the North Shoreline Property in any way or
manner whatsoever and/or the noncompliance with or investigation or other
action pursuant to any applicable Environmental Regulations (as defined in
Exhibit J to the Agreement for Lease) by the Lessee or any other Person or
with respect to the North Shoreline Property, whether or not disclosed in the
Environmental Reports (as defined in Exhibit J to the Agreement for Lease).
The Lessee shall forthwith upon demand reimburse any Indemnified
Person for any sum or sums expended with respect to any of the foregoing or,
upon request from any Indemnified Person, shall pay such amounts directly;
provided, however, the foregoing obligations shall not qualify the Lessee's
rights under Section 28 with respect to the payment of taxes. Any payment
made to or on behalf of any Indemnified Person pursuant to this Section 11
shall be increased to such amount as will, after taking into account all
taxes im-posed with respect to the accrual or receipt of such payment (as the
same may be increased pursuant to this sentence), equal the amount of the
payment, reduced by the amount of any savings in such taxes actually realized
by the Indemnified Person as a result of the payment or accrual of the
amounts in respect of which the payment to or on behalf of the Indemnified
Person hereunder is made. To the extent that the Lessee in fact indemnifies
any Indemnified Person under the indemnity provisions of this Lease, the
Lessee shall be subrogated to such Indemnified Person's rights in the
affected transaction and shall have a right to determine the settlement of
claims therein.
The indemnities contained in this Section 11 shall not be affected
by any termination of this Lease as a whole or in respect of any Parcel of
Property or Unit of Equipment leased hereunder or any failure or refusal of
the Lessee to accept any Property or Equipment acquired or ordered pursuant
to the terms hereof.
Notwithstanding any provisions of this Section 11 to the contrary,
the Lessee shall not indemnify and hold harmless any Indemnified Person
against any claims and liabilities, including, without limitation, claims for
taxes described in paragraph (c), arising from the gross negligence or
willful misconduct of such Indemnified Person.
(xxxvii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
In the event the Lessor shall be a party defendant to any
litigation arising out of this Lease and the transactions related thereto for
which the Lessee has given indemnification under this Section 11, the Lessor
shall give prompt notice thereof to the Lessee by telephone and in writing.
No failure or delay of the Lessor to give the notice required by this Section
11 shall excuse the obligation of the Lessee to indemnify the Lessor with
respect to such litigation except to the extent that any increase in
liability is a direct result of such failure or delay.
In the event any claim, action, proceeding or suit is brought
against an Indemnified Person with respect to which the Lessee would be
required to indemnify such Indemnified Person, the Lessee shall have the
right to assume the defense thereof, including the employment at its expense
of counsel; provided that the Lessee shall not have such right, to the extent
that such Indemnified Person shall deliver to the Lessee a written notice
waiving the benefits of the indemnification of such Indemnified Person
provided by this Section 11 in connection with such claim, action, proceeding
or suit. Notwithstanding the foregoing, if (i) any criminal proceeding is
brought against an Indemnified Person who is an individual, (ii) the action
threatens to restrain or adversely affect the conduct of the business of the
Indemnified Person, but not the business of the Lessor's ownership of the
Property or Equipment under this Lease, (iii) the claim, action, proceeding
or suit seeks damages of more than $5,000,000, or (iv) independent counsel to
an Indemnified Person shall conclude that there may be defenses available to
the Indemnified Person which are different from, or additional to, and may
conflict with those available to the Lessee, the Lessee shall not have the
right to assume the defense of any such action on behalf of the Indemnified
Person if such Indemnified Person chooses to defend such action, and all
reasonable costs, expenses and attorney's fees incurred by the Indemnified
Person in defending such action shall be borne by the Lessee.
Notwithstanding the assumption of its defense by the Lessee pursuant to this
paragraph, any Indemnified Person shall have the right to employ separate
counsel and to participate in its defense, but the fees and expenses of such
counsel shall be borne by the Indemnified Person. In addition, the Lessee
will not be liable for any settlement of any claim, action, proceeding or
suit unless the Lessee has consented thereto in writing. Any decision by an
Indemnified Person to employ its own counsel rather than counsel selected by
the Lessee (whether or not at the Lessee's expense) shall in no way affect
any rights of such Indemnified Person otherwise arising under this Section 11.
(xxxviii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
12. Lessee's Right to Terminate.
(a) So long as no Event of Default has occurred and is
continuing and with respect to any Parcel of Property, the Lessee shall have
the right, upon twenty (20) days' notice to the Lessor during the first three
months of the Initial Term, and upon ninety (90) days' notice to the Lessor
thereafter, to terminate the lease of any Parcel of Property or any or all
Units of Equipment on any Basic Rent Payment Date, by arranging, at its own
cost and expense, for the sale of such Property or Equipment in an arms'
length transaction on the date of termination and the receipt by the Lessor
of the proceeds of such sale; provided that if such sale does not occur, this
Lease shall not terminate with respect to such Property or Equipment. At the
time a Parcel of Property or Unit of Equipment is sold pursuant to this
Section 12, such Parcel or Unit shall not be undergoing any additions or
alterations, shall be in compliance with all Contractual Requirements and
Legal Requirements and shall not be subject to any Permitted Contest or any
Lien, unless the proceeds of such sale will be equal to or greater than the
Adjusted Acquisition Cost of such Parcel of Property or Unit of Equipment
notwithstanding such ongoing additions or alterations, lack of compliance
with Contractual Requirements and Legal Requirements, Permitted Contest or
Lien, or unless otherwise agreed to in writing by the Lessor with respect to
the sale of such Property or Equipment. As a condition to the sale under
this Section of any Parcel of Property subject to a Ground Lease, the
Lessor's rights under such Ground Lease shall be assigned to the purchaser.
The sale of a Parcel of Property shall include all Equipment included in the
Unit Leasing Record or AFL Unit Leasing Record relating to such Parcel. For
purposes of this Section 12 the proceeds of sale in such case shall mean the
aggregate proceeds from the sale of such Parcel and Equipment and the
"Adjusted Acquisition Cost" shall mean the aggregate of the Adjusted
Acquisition Costs of such Parcel and Equipment. For purposes of paragraphs
(b) (c) and (d) of this Section 12, Property shall include the aforementioned
Equipment included in the same Unit Leasing Record or AFL Unit Leasing Record.
(b) In the event the Lessee exercises its right to terminate
the lease of any Equipment pursuant to this Section 12 on any Basic Rent
Payment Date of the Initial Term with respect to such Equipment or in the
event a termination of the lease of any Equipment occurs pursuant to Section
14 hereof and the Basic Rent Payment Date on which such termination occurs is
on or before the last month of the Initial Term of such Equipment and the
Lessee chooses to effect a sale pursuant to this Section:
(i) if the proceeds of sale are greater than the Adjusted
Acquisition Cost of the Equipment sold, the Lessor shall pay
to the Lessee the amount by which such proceeds exceed such
Adjusted Acquisition Cost;
(ii) if the proceeds of sale are equal to or less than
the Adjusted Acquisition Cost of the Equipment sold, but
greater than or equal to 15%
(xxxix)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
of the Adjusted Acquisition Cost of such Equipment, the
Lessee shall pay to the Lessor an amount equal to (A) such
Adjusted Acquisition Cost less (B) the proceeds of such
sale; and
(iii) if the proceeds of sale are less than 15% of the
Adjusted Acquisition Cost of the Equipment sold, the Lessee
shall pay to the Lessor an amount equal to the sum of (A)
85% of such Adjusted Acquisition Cost and (B) the amount by
which the residual value of such Equipment has been reduced
by wear and tear in excess of that attributable to normal
use (the amount of such excess wear and tear to be such
amount as the Lessor and the Lessee agree, or if no agreement
is reached, the amount determined pursuant to the Appraisal
Procedure).
