California-Pleasanton-PeopleSoft Hacienda II Lease Facility - Wilmington Trust Co. and PeopleSoft Inc.
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W&S DRAFT
9/28/98
Prepared by and upon recording return to:
John R. Grier, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
MASTER LEASE
dated as of September 28, 1998
between
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Owner Trustee,
as the Lessor
and
PEOPLESOFT, INC.,
as the Lessee
PeopleSoft Hacienda II Lease Facility
This Lease has been executed in counterparts. To the extent, if any, that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no lien on this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart containing the receipt therefor executed by ABN
AMRO Bank N.V., as Indenture Trustee on the signature page hereof.
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TABLE OF CONTENTS
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PAGE
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ARTICLE I 1
1.1. Definitions; Interpretation 1
ARTICLE II 1
2.1. Acceptance and Lease of Property 1
2.2. Acceptance Procedure 2
2.3. Lease Term 2
2.4. Title 2
ARTICLE III 3
3.1. Rent 3
3.2. Payment of Basic Rent 3
3.3. Supplemental Rent 3
3.4. Method of Payment 4
ARTICLE IV 4
4.1. Utility Charges 4
ARTICLE V 4
5.1. Quiet Enjoyment 4
ARTICLE VI 5
6.1. Net Lease 5
6.2. No Termination or Abatement 6
ARTICLE VII 6
7.1. Ownership of the Property 6
ARTICLE VIII 8
8.1. Condition of the Property 8
8.2. Possession and Use of the Property 8
ARTICLE IX 9
9.1. Compliance with Requirements of Law and Insurance Requirements 9
ARTICLE X 9
10.1. Maintenance and Repair; Return 9
ARTICLE XI 10
11.1. Modifications, Substitutions and Replacements 10
ARTICLE XII 10
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12.1. Warranty of Title 10
12.2. Grants and Releases of Easements 11
12.3. Actions Required of the Lessor 12
12.4. Further Actions By the Lessee 12
ARTICLE XIII 13
13.1. Permitted Contests Other Than in Respect of Indemnities 13
ARTICLE XIV 13
14.1. Coverage 13
14.2. Public Liability and Workers' Compensation Insurance 13
14.3. Hazard and Other Insurance 14
14.4. Terms 15
ARTICLE XV 16
15.1. Casualty and Condemnation 16
15.2. Environmental Matters 18
15.3. Notice of Environmental Matters 18
ARTICLE XVI 19
16.1. Termination by the Lessee upon Certain Events 19
16.2. Procedures 19
16.3. Termination by the Lessor upon Certain Events 20
16.4. Purchase of Property 20
ARTICLE XVII 20
17.1. Lease Events of Default 20
17.2. Remedies 23
17.3. Waiver of Certain Rights 28
17.4. Power of Sale and Foreclosure 28
17.5. Remedies Cumulative 31
17.6. Lessee's Right to Cure 31
ARTICLE XVIII 31
18.1. The Lessor's Right to Cure the Lessee's Lease
Events of Default 31
ARTICLE XIX 32
19.1. Provisions Relating to the Lessee's Termination of this
Lease or Exercise of Purchase Option or Obligation and
Conveyance Upon Remarketing and Conveyance Upon Certain
Other Events 32
ARTICLE XX 33
20.1. Purchase Option 33
20.2. Expiration Date Purchase Obligation 33
20.3. Acceleration of Purchase Obligation 34
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ARTICLE XXI 34
21.1. Renewal 34
ARTICLE XXII 35
22.1. Option to Remarket 35
22.2. Certain Obligations Continue 38
22.3. Support Obligations 38
ARTICLE XXIII 39
23.1. Holding Over 39
ARTICLE XXIV 39
24.1. Risk of Loss 39
ARTICLE XXV 40
25.1. Subletting and Assignment 40
ARTICLE XXVI 40
26.1. Estoppel Certificates 40
ARTICLE XXVII 41
27.1. Right to Inspect 41
27.2. No Waiver 41
ARTICLE XXVIII 41
28.1. Acceptance of Surrender 41
ARTICLE XXIX 42
29.1. No Merger of Title 42
ARTICLE XXX 42
30.1. Notices 42
ARTICLE XXXI 44
31.1. Miscellaneous 44
31.2. Amendments and Modifications 44
31.3. Successors and Assigns 44
31.4. Headings and Table of Contents 44
31.5. Counterparts 44
31.6. GOVERNING LAW 44
31.7. Limitations on Recourse 44
31.8. Original Lease 45
31.9. Usury Savings Clause 45
ARTICLE XXXII 45
32.1. Ground Lease 45
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APPENDICES
APPENDIX I Definitions and Interpretation
EXHIBITS
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Equipment Schedule
SCHEDULES
SCHEDULE 1 Data Center Purchase Price
SCHEDULE 14.3 Minimum Insurance Requirements
MASTER LEASE
THIS MASTER LEASE (including all Lease Supplements and Equipment
Schedules from time to time executed and delivered, this "Lease"), dated as of
September 28, 1998, between WILMINGTON TRUST COMPANY, a Delaware banking
corporation, having its principal office at Rodney Square North, 1100 N. Market
Street, Wilmington, Delaware 19890, not in its individual capacity, but solely
as Owner Trustee, as the lessor (the "Lessor"), and PEOPLESOFT, INC., a Delaware
corporation, having a principal office at 4305 Hacienda Drive, Pleasanton,
California 94588, as the lessee (the "Lessee").
W I T N E S S E T H:
A. WHEREAS, the Owner Trustee, in its capacity as Lessor, will ground
lease the Ground Lease Interest from the Ground Lessor on the Ground Lease
Interest Acquisition Date;
B. WHEREAS, the Lessor desires to sublease to the Lessee, and the Lessee
desires to sublease from the Lessor, the Ground Lease Interest; and
C. WHEREAS, with respect to the Ground Lease Interest the Lessee, as
Construction Agent, will construct certain Improvements which as constructed
will be the property of the Lessor and will be leased to Lessee subject to the
terms of this Lease;
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NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1. Definitions; Interpretation. Capitalized terms used but not
otherwise defined in this Lease have the respective meanings specified in
Appendix 1 to this Lease; and the rules of interpretation set forth in Appendix
1 to this Lease shall apply to this Lease.
ARTICLE II
2.1. Acceptance and Lease of Property. Effective as of the Closing Date,
the Lessor, subject to the satisfaction or waiver of the conditions set forth in
Section 6 of the Participation Agreement, hereby agrees to lease the Ground
Lease Interest from the Ground Lessor on the Ground Lease Interest Acquisition
Date pursuant to the terms of the Participation Agreement, and simultaneously to
sublease to the Lessee hereunder for the Term (as defined in Section 2.3), the
Lessor's interest in such Ground Lease Interest and the Lessor's interest in any
Improvements existing thereon, and to lease to the Lessee any Improvements which
thereafter may be constructed thereon and any Equipment, if any, which may be
purchased for use in connection therewith pursuant to the Construction Agency
Agreement, this Lease or the Participation Agreement, and the Lessee hereby
agrees, expressly for the direct benefit of the Lessor, to sublease commencing
on the Ground Lease Interest Acquisition Date from the Lessor for the Term, the
Lessor's interest in such Ground Lease Interest to be leased by the Lessor from
the Ground Lessor on such Ground Lease Interest Acquisition Date and any
Improvements existing thereon and to lease any Improvements which thereafter may
be constructed thereon and such Equipment pursuant to the Construction Agency
Agreement, this Lease or the Participation Agreement. As used in this Lease, the
term "Property" shall have the meaning given to such term in Appendix 1 hereto,
and shall also include, without limitation, the right to use and enjoy (and, to
the extent the following consist of contract rights, to enforce) any interests
or rights of Lessor in, to or under the following, now existing or hereafter
arising: any and all Permitted Exceptions (including the Development Contracts),
and any other general intangibles, permits, licenses, franchises, certificates,
and other rights and privileges related to the Ground Lease Interest or the
underlying real property and the Property.
2.2. Acceptance Procedure. (a) The Lessor hereby authorizes one or more
employees of the Lessee, to be designated by the Lessee, as the authorized
representative or representatives of the Lessor to accept delivery on behalf of
the Lessor of the Property identified on the Acquisition Request or an Equipment
Schedule.
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(b) The Lessee hereby agrees that such acceptance of delivery by such
authorized representative or representatives and the execution and delivery by
the Lessee on the Ground Lease Interest Acquisition Date of a Lease Supplement
in the form of Exhibit A hereto (appropriately completed) shall, without further
act, constitute the irrevocable acceptance by the Lessee of the Property which
is the subject thereof for all purposes of this Lease and the other Operative
Documents on the terms set forth therein and herein, and that the Property
(including the Improvements constructed thereon) shall be deemed to be included
in the leasehold estate of this Lease and shall be subject to the terms and
conditions of this Lease as of the Ground Lease Interest Acquisition Date.
(c) The Lessee hereby agrees that such acceptance of delivery by such
authorized representative or representatives and the execution and delivery by
the Lessee of an Equipment Schedule in the form of Exhibit B hereto
(appropriately completed) on or prior to the applicable Funding Date with
respect to the acquisition of Equipment shall, without further act, constitute
the irrevocable acceptance of the Equipment which is the subject thereof for all
purposes of this Lease and the other Operative Documents on the terms set forth
therein and herein, and that the Equipment shall be deemed to be included in the
leasehold estate of this Lease and shall be subject to the terms and conditions
of this Lease as of such Funding Date.
2.3. Lease Term. The term of this Lease (the "Term") shall begin on the
Closing Date and shall end on the fifth anniversary of the Closing Date, unless
the Term is renewed or earlier terminated in accordance with the provisions of
this Lease.
2.4. Title. The Ground Lease Interest is subleased, and the other
Property is leased, as applicable, to the Lessee without any representation or
warranty of title, condition of the Improvements or permitted uses, express or
implied, by the Lessor and subject to the rights of parties in possession, the
existing state of title (including, without limitation, the Permitted
Exceptions), the terms of the Ground Lease and all applicable Requirements of
Law. The Lessee shall in no event have any recourse against the Lessor for any
defect in or exception to title to the Property, other than for any such defect
or exception constituting a Lessor Lien. The Lessee expressly waives and
releases the Lessor from any common law or statutory covenant of quiet
enjoyment.
ARTICLE III
3.1. Rent. (a) During the Term, the Lessee shall pay Basic Rent on each
Payment Date, on the date required under Section 22.1(i) in connection with the
Lessee's exercise of the Remarketing Option and on any date on which this Lease
shall terminate. The Lessor shall provide the Lessee with not less than five (5)
days' notice of the amount of Basic Rent due on any Scheduled Payment Date.
(b) Basic Rent shall be due and payable (i) during the Construction
Period, in the manner set forth in Section 3.9 of the Participation Agreement
and (ii) thereafter, in lawful money of the United States and shall be paid by
wire transfer of immediately
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available funds on the due date therefor to such account or accounts at such
bank or banks or to the Indenture Trustee or in such other manner as the
Indenture Trustee shall from time to time direct.
(c) Neither the Lessee's inability or failure to take possession of all
or any portion of the Property when delivered by the Lessor, nor the Lessor's
inability or failure to deliver all or any portion of the Property to the Lessee
on or before the Ground Lease Interest Acquisition Date or the applicable
Funding Date, whether or not attributable to any act or omission of the Lessee
or any act or omission of the Lessor, or for any other reason whatsoever, shall
delay or otherwise affect the Lessee's obligation to pay Rent for the Property
from and after commencement of the Term.
3.2. Payment of Basic Rent. Basic Rent shall be paid absolutely net to
the Lessor, so that this Lease shall yield to the Lessor the full amount
thereof, without setoff, deduction or reduction, whether or not the Lessee's
quiet possession of the Property is disturbed.
3.3. Supplemental Rent. The Lessee shall pay to the Lessor or the Person
entitled thereto any and all Supplemental Rent (including, without limitation,
Ground Rent) promptly as the same shall become due and payable, provided that
except for any payments of Asset Termination Value, Purchase Option Price,
Residual Value Guarantee Amount or any other amount due and payable on the
Expiration Date or Termination Date, the Lessor shall provide the Lessee with
not less than three (3) Business Days' notice of any Supplemental Rent due and
payable by the Lessee. If the Lessee fails to pay any Supplemental Rent, the
Lessor shall have all rights, powers and remedies provided for herein or by law
or equity or otherwise in the case of nonpayment of Basic Rent. The Lessee shall
pay to the Lessor, as Supplemental Rent, among other things, on demand, to the
extent permitted by Applicable Law, interest at the applicable Overdue Rate on
any installment of Basic Rent not paid when due for the period for which the
same shall be overdue and on any payment of Supplemental Rent not paid when due
or demanded by the Lessor for the period from the due date or the date of any
such demand, as the case may be, until the same shall be paid. The expiration or
other termination of the Lessee's obligations to pay Basic Rent hereunder shall
not limit or modify the obligations of the Lessee with respect to Supplemental
Rent. Unless expressly provided otherwise in this Lease, in the event of any
failure on the part of the Lessee to pay and discharge any Supplemental Rent as
and when due, the Lessee shall also promptly pay and discharge any fine,
penalty, interest or cost which may be assessed or added under any agreement
with a third party for nonpayment or late payment of such Supplemental Rent, all
of which shall also constitute Supplemental Rent.
3.4. Method of Payment. Each payment of Rent shall be made by the Lessee
to the Indenture Trustee by 12:00 noon, San Francisco time at the place of
payment in funds consisting of lawful currency of the United States of America
which shall be immediately available on the scheduled date when such payment
shall be due, unless such scheduled date shall not be a Business Day, in which
case such payment shall be made on the next succeeding Business Day or as
otherwise required by the definition of
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the term "Interest Period" set forth in Appendix 1 hereto. Payments initiated
after 12:00 noon, San Francisco time shall be deemed received on the next
succeeding Business Day.
ARTICLE IV
4.1. Utility Charges. The Lessee shall pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Property during the
Term. The Lessee shall be entitled to receive any credit or refund with respect
to any utility charge paid by the Lessee and the amount of any credit or refund
received by the Lessor on account of any utility charges paid by the Lessee, net
of the costs and expenses reasonably incurred by the Lessor in obtaining such
credit or refund, shall be promptly paid over to the Lessee. All charges for
utilities imposed with respect to the Property for a billing period during which
this Lease expires or terminates shall be adjusted and prorated on a daily basis
between the Lessor and the Lessee, and each party shall pay or reimburse the
other for each party's pro rata share thereof, except that if the Lessee retains
possession of the Property after termination or expiration of this Lease, no
such adjustment and proration shall be made.
ARTICLE V
5.1. Quiet Enjoyment. LESSEE SPECIFICALLY DISCLAIMS ANY WARRANTY OF
QUIET ENJOYMENT FOR ANY ACTION BY ANY PARTY, other than the obligations of the
Lessor to remove Lessor Liens.
ARTICLE VI
6.1. Net Lease. This Lease shall constitute a net lease. It is the
further express intent of Lessor and Lessee that the obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
that the Basic Rent and Supplemental Rent, and all other charges and sums
payable by Lessee hereunder, shall commence at the times provided herein and
shall continue to be payable in all events unless the obligations to pay the
same shall be terminated pursuant to an express provision in this Lease. Any
present or future law to the contrary notwithstanding, this Lease shall not
terminate, nor shall the Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent,
nor shall the obligations of the Lessee hereunder be affected (except as
expressly herein permitted and by performance of the obligations in connection
therewith) by reason of: (i) any defect in the condition, merchantability,
design, construction, quality or fitness for use of the Property or any part
thereof, or the failure of the Property to comply with all Requirements of Law,
including any inability to occupy or use the Property by reason of such
non-compliance; (ii) any damage to, removal, abandonment, salvage, loss,
contamination of or Release from, scrapping or destruction of or any requisition
or taking of the Property or any part thereof; (iii) any restriction, prevention
or curtailment of or
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interference with any use of the Property or any part thereof including
eviction; (iv) any defect in title to or rights to the Property or any Lien on
such title or rights or on the Property (other than Lessor Liens); (v) any
change, waiver, extension, indulgence or other action or omission or breach in
respect of any obligation or liability of or by the Lessor, the Indenture
Trustee or any Participant; (vi) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceedings
relating to the Lessee, the Lessor, the Indenture Trustee, any Participant, or
any other Person, or any action taken with respect to this Lease by any trustee
or receiver of the Lessee, the Lessor, the Indenture Trustee, any Participant or
any other Person, or by any court, in any such proceeding; (vii) any claim that
the Lessee has or might have against any Person, including without limitation
the Lessor, any vendor, manufacturer, contractor of or for the Property, the
Indenture Trustee or any Participant; (viii) any failure on the part of the
Lessor to perform or comply with any of the terms of this Lease, any other
Operative Document or any other agreement; (ix) any invalidity or
unenforceability or illegality or disaffirmance of this Lease or against or by
the Lessee or any provision hereof or any of the other Operative Documents or
any provision of any thereof; (x) the impossibility or illegality of performance
by the Lessee, the Lessor or both; (xi) any action by any court, administrative
agency or other Governmental Authority; (xii) any restriction, prevention or
curtailment of or interference with the construction on or any use of the
Property or any part thereof; (xiii) any cause or circumstance arising with
respect to or out of the Ground Lease; or (xiv) any other cause or circumstances
whether similar or dissimilar to the foregoing and whether or not the Lessee
shall have notice or knowledge of any of the foregoing. The parties intend that
the obligations of the Lessee hereunder shall be covenants and agreements that
are separate and independent from any obligations of the Lessor hereunder or
under any other Operative Documents and the obligations of the Lessee shall
continue unaffected unless such obligations shall have been modified or
terminated in accordance with an express provision of this Lease.
6.2. No Termination or Abatement. The Lessee shall remain obligated
under this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting the Lessor, the Indenture Trustee or any Participant, or
any action with respect to this Lease or any Operative Document which may be
taken by any trustee, receiver or liquidator of the Lessor, the Indenture
Trustee or any Participant or by any court with respect to the Lessor, the
Indenture Trustee or any Participant. The Lessee hereby waives all right (i) to
terminate or surrender this Lease (except as provided herein) or (ii) to avail
itself of any abatement, suspension, deferment, reduction, setoff, counterclaim
or defense (other than the defense of payment) with respect to any Rent. The
Lessee shall remain obligated under this Lease in accordance with its terms and
the Lessee hereby waives any and all rights now or hereafter conferred by
statute or otherwise to modify or to avoid strict compliance with its
obligations under this Lease. Notwithstanding any such statute or otherwise, the
Lessee shall be bound by all of the terms and conditions contained in this
Lease.
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ARTICLE VII
7.1. Ownership of the Property. (a) It is the intent of the parties
hereto that: (i) this Lease constitutes an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, for purposes of
Lessee's financial reporting, and (ii) for purposes of federal, state, and local
income or franchise taxes and for any other tax imposed on or measured by
income, the transaction contemplated hereby is a financing arrangement and
preserves ownership in the Property in the Lessee. Accordingly, and
notwithstanding any provision of this lease to the contrary, the parties hereto
agree and declare that: (i) the transactions contemplated by the Lease are
intended to have a dual, rather than single, form; and (ii) all references in
this Lease to the "lease" of the Property which fail to reference such duel form
do so as a matter of convenience only and do not reflect the intent of parties
hereto as to the true form of such arrangements. Nevertheless, the Lessee
acknowledges and agrees that neither the Indenture Trustee, the Lessor nor any
Participant has made any representations or warranties to the Lessee concerning
the tax, accounting or legal characteristics of the Operative Documents and that
the Lessee has obtained and relied upon such tax, accounting and legal advice
concerning the Operative Documents as it deems appropriate.
(b) Anything to the contrary in the Operative Documents notwithstanding,
the Lessor and the Lessee intend and agree that with respect to the nature of
the transactions evidenced by this Lease in the context of the exercise of
remedies under the Operative Documents, including, without limitation, in the
case of any insolvency or receivership proceedings or a petition under the
United States bankruptcy laws or any other applicable insolvency laws or statute
of the United States of America or any State or Commonwealth thereof affecting
the Lessee, the Lessor, or any Participant or any enforcement or collection
actions, (i) the transactions evidenced by this Lease are loans made by the
Lessor and the Participants as unrelated third party lenders to the Lessee
secured by the Property, (ii) the obligations of the Lessee under this Lease to
pay Basic Rent and Supplemental Rent or Asset Termination Value in connection
with a purchase of the Property pursuant to this Lease shall be treated as
payments of interest on and principal of, respectively, loans from the Lessor
and the Participants to the Lessee, and (iii) this Lease grants a security
interest and mortgage or deed of trust or lien, as the case may be, in the
Property to the Lessor and the Participants secure the Lessee's performance
under and payment of all amounts under this Lease and the other Operative
Documents.
(c) Specifically, without limiting the generality of subsection (b) of
this Section 7.1, the Lessor and the Lessee further intend and agree that, for
the purpose of securing the Lessee's obligations for the repayment of the
above-described loans from the Lessor and the Participants to the Lessee, (i)
this Lease shall also be deemed to be a security agreement and financing
statement within the meaning of Article 9 of the Uniform Commercial Code (and
specifically, a construction mortgage, as said term is defined in Section
9-313(1)(c) of the Uniform Commercial Code) and a real property mortgage or deed
of trust; (ii) the conveyance provided for in Article II shall be deemed
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to be a grant by the Lessee to the Lessor and the Participants of a mortgage
lien and security interest in all of the Lessee's right, title and interest in
and to the Property and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other property
(it being understood that Lessee hereby mortgages and warrants and grants a
security interest in the Property to Lessor and the Participants to secure such
loans); (iii) the possession by the Lessor or any of its agents of notes and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the Uniform Commercial Code; and (iv) notifications to Persons holding
such property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be deemed
to have been given for the purpose of perfecting such security interest under
Applicable Law. The Lessor and the Lessee shall, to the extent consistent with
this Lease, take such actions and execute, deliver, file and record such other
documents, financing statements, mortgages and deeds of trust as may be
necessary to ensure that, if this Lease were deemed to create a security
interest in the Property in accordance with this Section, such security interest
would be deemed to be a perfected security interest of first priority under
Applicable Law and will be maintained as such throughout the Term.
(d) Specifically, without limiting the generality of subsection (a), (b)
and (c) of this Section 7.1, the parties hereto intend and agree that, for
purposes of filing federal, state and local returns, reports and other
statements relating to income or franchise taxes, or any other taxes imposed
upon or measured by income, (i) the Lessee shall be entitled to take any
deduction, credit, allowance or other reporting position consistent with its
status as owner of the Property; and (ii) neither the Lessor nor any Participant
shall take an initial position on its federal, state and local returns, reports
and other statements relating to income or franchise taxes that is inconsistent
with the Lessee's status as owner of the Property.
(e) If the transaction evidenced by this Agreement and the other
Operative Documents can no longer be treated as an operating lease pursuant to
GAAP for accounting purposes, all provisions in the Operative Documents limiting
the Lessee's obligation to pay the Lease Balance or Asset Termination Value
(including the Remarketing Option) on the Expiration Date shall no longer apply.
If any such change in accounting treatment shall occur, the Lessee shall enter
into such amendments to the Operative Documents as the Lessor or the Required
Participants may reasonably request to reflect the foregoing.
ARTICLE VIII
8.1. Condition of the Property. THE LESSEE ACKNOWLEDGES AND AGREES THAT
ALTHOUGH THE LESSOR WILL HOLD LEASEHOLD OR FEE TITLE TO THE PROPERTY, AS
APPLICABLE, THE LESSEE IS SOLELY
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RESPONSIBLE FOR THE IMPROVEMENTS AND ANY ALTERATIONS OR MODIFICATIONS. THE
LESSEE FURTHER ACKNOWLEDGES AND AGREES THAT IT IS LEASING THE PROPERTY "AS IS"
WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR,
THE BANK, THE INDENTURE TRUSTEE OR ANY PARTICIPANT AND IN EACH CASE SUBJECT TO
(A) THE EXISTING STATE OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION
THEREOF, (C) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION
MIGHT SHOW, AND (D) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE
DATE HEREOF. NEITHER THE LESSOR, THE BANK, THE INDENTURE TRUSTEE NOR ANY
PARTICIPANT HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION,
WARRANTY OR COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE TITLE (INCLUDING BUT NOT LIMITED TO ANY IMPLIED
LIABILITY RELATING TO A COVENANT OF QUIET ENJOYMENT, WHICH THE LESSEE HEREBY
EXPRESSLY WAIVES), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR
FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND NEITHER THE LESSOR, THE BANK,
THE INDENTURE TRUSTEE NOR ANY PARTICIPANT SHALL BE LIABLE FOR ANY LATENT,
HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE PROPERTY, OR ANY PART
THEREOF, TO COMPLY WITH ANY REQUIREMENT OF LAW.
8.2. Possession and Use of the Property. The Property shall only be used
in a manner consistent with all Requirements of Law, other properties located
within the Hacienda Business Park, and any covenants, conditions and
restrictions of record and any ordinance or law affecting the use and occupancy
of the Property; and provided that such uses do not increase the liability,
directly or indirectly, of the Lessor or adversely affect the value, utility or
remaining useful life of the Property. The Lessee shall pay, or cause to be
paid, all charges and costs required in connection with the use of the Property
as contemplated by this Lease and the Construction Agency Agreement. The Lessee
shall not commit or permit any waste of the Property or any part thereof.
ARTICLE IX
9.1. Compliance with Requirements of Law and Insurance Requirements.
Subject to the terms of Article XIII relating to permitted contests, the Lessee,
at its sole cost and expense, shall (a) comply with all Requirements of Law
(including all Environmental Laws) and comply with all Insurance Requirements
relating to the Property, including the construction, use, operation,
maintenance, repair and restoration thereof and the remarketing thereof pursuant
to Article XXII, whether or not compliance therewith shall require structural or
extraordinary changes in the Improvements or interfere with the use and
enjoyment of the Property, and (b) procure, maintain and
<PAGE> 14
comply with all licenses, permits, orders, approvals, consents and other
authorizations required for the construction, use, maintenance and operation of
the Property and for the use, operation, maintenance, repair and restoration of
the Improvements.
ARTICLE X
10.1. Maintenance and Repair; Return. (a) The Lessee, at its sole cost
and expense, shall maintain the Property in good working order, mechanical
condition and repair and make all necessary repairs thereto, of every kind and
nature whatsoever, whether interior or exterior, ordinary or extraordinary,
structural or nonstructural or foreseen or unforeseen, in each case as required
by all Requirements of Law and Insurance Requirements and on a basis consistent
with the operation and maintenance of commercial properties comparable in type
and location to the Property and in compliance with prudent industry practice.
(b) The Lessor shall under no circumstances be required to build any
improvements on the Property, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease (except for Advances required under the
Participation Agreement) or maintain the Property in any way. The Lessor shall
not be required to maintain, repair or rebuild all or any part of the Property,
and the Lessee waives any right to (i) require the Lessor to maintain, repair,
or rebuild all or any part of the Property, or (ii) make repairs at the expense
of the Lessor pursuant to any Requirement of Law, Insurance Requirement,
contract, agreement, or covenant, condition or restriction in effect at any time
during the Term.
(c) The Lessee shall, upon the expiration or earlier termination of this
Lease, vacate and surrender the Property to the Lessor in its then-current, "AS
IS" condition, subject to the Lessee's obligations under Sections 9.1, 10.1(a),
11.1, 12.1, 15.1(e), 15.2, 22.1 and 23.1.
(d) The Lessee warrants that, subject to delays to the extent permitted
under the terms of the Construction Agency Agreement, it shall cause the
Improvements currently under construction or currently planned to be constructed
on the Property to be designed and constructed in a workmanlike manner and in
accordance with all Requirements of Law, prior to the Outside Completion Date so
that, prior to such date, such Improvements will be fit for their intended
purpose.
ARTICLE XI
11.1. Modifications, Substitutions and Replacements. (a) After
Completion of the Improvements, the Lessee, at its sole cost and expense, may at
any time and from time to time make alterations, renovations, improvements and
additions to the Property or any part thereof and substitutions and replacements
therefor (collectively, "Modifications"); provided that: (i) no Modification
shall impair the value, utility or
<PAGE> 15
useful life of the Property or any part thereof from that which existed
immediately prior to such Modification; (ii) the Modification shall be done
expeditiously and in a good and workmanlike manner; (iii) the Lessee shall
comply with all Requirements of Law (including all Environmental Laws) and
comply with all Insurance Requirements applicable to the Modification, including
the obtaining of all permits and certificates of occupancy, and the structural
integrity of the Property shall not be adversely affected; (iv) subject to the
terms of Article XIII relating to permitted contests, the Lessee shall pay all
costs and expenses and shall discharge (or cause to be insured or bonded over)
within sixty (60) days after the same shall be filed (or otherwise become
effective) any Liens arising with respect to the Modification; and (v) such
Modifications shall comply with Sections 8.2 and 10.1. All Modifications (other
than those that both are not Modifications required to be made pursuant to a
Requirement of Law or an Insurance Requirement ("Required Modification") and are
readily removable without impairing the value, utility or remaining useful life
of the Property) shall remain part of the realty and shall be subject to this
Lease, and title thereto shall immediately vest in the Lessor. So long as no
Lease Event of Default has occurred and is continuing, the Lessee may place upon
the Property any trade fixtures, machinery, equipment or other property
belonging to the Lessee or third parties and may remove the same at any time
during the Term, subject, however, to the terms of Section 10.1(a); provided
that such trade fixtures, machinery, equipment or other property do not impair
the value, utility or remaining useful life of the Property; provided, further,
that the Lessee shall keep and maintain at the Property and shall not remove
from the Property any Fixtures or Equipment financed or otherwise paid for
(directly or indirectly) by the Lessor or any Participant pursuant to the
Participation Agreement, unless it replaces such Fixtures or Equipment with
Fixtures or Equipment of equal or greater value, as evidenced by an appraisal,
invoice or other documentation satisfactory to the Lessor, not subject to any
Liens other than Permitted Liens.
(b) The Lessee shall deliver to the Lessor and the Indenture Trustee a
brief written narrative of the work to be done in connection with any
Modification to the Property the cost of which is anticipated to exceed $500,000
in the aggregate.
ARTICLE XII
12.1. Warranty of Title. (a) The Lessee agrees that except as otherwise
provided herein and subject to the terms of Article XIII relating to permitted
contests, the Lessee shall not directly or indirectly create or allow to remain,
and shall promptly discharge at its sole cost and expense, any Lien, defect,
attachment, levy, title retention agreement or claim upon the Property (or the
Lessor's interest therein) or any Modifications or any Lien, attachment, levy or
claim with respect to the Rent or with respect to any amounts held by the
Indenture Trustee pursuant to the Participation Agreement or the other Operative
Documents, other than Permitted Exceptions and Lessor Liens.
<PAGE> 16
(b) Nothing contained in this Lease shall be construed as constituting
the consent or request of the Lessor, expressed or implied, to or for the
performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Property
or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR, THE BANK,
ANY PARTICIPANT NOR THE INDENTURE TRUSTEE IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE OR TO ANYONE
HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE AND THAT NO
MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF THE LESSOR IN AND TO THE PROPERTY.
12.2. Grants and Releases of Easements. Provided that no Lease Event of
Default shall have occurred and be continuing and subject to the provisions of
Articles VIII, IX, X and XI, the Lessor hereby consents in each instance to the
following actions by the Lessee (provided, that the same are permitted by the
Ground Lease), in the name and stead of the Lessor, but at the Lessee's sole
cost and expense: (a) the granting of easements, licenses, rights-of-way and
other rights and privileges in the nature of easements reasonably necessary or
desirable for the completion of construction of the Improvements, use, repair,
operation or maintenance of the Property as herein provided; (b) the release of
existing easements or other rights in the nature of easements which are for the
benefit of the Property; (c) the execution of petitions to have the Property
annexed to any municipal corporation or utility district; (d) the execution of
amendments to any covenants and restrictions affecting the Property; and (e) the
Lessee's obtaining all necessary Governmental Actions necessary for completion
of the construction of the Improvements described in the Participation Agreement
or the making of any Modifications; provided, however, in each case the Lessee
shall have delivered to the Lessor a Responsible Officer's Certificate stating
that (i) such grant, release, dedication or transfer does not materially impair
the value, utility and remaining useful life of the Property, (ii) such grant,
release, dedication or transfer is reasonably necessary in connection with the
completion of construction of the Improvements, use, operation maintenance,
alteration or improvement of the Property, (iii) the Lessee shall remain
obligated under this Lease and under any instrument executed by the Lessee
consenting to the assignment of the Lessor's interest in this Lease as security
for indebtedness, in each such case in accordance with their terms, as though
such grant, release, dedication or transfer, had not been effected, (iv) the
Lessee shall pay and perform any obligations of the Lessor under such grant,
release, dedication or transfer, and (v) such easements, rights-of-way and other
rights shall be subordinate and subject to the Lien of the Mortgage and the
Indenture. Without limiting the effectiveness of the foregoing, provided that no
Lease Event of Default shall have occurred and be continuing, the Lessor shall,
upon the request of the Lessee, and at the Lessee's sole cost and expense,
execute and deliver any instruments necessary or appropriate to confirm any such
grant, release, dedication or transfer to any Person permitted under this
Section 12.2.