(c) In the event the Lessee exercises its right to terminate
the lease of any Property pursuant to this Section 12 on any Basic Rent
Payment Date of the Initial Term with respect to such Property or in the
event a termination of the lease of any Property occurs pursuant to Section
14 hereof and the Basic Rent Payment Date on which such termination occurs is
on or before the last month of the Initial Term of such Property and the
Lessee chooses to effect a sale pursuant to this Section:
(i) If the proceeds of sale are greater than the Adjusted
Acquisition Cost of the Property sold, the Lessor shall pay
to the Lessee the amount by which such proceeds exceed such
Adjusted Acquisition Cost;
(ii) if the proceeds of sale are equal to or less than the
Adjusted Acquisition Cost of the Property sold, but greater
than or equal to 20% of the Adjusted Acquisition Cost of
such Property, the Lessee shall pay to the Lessor an amount
equal to (A) such Adjusted Acquisition Cost less (B) the
proceeds of such sale; and
(iii) if the proceeds of sale are less than 20% of the
Adjusted Acquisition Cost of the Property sold, the Lessee
shall pay to the Lessor an amount equal to the sum of (A)
80% of such Adjusted Acquisition Cost and (B) the amount by
which the residual value of such Property has been reduced
by wear and tear in excess of that attributable to normal
use (the amount of such excess wear and tear to be such
amount as the Lessor and the Lessee agree, or if no agreement
is reached, the amount determined pursuant to the Appraisal
Procedure).
(d) In the event the Lessee exercises its right to terminate the
lease of any Property or Equipment pursuant to this Section 12 on any Basic
Rent Payment Date during the
(xli)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
Extended Term or Renewal Term with respect to such Property or Equipment or a
sale of Property or Equipment occurs during the Extended Term or Renewal Term
as the result of the Lessee's election under paragraph (b)(i) of Section 14
hereof:
(i) if the proceeds of sale are greater than the Adjusted
Acquisition Cost of the Property or Equipment sold, the
Lessor shall pay to the Lessee the amount by which such
proceeds exceed such Adjusted Acquisition Cost;
(ii) if the proceeds of sale are equal to or less than
the Adjusted Acquisition Cost of the Property or Equipment
sold, but greater than or equal to 13% of such Adjusted
Acquisition Cost, the Lessee shall pay to the Lessor an
amount equal to (A) such Adjusted Acquisition Cost less (B)
the proceeds of such sale; and
(iii) if the proceeds of sale are less than 13% of the
Adjusted Acquisition Cost, the Lessee shall pay to the
Lessor an amount equal to the sum of (A) 87% of such
Adjusted Acquisition Cost and (B) the amount by which the
residual value of such Property or Equipment has been
reduced by wear and tear in excess of that attributable
to normal use (the amount of such excess wear and tear
to be such amount as the Lessor and the Lessee agree, or
if no agreement is reached, the amount determined pursuant
to the Appraisal Procedure).
(e) All payments and credits referred to in paragraphs (b),
(c) and (d) above shall be made on the termination date of any Property or
Equipment pursuant to this Section 12, and the parties shall account to each
other for such payments and credits, and the Lessee shall pay to the Lessor
all Basic Rent payable, the Variable Component of Basic Rent accrued with
respect to such Property or Equipment and any Additional Rent and other
amounts owing hereunder. Upon receipt by the Lessor of the proceeds of sale
and all other amounts then due and owing hereunder, the Lessor shall transfer
title to such Property or Equipment to the purchaser at the sale designated
by the Lessee. The "proceeds of sale" referred to in paragraphs (b), (c) and
(d) shall mean the proceeds of sale without reduction for any amounts paid by
the Lessee. In the event of a sale pursuant to this Section 12, neither the
Lessee or any Affiliate of the Lessee shall purchase the Property or
Equipment sold.
(f) In its notice given pursuant to paragraph (a) of this
Section 12, the Lessee shall advise the Lessor if the sale provided for in
such notice will result in the applicability of paragraph (b)(iii) of Xxxxxxx
00, xxxxxxxxx (x)(xxx) of Section 12 or paragraph (d)(iii) of Section 12
hereof. If the Lessee advises the Lessor that any such Section will be
applicable, the Lessor may arrange for such sale to be made to a purchaser
designated by the Lessor, if such purchaser
(xli)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
will pay an amount sufficient to render paragraph (b)(iii) of Xxxxxxx 00,
xxxxxxxxx (x)(xxx) of Section 12 or paragraph (d)(iii) of Section 12 hereof
inapplicable. Unless the Lessor shall arrange for such sale and shall give
the Lessee notice thereof within thirty (30) days of the Lessee's notice
during the first three months of the Initial Term or within thirty (30) days
of the Lessor's receipt of the Lessee's notice at any other time, the Lessee
may proceed with the sale to a purchaser designated by it. Within thirty
(30) days of the Lessee's receipt of the Lessor's notice provided for in the
preceding sentence, the Lessee may arrange for such sale to be made to
another purchaser designated by it, if such purchaser shall pay an amount
sufficient to render paragraph (b)(iii) of Xxxxxxx 00, xxxxxxxxx (x)(xxx) of
Section 12 or paragraph (d)(iii) of Section 12 hereof inapplicable.
(g) If the Lessor and the Lessee shall not agree on the amount
of "wear and tear in excess of that attributable to normal use", the
Appraisal Procedure shall include as "wear and tear in excess of that
attributable to normal use", among other things, all reductions in the value
of the Property or the Equipment which result from actions of the Lessee,
whether or not permitted by the terms of the Agreement for Lease or this
Lease, in amending, modifying or supplementing the Design Development
Drawings (as defined in the Agreement for Lease), the Unit Plans (as defined
in the Agreement for Lease), the Unit Budget (as defined in the Agreement for
Lease) or the Unit FF&E Specifications (as defined in the Agreement for
Lease); which result from any encroachment by the Property or overhang of the
Property on any easement or right-of-way on the land of others and any
similar actions by Lessee as described in Section 16(c) during the period the
Property was subject to the Agreement for Lease or this Lease; which result
from any improvement, addition or alteration to the Property or Equipment, or
because Equipment has not been installed in accordance with the
specifications and requirements of the vendor thereof; or which result from
the Unit Improvements (as defined in the Agreement for Lease) not being built
in accordance with the Unit Plans (as defined in the Agreement for Lease) or
the Design Development Drawings (as defined in the Agreement for Lease); or,
with respect to the North Shoreline Property, which result from a change of
use thereof.
13. Lessee's Rights of Purchase and Renewal.
(a) So long as no Event of Default has occurred and is
continuing, the Lessee shall have the right, upon twenty (20) days' written
notice to the Lessor during the first three months of the Initial Term and
upon ninety (90) days' written notice to the Lessor at any other time, to
purchase any Parcel of Property or Unit of Equipment on any Basic Rent
Payment Date for an amount equal to its Adjusted Acquisition Cost. In
connection with any purchase under this paragraph (a), on the Basic Rent
Payment Date upon which such purchase occurs, the Lessee shall pay to the
Lessor the purchase price, all Basic Rent payable, the Variable Component of
Basic Rent accrued with respect to such Property or Equipment and any
Additional Rent and other amounts owing hereunder. Upon payment of such
amounts, the Lessor shall transfer the Parcel of Property to the Lessee or
any Person designated by the Lessee.
(xlii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(b) So long as no Event of Default has occurred and is
continuing, the Lessee shall have the right, upon ninety (90) days' written
notice to the Lessor, to renew the lease of any Parcel of Property or Unit of
Equipment for a term (the "Renewal Term") equal to the number of calendar
months set forth opposite such Parcel of Property or type of Equipment under
the heading "Renewal Term" in Exhibit A hereto, commencing on the first day
of the calendar month following the last day of the Lease Term thereof at the
fair market rental, except that, in the case of the North Shoreline Property,
the fair market rental shall be an amount equal to 0.125% per month of the
Acquisition Cost of such Property.