<PAGE> 17
12.3. Actions Required of the Lessor. So long as no Lease Event of
Default shall have occurred and be continuing, the Lessor shall, at no cost or
expense to the Lessor, cooperate with the Lessee in connection with actions
contemplated in clauses (a) through (e) of Section 12.2, and under Article XI
above, including execution of documents and taking such other action required by
the Permitted Exceptions or by Applicable Laws; provided, that (i) such actions
shall be limited to actions that can only be taken by the Lessor as the owner or
ground lessee of the Property, as opposed to any action that can be taken by the
Lessee or any third party (and the payment of any monetary obligation shall not
be an action required of the Lessor under this subparagraph unless the Lessor
shall first have received funds from the Lessee, in excess of any other amounts
due from the Lessee hereunder, sufficient to pay such monetary obligations),
(ii) the Lessee requests the action to be taken by the Lessor (which request
must be specific and in writing, if required by Lessor at the time the request
is made), and (iii) the action to be taken will not constitute a violation of
any Applicable Laws or subject the Lessor to any liability whatsoever, unless
such liability is covered by the indemnification obligations under Section 13.1
of the Participation Agreement.
12.4. Further Actions By the Lessee. Subject to the other terms and
conditions of this Lease and the Ground Lease, the Lessee shall be entitled to
do any of the following in the Lessee's own name and to the exclusion of the
Lessor during the Term without any notice to or consent of the Lessor so long as
no Lease Event of Default has occurred and is continuing and so long as the
Lessee does not thereby create any encumbrance or cloud on the Lessor's title to
the Property (other than a Permitted Exception):
(a) to perform obligations arising under and to exercise and
enforce the rights of the Lessee or the owner of the Property under the
Development Contracts and other Permitted Exceptions;
(b) to perform obligations arising under and to exercise and
enforce the rights of the Lessee or the owner of the Property with
respect to any other contracts or documents (such as plans and
specifications) included within the Property; and
(c) to recover and retain any monetary damages or other benefit
inuring to the Lessee or the owner of the Property through the
enforcement of any rights, contracts or other documents included within
the Property (including without limitation the Development Contracts and
other Permitted Encumbrances and any ordinances, regulations and laws);
provided, that to the extent any such monetary damages may become payable as
compensation for an adverse impact on value of the Property, the rights of
Lessor and Lessee hereunder with respect to the collection and application of
such monetary damages shall be the same as for condemnation proceeds payable
because of a taking of all or any part of the Property. Without limiting the
generality of the foregoing, subject to the terms of the Ground Lease, the
Lessee shall be entitled to any and all refunds
<PAGE> 18
received by the Lessor with respect to any assessment bonds or assessment
districts applicable to the Property for such periods or portions thereof ending
on the earlier of the Termination Date or the Expiration Date or other date of
termination of this Lease unless the Lessee has purchased the Property, in which
event the Lessee shall be entitled to all such refunds regardless of the period
to which they are applicable.
ARTICLE XIII
13.1. Permitted Contests Other Than in Respect of Indemnities. Except to
the extent otherwise provided for in Section 13 of the Participation Agreement,
the Lessee, on its own or on the Lessor's behalf but at the Lessee's sole cost
and expense, may contest, by appropriate administrative or judicial proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Requirement of Law, or utility charges
payable pursuant to Section 4.1 or any Lien, attachment, levy, encumbrance or
encroachment, and the Lessor agrees not to pay, settle or otherwise compromise
any such item, provided that (a) the commencement and continuation of such
proceedings shall suspend the collection thereof from, and suspend the
enforcement thereof against, the Property, the Collateral, the Lessor, the
Indenture Trustee and the Participants or the Lessee shall have bonded or
otherwise secured such amount in a manner satisfactory to the Lessor and the
Indenture Trustee; (b) there shall be no risk of the imposition of a Lien (other
than Permitted Exceptions) on the Property or the Collateral and no part of the
Property nor any Rent would be in any danger of being sold, forfeited, lost or
deferred; (c) at no time during the permitted contest shall there be a risk of
the imposition of criminal liability or material civil liability on the Lessor,
the Indenture Trustee or any Participant for failure to comply therewith
(unless, in the case of civil liability, the Lessee shall have bonded or
otherwise secured such amount in a manner satisfactory to the Lessor and the
Indenture Trustee); and (d) in the event that, at any time, there shall be a
material risk of extending the application of such item beyond the end of the
Term, then the Lessee shall deliver to the Lessor a Responsible Officer's
Certificate certifying as to the matters set forth in clauses (a), (b) and (c)
of this Section 13.1. The Lessor, at the Lessee's sole cost and expense, shall
execute and deliver to the Lessee such authorizations and other documents as may
reasonably be required in connection with any such contest and, if reasonably
requested by the Lessee, shall join as a party therein at the Lessee's sole cost
and expense.
ARTICLE XIV
14.1. Coverage. During the Construction Period, the Lessee shall arrange
for insurance as agent for the Lessor and the incremental cost of such insurance
shall be capitalized as a project cost. After the Construction Period, the
Lessee, at its sole cost and expense, shall at all times carry and maintain
insurance coverage. Such insurance, both during and after the Construction
Period, shall provide for coverage as specified in Sections 14.2 through 14.4
hereof.
<PAGE> 19
14.2. Public Liability and Workers' Compensation Insurance. The Lessee
shall procure and carry commercial general liability insurance, including
contractual liability, for claims for injuries or death sustained by persons or
damage to property while on the Property and such other commercial general
liability coverages as are ordinarily procured by Persons who own or operate
similar properties and consistent with prudent business practice, which policies
shall include contractual liability endorsements covering the Lessee's
indemnification obligations in Section 13.1 of the Participation Agreement. Such
insurance shall be on terms and in amounts (which shall be acceptable to the
Lessor and in the event of liability insurance shall be maintained at a level
set forth on Schedule 14.3 that are no less favorable than insurance maintained
by the Lessee with respect to similar properties that it owns and that are in
accordance with prudent business practice and may be provided under blanket
policies maintained by or on behalf of the Lessee. The policy shall be endorsed
to name the Lessor, the Bank, the Indenture Trustee and each Participant as
additional insureds. The policy shall also specifically provide that the policy
shall be considered primary insurance which shall apply to any loss or claim
before any contribution by any insurance which the Lessor, the Bank, the
Indenture Trustee or the Participants may have in force. The Lessee shall, in
the construction of the Improvements and the operation of the Property
(including in connection with any Modifications thereof) comply with the
applicable workers' compensation laws and protect the Lessor, the Bank, the
Indenture Trustee and the Participants against any liability under such laws.
14.3. Hazard and Other Insurance. The Lessee shall keep, or cause to be
kept, the Property insured against loss or damage by fire, flood, earthquakes,
and other risks in an amount not less than the greater of the amount set forth
on Schedule 14.3 and the then current replacement cost of the buildings and
improvements on the Property and on terms that are no less favorable than
insurance covering other similar properties owned or leased by the Lessee or any
of its Affiliates and that are in accordance with prudent business practice;
provided that the Lessee shall be required to maintain earthquake coverage only
if commercially reasonably available and, if obtained, in a minimum amount equal
to 100% of the probable maximum loss with respect to the Property as
demonstrated by a professional engineer qualified to make such a determination
selected by the Lessee as reasonably approved by the Lessor and the Indenture
Trustee. Earthquake insurance shall be deemed to be commercially reasonably
available if it is offered by more than one insurance carrier. The Lessee may
provide such coverage under blanket policies maintained by the Lessee; provided
that if the Lessee does not elect to terminate the Lease pursuant to Article XVI
hereof following the occurrence of an event covered by any such blanket policy,
the proceeds of any such blanket policy shall be applied (i) first, to the
exclusion of other facilities covered by such policy other than the Initial
Property, to the repair, rebuilding and restoration of any damage to the
Property and the Initial Property covered by such policy on a pro rata basis, if
so required in order to complete such repair, rebuilding or restoration, up to
the lesser of (A) the extent of the loss suffered and (B) $23,000,000 per
occurrence, and (ii) second, if the loss suffered is in excess of $23,000,000
per occurrence, any such proceeds in excess of $23,000,000 per occurrence shall
be shared between the loss payees under this Lease and the lease referred to in
the Initial Participation Agreement, on the one hand, and other
<PAGE> 20
parties having an insured interest with respect to such event covered by such
policy, on the other hand, based on the proportion that the loss suffered with
respect to the Property and the Initial Property, on the one hand, bears to the
aggregate loss suffered by the Property, the Initial Property and all other
properties insured by such policy, on the other hand. During the construction of
any Improvements the Lessee shall also maintain builders' risk insurance. Each
policy of insurance maintained by the Lessee pursuant to this Section 14.3 shall
provide that all insurance proceeds in respect of any loss or occurrence shall
be paid to and adjusted solely by Indenture Trustee (at the Lessee's expense)
during the Construction Period, and thereafter, by (and such proceeds shall be
paid to) the Lessee, except (i) insurance proceeds in excess of $5,000,000 shall
be paid to the Indenture Trustee and applied to the repair, rebuilding or
restoration of the Property in accordance with Article XV and (ii) from and
after the date on which the insurer receives written notice from the Lessor or
the Indenture Trustee that a Lease Event of Default exists (and unless and until
such insurer receives written notice from the Lessor or the Indenture Trustee
that all Lease Events of Default have been cured), all losses shall be adjusted
solely by, and all insurance proceeds shall be paid solely to, the Indenture
Trustee (or the Lessor if the Notes have been fully paid) for application
pursuant to Article XV.
14.4. Terms. (a) The Lessee shall furnish the Lessor and the Indenture
Trustee with certified copies of the insurance policies showing the insurance
required under Sections 14.2 and 14.3 to be in effect and naming the Lessor, the
Bank, the Indenture Trustee and each Participant as additional insureds and,
with respect to the insurance required under Section 14.3, loss payees, and
showing the mortgagee endorsement required by Section 14.4(c). All such
insurance shall be at the cost and expense of the Lessee. Such policies shall
include a provision for advance written notice by the insurer to the Lessor, the
Indenture Trustee and the Lessee of ten (10) days in the event of cancellation
of such coverage for non-payment of premiums or thirty (30) days in the event of
cancellation of such insurance for any other reason.
(b) The Lessee agrees that the insurance policy or policies required by
Sections 14.2 and 14.3 shall include (i) an appropriate clause pursuant to which
such policy shall provide that it will not be invalidated should the Lessee
waive, in writing, prior to a loss, any or all rights of recovery against any
party for losses covered by such policy, and that the insurance in favor of the
Lessor, the Bank, the Indenture Trustee and the Participants, and their
respective rights under and interests in said policies shall not be invalidated
or reduced by any act or omission or negligence of the Lessee or any other
Person having any interest in the Property, and (ii) a so-called "Waiver of
Subrogation Clause". The Lessee hereby waives any and all such rights against
the Lessor, the Bank, the Indenture Trustee and the Participants to the extent
of payments made under such policies.
(c) All such insurance shall be written by reputable insurance companies
that are financially sound and solvent and otherwise reasonably appropriate
considering the amount and type of insurance being provided by such companies;
provided that the Lessee may self insure such coverage through its domestic
insurance captive subsidiary.
<PAGE> 21
Any third-party insurance company selected by the Lessee which is rated in
Best's Key Rating Guide or any successor thereto (or if there be none, an
organization having a similar national reputation) shall have a general
policyholder rating of "A" and a financial rating of at least VII in Best's Key
Rating Guide or be otherwise acceptable to the Lessor, the Indenture Trustee and
the Required Participants. All insurance policies required by Section 14.3 shall
include a standard form mortgagee endorsement in favor of the Indenture Trustee.
(d) The Lessor shall not carry separate insurance concurrent in kind or
form or contributing in the event of loss with any insurance required under this
Article XIV except that the Lessor may carry separate liability insurance (at
its sole cost) so long as (i) the Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance the Lessor may have in
force which would apply to a loss covered under the Lessee's policy and (ii)
each such insurance policy will not cause the Lessee's insurance required under
this Article XIV to be subject to a coinsurance exception of any kind.
(e) The Lessee shall pay as they become due all premiums for the
insurance required by Section 14.2 and Section 14.3, and shall renew or replace
each policy prior to the expiration date thereof. Throughout the Term, at the
time each of the Lessee's insurance policies is renewed (but in no event less
frequently than once each year), the Lessee shall deliver to the Lessor and the
Indenture Trustee certified copies of the insurance policies required by this
Article XIV to be maintained by the Lessee with respect to the Property.
(f) The Lessee hereby waives, releases and discharges the Lessor, the
Indenture Trustee and each Participant and their agents and employees from all
claims whatsoever arising out of loss, claim, expense or damage to or
destruction covered or coverable by insurance required under this Article XIV
notwithstanding that such loss, claim, expense or damage may have been caused by
the Lessor, the Indenture Trustee or any Participant or any of their agents or
employees, and the Lessee agrees to look to the insurance coverage only in the
event of such loss.
ARTICLE XV
15.1. Casualty and Condemnation. (a) Subject to the provisions of
Article XIV, this Article XV and (in the event the Lessee delivers, or is
obligated to deliver, a Termination Notice) Article XVI, and prior to the
occurrence and continuation of a Lease Event of Default, the Lessee shall be
entitled to receive (and the Lessor shall pay over to the Lessee, if received by
the Lessor, and hereby irrevocably assigns to the Lessee all of the Lessor's
right, title and interest in) any award, compensation or insurance proceeds to
which the Lessee or the Lessor may become entitled by reason of their respective
interests in the Property (i) if all or a portion of the Property is damaged or
destroyed in whole or in part by a Casualty or (ii) if the use, access,
occupancy, easement rights or title to the Property or any part thereof, is the
subject of a Condemnation; provided, however,
<PAGE> 22
subject to Article XIV, if the amount of such proceeds is in excess of
$5,000,000 or if a Lease Event of Default shall have occurred and be continuing,
such award, compensation or insurance proceeds shall be paid directly to the
Indenture Trustee or, if received by the Lessee, shall be held in trust for the
Indenture Trustee, and shall be paid over by the Lessee to the Indenture Trustee
(or, if the Notes have been fully paid, to the Lessor) and held in accordance
with the terms of this paragraph (a). If, contrary to such provision, any such
award, compensation or insurance proceeds are paid to the Lessor or the Lessee
rather than to the Indenture Trustee, the Lessor and the Lessee, as the case may
be, hereby agree to transfer any such payment to the Indenture Trustee. All
amounts held by the Lessor or the Indenture Trustee under the preceding sentence
on account of any award, compensation or insurance proceeds either paid directly
to the Lessor or the Indenture Trustee or turned over to the Lessor or the
Indenture Trustee shall either be (i) paid to the Lessee for the repair of
damage caused by such Casualty or Condemnation in accordance with paragraph (e)
of this Section 15.1, or (ii) applied to the purchase price of the Property on
the Termination Date, with any Excess Proceeds being payable to the Lessee.
(b) In any proceeding or action under the control of the Lessor pursuant
to the terms of Section 14.3, the Lessee may participate and shall pay all
expenses of such proceeding and its participation. At the Lessee's reasonable
request, and at the Lessee's sole cost and expense, the Lessor and the Indenture
Trustee shall participate in any such proceeding, action, negotiation,
prosecution or adjustment under the control of the Lessee. The Lessor and the
Lessee agree that this Lease shall control the rights of the Lessor and the
Lessee in and to any such award, compensation or insurance payment.
(c) If the Lessor or the Lessee shall receive notice of a Casualty or of
an actual, pending or threatened Condemnation of the Property or any interest
therein, the Lessor or the Lessee, as the case may be, shall give notice thereof
to the other and to the Indenture Trustee promptly after the receipt of such
notice.
(d) In the event of a Casualty or receipt of notice by the Lessee or the
Lessor of a Condemnation, the Lessee may deliver to the Lessor and the Indenture
Trustee a Termination Notice with respect to the Property pursuant to Section
16.1. If the Lessee does not deliver a Termination Notice within ninety (90)
days after such occurrence, then this Lease shall (subject to the terms and
conditions thereof) remain in full force and effect, and the Lessee shall, at
the Lessee's sole cost and expense, promptly and diligently restore the Property
pursuant to paragraph (e) of this Section 15.1 and otherwise in accordance with
this Lease. If the Lessee delivers a Termination Notice within ninety (90) days
after such occurrence, a Significant Event shall irrevocably be deemed to have
occurred with respect to the Property, and, in such event, this Lease shall
terminate and the Lessee shall purchase the Property on the next Payment Date
(or, if such Payment Date is within fifteen (15) days of the Lessor's receipt of
such Termination Notice, on the Payment Date next following such Payment Date)
(a "Termination Date") pursuant to Article XVI hereof.
(e) If pursuant to this Section 15.1 this Lease shall continue in full
force and effect following a Casualty or Condemnation, the Lessee shall, at its
sole cost and
<PAGE> 23
expense (and, without limitation, if any award, compensation or insurance
payment is not sufficient to restore the Property in accordance with this
paragraph, the Lessee shall pay the shortfall), promptly and diligently repair
any damage to the Property caused by such Casualty or Condemnation or substitute
new Equipment for the affected Equipment in conformity with the requirements of
Sections 10.1 and 11.1 using the as-built Plans and Specifications for the
Property (as modified to give effect to any subsequent Modifications, any
Condemnation affecting the Property and all applicable Requirements of Law) so
as to restore the Property to at least the same condition, operation, function
and value as existed immediately prior to such Casualty or Condemnation;
provided, the substitution of any Equipment for any such affected Equipment
shall, at the Lessor's reasonable request, be subject to delivery of an
independent third-party appraisal reasonably satisfactory to the Lessor and the
Required Participants by an appraiser satisfactory to the Lessor and the
Required Participants showing both (i) a current Fair Market Sales Value and
(ii) expected Fair Market Sales Value as of the then current Expiration Date and
the dates on which any potential Renewal Term would expire, in each case equal
to or greater than such values at such dates for the Equipment being replaced.
In the event of such restoration, title to the Property shall remain with the
Lessor; provided, that (i) title to any such substituted equipment shall vest in
the Lessor and such equipment shall constitute Equipment thereafter for all
purposes of this Lease, and (ii) the Lessor shall assign all of its right, title
and interest to the Lessee in any such replaced equipment without representation
or warranty of any kind other than that such equipment is free of Lessor Liens.
Upon completion of such restoration, the Lessee shall furnish the Lessor an
architect's certificate of substantial completion and a Responsible Officer's
Certificate confirming that such restoration has been completed pursuant to this
Lease.
(f) In no event shall a Casualty or Condemnation with respect to which
this Lease remains in full force and effect under this Section 15.1 affect the
Lessee's obligations to pay Rent pursuant to Section 3.1 or to perform its
obligations and pay any amounts due on the Expiration Date or pursuant to
Articles XIX and XX.
(g) Any Excess Proceeds received by the Lessor or the Indenture Trustee
in respect of a Casualty or Condemnation shall be turned over to the Lessee,
provided that no Lease Event of Default or Lease Default has occurred and is
continuing.
15.2. Environmental Matters. Promptly upon the Lessee's actual knowledge
of the presence of Hazardous Substances in any portion of the Property in
concentrations and conditions that constitute an Environmental Violation where
the cost to remediate such Environmental Violation in compliance with all
Environmental Laws would, in the opinion of the Lessee, be at least $500,000,
the Lessee shall notify the Lessor in writing of such condition. In the event of
such Environmental Violation, the Lessee shall, not later than thirty (30) days
after the Lessee has actual knowledge of such Environmental Violation, either,
if such Environmental Violation is a Significant Event, deliver to the Lessor
and the Indenture Trustee a Responsible Officer's Certificate and a Termination
Notice with respect to the Property pursuant to Section 16.1, or, if such
Environmental Violation is not a Significant Event, at the Lessee's sole cost
and expense, promptly and
<PAGE> 24
diligently commence any Response Actions necessary to investigate, remove, clean
up or remediate the Environmental Violation in accordance with the terms of
Section 9.1. If the Lessee does not deliver a Termination Notice with respect to
the Property pursuant to Section 16.1, the Lessee shall, upon completion of
Response Actions by the Lessee, cause to be prepared by an environmental
consultant reasonably acceptable to the Lessor a report describing the
Environmental Violation and the Response Actions taken by the Lessee (or its
agents) for such Environmental Violation, and a statement by the consultant that
the Environmental Violation has been remedied in compliance in all material
respects with applicable Environmental Law. Each such Environmental Violation
shall be remedied prior to the Expiration Date. Nothing in this Article XV shall
reduce or limit the Lessee's obligations under Sections 13.1, 13.2 or 13.3 of
the Participation Agreement.
15.3. Notice of Environmental Matters. Promptly, but in any event within
the thirty (30) Business Days from the date the Lessee has actual knowledge
thereof, the Lessee shall provide to the Lessor written notice of any pending or
threatened claim, action or proceeding involving any Environmental Law or any
Release on or in connection with the Property where the cost to remediate the
underlying condition or the aggregate indemnifiable exposure under Section 13.2
of the Participation Agreement is estimated by the Lessee to be at least
$500,000. All such notices shall describe in reasonable detail the nature of the
claim, action or proceeding and the Lessee's proposed response thereto. In
addition, the Lessee shall provide to the Lessor, within thirty (30) Business
Days of receipt, copies of all material written communications with any
Governmental Authority relating to any Environmental Law in connection with the
Property where the cost to remediate such Environmental Violation in compliance
with all Environmental Laws would, in the opinion of the Lessee, be at least
$500,000. The Lessee shall also promptly provide such detailed reports of any
such environmental claims as may reasonably be requested by the Lessor and the
Indenture Trustee.
ARTICLE XVI
16.1. Termination by the Lessee upon Certain Events. If either: (i) the
Lessee or the Lessor shall have received notice of a Condemnation, and the
Lessee shall have delivered to the Lessor a Responsible Officer's Certificate
that such Condemnation is a Significant Condemnation; or (ii) a Casualty occurs,
and the Lessee shall have delivered to the Lessor a Responsible Officer's
Certificate that such Casualty is a Significant Casualty; or (iii) an
Environmental Violation occurs or is discovered and the Lessee shall have
delivered to the Lessor a Responsible Officer's Certificate stating that, in the
reasonable, good-faith judgment of the Lessee, the cost to remediate the same
will cause the same to be a Significant Event, or (iv) if the Lessee shall not
have delivered a Termination Notice with respect to such Environmental Violation
described in clause (iii) but the requirements of Section 16.4 are met with
respect to such Environmental Violation; then, (A) the Lessee shall,
simultaneously with the delivery of the Responsible Officer's Certificate
pursuant to the preceding clause (i), (ii) or (iii) deliver a written notice in
the form described in Section 16.2(a) (a "Termination Notice"), or (B) if clause
(iv) is applicable, the Lessor may deliver Termination Notice pursuant to
Section 16.4.
<PAGE> 25
16.2. Procedures. (a) A Termination Notice shall contain: (i) notice of
termination of this Lease with respect to the Property or the affected portion
thereof on a date that is no later than thirty (30) days after the occurrence of
the applicable event described in clause (i), (ii), (iii) or (iv) of Section
16.1 (the "Termination Date"), such termination to be effective upon the
Lessee's payment of the Asset Termination Value (or portion thereof representing
the Property Cost of the affected portion of the Property) (offsetting against
such amount the aggregate amount of the Cash Collateral, if any); and (ii) a
binding and irrevocable agreement of the Lessee to pay the Asset Termination
Value or a portion thereof (offsetting against such amount the aggregate amount
of the Cash Collateral, if any), and purchase the Property on the Termination
Date.
(b) On the Termination Date, the Lessee shall pay to the Lessor the
Asset Termination Value (or such portion thereof, as applicable), plus all other
amounts owing in respect of Rent for the Property (including Supplemental Rent)
theretofore accruing, and the Lessor shall convey the Lessor's interest in the
Property or such portion thereof to the Lessee (or the Lessee's designee) all in
accordance with Section 19.1, as well as any Net Proceeds with respect to the
Casualty or Condemnation giving rise to the termination of this Lease with
respect to the Property theretofore received by the Lessor.
16.3. Termination by the Lessor upon Certain Events. If the Lessor
reasonably determines that any change in, or change in the interpretation of,
any applicable law after the date hereof would result in it or any Participant
being unable to continue to hold legal or beneficial title to all or any portion
of the Property or, except as provided in Section 16.4 hereof, subject it or any
Participant to onerous regulations or onerous liability on account thereof, the
Lessor may deliver a Termination Notice with respect to the Lease to the
Indenture Trustee, the Participants and the Lessee, such termination to be
effective on the Termination Date specified therein. Prior to delivering a
Termination Notice, the Lessor agrees that it will use its reasonable efforts to
reduce or eliminate the consequences of any such onerous regulation or onerous
liability, including, subject to Applicable Law, a change in the applicable
lending office for this transaction; provided, however, that nothing herein
shall obligate the Lessor to take any action which, in the opinion of the
Lessor, is unlawful, or results in any unreimbursed cost or expense to the
Lessor, which cost or expense would not have been incurred but for such action.
In the event the Lessor exercises its termination option, the Lessee may
exercise the Remarketing Option provided in Section 22.1 hereof by giving notice
to the Lessor within ten (10) Business Days of receipt of the notice from the
Lessor. If the Lessee does not exercise its Remarketing Option, the Lessee shall
be obligated to purchase the Property in accordance with Section 20.2 hereof on
the Termination Date for the purchase price set forth therein.
16.4. Purchase of Property. Upon receipt of any notice pursuant to
Section 15.2 or 15.3, the Lessor or the Required Participants, at the Lessee's
expense, shall have the right to select an independent environmental consultant
acceptable to the Lessee, which acceptance shall not be unreasonably withheld or
delayed, to determine the estimated cost of conducting any clean-up or
remediation required as a result of the Environmental
<PAGE> 26
Violation disclosed in such notice. If such independent environmental consultant
determines that the cost of any such clean-up or remediation would exceed
$2,500,000, the Lessor shall, at the direction of the Required Participants,
require the Lessee to purchase, or arrange for an Affiliate or other third party
to purchase, the Property on the Expiration Date by delivering a Termination
Notice following the requirements of Section 16.2 hereof.
ARTICLE XVII
17.1. Lease Events of Default. The occurrence of any one or more of the
following events (whether such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute a "Lease Event of
Default":
(a) the Lessee shall fail to make payment of (i) any Basic Rent
(provided that the Lessor has given the notice of amount due required under
Section 3.1 when required) (other than a payment of Basic Rent due on the
Expiration Date or Termination Date) within five (5) Business Days after the
same has become due and payable or (ii) Basic Rent, Purchase Option Price, Asset
Termination Value or Residual Value Guarantee Amount or other amounts due on the
Expiration Date or the Termination Date, including, without limitation, amounts
due pursuant to Sections 16.2, 16.3, 16.4, 20.1, 20.2, 20.3 or 22.1, after the
same has become due and payable;
(b) the Lessee shall fail to make payment of any Supplemental Rent
(other than Supplemental Rent referred to in clause (a) of this Section) due and
payable within thirty (30) days after written notice thereof;
(c) the Lessee shall fail to maintain insurance as required by Article
XIV of this Lease;
(d) the Lessee shall fail to observe or perform any term, covenant or
condition of the Lessee under this Lease, the Participation Agreement or any
other Operative Document to which it is a party other than those described in
Section 17.1(a), (b),or (c) hereof, or any representation or warranty set forth
in this Lease or in any other Operative Document or in any document entered into
in connection herewith or therewith or in any document, certificate or financial
or other statement delivered in connection herewith or therewith shall be false
or inaccurate in any Material way, and such failure or misrepresentation or
breach of warranty shall remain uncured for a period of thirty (30) days after
receipt of written notice thereof; provided, that if such failure to perform is
not capable of being cured within such period but is capable of being cured
within one hundred eighty (180) days after the occurrence of such default and
the Lessee is proceeding diligently to cure such default, the Lessee shall be
entitled to request an additional period (not to exceed one hundred eighty (180)
days from the date of such
<PAGE> 27
default) to cure such default, which extended cure period may be granted by the
Lessor and the Required Participants in their sole discretion;
(e) the Lessee shall (i) admit in writing its inability to pay its debts
generally as they become due, (ii) file a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the United
States of America or any State or Commonwealth thereof, (iii) make a general
assignment for the benefit of its creditors, (iv) consent to the appointment of
a receiver of itself or the whole or any substantial part of its property, (v)
fail to cause the discharge of any custodian, trustee or receiver appointed for
the Lessee or the whole or a substantial part of its property within sixty (60)
days after such appointment, or (vi) file a petition or answer seeking or
consenting to reorganization under the United States bankruptcy laws or any
other applicable insolvency law or statute of the United States of America or
any State or Commonwealth thereof;
(f) insolvency proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the United
States of America or any State or Commonwealth thereof shall be filed against
the Lessee and not dismissed within sixty (60) days from the date of its filing,
or a court of competent jurisdiction shall enter an order or decree appointing,
without the consent of the Lessee, a receiver of the Lessee or the whole or a
substantial part of its property, and such order or decree shall not be vacated
or set aside within sixty (60) days from the date of the entry thereof;
(g) if any of the following shall occur, and the aggregate liability of
the Lessee in respect thereof would exceed $5,000,000: (i) any member of the
ERISA Group shall fail to pay when due an amount or amounts aggregating in
excess of $5,000,000 which it shall have become liable to pay under Title IV of
ERISA; or (ii) notice of intent to terminate a Material Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any plan administrator
or any combination of the foregoing; or (iii) the PBGC shall institute
proceedings under Title IV of ERISA to terminate, to impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or (iv) there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $5,000,000;
(h) a judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Lessee or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed (pursuant to laws,
rules or court orders) for a period of thirty (30) days;
(i) the Guarantor, the Lessee or any of their respective Subsidiaries
(i) shall default in the payment when due, whether at stated maturity or
otherwise, of principal or interest in respect of Indebtedness (other than under
the Operative Documents) or
<PAGE> 28
obligations in respect of Consolidated Off-Balance Sheet Debt having an
aggregate principal amount of $5,000,000 or more; or (ii) shall fail to perform
or observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Consolidated Off-Balance Sheet Debt, if the effect of any such
failure, event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) or the lessor or the lenders under any such Consolidated
Off-Balance Sheet Debt to cause such Indebtedness or Consolidated Off-Balance
Sheet Debt to be declared to be due and payable prior to its stated maturity, or
cash collateral in respect thereof to be demanded or, in the case of
Consolidated Off-Balance Sheet Debt, demand that the Lessee purchase the
property covered by such Consolidated Off-Balance Sheet Debt;
(j) a Guarantee Event of Default shall have occurred and be continuing;
(k) [intentionally omitted]
(l) a Construction Agency Agreement Event of Default shall have occurred
and be continuing; or
(m) an Environmental Violation shall occur that, in the reasonable
opinion of the Lessor and the Required Participants, based on an Environmental
Audit, constitutes a Significant Event and the Lessee shall not, within thirty
(30) days after notice from the Lessor, have delivered a Termination Notice with
respect thereto pursuant to Section 16.1 hereof or, if so delivered, repurchase
of the Property shall not have been consummated on the Termination Date pursuant
to Section 16.2 hereof;
(n) the Lessee shall have elected to or be required to purchase the
Property pursuant to Sections 16.3 or 16.4 hereof and such purchase shall not
have been consummated on the Termination Date pursuant to either such Section;
or
(o) a Ground Lease Event of Default shall have occurred and be
continuing; or the Lessee shall fail to comply with its covenants set forth in
Section 32.1 hereof; or the Ground Lease shall, in whole or in part, terminate,
cease to be effective or cease to be the legal, valid and binding obligation of
the Lessee.