(c) Except to the extent noted above, the fair market rental
value of any Parcel of Property or Unit of Equipment for purposes of
paragraph (b) of this Section 13 shall be as agreed by the Lessor and the
Lessee or, if they are unable to agree, pursuant to the Appraisal Procedure.
14. Lessor's Right to Terminate.
(a) The Lessor shall have the right upon written notice to the
Lessee to terminate the lease of any or all Property or Equipment as of a
Basic Rent Payment Date stipulated in such notice if (i) at any time, for any
reason (other than an Event of Default by the Lessor under a Credit Agreement
(as therein defined) which has not been caused by or resulted from an Event
of Default under this Lease or from a breach by the Lessee of its obligations
under any agreement or document executed and delivered in connection with
this Lease), Commercial Paper cannot be issued by the Lessor upon terms
reasonably acceptable to the Lessor, the Lessor cannot arrange for bank
borrowings to finance or refinance the purchase of such Property or Equipment
upon terms reasonably acceptable to the Lessor, and the Lessor may no longer
make or continue borrowings under a Credit Agreement sufficient to finance or
refinance such purchase, (ii) at any time, for any reason (other than an
Event of Default by the Lessor under a Credit Agreement (as therein defined)
which has not been caused by or resulted from an Event of Default under this
Lease or from a breach by the Lessee of its obligations under any agreement
or document executed and delivered in connection with this Lease), a limited
partner or partners of the Lessor cannot arrange for borrowings from the bank
or banks acting as lender under a Credit Agreement in an amount equal to such
limited partners' limited partnership interest or interests in the Lessor or
(iii) such bank or banks which shall act as lender to a limited partner or
partners of the Lessor shall make a material change in the terms of any such
lending arrangement a condition precedent to the extension of such lending
arrangement without a corresponding change being effected under the Credit
Agreement to which such lender is a party.
(xliii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(b) In the event of a termination with respect to any or all
Property or Equipment pursuant to paragraph (a) of this Section 14, the
Lessee shall be required, at its option, either (i) to arrange for such
Property or Equipment to be sold under the terms and subject to the
conditions of Section 12 above and with the consequences therein provided,
except that such sale must occur on the Basic Rent Payment Date stipulated in
the written notice contemplated in paragraph (a) of this Section 14, or (ii)
to purchase, on the Basic Rent Payment Date stipulated in the written notice
contemplated by paragraph (a) of this Section 14, such Property or Equipment
for cash at its Adjusted Acquisition Cost. In connection with any purchase
or sale under this paragraph, on the Basic Rent Payment Date upon which such
purchase or sale occurs, the Lessee shall pay to the Lessor, in addition to
any purchase price payable, all Basic Rent payable, the Variable Component of
Basic Rent accrued with respect to such Property or Equipment and any
Additional Rent and other amounts owing hereunder.
15. Loss of or Damage to Property or Equipment.
(a) The Lessee hereby assumes all risk of loss of or damage to
Property or Equipment, however caused. No loss of or damage to any Property
or Equipment shall im-pair any obligation of the Lessee under this Lease,
which shall continue in full force and effect with respect to any lost or
damaged Property or Equipment. The Lessee hereby expressly waives the
benefits of Sections 1932 and 1933 of the California Civil Code.
(b) In the event of damage of any kind whatsoever to any
Property or Equipment (unless paragraph (c) of this Section shall be
applicable thereto) the Lessee, at its own cost and expense, shall place the
same in good operating order, repair, condition and appearance. The Lessee's
right to any proceeds paid under any insurance policy or policies required
under Section 10 of this Lease with respect to any such damage to any
Property or Equipment which has been so placed by the Lessee in good
operating order, repair, condition and appearance is governed by paragraph
(h) of Section 10 hereof.
(xliv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(c) If any Property or Equipment is lost, stolen, destroyed,
seized, confiscated, rendered unfit for use or damaged to such an extent (in
the reasonable judgment of the Lessee) that it is not practical for the
Lessee to repair and restore such Property or Equipment, or if the use
thereof by the Lessee in the ordinary course of business is prevented by the
act of any third Person or Persons or governmental instrumentality for a
period exceeding ninety (90) days, or if such Property or Equipment is
attached (other than on a claim against the Lessor as to which the Lessee is
not obligated to indemnify the Lessor) and the attachment is not removed
within ninety (90) days, or if a Taking as described in Section 16 shall
occur, then in any such event, (i) the Lessee shall promptly notify the
Lessor in writing of such event, (ii) on the Basic Rent Payment Date
following such event the Lessee shall pay to the Lessor an amount equal to
the Adjusted Acquisition Cost of such Property or Equipment, (iii) the Lease
Term or Renewal Term of such Property or Equipment shall con-tinue until the
Basic Rent Payment Date on which the Lessor receives payment from the Lessee
of the amount payable pursuant to this paragraph (c) and of Basic Rent
payable, the Variable Component of Basic Rent accrued with respect to such
Property or Equipment and any Additional Rent and other amounts owing
hereunder, and shall thereupon terminate and (iv) the Lessor shall on such
Basic Rent Payment Date transfer title to such Property or Equipment to the
Lessee, and the Lessee shall be subrogated to the Lessor's rights resulting
from such event. Insurance and condemnation proceeds, if any, received by
the Lessor in excess of the Adjusted Acquisition Cost of the affected
Property or Equipment, so long as no Event of Default has occurred and is
continuing, shall be paid by the Lessor to the Lessee upon the payment by the
Lessee of all amounts referred to in the preceding sentence or, if an Event
of Default has occurred and is continuing, shall be applied to amounts owing
by the Lessee under this Lease, and any excess shall be paid to the Lessee.
16. Condemnation and Dedication of Property; Easements.
(xlv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(a) If the use, occupancy or title to all or a substantial
portion of a Parcel of Property is taken, requisitioned or sold in, by or on
account of actual or threatened eminent domain proceedings or other action by
any person or authority having the power of eminent domain (such events
collectively referred to as a "Taking"), then the Lease Term or Renewal Term
of such Parcel of Property shall terminate as provided in paragraph (c) of
Section 15 hereof. Upon receipt of proceeds from any award or sale made in
connection with such Taking, if the Lessee has paid all amounts owing under
paragraph (c) of Section 15 hereof, so long as no Event of Default has
occurred and is continuing, the Lessor shall remit to the Lessee the net
amount of such proceeds remaining after reimbursement for all costs and
expenses (including, without limitation, reasonable attorneys' fees) incurred
by the Lessor in connection with the negotiation and settlement of any
proceedings related to such Taking, or if an Event of Default has occurred
and is continuing, such proceeds shall be applied to amounts owing by the
Lessee under this Lease, and any excess shall be paid to the Lessee. A
Taking shall be deemed substantial if the remainder of the Parcel of Property
is unusable for the Lessee's ordinary business purposes. Lessee may
conclusively establish that a Taking is "substantial" by so notifying the
Lessor and any Assignee. The Lessee hereby expressly waives the benefits of
Section 1265.130 of the California Code of Civil Procedure.
(b) If less than a substantial portion of a Parcel of Property
is subject to a Taking, then this Lease shall continue in effect as to the
portion of the Parcel not taken and any net proceeds, so long as no Event of
Default has occurred and is continuing, shall be paid to the Lessee; provided
that if as a result of all such partial Takings the aggregate proceeds
received are greater than $2,000,000, then the proceeds shall be paid to, or
retained by, the Lessor and any portion of such proceeds remaining after
application to amounts then due and owing to the Lessor shall be applied to
reduce the Adjusted Acquisition Cost of the affected Parcel or Parcels. Such
reduction shall be evidenced by a revised Unit Leasing Record or AFL Unit
Leasing Record, as the case may be.
(c) So long as no Event of Default hereunder has occurred and
is continuing, the Lessee shall have the right (i) to xxxxx xxxxx easements
for the benefit of any Parcel of Property, (ii) to voluntarily dedicate or
convey, as required, portions of any Parcel of Property for road, highway and
other public purposes and (iii) to voluntarily execute petitions to have any
Parcel of Property or a portion thereof annexed to any municipality or
included within any utility, highway or other improvement or service
district, provided that the Lessee promptly and diligently performs, at its
sole cost and expense, restoration repairs, or other work required. If any
monetary consideration is paid for any such easement or dedication, the
Lessee shall be entitled to receive or retain such consideration; provided
that if the aggregate consideration received for all such easements or
dedications is greater than $2,000,000, then such consideration shall be paid
to the Lessor and any portion of such consideration remaining after
application to amounts then due and owing to Lessor shall be applied to
reduce the Adjusted Acquisition Cost
(xlvi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
of the affected Parcel or Parcels. Such reduction shall be evidenced by a
revised Unit Leasing Record or AFL Unit Leasing Record, as the case may be.
The Lessee shall exercise the above power to grant without the
joinder of the Lessor, except that the Lessor will cooperate, without
unreasonable delay and at the Lessee's expense, as necessary and join in the
execution of any appropriate instrument or shall execute any separate
instrument as necessary. As a condition precedent to the Lessee's exercise
of any of the Lessee's powers under this Section 16, the Lessee shall provide
to the Lessor a certificate of the Lessee stating that such action will not
materially adversely affect either the fair market value of such Property or
the use of such Property for its intended purpose, will not affect the
Lessor's ability to exercise its rights and remedies under this Lease and
that the Lessee undertakes to remain obligated under this Lease to the same
extent as if the Lessee had not exercised its powers under this Section 16
and the Lessee will perform all obligations under such instrument and shall
prepare all required documents and provide all other instruments and
certificates as the Lessor may reasonably request.
Anything to the contrary provided herein notwithstanding, the
Lessee shall have the right on behalf of the Lessor, in connection with the
development and occupancy of the North Shoreline Property, to convey a
portion of the North Shoreline Property to the appropriate Governmental
Authority in connection with the relocation of the direct off-ramp to
northbound North Shoreline Boulevard from Route 101. The Lessor shall
cooperate, without unreasonable delay and at the Lessee's expense, in
connection with such conveyance and shall join in the execution of any
appropriate instruments or shall execute any separate instruments as
necessary.
17. Surrender of Property or Equipment.
Subject to the provisions of Sections 12, 13, 14, 15, 19, 20 and
29 hereof, upon termination of the lease of any Property or Equipment
hereunder, the Lessee shall surrender such Property or Equipment to the
Lessor, except for such Removable property as the Lessee shall elect to
remove or retain. Equipment shall be surrendered by delivering the same to
the Lessor at such location as the Lessor and the Lessee may agree and, if
they are unable to agree, at such location as the Lessor may reasonably
direct. Such Property or Equipment shall be surrendered in the condition
required by paragraph (b) of Section 9 of this Lease. Any cost of removal and
delivery of Equipment to the Lessor shall be paid by the Lessee.
(xlvii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
18. Events of Default.
Any of the following events of default shall constitute an "Event
of Default" and shall give rise to the rights on the part of the Lessor
described in Section 19 hereof:
(a) Failure of the Lessee to pay amounts due to the Lessor at
the time of any scheduled sale of any Parcel of Property or Unit of Equipment
hereunder, failure of the Lessee to pay Basic Rent for more than five (5)
days after such payment is due pursuant to Section 7 hereof, or failure of
the Lessee to pay any other amount payable by the Lessee hereunder and the
continuance of such failure for more than ten (10) days after written notice
of said failure by the Lessor to Lessee; or
(b) Failure to comply with Section 14(b) hereof or to maintain
the insurance required by Section 10 hereof, or default in the performance of
the covenant contained in paragraph (l) of Section 10 hereof; or
(c) Default in the performance of any other obligation or
covenant of the Lessee pursuant to this Lease or any Consent and the
continuance of such default for thirty (30) days after written notice to the
Lessee by the Lessor or any Assignee; provided that such event shall not be
an Event of Default if (i) such default is of a nature that it cannot be
completely remedied with reasonable and diligent efforts within such thirty
(30) day period, but is capable of being remedied within an additional ninety
(90) days and (ii) the Lessee shall have instituted and thereafter diligently
and continuously prosecuted to completion all steps necessary to remedy such
default and such default is in fact remedied within an additional ninety (90)
days and (iii) the continuance of such default will not place the Lessor in
any danger of civil liability for which the Lessor is not adequately
indemnified (the Lessee's obligations under Section 11 of this Lease shall be
deemed to be adequate indemnification if no other Event of Default exists
hereunder and if such civil liability is reasonably likely to be less then
$5,000,000) or subject the Lessor to any criminal liability as a result of
such default; or
(d) The entry of a decree or order for relief in respect of
the Lessee or the Guarantor by a court having jurisdiction in the premises in
an involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency
or other similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Lessee or the
Guarantor or of any substantial part of the Lessee's or the Guarantor's
property, or ordering the winding up or liquidation of the Lessee's or the
Guarantor's affairs, and the continuance of any such decree or order unstayed
and in effect for a period of sixty (60) consecutive days; or
(xlviii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(e) The discontinuance of the Lessee's or the Guarantor's
business operations, the Lessee's or the Guarantor's general inability to pay
their debts as they become due or the Lessee's or the Guarantor's admission,
each as to itself, of a general inability to pay its debts as they come due
or of bankruptcy, or the commencement by the Lessee or the Guarantor of a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency
or other similar law, or the consent by the Lessee or the Guarantor to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Lessee or
the Guarantor or of any substantial part of the Lessee's or the Guarantor's
property, or the making by the Lessee or the Guarantor of an assignment for
the benefit of creditors, or the failure of the Lessee or the Guarantor
generally to pay their debts as such debts become due, or the taking of
corporate action by the Lessee or the Guarantor in furtherance of any such
action; or
(f) A default or event of default, the effect of which is to
permit the holder or holders of any instrument evidencing indebtedness
(including, without limitation, lease obligations which are shown on the
balance sheet of the Lessee or the Guarantor or which relate to
sale-leaseback transactions), or a trustee or agent on behalf of such holder
or holders, to cause the indebtedness evidenced by such instrument to become
due prior to its stated maturity shall occur under the provisions of any
instrument evidencing indebtedness in excess of $20,000,000 of the Lessee or
the Guarantor (or under the provisions of any agreement pursuant to which
such instrument was issued) or any obligation of the Lessee or the Guarantor
for the payment of such indebtedness shall become or be declared to be due
and payable prior to its stated maturity and shall not be paid when due; or
(g) Any representation or warranty made by the Lessee in this
Lease, any Consent or any document contemplated hereby or thereby proves to
be false or inaccurate in any material respect; or
(h) Final judgment for the payment of money in excess of
$10,000,000 shall be rendered against the Lessee or the Guarantor by any U.S.
Federal or state court and the same shall remain undischarged for a period of
thirty (30) days during which execution of such judgment shall not be
effectively stayed; or
(i) Any representation or warranty made by the Guarantor in
the Guarantee, any Consent or any document contemplated hereby or thereby
proves to be false or inaccurate in any material respect; or
(j) The Guarantor defaults in any obligation under the
Guarantee which default continues after the period of any grace period
granted to the Lessee hereunder in respect of such guaranteed obligation, or
the Guarantor defaults in its obligations set forth in Section 11
(xlix)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
of the Guarantee and such default continues for twenty (20) Business Days
after notice thereof by Owner to Guarantor; or
(k) An Event of Default (as defined in the Agreement for Lease)
shall occur under the Agreement for Lease.