17.2. Remedies. Upon the occurrence of any Lease Event of Default and at
any time thereafter, the Lessor may, so long as such Lease Event of Default is
continuing, do one or more of the following as the Lessor in its sole discretion
shall determine, without limiting any other right or remedy the Lessor may have
on account of such Lease Event of Default (including, without limitation, the
obligation of the Lessee to purchase the Property as set forth in Section 20.3):
(a) The Lessor may, by notice to the Lessee, rescind or terminate this
Lease as to all or any portion of the Property as of the date specified in such
notice; however, (i) no reletting, reentry or taking of possession of the
Property (or any portion thereof) by the
<PAGE> 29
Lessor will be construed as an election on the Lessor's part to terminate this
Lease unless a written notice of such intention is given to the Lessee, (ii)
notwithstanding any reletting, reentry or taking of possession, the Lessor may
at any time thereafter elect to terminate this Lease for a continuing Lease
Event of Default, and (iii) no act or thing done by the Lessor or any of its
agents, representatives or employees and no agreement accepting a surrender of
the Property shall be valid unless the same be made in writing and executed by
the Lessor;
(b) The Lessor may (i) demand that the Lessee, and the Lessee shall upon
the written demand of the Lessor, return the Property promptly to the Lessor in
the manner and condition required by, and otherwise in accordance with all of
the provisions of, Articles VIII, IX and X hereof as if the Property were being
returned at the end of the Term, and the Lessor shall not be liable for the
reimbursement of the Lessee for any costs and expenses incurred by the Lessee in
connection therewith and (ii) without prejudice to any other remedy which the
Lessor may have for possession of the Property, and to the extent and in the
manner permitted by Applicable Law, enter upon the Property and take immediate
possession of (to the exclusion of the Lessee) the Property or any part thereof
and expel or remove the Lessee and any other Person who may be occupying the
Property, by summary proceedings or otherwise, all without liability to the
Lessee for or by reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or otherwise and, in
addition to the Lessor's other damages, the Lessee shall be responsible for all
costs and expenses incurred by the Lessor and/or the Indenture Trustee or the
Participants in connection with any reletting, including, without limitation,
brokers' fees and all costs of any alterations or repairs made by the Lessor;
(c) The Lessor may (i) sell all or any part of the Property at public or
private sale, as the Lessor may determine, free and clear of any rights of the
Lessee and without any duty to account to the Lessee with respect to such action
or inaction or any proceeds with respect thereto (except to the extent required
by clause (ii) below if the Lessor shall elect to exercise its rights
thereunder) in which event the Lessee's obligation to pay Basic Rent hereunder
for periods commencing after the date of such sale shall be terminated or
proportionately reduced, as the case may be; and (ii) if the Lessor shall so
elect, demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor, on the date of such sale, as liquidated damages for loss of a bargain
and not as a penalty (the parties agreeing that the Lessor's actual damages
would be difficult to predict, but the aforementioned liquidated damages
represent a reasonable approximation of such amount) (in lieu of Basic Rent due
for periods commencing on or after the Payment Date coinciding with such date of
sale (or, if the sale date is not a Payment Date, the Payment Date next
preceding the date of such sale)), an amount equal to (subject to Section
17.2(j)) (A) the excess, if any, of (1) the Asset Termination Value calculated
as of such Payment Date (including all Rent due and unpaid to and including such
Payment Date) less the aggregate amount of the Cash Collateral, if any,
permitted to be retained by the Lessor, the Indenture Trustee or the
Participants, over (2) the net proceeds of such sale, if any (that is, after
deducting all costs and expenses incurred by the Lessor, the Indenture Trustee
and the Participants incident to such conveyance, including, without limitation,
<PAGE> 30
repossession costs, brokerage commissions, prorations, transfer taxes, fees and
expenses for counsel, title insurance fees, survey costs, recording fees, and
any repair or alteration costs); plus (B) all damages, costs and expenses of the
Lessor under the Ground Lease; plus (C) interest at the Overdue Rate on the
foregoing amount from such Payment Date until the date of payment;
(d) The Lessor may terminate the Commitments and its obligation to make
Advances as provided in Section 3.8 of the Participation Agreement;
(e) Unless the Property has been sold in its entirety, the Lessor may,
subject to Section 17.2(j), whether or not the Lessor shall have exercised or
shall thereafter at any time exercise any of its rights under paragraph (b), (c)
or (d) of this Section 17.2 with respect to the Property or portions thereof,
demand, by written notice to the Lessee specifying a date (a "Termination Date")
not earlier than 10 days after the date of such notice, that the Lessee
purchase, on such Termination Date, the Property (or the remaining portion
thereof) in accordance with the provisions of Article XIX and Section 20.3;
provided, that the Lessee shall remain liable for all damages, costs and
expenses of the Lessor under the Ground Lease;
(f) The Lessor may exercise any other right or remedy that may be
available to it under the Operative Documents or otherwise under Applicable Law,
or proceed by appropriate court action (legal or equitable) to enforce the terms
hereof or to recover damages for the breach hereof. Separate suits may be
brought to collect any such damages for any period(s), and such suits shall not
in any manner prejudice the Lessor's right to collect any such damages for any
subsequent period(s), or the Lessor may defer any such suit until after the
expiration of the Term, in which event such suit shall be deemed not to have
accrued until the expiration of the Term; or
(g) The Lessor may retain and apply against the Lessor's damages all
sums which the Lessor would, absent such Lease Event of Default, be required to
pay to, or turn over to, the Lessee pursuant to the terms of this Lease.
(h) In addition to the other rights and remedies set forth herein,
Lessor shall have the right to continue this Lease in effect and, as permitted
by Section 1951.4 of the California Civil Code, to enforce, by suit or
otherwise, all covenants and conditions hereof to be performed or complied with
by Lessee and exercise all of Lessor's rights and remedies under this Lease,
including, without limitation, the right to recover Basic Rent and Supplemental
Rent from Lessee as it becomes due under this Lease, even though Lessee shall
have breached this Lease and abandoned the Property. Acts of maintenance or
preservation, or efforts by Lessor or on Lessor's behalf to relet the Property,
or the appointment of a receiver upon the initiative of Lessor to protect
Lessor's interest under this Lease shall not constitute a termination of
Lessee's right to possession of the Property; provided, however, that the
foregoing enumeration shall not be construed as in any way limiting the actions
Lessor may take without terminating Lessee's right to possession. In furtherance
of the rights hereby granted to Lessor, and to the extent, permitted by law,
Lessee hereby appoints Lessor its agent and attorney-in-fact, which
<PAGE> 31
appointment shall be deemed to be coupled with an interest and is irrevocable,
with power of substitution, to enter the Property upon a Lease Event of Default
hereunder and remove therefrom all persons and property (with the right to store
such property on the Property in a public warehouse or elsewhere at the cost and
risk and for the account of Lessee) and to alter the Property in such manner as
Lessor may deem necessary or advisable so as to put the Property in good order
and to make the same rentable and from time to time sublet the Property or any
part thereof for such term or terms whether or not extending beyond the then
current term of this Lease (but such sublease may provide for a new and
successive lease to commence immediately upon the termination of this Lease), at
such rentals and upon such other terms as Lessor in its sole discretion may deem
advisable, and with the right to make alterations and repairs to the Property;
and Lessee agrees to pay to Lessor on demand all reasonable expenses incurred by
Lessor in such subletting, and in altering, repairing and putting the Property
in good order and condition, and in reletting the same, including fees of
attorneys and architects, and all other reasonable expenses or commissions.
Lessor shall be Lessee's agent and representative on the Property in respect of
all matters arising under or in connection with any such sublease made for
Lessee by Lessor. Under each such sublease, Lessee shall retain the right to
enter upon and use the Property, subject to the terms and conditions of such
sublease and the rights of the sublessee thereunder. Lessee further agrees to
pay to Lessor, following the date of such subletting, to and including the date
provided in this Lease for the expiration of the Lease Term, the sums of money
which would have been payable by Lessee as Basic Rent and Supplemental Rent,
deducting only the net amount of rent, if any, which Lessor shall actually
receive (after deducting from the gross receipts the expenses, costs and
payments of Lessor which in accordance with the terms of this Lease would have
been borne by Lessee) in the meantime from and by any such subletting of the
Property, and Lessee hereby agrees to remain liable for all sums otherwise
payable by Lessee under this Lease, including, but not limited to, the expenses
of Lessor aforesaid, as well as for any deficiency aforesaid. Lessor shall have
the right from time to time to begin and maintain successive actions or other
legal proceedings against Lessee for the recovery of such deficiency, expenses
or damages or for a sum equal to any installments of Basic Rent or Supplemental
Rent and other sums payable hereunder, and to recover the same upon the
liability of Lessee herein provided, which liability it is expressly covenanted
shall survive the commencement or determination of any action to secure
possession of the Property. Nothing herein contained shall be deemed to require
Lessor to wait to begin such action or other legal proceedings until the date
when this Lease would have expired by limitation had there been no such Lease
Event of Default. Notwithstanding any such subletting without termination,
pursuant to the terms hereof, Lessor shall retain the right to and may at any
time thereafter elect to terminate this Lease or Lessee's right to possession of
the Property for any previous breach which remains uncured or for any subsequent
breach by giving Lessee written notice thereof as herein provided, and in such
event Lessee shall forfeit any rights or interest under any such sublease and
thereafter the obligations of any such sublessee shall run directly to Lessor
for its own account. Upon application by Lessor, a receiver may be appointed to
take possession of the Property, exercise all rights granted to Lessor as agent
and attorney-in-fact for Lessee set forth in this Section 17.2(h) and apply any
rentals collected from the Property as hereinabove provided. No taking of
possession of the
<PAGE> 32
Property or other act by Lessor as the agent and attorney-in-fact for Lessee
pursuant to the foregoing provisions, nor any subletting by Lessor for Lessee
pursuant to the foregoing provisions, nor any such appointment of a receiver
shall constitute or be construed as an election by Lessor to terminate this
Lease or Lessee's right to possession of the Property unless a written notice of
such intention be given to Lessee.
(i) In the event of any termination of the Lease Term pursuant to
Section 17.2(a) or as permitted by law, Lessee shall quit and surrender the
Property to Lessor, and Lessor may without further notice enter upon, reenter,
possess and repossess the same by summary proceedings, ejectment or otherwise,
and again have, repossess and enjoy the same as if this Lease had not been made,
and in any such event neither Lessee nor any Person claiming through or under
Lessee by virtue of any law or an order of any court shall be entitled to
possession or to remain in possession of the Property but shall forthwith quit
and surrender the Property, and Lessor shall, notwithstanding any other
provision of this Lease, be entitled to recover from Lessee the aggregate of all
amounts Lessor is permitted to recover from Lessee, including:
(i) the worth at the time of award, as computed below,
of the unpaid rent (including, without limitation, Basic Rent and
Supplemental Rent) which had been earned at the time of termination of
this Lease;
(ii) the worth at the time of award of the amount by
which the unpaid rent (including, without limitation, Basic Rent and
Supplemental Rent) which would have been earned after the time of
termination of this Lease until the time of award exceeds the amount of
such rental loss that Lessee proves could have been reasonably avoided;
(iii) the worth at the time of award of the amount by
which the unpaid rent (including, without limitation, Basic Rent and
Supplemental Rent) for the balance of the term after the time of award
exceeds the amount of such rental loss for said balance of the term that
Lessee proves could be reasonably avoided; and
(iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom; including without limitation any
loss or damage arising out of the failure of Lessor to receive the
benefit of the performance by Lessee of any obligation to purchase the
Property under the provisions of this Lease. Lessee acknowledges and
agrees that, in reliance upon this Lease and Lessee's covenants and
agreements hereunder and the creditworthiness and financial condition of
Lessee, Lessor has entered into certain special transactions to finance
the costs of purchasing the Ground Lease Interest and constructing the
Improvements and, in connection with such financing transactions, Lessor
has incurred and will continue to incur indebtedness and liabilities
under and pursuant to the Participation Agreement and the other
Operative Documents. Lessee
<PAGE> 33
acknowledges and agrees that a Lease Event of Default will cause Lessor
substantial damage and detriment due to its obligations and liabilities
under the Participation Agreement and the other Operative Documents,
including, without limitation, the failure of Lessor to be fully
compensated for the Advances made to Lessee. Accordingly, in order to
compensate Lessor for all detriment proximately caused by Lessee's
failure to perform its obligations under this Lease, Lessor shall be
permitted to recover from Lessee, without limitation, all amounts
necessary for Lessor to be fully compensated for all of the Advances
made to the Lessee.
The "worth at the time of award, of the amounts referred to in the
foregoing subsections 17.2(i) (i) and (ii) shall be computed by allowing
interest at the Overdue Rate (or at the highest rate permitted by applicable
law, whichever is less) on each rental installment from the date the same was
due hereunder to the time of award. The "worth at the time of award" of the
amount referred to in the foregoing subparagraph (iii) shall 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 (1%). As used herein, the
term "time of award" shall mean either (A) the date upon which Lessee pays to
Lessor the amount recoverable by Lessor as hereinabove set forth or (B) the date
of entry of any determination, order or judgment of any court, other legally
constituted body, or any arbitrator(s), determining the amount recoverable,
whichever first occurs. If the time of award is determined under clause (B),
above, then the amount recoverable by Lessor hereunder shall bear interest from
the time of award until paid at the Overdue Rate (or at the highest rate
permitted by applicable law, whichever is less). Nothing herein contained shall
limit or prejudice the right of Lessor, and Lessor is hereby expressly granted
the right, in any bankruptcy or reorganization or insolvency proceedings, to
prove for and obtain as damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law whether such amount shall
be greater or less than the amounts referred to above.
(j) Notwithstanding anything contained in this Lease to the
contrary, in the event that the Lease Event of Default resulting in the exercise
of remedies by the Lessor hereunder is solely an Event of Default described in
Section 17.1 (l) occurring during the Construction Period, the Lessee shall, at
the request of the Lessor, (i) (A) return the Property to the Lessor or a Person
designated by the Lessor on a date specified by the Lessor (which date shall
constitute the Expiration Date) and/or (B) remarket the Property for the Lessor
as the Lessor's agent subject to the Lessor's direction, and at the Lessee's
expense and (ii) pay to the Lessor (A) the maximum Residual Value Guarantee
Amount on the date that is ten (10) days after the Lessor furnishes the Lessee
notice that it will require the Lessee to return or remarket the Property), (B)
all breakage costs incurred by the Participants for the duration of all then
current Interest Periods or Fixed Rate Periods under the Participation Agreement
with respect to the amount so paid following notices thereof by the Indenture
Trustee, (C) the other costs and expenses of the sale of the Property, and (D)
all Rent and other amounts payable under this Lease and the other Operative
Documents; provided, that the Lessor may recover from the Lessee, and the Lessee
shall be obligated to pay to the Lessor, the Asset Termination Value as of
<PAGE> 34
such date (notwithstanding the limitation to maximum Residual Value Guarantee
Amount contained in clause (A) above) if a Fully Indemnifiable Event has
occurred.
17.3. Waiver of Certain Rights. If this Lease shall be terminated
pursuant to Section 17.2, the Lessee waives, to the fullest extent permitted by
law, (a) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (b) any right of redemption, re-entry or
repossession; (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt or limiting the Lessor with respect
to the election of remedies; and (d) any other rights which might otherwise
limit or modify any of the Lessor's rights or remedies under this Article XVII.
17.4. Power of Sale and Foreclosure. Subject to Article XXII below, in
the event that a court of competent jurisdiction rules that this Lease
constitutes a mortgage, deed of trust or other secured financing, and subject to
the availability of such remedy under applicable law, then the Lessor and the
Lessee agree that the Lessee hereby mortgages and grants to Lessor a Lien
against the Property WITH POWER OF SALE, for the purpose of securing all of
Lessee's obligations hereunder (including the payment of Basic Rent,
Supplemental Rent and the Asset Termination Value or Purchase Option Price)
(collectively, the "Obligations"). In each case, upon the occurrence of any
Lease Event of Default, the Lessor shall have the power and authority, to the
extent provided by law, to exercise the following rights and remedies:
(a) To declare the Obligations immediately due and payable;
(b) With or without notice, and without releasing Lessee from any
obligation hereunder, to cure any default of Lessee and, in connection
therewith, to enter upon the Property and to perform such acts and things as
Lessor deems necessary or desirable to inspect, investigate, assess and protect
the Property, including, without limitation of any of its other rights: to
obtain a court order to enforce Lessor's right to enter and inspect the Property
pursuant to California Civil Code Section 2929.5, to which the decision of
Lessor as to whether there exists a release or threatened release of a Hazardous
Substance onto the Property shall be deemed reasonable and conclusive as between
the parties hereto; to have a receiver appointed pursuant to California Code of
Civil Procedure Section 564 to enforce Lessor's right to enter and inspect the
Property for Hazardous Substances; to appear in and defend any action or
proceeding purporting to affect the Property or the rights or powers of Lessor
hereunder; to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the judgment of Lessor, is prior or superior hereto,
the judgment of Lessor being conclusive as between the parties hereto; to pay
any premiums or charges with respect to insurance required to be carried
hereunder; and to employ counsel, accountants, contractors and other appropriate
persons to assist Lessor;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to obtain
specific enforcement of the covenants of Lessee hereunder, and Lessee agrees
that such covenants shall be specifically enforceable by injunction or any other
appropriate equitable remedy
<PAGE> 35
and that for the purposes of any suit brought hereunder, Lessee waives the
defense of laches and any applicable statute of limitations;
(d) Lessor or its employees, acting by themselves or through a
court-appointed receiver, may enter upon, possess, manage, operate, dispose of
and contract to dispose of the Property or any part thereof; negotiate with
governmental authorities with respect to the Property's environmental compliance
and remedial measures; contract for goods and services, hire agents, employees
and counsel, make repairs, alterations and improvements to the Property
necessary, in Lessor's judgment, to protect or enhance the security hereof; to
incur the risks and obligations ordinarily incurred by owners of property
(without any personal obligation on the part of the receiver); and/or to take
any and all other actions which may be necessary or desirable to comply with
Lessee's obligations hereunder and under the Operative Documents. All sums
realized by Lessor under this Section 17.4(d), less all costs and expenses
incurred by it under this Section 17.4(d), including attorneys' fees, and less
such sums as Lessor deems appropriate as a reserve to meet future expenses under
this Section 17.4(d), shall be applied on any Obligations secured hereby in such
order as Lessor shall determine. Neither application of said sums to said
indebtedness nor any other action taken by Lessor under this Section 17.4(d)
shall cure or waive any Lease Event of Default or notice of default hereunder or
nullify the effect of any such notice of default. Lessor, or any employee or
agent of Lessor, or a receiver appointed by a court, may take any action or
proceeding hereunder without regard to (i) the adequacy of the security for the
indebtedness secured hereunder, (ii) the existence of a declaration that the
indebtedness secured hereby has been declared immediately due and payable, or
(iii) the filing of a notice of default;
(e) To execute a written notice of such Lease Event of Default and
of its election to cause the Property to be sold to satisfy the obligations
secured hereby. Lessor shall give and record such notice as the law then
requires as a condition precedent to a nonjudicial foreclosure sale. When the
minimum period of time required by law after such notice has elapsed, Lessor,
without notice to or demand upon Lessee except as otherwise required by law,
shall sell the Property at the time and place of sale fixed by it in the notice
of sale and in such order as it or Lessor may determine, at public auction to
the highest bidder for cash, in lawful money of the United States, payable at
time of sale (the Obligations hereby secured being the equivalent of cash for
purposes of said sale). If the Property consists of several lots, parcels, or
items of property, Lessor may: (i) designate the order in which such lots,
parcels, or items shall be offered for sale or sold, or (ii) elect to sell such
lots, parcels or items through a single sale, through two or more successive
sales, or in any other manner Lessor deems in its best interest. Lessee shall
have no right to direct the order in which the Property is sold. Lessor may
postpone sale of all or any portion of the Property by public announcement at
such time and place of sale, and from time to time thereafter may postpone such
sale by public announcement at such time fixed by the preceding postponement.
Lessor shall deliver to the purchaser at such sale a deed or other appropriate
transfer instrument conveying the Property or portion thereof so sold, but
without any covenant or warranty, express or implied. The recitals in such deed
of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including Lessor or Lessee may purchase at such sale.
<PAGE> 36
In connection with any sale or sales hereunder, Lessor may elect
to treat any of the Property which consists of a right in action or which is
property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
After deducting all costs, fees and expenses of Lessor and of this
trust, including all costs of evidence of title and attorneys' fees in
connection with sale, Lessor shall apply the proceeds of sale to payment of all
sums so expended under the terms hereof not then repaid; the payment of all
other sums then secured hereby; and the remainder, if any, to the person or
persons legally entitled thereto;
(f) To resort to and realize upon the Property and any other
security now or hereafter held by Lessor in such order and manner as Lessor may,
in its sole discretion, determine; and resort to any or all such security may be
taken concurrently or successively and in one or several consolidated or
independent judicial actions or lawfully taken non-judicial proceedings, or
both;
(g) To commence and maintain an action or actions in any court of
competent jurisdiction pursuant to California Code of Civil Procedure Section
736, whether commenced prior to foreclosure of the Property or after foreclosure
of the Property, and to seek the recovery of any and all costs, damages,
expenses, fees, penalties, fines, judgments, indemnification payments to third
parties, and other out-of-pocket costs or expenses actually incurred by Lessor
(collectively, the "Environmental Costs") incurred or advanced by Lessor
relating to the cleanup, remediation or other response action required by
Applicable Law or which Lessor believes necessary to protect the Property, it
being conclusively presumed between Lessor and Lessee that all such
Environmental Costs incurred or advanced by Lessor relating to the cleanup,
remediation or other response action of or to the Property were made by Lessor
in good faith. All Environmental Costs incurred by Lessor pursuant to this
Section 17.4(g) (including, without limitation, court costs, consultants' fees
and attorneys' fees, whether incurred in litigation or not and whether before or
after judgment) shall bear interest at the Overdue Rate from the date of
expenditure until said sums have been paid. Lessor shall be entitled to bid, at
the sale of the Property held pursuant to Section 17.4(e) above, the amount of
said costs, expenses and interest in addition to the amount of the other
Obligations hereby secured as a credit bid, the equivalent of cash. For the
purposes of any action brought under this Section 17.4(g), Lessee hereby waives
the defense of laches and any applicable statute of limitations; and
(h) To waive its lien against the Property or any portion thereof,
whether fixtures or personal property, to the extent such property is found to
be environmentally impaired in accordance with California Code of Civil
Procedure Section 726.5 and to exercise any and all rights and remedies of an
unsecured creditor against
<PAGE> 37
Lessee and all of Lessee's assets and property for the recovery of any
deficiency and Environmental Costs, including, but not limited to, seeking an
attachment order pursuant to California Code of Civil Procedure Section 483.010.
As between Lessor and Lessee, for purposes of California Code of Civil Procedure
Section 726.5, Lessee shall have the burden of proving that Lessee or any
related party (or any affiliate or agent of Lessee or any related party) was not
in any way negligent in permitting the release or threatened release of the
Hazardous Substance. For the purposes of any action brought under this
paragraph, Lessee hereby waives the defense of laches and any applicable statute
of limitations.
(i) All costs and expenses incurred by Lessor pursuant to Section
17.4 (including without limitation court costs, consultants' fees and attorneys'
fees, whether incurred in litigation or not and whether before or after
judgment) shall bear interest at the Overdue Rate, from the date of expenditure
until said sums have been paid. Lessor shall be entitled to bid, at the sale of
the Property held pursuant to subsection 17.4(e) above, the amount of said
costs, expenses and interest in addition to the amount of the other Obligations
hereby secured as a credit bid, which shall be deemed the equivalent of cash.
(j) Lessee hereby waives any right to require that any security
given hereunder or under any other agreement securing the Obligations be
marshalled and further waives any right otherwise available in respect to
marshalling of assets which secure any Obligation or to require Lessor to pursue
its remedies against any such assets.
17.5. Remedies Cumulative. The remedies herein provided shall be
cumulative and in addition to (and not in limitation of) any other remedies
available at law, equity or otherwise, including, without limitation, any
mortgage foreclosure remedies.
17.6. Lessee's Right to Cure. Notwithstanding any provision contained in
the Lease or any other Operative Agreement, if a Lease Event of Default has
occurred and is continuing, the Lessee shall have the right to cure such Lease
Event of Default by exercising its Purchase Option at any time prior to the
termination of the Lessee's possessory interest in the Property and the thirty
(30) day period following the occurrence of a Lease Event of Default and
purchasing the Property at any time prior to such time as a foreclosure upon or
sale of the Property has been completed.
ARTICLE XVIII
18.1. The Lessor's Right to Cure the Lessee's Lease Events of Default.
The Lessor, without waiving or releasing any obligation or Lease Event of
Default, may (but shall be under no obligation to), upon not less than three (3)
Business Days' notice to the Lessee, remedy any Lease Event of Default for the
account and at the sole cost and expense of the Lessee, including the failure by
the Lessee to maintain the insurance required by Article XIV, and may, to the
fullest extent permitted by law, and notwithstanding any right of quiet
enjoyment in favor of the Lessee, enter upon the
<PAGE> 38
Property for such purpose and take all such action thereon as may be necessary
or appropriate therefor. No such entry shall be deemed an eviction of the
Lessee. All out-of-pocket costs and expenses so incurred (including fees and
expenses of counsel), together with interest thereon at the Overdue Rate from
the date on which such sums or expenses are paid by the Lessor, shall be paid by
the Lessee to the Lessor on demand, as Supplemental Rent.
ARTICLE XIX
19.1. Provisions Relating to the Lessee's Termination of this Lease or
Exercise of Purchase Option or Obligation and Conveyance Upon Remarketing and
Conveyance Upon Certain Other Events. (a) In connection with any termination of
this Lease pursuant to the terms of Article XVI (if the Lessee is obligated to
purchase the Property), or in connection with the Lessee's exercise of its
Purchase Option, Partial Purchase Option or Expiration Date Purchase Obligation,
upon the date on which this Lease is to terminate or upon the Expiration Date,
and upon tender by the Lessee of the amounts set forth in Sections 16.2(b),
20.1, 20.2 or 20.3, as applicable: (i) the Lessor shall execute and deliver to
the Lessee (or to the Lessee's designee) at the Lessee's cost and expense an
assignment without recourse of the Lessor's right, title and interest in the
Property or applicable portion thereof and the Ground Lease (except for the
Lessor's indemnities thereunder) (which shall include a release, quitclaim and
assignment of all of the Lessor's right, title and interest in and to any Net
Proceeds with respect to the Property or such portion thereof not previously
received by the Lessor), subject to the Permitted Exceptions (other than Lessor
Liens) and any encumbrance caused by the fault, neglect or intention of the
Lessee, in recordable form and otherwise in conformity with local custom and
free and clear of the Mortgage and any Lessor Liens attributable to the Lessor;
and (ii) the Lessee shall execute and deliver to the Lessor an assumption of all
of the Lessor's obligations under the Ground Lease.. The Improvements and the
Equipment shall be conveyed to the Lessee "AS IS" and in their then present
condition of title and physical condition free of any Lessor Liens.
(b) If the Lessee properly exercises the Remarketing Option or is
required to remarket the Property or return the Property to the Lessor pursuant
to Section 17.2, then the Lessee shall, on the Expiration Date, and at its own
cost, transfer possession of the Property (or remaining portion thereof),
together with the Lessor's rights under the Ground Lease (except for the
Lessor's rights of indemnification), to the independent purchaser thereof, by
surrendering the same into the possession of the Lessor or such purchaser, as
the case may be, free and clear of all Liens other than Lessor Liens, in good
condition (as modified by Modifications permitted by this Lease), ordinary wear
and tear excepted, in compliance with Applicable Law, and in "broom-swept clean"
condition. The Lessee shall cooperate reasonably with the Lessor and the
independent purchaser of the Property (or remaining portion thereof) in order to
facilitate the purchase by such purchaser of the Property (or remaining portion
thereof) which cooperation shall include the following, all of which the Lessee
shall do on or before the Expiration Date: providing all books and records
regarding the maintenance and ownership of the Property
<PAGE> 39
and all know-how, data and technical information relating thereto, providing a
current copy of the "as built" Plans and Specifications for the Property (or
remaining portion thereof), granting or assigning all licenses necessary for the
operation and maintenance of the Property and cooperating reasonably in seeking
and obtaining all necessary Governmental Action and complying with the revision
of Section 22.3 hereof. The obligations of the Lessee under this paragraph shall
survive the expiration or termination of this Lease.
ARTICLE XX
20.1. Purchase Option. (a) Without limitation of the Lessee's purchase
obligation pursuant to Sections 20.2 or 20.3, unless the Lessee shall have given
notice of its intention to exercise the Remarketing Option and the Lessor shall
have entered into a binding contract to sell the Property, the Lessee shall have
the option (exercisable by giving the Lessor irrevocable written notice (the
"Purchase Notice") of the Lessee's election to exercise such option) to
purchase, or to designate a third party to purchase, (i) all of the Property
(the "Purchase Option") or (ii) the Data Center (the "Partial Purchase Option"),
in each case, together with the Lessor's rights under the Ground Lease with
respect to all or such portion of the Property, as applicable (except for the
Lessor's rights of indemnification), on the date specified in such Purchase
Notice, which date shall be a Payment Date. The purchase price in respect of the
Property shall be as follows: (i) in respect of the entire Property, the Asset
Termination Value and (ii) in respect of the Data Center, as set forth on
Schedule 1 hereto, plus, in each case, all other amounts owing in respect of
Rent (including Supplemental Rent) theretofore accruing with respect to all or
such portion of the Property, as the case may be (the "Purchase Option Price")
(offsetting against such amount the aggregate amount or such proportionate
amount of the Cash Collateral, if any). The Lessee shall deliver the Purchase
Notice to the Lessor not less than sixty (60) days prior to the purchase date.
If the Lessee exercises its Purchase Option or Partial Purchase Option, pursuant
to this Section 20.1, the Lessor shall (x) transfer to the Lessee all of the
Lessor's right, title and interest in and to all or the applicable portion of
the Property, together with the Lessor's rights under the Ground Lease with
respect to all or such portion of the Property, as applicable (except for the
Lessor's rights of indemnification), as of the date specified in the Purchase
Notice upon receipt of the Purchase Option Price and all Rent and other amounts
then due and payable under this Lease and any other Operative Document, in
accordance with Section 19.l(a), and (y) enter into such cross parking and
access easement agreements as may be reasonably necessary in order to ensure
access to and adequate parking for the Data Center and the remaining Property.
(b) The purchase by the Lessee on any Payment Date of the Data Center
pursuant to this Section 20.1 is subject to receipt by the Lessor, on or prior
to such date, of new Appraisals for all sub-tracts and tracts of the Property
that are to remain subject to the Lease after such date, which appraisals (i)
each shall be dated a recent date prior to such date and (ii) together shall
assess the aggregate Fair Market Sales Value of all such remaining sub-tracts
and tracts of the Property at not less than the Fair Market Sales
<PAGE> 40
Value therefor as of the Maturity Date as set forth in the Appraisal delivered
to Lessor on the Closing Date.
20.2. Expiration Date Purchase Obligation. Unless (a) the Lessee shall
have properly exercised the Purchase Option pursuant to Section 20.1 and
purchased the Property pursuant thereto, (b) the Lessee shall have properly
exercised the Remarketing Option and shall have fulfilled all of the conditions
of clauses (a) through (j) of Section 22.1 hereof or (c) the Lessee shall have
properly exercised the Renewal Option pursuant to Section 21.1 and the terms and
conditions of a Renewal Term shall have been agreed upon pursuant to such
Section, then, subject to the terms, conditions and provisions set forth in this
Article, and in accordance with the terms of Section 19.1(a), the Lessee shall
purchase from the Lessor, and the Lessor shall assign to the Lessee without
recourse, on the Expiration Date of the Term (as such Term may be renewed
pursuant to Section 21.1) all of the Lessor's right, title and interest in the
Property, together with the Lessor's rights under the Ground Lease (except for
the Lessor's rights of indemnification), (subject to all existing Liens, other
than the Mortgage and Lessor Liens) for an amount equal to the Asset Termination
Value (offsetting against such amount the aggregate amount of the Cash
Collateral, if any). The Lessee may designate, in a notice given to the Lessor
not less than ten (10) Business Days prior to the closing of such purchase (time
being of the essence), the transferee or transferees to whom the conveyance
shall be made (if other than to the Lessee), in which case such conveyance shall
(subject to the terms and conditions set forth herein) be made to such designee;
provided, however, that such designation of a transferee or transferees shall
not cause the Lessee to be released, fully or partially, from any of its
obligations under this Lease, including, without limitation, the obligation to
pay the Lessor an amount equal to the Asset Termination Value that was not fully
and finally paid by such designee on such Expiration Date.
20.3. Acceleration of Purchase Obligation. (a) The Lessee shall be
obligated to purchase for an amount equal to the Asset Termination Value
(offsetting against such amount the aggregate amount of the Cash Collateral, if
any, permitted to be retained by the Lessor, the Indenture Trustee and the
Participants), the Lessor's interest in the Property (notwithstanding any prior
election to exercise its Purchase Option pursuant to Section 20.1) (i)
automatically and without notice upon the occurrence of any Lease Event of
Default specified in clause (e) or (f) of Section 17.1, and (ii) as provided for
at Section 17.2(e) immediately upon written demand of the Lessor upon the
occurrence of any other Lease Event of Default (except as provided in Section
17.2(j)).
(b) The Lessee shall be obligated to purchase for an amount equal to the
Asset Termination Value (plus all other amounts owing in respect of Rent
(including Supplemental Rent) theretofore accruing) (offsetting against such
amount the aggregate amount of the Cash Collateral, if any, permitted to be
retained by the Lessor, the Indenture Trustee and the Participants), immediately
upon written demand of the Lessor, the Lessor's interest in the Property at any
time during the term when the Lessor's interest in the Property is foreclosed
due to an event arising out of a violation of the warranty of title contained in
Section 12.1 hereof and the Lessor ceases to have title as contemplated by
Section 12.1.