19. Rights upon Default.
Upon the occurrence and continuation of any Event of Default the
Lessor may do any one or more of the following:
(a) Terminate the lease of any or all Property or Equipment
leased hereunder;
(b) To the extent permitted by applicable law, whether or not
the lease of any Property or Equipment is terminated, take immediate
possession of and remove any or all Equipment and other equipment or property
of the Lessor in the possession of the Lessee, wherever situated, and for
such purpose, enter upon any premises without liability to the Lessee for so
doing;
(c) Whether or not any action has been taken under paragraph
(a) or (b) above, sell the Lessor's and/or Lessee's interest in any Property
or Equipment (with or without the concurrence or request of the Lessee) at
public or private sale (judicially or non-judicially), pursuant to such
notices and procedures as may be required by law, to the extent such
requirements are not effectively waived by the Lessee hereunder;
(d) Hold, use, occupy, operate, remove, lease or keep idle any
or all Property or Equipment as the Lessor in its sole discretion may
determine, without any duty to account to the Lessee with respect to any such
action or inaction or for any proceeds thereof except as expressly set forth
herein;
(e) Exercise any other right or remedy which may be available
under applicable law and in general proceed by appropriate judicial
proceedings, either at law or in equity, to enforce the terms hereof or to
recover damages for the breach hereof; and
(f) Continue this Lease in full force and effect and collect
rent when due, and/or enter the Property and assemble the Equipment and relet
for the Lessee's account, with the Lessee liable for all costs incurred by
the Lessor in reletting the same.
Suit or suits for the recovery of any default in the payment of
any sum due hereunder or for damages may be brought by the Lessor from time
to time at the Lessor's election, and nothing herein contained shall be
deemed to require the Lessor to await the date
(l)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
whereon this Lease or the term hereof would have expired by limitation had
there been no such default by the Lessee or no such termination or
cancellation.
The receipt of any payments under this Lease by the Lessor with
knowledge of any breach of this Lease by the Lessee or of any default by the
Lessee in the performance of any of the terms, covenants or conditions of
this Lease, shall not be deemed to be a waiver of any provision of this Lease.
No receipt of moneys by the Lessor from the Lessee after the
termination or cancellation hereof in any lawful manner shall reinstate,
continue or extend the Lease Term or any Renewal Term, or affect any notice
theretofore given to the Lessee, or operate as a waiver of the right of the
Lessor to enforce the payment of Basic Rent or Additional Rent or other
charges payable hereunder, or operate as a waiver of the right of the Lessor
to recover possession of any Unit of Equipment or Parcel of Property by
proper suit, action, proceedings or remedy; it being agreed that, after the
service of notice to terminate or cancel this Lease, and the expiration of
the time therein specified, if the default has not been cured in the
meantime, or after the commencement of any suit, action or summary
proceedings or of any other remedy, or after a final order, warrant or
judgment for the possession of any Unit of Equipment or Parcel of Property,
the Lessor may demand, receive and collect any moneys payable hereunder,
without in any manner affecting such notice, proceedings, suit, action,
order, warrant or judgment; and any and all such moneys so collected shall be
deemed to be payments on account for the use and operation of any Unit of
Equipment or the use, operation and occupation of any Parcel of Property, or
at the election of the Lessor, on account of the Lessee's liability
hereunder. Acceptance of the keys to any Parcel of Property, or any similar
act, by the Lessor, or any agent or employee of the Lessor, during the term
hereof, shall not be deemed to be an acceptance of a surrender of any Parcel
of Property unless the Lessor shall consent thereto in writing.
After any Event of Default, the Lessee shall be liable for, and
the Lessor may recover from the Lessee, (i) all Basic Rent accrued to the
date of payment, (ii) any Additional Rent owing with respect to all Property
or Equipment leased by the Lessee, (iii) all amounts payable
pursuant to Sections 11, 25 and 27 hereof and (iv) all losses, damages, costs
and expenses (including, without limitation, attorneys' fees and expenses,
commissions, filing fees and sales or transfer taxes) sustained by the Lessor
by reason of such Event of Default and the exercise of the Lessor's remedies
with respect thereto, including, in the event of a sale by the Lessor of any
Property or Equipment pursuant to this Section 19, all costs and expenses
associated with such sale. The amounts payable in clauses (i) through (iv)
above are hereinafter sometimes referred to as the "Accrued Default
Obligations". Accrued Default Obligations, as used in this paragraph, shall
not include any damages for loss of opportunity or profits arising from the
prospective use, operation and occupancy by parties other than the Lessee of
any Property or from alternative investments foregone by the Lessor in
acquiring the Property or the
(li)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
anticipated receipt of income therefrom, in each case, subsequent to the
Lessee's possession of such Property after the Lease Term.
After an Event of Default, the Lessor may sell its interest in any
Property and Equipment to any non-Affiliate of the Lessor upon any terms that
the Lessor deems satisfactory, free of any rights of the Lessee or any Person
claiming through or under the Lessee. In the event of any such sale, in
addition to the Accrued Default Obligations, the Lessor shall be entitled to
recover from the Lessee, as liquidated damages, and not as a penalty, an
amount equal to the Adjusted Acquisition Cost of any Property or Equipment so
sold, minus the proceeds of such sale received by the Lessor. Proceeds of
sale received by the Lessor in excess of the Adjusted Acquisition Cost of
such Property or Equipment sold shall be credited against the Accrued Default
Obligations the Lessee is required to pay under this Section 19. If such
proceeds exceed the Accrued Default Obligations, or, if the Lessee has paid
all amounts required to be paid under this Section 19, such excess shall be
paid by the Lessor to the Lessee. As an alternative to any such sale, or if
the Lessee converts any Property or Equipment after an Event of Default, or
if such Property or Equipment is lost or destroyed, in addition to the
Accrued Default Obligations, the Lessor may cause the Lessee to pay to the
Lessor, and the Lessee shall pay to the Lessor, as liquidated damages and not
as a penalty, an amount equal to the Adjusted Acquisition Cost of such
Property or Equipment. In the event the Lessor receives payment pursuant to
the previous sentence of this paragraph, the Lessor shall transfer all of the
Lessor's right, title and interest in and to the Property and Equipment to
the Lessee.
In addition to any other remedies available under this Lease to
the Lessor, the Lessor may choose, in its sole discretion, upon termination
of this Lease pursuant to this Section 19, to recover the maximum amount
(including interest) to which the Lessor is entitled under applicable law
with respect to rent accrued, or which would have accrued, under this Lease
as of the time of any award, and, with respect to the loss of future rents,
to recover from the Lessee the worth, at the time of the award, of the amount
by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of the loss of rent that the Lessee proves could have been
reasonably avoided. "The worth at the time of award", as used herein, is to
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award, plus one percent, or
if less, the minimum discount rate permitted by law.
In the event of a sale pursuant to this Section 19, upon receipt
by the Lessor of the amounts payable hereunder, the Lessor shall transfer all
of the Lessor's right, title and interest in and to the Property and
Equipment to the Lessee or purchaser other than the Lessee, as the case may
be.
No remedy referred to in this Section 19 is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to the
(lii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
Lessor at law or in equity, and the exercise in whole or in part by the
Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by the Lessor of any or all such other
remedies. No waiver by the Lessor of any Event of Default hereunder shall in
any way be, or be construed to be, a waiver of any future or subsequent Event
of Default.
With respect to the termination of this Lease as to any Parcel of
Property as a result of an Event of Default, the Lessee hereby waives service
of any notice of intention to re-enter. The Lessee hereby waives any and all
rights to recover or regain possession of any Parcel of Property or to
reinstate this Lease as permitted or provided by or under any statute, law or
decision now or hereafter in force and effect.
20. Equipment to be Personal Property.
It is the intention and understanding of the Lessor and the Lessee
that all Equipment shall be and at all times remain personal property. The
Lessee shall obtain and record such instruments and take such steps as may be
necessary to prevent any Person from acquiring any rights in Equipment
paramount to the rights of the Lessor by reason of such Equipment being
deemed to be real property. If, notwithstanding the intention of the parties
and the provisions of this Section 20, any Person acquires or claims to have
acquired any rights in any Equipment superior to the rights of the Lessor, by
reason of such Equipment being deemed to be real property, the Lessee shall
promptly notify the Lessor in writing of such fact and (unless the basis for
such claim is waived or eliminated to the satisfaction of the Lessor within a
period of thirty (30) days from the date it is asserted) the Lessee shall on
the Basic Rent Payment Date following the expiration of the thirty (30) day
period referred to above in this sentence pay to the Lessor an amount equal
to the Adjusted Acquisition Cost of such Equipment at the time of payment.
On such Basic Rent Payment Date, in addition to the payment of the Adjusted
Acquisition Cost, the Lessee shall pay to the Lessor Basic Rent payable, the
Variable Component of Basic Rent accrued with respect to such Equipment and
any Additional Rent and other amounts owing hereunder and the lease of such
Equipment shall thereupon terminate. The Lessor shall on such Basic Rent
Payment Date transfer title to such Equipment to the Lessee, and the Lessee
shall be subrogated to the Lessor's rights in the affected transaction.
21. Sale or Assignment by Lessor.
(a) Except as otherwise expressly provided in this Section,
the Lessor shall not assign, convey or otherwise transfer any of its right,
title and interest in, to and under this Lease. The Lessor shall have the
right to obtain equity and debt financing for the acquisition and ownership
of the Property or Equipment by mortgaging, assigning or granting a security
interest in its right, title and interest in any or all amounts due from the
Lessee or any third party under this Lease or in such Property or Equipment;
provided, that any such sale or assign-ment shall be subject to the rights
and interests of the Lessee under this Lease.
(liii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(b) Any Assignee shall, except as otherwise agreed by the
Lessor and such Assignee, have all the rights, powers, privileges and
remedies of the Lessor hereunder, and the Lessee's obligations as between
itself and such Assignee hereunder shall not be subject to any claims or
defense that the Lessee may have against the Lessor. Upon written notice to
the Lessee of any such assignment, the Lessee shall thereafter make payments
of Basic Rent, Additional Rent and other sums due hereunder to the Assignee,
to the extent specified in such notice, and such payments shall discharge the
obligation of the Lessee to the Lessor hereunder to the extent of such
payments. Anything contained herein to the contrary notwithstanding, no
Assignee shall be obligated to perform any duty, covenant or condition
required to be performed by the Lessor hereunder, and any such duty, covenant
or condition shall be and remain the sole obligation of the Lessor.
22. Income Taxes.
(a) The Lessor agrees that it will not file any Federal, state
or local income tax (or franchise tax computed by reference to net income)
returns during the Lease Term or Renewal Term, if any, with respect to any
Property or Equipment that are inconsistent with the treatment of the Lessee
as owner of such Property or Equipment for Federal, state and local income
tax (or franchise tax computed by reference to net income) purposes.
(liv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(b) Paragraph (a) of Section 22 above notwithstanding, the
Lessor agrees that, at the written request of the Lessee, it will take all
such action as may be required to be taken by a lessor to elect under any
provision of the Code or state law substantially similar to section 48(d) of
the Internal Revenue Code of 1954, as amended prior to the enactment of the
Tax Reform Act of 1986, permitting a pass-through of an investment tax credit
to a lessee, to treat the Lessee as having acquired any Unit of Equipment or
any qualifying appliances, equip-ment and machinery attached to any Parcel of
Property acquired by the Lessor that would qualify for such a credit (within
the meaning of section 48(b) of the Code); provided, that such request is
received by the Lessor reasonably in advance of the date on which the Lessor
is required to take such action, and the Lessee provides the Lessor in a
timely fashion with all information (other than identifying information
pertaining to the Lessor) required to take such action. The Lessor does not
represent or warrant to the Lessee that credits will be allowable with
respect to any Unit of Equipment or other property under the Code or that any
election will be effective to transfer any such credits that are allowable to
the Lessee. The Lessor, Xxxxxxx, Xxxxxxx Xxxxx and Xxxxxxx Leasing shall
have no liability to the Lessee resulting from the disallowance to the Lessee
of credits under the Code with respect to any Unit of Equipment or other
property unless such disallowance is directly and primarily attributable to
the failure of the Lessor to comply with its obligations under the first
sentence of this paragraph (b).
23. Notices and Requests.
All notices, offers, acceptances, approvals, waivers, requests,
demands and other communications hereunder or under any other instrument,
certificate or other document delivered in connection with the transactions
described herein shall be in writing, shall be addressed as provided below
and shall be considered as properly given (a) if delivered in person, (b) if
sent by express courier service (including, without limitation, Federal
Express, Xxxxx, DHL, Airborne Express, and other similar express delivery
services), (c) in the event overnight delivery services are not readily
available, if mailed by international airmail, postage prepaid, registered or
certified with return receipt requested, or (d) if sent by telecopy and
confirmed; provided, that in the case of a notice by telecopy, the sender
shall in addition confirm such notice by writing sent in the manner specified
in clauses (a), (b) or (c) of this Section 23. All notices shall be
effective upon receipt by the addressee; provided, however, that if any
notice is tendered to an addressee and the delivery thereof is refused by
such addressee, such notice shall be effective upon such tender. For the
purposes of notice, the addresses of the parties shall be as set forth below;
provided, however, that any party shall have the right to change its address
for notice hereunder to any other location by giving written notice to the
other party in the manner set forth herein. The initial addresses of the
parties hereto are as follows:
If to the Lessor:
Virtual Funding, Limited Partnership
(lv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
c/o ML Leasing Equipment Corp.
Project and Lease Finance Group
North Tower - 27th Floor
World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy of all notices under this Section 23 to be simultaneously given,
delivered or served to Xxxx Xxxxxx at the following address:
ML Leasing Equipment Corp.
Controller's Office
World Financial Center
South Tower - 8th Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
(lvi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
If to the Lessee:
Silicon Graphics Real Estate, Inc.
0000 Xxxxx Xxxxxxxxx Xxxx.
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Treasury
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Silicon Graphics Real Estate, Inc.
0000 Xxxxx Xxxxxxxxx Xxxx.
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Legal Services
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy of all notices under this Section 23 to any Assignee at such
address as such As-signee may specify by written notice to the Lessor and the
Lessee.
24. Covenant of Quiet Enjoyment.
During the Lease Term or Renewal Term, if any, of any Property or
Equipment hereunder and so long as no Event of Default shall have occurred
and be continuing, the Lessee shall be entitled to quiet enjoyment of the
Property or Equipment on the terms and conditions provided in this Lease
without any interference from the Lessor or anyone claim-ing through or under
the Lessor.
25. Right to Perform for Lessee.
If the Lessee fails to perform or comply with any of its covenants
or agreements contained in this Lease beyond any applicable notice or grace
period, the Lessor may, upon notice to the Lessee but without waiving or
releasing any obligations or default, it-self perform or comply with such
covenant or agreement, and the amount of the reasonable expenses of the
Lessor incurred in connection with such performance or compliance, shall be
payable by the Lessee, not later than ten (10) days after written notice by
the Lessor.