<PAGE> 41
ARTICLE XXI
21.1. Renewal.
(a) Subject to the conditions set forth herein, the Lessee shall have
the option (the "Renewal Option") by written request (the "Renewal Request") to
the Lessor, each Participant and the Indenture Trustee given at any time and
from time to time after six months after the Closing Date to renew the Term for
a five year period commencing on the date requested by the Lessee (the "Renewal
Effective Date"). No later than the date (the "Renewal Response Date") which is
thirty (30) days after such request has been delivered to each of the Lessor,
each Participant and the Indenture Trustee, the Lessor will notify the Lessee in
writing (with a copy to the Indenture Trustee) whether or not it consents to
such Renewal Request (which consent may be granted or denied in its sole
discretion and may be conditioned on receipt of such financial information or
other documentation as may be specified by the Lessor including without
limitation a satisfactory appraisal of the Property), provided that if the
Lessor shall fail to notify the Lessee on or prior to the Renewal Response Date,
it shall be deemed to have denied such Renewal Request. The renewal of the Term
contemplated by any Renewal Request shall become effective as of the Renewal
Effective Date on or after the Renewal Response Date on which the Lessor shall
have consented to such Renewal Request; provided that such renewal shall be
subject to and conditioned upon the following:
(A) on both the Expiration Date then in effect and the date of
the Renewal Request, (i) no Lease Default or Lease Event of Default
shall have occurred and be continuing, and (ii) the Lessor and the
Indenture Trustee shall have received a Responsible Officer's
Certificate of the Lessee as to the matters set forth in clause (i)
above,
(B) the Lessee shall not have exercised the Remarketing Option,
and
(C) the Participants shall have agreed to extend the Maturity
Date contemporaneously therewith pursuant to Section 3.6 of the
Participation Agreement such that the Renewal Term will expire on the
same date as the extended Maturity Date.
(b) The renewal of this Lease shall be on the same terms and conditions
as are set forth in this Lease for the original Term, with such modifications
thereto, if any, as the parties hereto and to the other Operative Documents may
negotiate based upon the current credit information regarding the Lessee,
interest rates and such other factors as the Lessor may consider relevant.
ARTICLE XXII
<PAGE> 42
22.1. Option to Remarket. Subject to the fulfillment of each of the
conditions set forth in this Section 22.1, the Lessee shall have the option (the
"Remarketing Option") to market for the Lessor and complete the sale of all, but
not less than all, of the Lessor's interest in the Property, together with the
Lessor's rights under the Ground Lease (except for the Lessor's rights of
indemnification), on the Expiration Date for the Lessor.
The Lessee's effective exercise and consummation of the Remarketing
Option shall be subject to the due and timely fulfillment of each of the
following provisions as of the dates set forth below.
(a) Not later than one hundred eighty (180) days prior to the Expiration
Date, the Lessee shall give to the Lessor written notice of the Lessee's
exercise of the Remarketing Option, which exercise shall be irrevocable (except
by delivery of a Purchase Notice and consummation of the exercise of the
Purchase Option prior to the earlier of (i) the Expiration Date or (ii) the date
on which the Lessor enters into a binding contract to sell the Property pursuant
to the exercise of the Remarketing Option).
(b) The Lessee shall deliver to the Lessor an Environmental Audit of the
Property together with its notice of exercise of the Remarketing Option. Such
Environmental Audit shall be prepared by an environmental consultant selected by
the Lessor in the Lessor's reasonable discretion and shall contain no change in
the environmental status of the Property from that existing at the Ground Lease
Interest Acquisition Date. If such Environmental Audit indicates any material
exceptions reasonably requiring remedy or further investigation, the Lessee
shall have also delivered a Phase Two environmental assessment by such
environmental consultant prior to the Expiration Date showing the completion of
the remedying of such exceptions in compliance with Applicable Law.
(c) On the date of the Lessee's notice to the Lessor of the Lessee's
exercise of the Remarketing Option, no Lease Event of Default or Lease Default
shall exist, and thereafter, no uncured Lease Event of Default shall exist.
(d) The Lessee shall have completed in all Material respects all
Modifications, restoration and rebuilding of the Property pursuant to Sections
11.1 and 15.1 (as the case may be) and shall have fulfilled in all Material
respects all of the conditions and requirements in connection therewith pursuant
to said Sections, in each case by the date on which the Lessor receives the
Lessee's notice of the Lessee's exercise of the Remarketing Option (time being
of the essence), regardless of whether the same shall be within the Lessee's
control. The Lessee shall have also paid the cost of all Modifications commenced
prior to the Expiration Date. The Lessee shall not have been excused pursuant to
Section 13.1 from complying with any Applicable Law that involved the extension
of the ultimate imposition of such Applicable Law beyond the last day of the
Term. Any Liens on the Property that were contested by the Lessee shall have
been removed before the Expiration Date.
<PAGE> 43
(e) During the Marketing Period, the Lessee shall, as nonexclusive agent
for the Lessor, use commercially reasonable efforts to sell the Lessor's
interest in the Property, together with the Lessor's rights under the Ground
Lease (except for the Lessor's rights of indemnification), on or prior to the
Expiration Date (without diminishing the Lessee's obligation to consummate the
sale on the Expiration Date) and will attempt to obtain the highest purchase
price therefor and for not less than the Fair Market Sales Value. The Lessee
will be responsible for hiring and compensating brokers and making the Property
available for inspection by prospective purchasers. The Lessee shall promptly
upon request permit inspection of the Property and any maintenance records
relating to the Property by the Lessor, any Participant and any potential
purchasers, and shall otherwise do all things necessary to sell and deliver
possession of the Property to any purchaser. All such marketing of the Property
shall be at the Lessee's sole expense. The Lessee shall allow the Lessor and any
potential qualified purchaser reasonable access to the Property for the purpose
of inspecting the same.
(f) The Lessee shall submit all bids to the Lessor, the Indenture
Trustee and the Participants, and the Lessor will have the right to review the
same and the right to submit any one or more bids. All bids shall be on an
all-cash basis unless the Lessor, the Indenture Trustee and the Participants
shall otherwise agree in their sole discretion. The Lessee shall procure bids
from one or more bona fide prospective purchasers and shall deliver to the
Lessor, the Indenture Trustee and the Participants not less than ninety (90)
days prior to the Expiration Date a binding written unconditional (except as set
forth below), irrevocable offer by such purchaser or purchasers offering the
highest bid to purchase the Property, together with the Lessor's rights under
the Ground Lease (except for the Lessor's rights of indemnification). No such
purchaser shall be the Lessee, or any Subsidiary or Affiliate of the Lessee. The
written offer must specify the Expiration Date as the closing date unless the
Lessor, the Indenture Trustee and the Participants shall otherwise agree in
their sole discretion.
(g) In connection with any such sale of the Property, the Lessee will
provide to the purchaser all customary "seller's" indemnities, representations
and warranties regarding title, absence of Liens (except Lessor Liens) and the
condition of the Property, as well as such other terms and conditions as may be
negotiated between the Lessee and the purchaser. The Lessee shall have obtained,
at its cost and expense, all required governmental and regulatory consents and
approvals and shall have made all filings as required by Applicable Law in order
to carry out and complete the transfer of the Property and such rights under the
Ground Lease. As to the Lessor, any such sale shall be made on an "as is, with
all faults" basis without representation or warranty by the Lessor other than
the absence of Lessor Liens. Any agreement as to such sale shall be made subject
to the Lessor's rights hereunder.
(h) The Lessee shall pay directly, and not from the sale proceeds, all
prorations, credits, costs and expenses of the sale of the Property and such
rights under the Ground Lease, whether incurred by the Lessor or the Lessee,
including without limitation, the cost of all title insurance, surveys,
environmental reports, appraisals, transfer taxes, the Lessor's and the
Indenture Trustee's reasonable attorneys' fees, the
<PAGE> 44
Lessee's attorneys' fees, commissions, escrow fees, recording fees, and all
applicable documentary and other transfer taxes.
(i) The Lessee shall pay to the Indenture Trustee on or prior to the
Expiration Date (or to such other Person as the Indenture Trustee shall notify
the Lessee in writing, or in the case of Supplemental Rent, to the Person
entitled thereto) an amount equal to the Residual Value Guarantee Amount plus
all Rent and all other amounts under this Lease and the other Operative
Documents which have accrued or will accrue prior to or as of the Expiration
Date, in the type of funds specified in Section 3.4 hereof.
(j) If the selling price of the Property and such rights under the
Ground Lease is less than the difference between (A) the Asset Termination Value
minus (B) the Residual Value Guarantee Amount, then the Lessee shall have caused
to be delivered to the Lessor, the Indenture Trustee and each Participant the
appraisal required by Section 13.2 of the Participation Agreement thirty (30)
Business Days prior to the Expiration Date and shall pay to the Indenture
Trustee on or prior to the Expiration Date (or to such other person as the
Indenture Trustee shall notify the Lessee in writing) the amounts required to be
paid pursuant to Section 13.2 of the Participation Agreement.
(k) The purchase of the Property shall be consummated on the Expiration
Date following the payment by the Lessee pursuant to paragraphs (i) and (j)
above and contemporaneously with the Lessee's surrender of the Property pursuant
to Section 19.1(b) and the gross proceeds (the "Gross Proceeds") of the sale of
the Property (i.e., without deduction for any marketing, closing or other costs,
prorations or commissions) shall be paid directly to the Indenture Trustee;
provided, however, that if the sum of the Gross Proceeds from such sale plus the
Residual Value Guarantee Amount paid by the Lessee pursuant to paragraph (i)
above exceeds the Asset Termination Value, then the excess shall be paid to the
Lessee on the Expiration Date.
(l) The Lessee shall not be entitled to exercise or consummate the
Remarketing Option if a circumstance that would permit the Lessor to require the
Lessee to repurchase the Property under Section 16.4 exists and is continuing.
If one or more of the foregoing provisions shall not be fulfilled as of
the date set forth above, then the Lessor shall declare by written notice to the
Lessee the Remarketing Option to be null and void (whether or not it has been
theretofore exercised by the Lessee) as to the Property, in which event all of
the Lessee's rights under this Section 22.1 shall immediately terminate and the
Lessee shall be obligated to vacate the Property on the Expiration Date and
comply with the obligations set forth in Section 22.3. Except as expressly set
forth herein, the Lessee shall have no right, power or authority to bind the
Lessor in connection with any proposed sale of the Property.
22.2. Certain Obligations Continue. During the Marketing Period, the
obligation of the Lessee to pay Rent (including the installment of Basic Rent
due on the fifth anniversary of the Closing Date or at the end of the Renewal
Term, or on the Expiration Date, as the case may be) shall continue undiminished
until payment in full to
<PAGE> 45
the Indenture Trustee of the Gross Proceeds, the Residual Value Guarantee
Amount, and all other amounts due to the Lessor with respect to the Property
under the Operative Documents. The Lessor shall have the right, but shall be
under no duty, to solicit bids, to inquire into the efforts of the Lessee to
obtain bids or otherwise to take action in connection with any such sale, other
than as expressly provided in this Article XXII.
22.3. Support Obligations. In the event that (A) the Lessee does not
elect to purchase the Property on the Expiration Date, (B) this Lease is
terminated without a purchase of the Property by the Lessee as expressly
permitted herein or (C) pursuant to the Lessor's exercise of remedies under
Article XVII, this Lease is terminated, the Lessee shall provide the Lessor or
other purchaser of the Property, effective on the Expiration Date or earlier
termination date of this Lease, with (i) all permits, certificates of occupancy,
governmental licenses and authorizations necessary to use and operate the
Property for its intended purposes (to the extent such items are transferable or
may be obtained by the Lessee on behalf of another party), (ii) such easements,
licenses, rights-of-way and other rights and privileges in the nature of an
easement as are reasonably necessary or desirable in connection with the use,
repair, access to or maintenance of the Property as the Lessor shall request,
and (iii) a services agreement covering such services as the Lessor may request
in order to use and operate the Property for its intended purposes at such rates
(not in excess of arm's length fair market rates) as shall be acceptable to the
Lessor and the Lessee. All assignments, licenses, easements, agreements and
other deliveries required by clauses (i) and (ii) of this Section 22.3 shall be
in form satisfactory to the Lessor and shall be fully assignable (including both
primary assignments and assignments given in the nature of security) without
payment of any fee, cost or other charge.
ARTICLE XXIII
23.1. Holding Over. If the Lessee shall for any reason remain in
possession of the Property after the expiration or earlier termination of this
Lease (unless the Property is conveyed to the Lessee), such possession shall be
as a tenancy at sufferance during which time the Lessee shall continue to pay
Supplemental Rent that would be payable by the Lessee hereunder were the Lease
then in full force and effect and the Lessee shall continue to pay Basic Rent at
an annual rate equal to 110% of the average rate of Basic Rent payable hereunder
during the Term. Such Basic Rent shall be payable from time to time upon demand
by the Lessor. During any period of tenancy at sufferance, the Lessee shall,
subject to the second preceding sentence, be obligated to perform and observe
all of the terms, covenants and conditions of this Lease, but shall have no
rights hereunder other than the right, to the extent given by law to tenants at
sufferance, to continue its occupancy and use of the Property. Nothing contained
in this Article XXIII shall constitute the consent, express or implied, of the
Lessor to the holding over of the Lessee after the expiration or earlier
termination of this Lease (unless the Property is conveyed to the Lessee), and
nothing contained herein shall be read or construed to relieve the Lessee of its
obligations to purchase or remarket the Property on the Expiration Date pursuant
to Article XX or Article XXII or as preventing the Lessor from maintaining a
suit for
<PAGE> 46
possession of the Property or exercising any other remedy available to the
Lessor at law or in equity or hereunder.
ARTICLE XXIV
24.1. Risk of Loss. The Lessee assumes all risks of loss arising from
any Casualty or Condemnation which arises or occurs prior to the Expiration Date
or while the Lessee is in possession of the Property and all liability for all
personal injuries and deaths and damages to property suffered by any Person or
property on or in connection with the Property which arises or occurs prior to
the Expiration Date or while the Lessee is in possession of the Property, except
in each case to the extent any such loss or liability is primarily caused by the
gross negligence or willful misconduct of a Lessor Party; provided, however,
that the Lessee shall have no obligation under this Section 24.1 on account of
any such loss or liability arising during the Construction Period except as
follows:
(a) The Lessee shall be liable to the Lessor under this Section
24.1 for all such losses and liabilities caused by or arising from any
failure by the Lessee to comply with any of its obligations under the
Operative Documents (including its insurance obligations), any
representation by the Lessee in any of the Operative Documents not being
true, any negligence or willful misconduct of the Lessee, or any claim
by any third-party against the Lessee (or against the Lessor) based upon
any alleged action or inaction by the Lessee.
(b) If any Lessor Party incurs any such loss or liability for
which the Lessee is not liable pursuant to Section 24.1(a), the amount
of such loss or liability shall, if such Lessor Party shall so request
by a written notice to the Lessor, be capitalized pursuant to Section
3.9(f) of the Participation Agreement.
The Lessee hereby waives the provisions of California Civil Code Sections
1932(1), 1932(2) and 1933(4), and any and all other applicable existing or
future laws, ordinances and governmental regulations permitting the termination
of this Lease as a result of the damage or destruction of the Property by fire,
the elements, casualties, thefts, riots, wars or otherwise, and the Lessor shall
in no event be answerable or accountable for any risk of loss of or decrease in
the enjoyment and beneficial use of the Property as a result of any such event.
ARTICLE XXV
25.1. Subletting and Assignment. The Lessee may assign with recourse
this Lease or any of its rights or obligations hereunder in whole or in part to
any Person, in which case the Lessee shall guarantee performance of the
obligations of such assignee under this Lease by a guaranty in form and
substance acceptable to the Lessor and the Required Participants. The Lessee
may, without the consent of the Lessor, sublease the
<PAGE> 47
Property or portion thereof to any Person, provided, that any sublessee shall
agree to abide by the applicable terms of this Lease and the Lessee shall
provide to the Lessor a copy of any such subleases. No assignment, sublease or
other relinquishment of possession of the Property shall in any way discharge or
diminish any of the Lessee's obligations to the Lessor hereunder and the Lessee
shall remain directly and primarily liable under this Lease as to the Property,
or portion thereof, so assigned or sublet. Any sublease of the Property shall be
made subject to and subordinated to this Lease and to the rights of the Lessor
hereunder, and shall expressly provide for the surrender of the Property (or
portion thereof) after a Lease Event of Default hereunder. All such subleases
shall expressly provide for termination at or prior to the earlier of the
applicable Expiration Date or other date of termination of this Lease unless the
Lessee shall have purchased the Property pursuant to Article XX. No assignee or
sublessee shall be permitted to engage in any activities on the Property other
than those permitted pursuant to the terms of Section 8.2, without the prior
written consent of the Lessor.