(lvii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
26. Merger, Consolidation or Sale of Assets.
The Lessee may not consolidate with or merge into any other
corporation or sell all or substantially all of its assets to any Person,
except that the Lessee may consolidate with or merge into any other
corporation other than the Guarantor which is an Affiliate of the Lessee, or
sell all or substantially all of its assets to any Person other than the
Guarantor which is an Affiliate of the Lessee; provided, that the surviving
corporation or transferee Person shall assume, by execution and delivery of
instruments satisfactory to the Lessor, the obligations of the Lessee
hereunder and become successor to the Lessee, but the Lessee shall not
thereby be released, without the consent of the Lessor, from its obligations
hereunder and; provided, further, that such surviving corporation or
transferee Person will, on a pro forma basis, immediately after such
consolidation, merger or sale, possess a consolidated net worth and credit
rating substantially equivalent to or greater than that of the Lessee
immediately prior to such consolidation, merger or sale. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of
the Lessee and its respective successors and assigns.
27. Expenses.
The Lessee shall pay all of the out-of-pocket costs and expenses
incurred by the Lessor, and any Assignee in connection with this Lease
including, without limitation, the reasonable fees and disbursements of
counsel to the Lessor and counsel to any Assignee.
28. Permitted Contests.
(lviii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(a) The Lessee shall not be required, nor shall the Lessor
have the right, to pay, discharge or remove any tax, assessment, levy, fee,
rent, charge, Lien or encumbrance, or to comply or cause any Parcel of
Property or Unit of Equipment to comply with any Legal Requirements
applicable to any Parcel of Property or Unit of Equipment or the occupancy,
use or operation thereof, so long as no Event of Default exists under this
Lease, and, in the opinion of the Lessee's counsel, the Lessee shall have
reasonable grounds to contest the existence, amount, applicability or
validity thereof by appropriate proceedings, which proceed-ings in the
reasonable judgment of the Lessor, (i) shall not involve any material danger
that any Parcel of Property or Unit of Equipment or any Basic Rent or any
Additional Rent would be subject to sale, forfeiture or loss, as a result of
failure to comply therewith, (ii) shall not affect the payment of any Basic
Rent or any Additional Rent or other sums due and payable hereunder, (iii)
will not place the Lessor in any danger of civil liability for which the
Lessor is not adequately indemnified (the Lessee's obligations under Section
11 of this Lease shall be deemed to be adequate indemnification if no Event
of Default exists) or to any criminal liability, (iv) if involving taxes,
shall suspend the collection of taxes, and (v) shall be permitted under and
be conducted in accordance with the provisions of any other instrument to
which the Lessee or the Parcel of Property or Unit of Equipment is subject
and shall not constitute a default thereunder (the "Permitted Contest"). The
Lessee shall conduct all Per-mitted Contests in good faith and with due
diligence and shall promptly after the final determination (including
appeals) of any Permitted Contest, pay and discharge all amounts which shall
be determined to be payable therein. The Lessor shall cooperate in good
faith with the Lessee with respect to all Permitted Contests conducted by the
Lessee pursuant to this Section 28.
(b) In the event the Lessor deems, in its sole discretion,
that its interests under this Lease or in any Parcel of Property or Unit of
Equipment are not adequately protected in connection with a Permitted Contest
brought by the Lessee under this Section 28 as a result of concerns related
to the financial condition of the Guarantor, the Lessee shall give such
reasonable security, as may be demanded by the Lessor to insure payment of
such tax, assessment, levy, fee, rent, charge or Lien and compliance with any
Legal Requirement and to prevent any sale or forfeiture of any Parcel of
Property or Unit of Equipment, any Basic Rent or any Additional Rent by
reason of such nonpayment or noncompliance. The Lessee hereby agrees that
the Lessor may assign such security provided by the Lessee to any Assignee.
(lix)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(c) At least ten (10) days prior to the commencement of any
Permitted Contest, the Lessee shall notify the Lessor in writing thereof if
the amount in contest exceeds $100,000, and shall describe such proceeding in
reasonable detail. In the event that a taxing authority or subdivision thereof
proposes an additional assessment or levy of any tax for which the Lessee is
obligated to reimburse the Lessor under this Lease, or in the event that the
Lessor is notified of the commencement of an audit or similar proceeding which
could result in such an additional assessment, then the Lessor shall in a
timely manner notify the Lessee in writing of such proposed levy or proceeding.
29. Leasehold Interests.
The following provisions relate to each lease (a "Ground Lease")
under which a leasehold interest in a Parcel of Property is subleased to the
Lessee hereunder:
(a) The Lessee hereunder covenants and agrees to perform and
to observe all of the terms, covenants, provisions, conditions and agreements
of the underlying Ground Leases on the Lessor's part as lessee thereunder to
be performed and observed (including, without limitation, payment of all
rent, additional rent and other amounts payable by the Lessor as lessee under
any Ground Lease) to the end that all things shall be done which are
neces-sary to keep unimpaired the rights of the Lessor as lessee under any
Ground Lease. The Lessee further covenants that it shall cause to be
exercised any renewal option contained in the Ground Lease which relates to
renewal occurring in whole or in part during the term of this Lease.
(b) The Lessee covenants and agrees pursuant to Section 11
hereof to indemnify and hold harmless the Lessor and any Assignee from and
against any and all lia-bility, loss, damage, suits, penalties, claims and
demands of every kind and nature (including, without limitation, reasonable
attorneys' fees and expenses) by reason of the Lessee's failure to comply
with any Ground Lease or the provisions of this Section 29.
(c) The Lessor and the Lessee agree that the Lessor shall have
no obligation or responsibility to provide services or equipment required to
be provided or repairs or restorations required to be made in accordance with
the provisions of any Ground Lease by the lessor thereunder. The Lessor
shall in no event be liable to the Lessee nor shall the obligations of the
Lessee hereunder be impaired or the performance thereof excused because of
any failure or delay on the part of the lessor under any Ground Lease in
providing such services or equipment or making such restorations or repairs
and such failure or delay shall not constitute a basis for any claim against
the Lessor or any offset against any amount payable to the Lessor under this
Lease.
(d) If the Lessor's interest under any Ground Lease shall
expire, terminate or otherwise be extinguished, the Lease of the Parcel of
Property to which such Ground Lease relates shall thereupon terminate as
provided in this paragraph (d). Upon such expiration, termi-
(lx)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
nation or extinguishment, the Lessee shall be required to purchase the
Lessor's interest in such Parcel of Property at its Adjusted Acquisition
Cost. If the Lessee shall be required to purchase the Lessor's interest in
such affected Parcel, then (i) on the Basic Rent Payment Date next succeeding
such event, the Lessee shall pay to the Lessor an amount equal to the
Adjusted Acquisition Cost of such Property, (ii) the Lease Term or Renewal
Term of such Property shall continue until the date on which the Lessor
receives payment from the Lessee of the amount payable pursuant to this
paragraph (d) and of all Basic Rent payable, the Variable Component of Basic
Rent accrued with respect to such Parcel of Property and any Additional Rent
and other amounts owing hereunder, and shall then terminate upon the payment
of such amounts and (iii) the Lessor shall on such date transfer title to the
Lessor's interest in such Parcel to the Lessee.
(c) The Lessee shall ensure that each Ground Lease shall be a
Mortgageable Ground Lease.
30. Miscellaneous.
(a) All indemnities, representations and warranties, and the
obligation to pay Additional Rent contained in this Lease shall survive the
expiration or other termination hereof.
(b) This Lease, the Unit Leasing Records, the AFL Unit Leasing
Records covering Property or Equipment leased pursuant hereto, the Agreement
for Lease, and the instruments, documents or agreements referred to herein
and therein constitute the entire agreement between the parties and no
representations, warranties, promises, guarantees or agreements, oral or
written, express or implied, have been made by any party hereto with respect
to this Lease or the Property or Equipment, except as provided herein or
therein.
(c) This Lease may not be amended, modified or terminated, nor
may any obligation hereunder be waived orally, and no such amendment,
modification, termination or waiver shall be effective for any purpose unless
it is in writing, signed by the party against whom enforcement thereof is
sought. A waiver on one occasion shall not be construed to be a waiver with
respect to any other occasion.
(d) The captions in this Lease are for convenience of
reference only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof. Any provision of this Lease which is
prohibited by law or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceabil-ity without invalidating the remaining provisions hereof, and
the parties hereto shall negotiate in good faith appropriate modifications to
reflect such changes as may be required by law, and, as nearly as possible,
to produce the same economic, financial and tax effects as the provision
which is prohibited or unenforceable; and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
(lxi)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
permitted by applicable law, the Lessee and the Lessor hereby waive any
provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
(e) In connection with any sale of Property or Equipment
pursuant to Section 12, 13, 14, 15, 19, 20 or 29 of this Lease, when the
Lessor transfers title, such transfer shall be on an as-is, non-installment
sale basis, without warranty by, or recourse to, the Lessor. The purchase
price for any such sale shall be paid entirely in cash and in immediately
available funds.
(f) In connection with the sale or purchase of Property or
Equipment pursuant to Section 12, 13, 14, 15, 19, 20 or 29, the Lessee shall
pay or shall cause the pur-chaser of such Property or Equipment to pay in
addition to the purchase price, all transfer taxes, transfer gains taxes,
mortgage recording tax, if any, recording and filing fees and all other
similar taxes, fees, expenses and closing costs (including reasonable
attorneys' fees) in connection with the conveyance of such Property or
Equipment to the Lessee or any purchaser.
(g) When used in Section 12, 13, 14, 15, 20 or 29 of this
Lease, the phrase "the Variable Component of Basic Rent accrued" means the
Variable Component of Basic Rent accrued through the date of termination of
this Lease pursuant to such Section which has not been included in Basic Rent
then payable or previously paid.
(h) If any costs of the Lessor related to the Agreement for Lease
which were not included in the Acquisition Cost of a Parcel of Property are
allocated to such Parcel of Property pursuant to the definition of Unit
Acquisition Cost in the Agreement for Lease, the Lessee and the Lessor shall
execute a revised AFL Unit Leasing Record to amend the Adjusted Acquisition
Cost for such Parcel to reflect the increase in the Acquisition Cost.
(lxii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
(i) THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF
NEW YORK. THE LESSEE AND THE LESSOR AGREE THAT, TO THE MAXIMUM EXTENT
PERMITTED BY THE LAWS OF THE STATE OF NEW YORK, THIS LEASE, AND THE RIGHTS
AND DUTIES OF THE LESSEE AND THE LESSOR HEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW) IN ALL RESPECTS, INCLUDING WITHOUT LIMITATION IN
RESPECT OF ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THE LESSEE
HEREBY IRREVOCABLY SUBMITS, FOR ITSELF AND ITS PROPERTIES, TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND THE SUPREME COURT OF THE STATE OF NEW YORK IN THE COUNTY OF NEW
YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR
IN CONNECTION WITH THIS LEASE OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE LESSEE HEREBY WAIVES AND AGREES
NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER, OR THAT THIS LEASE OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO
HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURT.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE LESSEE AGREES NOT TO SEEK AND
HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY
ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO
GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE LESSEE AGREES THAT SERVICE OF
PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS
FOR NOTICES SET FORTH IN THIS LEASE OR ANY METHOD AUTHORIZED BY THE LAWS OF
NEW YORK. THE LESSOR AND THE LESSEE EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY. THE LESSOR AND THE LESSEE ACKNOWLEDGE
THAT THE PROVISIONS OF THIS SECTION 30 HAVE BEEN BARGAINED FOR AND THAT THEY
HAVE BEEN REPRESENTED BY COUNSEL IN CONNECTION THEREWITH.
(lxiii)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
31. No Recourse.
The Lessor's obligations hereunder are intended to be the
obligations of the limited partnership and of the corporation which is the
general partner thereof only and no recourse for the payment of any amount
due under this Lease or for any claim based thereon or otherwise in respect
thereof, shall be had against any limited partner of the Lessor or any
incorporator, shareholder, officer, director or Affiliate, as such, past,
present or future of such corporate general partner or of any corporate
limited partner or of any successor corporation to such corporate general
partner or any corporate limited partner of the Lessor, or against any direct
or indirect parent corporation of such corporate general partner or of any
limited partner of the Lessor or any other subsidiary or Affiliate of any
such direct or indirect parent corporation or any incorporator, shareholder,
officer or director, as such, past, present or future, of any such parent or
other subsidiary or Affiliate, it being understood that the Lessor is a
limited partnership formed for the purpose of the transactions involved in
and relating to this Lease on the express understanding aforesaid. Nothing
contained in this Section 31 shall be construed to limit the exercise or
enforcement, in accordance with the terms of this Lease and any other
documents referred to herein, of rights and remedies against the limited
partnership or the corporate general partner of the Lessor or the assets of
the limited partnership or the corporate general partner of the Lessor.
32. No Merger.
There shall be no merger of this Lease or of the leasehold estate
hereby created with the fee estate in any Parcel of Property by reason of the
fact that the same person acquires or holds, directly or indirectly, this
Lease or the leasehold estate hereby created or any interest herein or in
such leasehold estate as well as the fee estate in any Parcel of Property or
any interest in such fee estate.
33. Assignment by the Lessee.
(a) So long as no Event of Default has occurred and is continuing,
the Lessee may, upon thirty (30) days prior written notice to the Lessor and
any Assignee and subject to the terms and conditions of this Lease, assign
all of its rights and the performance of its obligations hereunder to any
Affiliate of the Guarantor (but not the Guarantor) (provided that the
Guarantor shall own directly or indirectly not less than 90% of the
outstanding shares of common stock of such Affiliate) and upon such
assignment be released from any liability or obligation hereunder; provided
that such assignment shall be subject to the satisfaction of the following
conditions:
(i) The Lessor and any Assignee shall have received a
certificate of a Responsible Officer of the Guarantor
certifying that the Guarantor
(lxiv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
owns, directly or indirectly, not less than 90% of the
outstanding shares of the common stock of such Affiliate.
(ii) The Lessor and any Assignee shall have received a
Reaffirmation of Guarantee in the form of Schedule A to
the Assignment and Assumption Agreement attached hereto as
Exhibit D, together with an opinion of counsel in form and
substance reasonably satisfactory to the Lessor and any
Assignee which opinion shall state, in addition to
addressing matters in respect of the Guaranty and the
Guarantor, that such Affiliate's obligations under the Lease
and the Agreement for Lease are valid, binding and enforceable
according to their terms, subject to customary exceptions.
(iii) Such Affiliate shall have executed and delivered a Consent
in form and substance reasonably satisfactory to the
Lessor and any Assignee.
(iv) The Lessor and any Assignee shall have received a
certificate of such Affiliate to the effect set forth in
Section III of the Assignment and Assumption Agreement
attached hereto as Exhibit D.
(v) Such Affiliate and the Lessee shall execute an Assignment
and Assumption Agreement in the form of Exhibit D hereto.
(lxv)
THIS LEASE AGREEMENT
IS CONFIDENTIAL
AND PROPRIETARY
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this
Lease to ____________________ be executed and delivered by their duly
authorized officers as of the day and year first above
written.
Virtual Funding, Limited Partnership by
Virtual Capital, Inc., its General Partner
By ________________________
Name:
Title:
Silicon Graphics Real Estate, Inc.
By _________________________
Name:
Title:
(lxvi)