ARTICLE XXVI
26.1. Estoppel Certificates. At any time and from time to time upon not
less than twenty (20) days' prior request by the Lessor or the Lessee (the
"Requesting Party"), the other party (whichever party shall have received such
request, the "Certifying Party") shall furnish to the Requesting Party (but not
more than four times per year unless required to satisfy the requirements of any
sublessees and only to the extent that the required information has been
provided to the Certifying Party by the other party) a certificate signed by an
individual having the office of vice president or higher in the Certifying Party
certifying that this Lease is in full force and effect (or that this Lease is in
full force and effect as modified and setting forth the modifications); the
dates to which the Basic Rent and Supplemental Rent have been paid; to the best
knowledge of the signer of such certificate, whether or not the Requesting Party
is in default under any of its obligations hereunder (and, if so, the nature of
such alleged default); and such other matters under this Lease as the Requesting
Party may reasonably request. Any such certificate furnished pursuant to this
Article XXVI may be relied upon by the Requesting Party, and any existing or
prospective mortgagee, purchaser or lender, and any accountant or auditor, of,
from or to the Requesting Party (or any Affiliate thereof).
ARTICLE XXVII
27.1. Right to Inspect. During the Term, the Lessee shall upon
reasonable notice (but in any event not less than forty-eight (48) hours'
notice) from the Lessor (except that no notice shall be required if a Lease
Event of Default has occurred and is continuing), permit the Lessor, the
Indenture Trustee and their respective authorized representatives to inspect the
Property during normal business hours, provided that such inspections shall not
unreasonably interfere with the Lessee's business operations at the Property.
<PAGE> 48
27.2. No Waiver. No failure by the Lessor or the Lessee to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
ARTICLE XXVIII
28.1. Acceptance of Surrender. No surrender to the Lessor of this Lease
or of all or any portion of any Property or of any part of any thereof or of any
interest therein shall be valid or effective unless agreed to and accepted in
writing by the Lessor and, prior to the payment or performance of all
obligations under the Indenture and termination of the Commitments, the
Indenture Trustee, and no act by the Lessor or the Indenture Trustee or any
representative or agent of the Lessor or the Indenture Trustee, other than a
written acceptance, shall constitute an acceptance of any such surrender.
ARTICLE XXIX
29.1. No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly, in whole or in part, (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate, or (b) the fee title in the Property, except as may
expressly be stated in a written instrument duly executed and delivered by the
appropriate Person.
ARTICLE XXX
30.1. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and delivered (i) personally,
(ii) by a nationally recognized overnight courier service, (iii) by mail (by
registered or certified mail, return receipt requested, postage prepaid) or (iv)
by facsimile, addressed to the respective parties, as follows:
If to the Lessee:
PeopleSoft, Inc.
4305 Hacienda Drive
Pleasanton, California 94588
Attention: General Counsel
Telephone: (925) 694-7180
Facsimile: (925) 694-7184
<PAGE> 49
with copies to:
PeopleSoft, Inc.
4305 Hacienda Drive
Pleasanton, California 94588
Attention: Director of Real Estate
Telephone: (925) 694-7053
Facsimile: (925) 694-7050
PeopleSoft, Inc.
4305 Hacienda Drive
Pleasanton, California 94588
Attention: Chief Financial Officer
Telephone: (925) 694-7114
Facsimile: (925) 694-7190
Griggs Resource Group
3470 Mt. Diablo Blvd.
Suite A-205
Lafayette, California 94549
Attention: Brian Griggs
Telephone: (510) 299-4870
Facsimile: (510) 299-4872
Orrick Herrington & Sutcliffe
400 Sansome Street
San Francisco, California 94111
Attention: William Murray
Telephone: (415) 773-5807
Facsimile: (415) 773-5759
If to the Lessor:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Facsimile: (302) 651-8882
If to the Indenture Trustee:
ABN AMRO Bank N.V.
<PAGE> 50
1325 Avenue of the Americas
9th Floor
New York, New York 10019
Attention: Edward Corletzi
Telephone: (212) 314-1721
Facsimile: (212) 314-1709
or such additional parties and/or other address as such party may hereafter
designate (provided, however, in no event shall either party be obligated to
notify, in the aggregate, more than five (5) designees of the other party), and
shall be effective upon receipt or refusal thereof.
ARTICLE XXXI
31.1. Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of the Lessee or the Lessor
arising from events commencing prior to the expiration or earlier termination of
this Lease shall survive such expiration or earlier termination. If any term or
provision of this Lease or any application thereof shall be declared invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any right or option of the
Lessee provided in this Lease, including any right or option described in
Articles XV, XVI, XX, XXI or XXII, would, in the absence of the limitation
imposed by this sentence, be invalid or unenforceable as being in violation of
the rule against perpetuities or any other rule of law relating to the vesting
of an interest in or the suspension of the power of alienation of property, then
such right or option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of the
descendants of Franklin D. Roosevelt, the former president of the United States,
Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the
founder of the Standard Oil Company, known to be alive on the date of the
execution, acknowledgment and delivery of this Lease.
31.2. Amendments and Modifications. Subject to the requirements,
restrictions and conditions set forth in the Participation Agreement, neither
this Lease, any Lease Supplement nor any provision hereof may be amended,
waived, discharged or terminated except by an instrument in writing in
recordable form signed by the Lessor and the Lessee. In the event of any
conflict or inconsistency between the terms hereof and the terms of the
Participation Agreement, the Participation Agreement shall control.
31.3. Successors and Assigns. All the terms and provisions of this Lease
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
31.4. Headings and Table of Contents. The headings and table of contents
in this Lease are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
<PAGE> 51
31.5. Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
31.6. GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES.
31.7. Limitations on Recourse. The parties hereto agree that Wilmington
Trust Company, in its individual capacity (in such capacity, "Bank") shall have
no personal liability whatsoever to the Lessee or its respective successors and
assigns for any claim based on or in respect of this Lease or any of the other
Operative Documents or arising in any way from the transactions contemplated
hereby or thereby; provided, however, that the Bank shall be liable in its
individual capacity (a) for its own willful misconduct or gross negligence (or
negligence in the handling of funds), (b) for liabilities that may result from
the incorrectness of any representation or warranty expressly made by it in
Section 8.1 of the Participation Agreement or (c) for any Taxes based on or
measured by any fees, commission or compensation received by it for acting as
the Lessor as contemplated by the Operative Documents. It is understood and
agreed that, except as provided in the preceding proviso: (i) the Bank shall
have no personal liability under any of the Operative Documents as a result of
acting pursuant to and consistent with any of the Operative Documents; (ii) all
obligations of the Bank to the Lessee are solely nonrecourse obligations except
to the extent that it has received payment from others and are enforceable
solely against the Lessor's interest in the Property; (iii) all such personal
liability of the Bank is expressly waived and released as a condition of, and as
consideration for, the execution and delivery of the Operative Documents by the
Lessor; and (iv) this Lease is executed and delivered by the Bank solely in the
exercise of the powers expressly conferred upon it as the Lessor under the Trust
Agreement.
31.8. Original Lease. The single executed original of this Lease marked
"THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page
thereof and containing the receipt of the Indenture Trustee therefor on or
following the signature page thereof shall be the Original Executed Counterpart
of this Lease (the "Original Executed Counterpart"). To the extent that this
Lease constitutes chattel paper, as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the Original Executed Counterpart.
31.9. Usury Savings Clause. Nothing continued in this Lease or the other
Operative Documents shall be deemed to require the payment of interest or other
charges by the Lessee or any other Person in excess of the amount which may
lawfully be charged under any applicable usury laws. In the event that the
Lessor or any other Person shall collect moneys under this Lease or any other
Operative Document which are deemed to constitute interest (including, without
limitation, the Basic Rent or
<PAGE> 52
Supplemental Rent) which would increase the effective interest rate to a rate in
excess of that permitted to be charged by applicable law, all such sums deemed
to constitute interest in excess of the legal rate shall, upon such
determination, at the option of the Person to whom such payment was made, be
returned to the Person making such payment or credited against other amounts
owed by the person making such payment.
ARTICLE XXXII
32.1. Ground Lease. During the Term, the Lessee shall observe and
perform all of the obligations of the Lessor under the Ground Lease.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Lease be duly executed
and delivered as of the date first above written.
WILMINGTON TRUST COMPANY, not in
its individual capacity, but solely
as Owner Trustee, as Lessor
By: ______________________________
Name: ______________________________
Title:______________________________
PEOPLESOFT, INC., a Delaware corporation,
as Lessee
By: ________________________________
Mark G. Thompson,
Treasurer
STATE OF DELAWARE )
) SS.:
COUNTY OF NEW CASTLE )
Before me, the undersigned, a Notary Public within and for the
State and County aforesaid, personally appeared ___________________, with whom I
am personally acquainted (or proved to me on the basis of satisfactory
evidence), and who,
<PAGE> 53
upon oath, acknowledged himself to be a _________________ of Wilmington Trust
Company, the within named bargainor, a corporation, and that he as such
________________, being duly authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such ________________.
WITNESS my hand and seal, at office, on this the ____ day of
September, 1998.
________________________________________
Notary Public
My Commission Expires:
_________________________________
STATE OF CALIFORNIA )
) SS.:
COUNTY OF ALAMEDA )
Before me, the undersigned, a Notary Public within and for the
State and County aforesaid, personally appeared Mark G. Thompson, with whom I am
personally acquainted (or proved to me on the basis of satisfactory evidence),
and who, upon oath, acknowledged himself to be the Treasurer of PEOPLESOFT,
INC., the within named bargainor, a corporation, and that he as such Treasurer
being duly authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by himself as
such Treasurer.
WITNESS my hand and seal, at office, on this the ____day of
September, 1998.
________________________________________
Notary Public
My Commission Expires:
_________________________________
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
<PAGE> 54
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of September 28, 1998.
ABN AMRO BANK N.V., as Indenture Trustee
By: _________________________________
Name: _________________________________
Title: _________________________________
By: _________________________________
Name: _________________________________
Title: _________________________________
SCHEDULE 1
TO THE LEASE
Data Center Release Price
$27,500,000
SCHEDULE 14.3
TO THE LEASE
Minimum Insurance Requirements
(i) Commercial general liability insurance, umbrella insurance and excess
liability insurance, each written on an "occurrence basis," including
contractual liability and products and completed operations hazards,
covering claims for bodily injury, personal injury or death sustained by
persons or damage to property, in an amount of not less than $50,000,000
per occurrence and $50,000,000 annual aggregate;
(ii) Workers compensation insurance for statutory limits and employer's
liability insurance covering injury, death or disease sustained by
employees, in an amount not less than $1,000,000 for disease and
$1,000,000 for bodily injury or death by accident; and
<PAGE> 55
(iii) "All risk" property insurance covering loss or damage in an amount not
less than the then current replacement cost of the buildings and
improvements on the Property, including loss or damage by earthquake in
an amount of not less than 100% of the probable maximum loss to the
Property, as determined by a professional engineer qualified to make
such a determination selected by the Lessee and approved by the Lessor.
Prepared by and upon recording return to:
John R. Grier, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
EXHIBIT A TO
THE LEASE
LEASE SUPPLEMENT NO. 1
(And Memorandum of Lease)
THIS LEASE SUPPLEMENT NO. 1 (And Memorandum of Lease) (this "Lease
Supplement") dated as of September 28, 1998, between WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely as Owner Trustee, as lessor (the
"Lessor"), and PeopleSoft, Inc., a Delaware corporation, as lessee (the
"Lessee").
WHEREAS, the Lessor is the holder of a leasehold interest in the parcels
of land described on Schedule 1 hereto and wishes to sublease such Ground Lease
Interest and lease all Improvements thereon or which may thereafter be
constructed thereon pursuant to the Construction Agency Agreement or the Lease
to the Lessee (the Ground Lease Interest and such Improvements being
collectively called the "Property");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions; Interpretation. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix 1 to the Master Lease, dated as
of September 28, 1998, between the Lessee and the Lessor; and the rules of
interpretation set forth in Appendix 1 to the Lease shall apply to this Lease
Supplement.
SECTION 2. The Property. Attached hereto as Schedule I is the
description of a certain Ground Lease Interest. Effective upon the execution and
delivery of this Lease Supplement by the Lessor and the Lessee, the Property
shall be subject to the terms and provisions of the Lease. Subject to the terms
and conditions of the Lease, the Lessor hereby leases to the Lessee for the Term
(as defined below) of the Lease, the Lessor's
<PAGE> 56
interest in the Property, and the Lessee hereby agrees, expressly for the direct
benefit of the Lessor, to lease from the Lessor for the Term, the Lessor's
interest in the Property.
SECTION 3. Parties and Addresses. The Lease is dated as of September 28,
1998, between the Lessor, whose principal office is at Rodney Square North, 1100
N. Market Street, Wilmington, Delaware 19890 and the Lessee, whose principal
office is 4305 Hacienda Drive, Pleasanton, California 94588.
SECTION 4. Lease Term. The term of the Lease (the "Term") shall begin on
September 28, 1998, and shall end on September 28, 2003, unless the Term is
renewed or earlier terminated in accordance with the provisions of the Lease.
The Lease contains extension options which give Lessee the right, subject to the
terms thereof, to extend the term of the Lease.
SECTION 5. Ownership of the Property. (a) It is the intent of the
parties hereto that: (i) the Lease constitutes an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, for purposes of
Lessee's financial reporting, and (ii) for purposes of Federal and state income
tax, the transaction contemplated hereby and by the Lease is a financing
arrangement and preserves ownership in the Property in the Lessee. Accordingly,
and notwithstanding any provision of this lease to the contrary, the parties
hereto agree and declare that: (i) the transactions contemplated by the Lease
are intended to have a dual, rather than single, form; and (ii) all references
in the Lease to the "lease" of the Property which fail to reference such duel
form do so as a matter of convenience only and do not reflect the intent of
parties hereto as to the true form of such arrangements. Nevertheless, the
Lessee acknowledges and agrees that neither the Indenture Trustee, the Lessor
nor any Participant has made any representations or warranties to the Lessee
concerning the tax, accounting or legal characteristics of the Operative
Documents and that the Lessee has obtained and relied upon such tax, accounting
and legal advice concerning the Operative Documents as it deems appropriate.
(b) Anything to the contrary in the Operative Documents notwithstanding,
the Lessor and the Lessee intend and agree that with respect to the nature of
the transactions evidenced by the Lease in the context of the exercise of
remedies under the Operative Documents, including, without limitation, in the
case of any insolvency or receivership proceedings or a petition under the
United States bankruptcy laws or any other applicable insolvency laws or statute
of the United States of America or any State or Commonwealth thereof affecting
the Lessee, the Lessor or any Participant or any enforcement or collection
actions, (i) the transactions evidenced by the Lease are loans made by the
Lessor and the Participants as unrelated third party lenders to the Lessee
secured by the Property, (ii) the obligations of the Lessee under the Lease to
pay Basic Rent and Supplemental Rent or Asset Termination Value in connection
with any purchase of the Property pursuant to the Lease shall be treated as
payments of interest on and principal of, respectively, loans from the Lessor
and the Participants to the Lessee, and (iii) the Lease grants a security
interest and mortgage or deed of trust or lien, as the case may be, in the
Property to the Lessor and the Participants to secure the Lessee's
<PAGE> 57
performance under and payment of all amounts under the Lease and the other
Operative Documents.
(c) Specifically, but without limiting the generality of subsection (b)
of this Section 5, the Lessor and the Lessee further intend and agree that, for
the purpose of securing the Lessee's obligations for the repayment of the
above-described loans from the Certificate Purchaser and the Lenders to the
Lessee, (i) the Lease shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the Uniform Commercial
Code and a real property mortgage or deed of trust; (ii) the conveyance provided
for hereby and in Article II of the Lease shall be deemed to be a grant by the
Lessee to the Lessor and the Participants of a mortgage lien and security
interest in all of the Lessee's right, title and interest in and to the Property
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, investments, securities or other property, whether in the form of
cash, investments, securities or other property (it being understood that Lessee
hereby mortgages and warrants and grants a security interest in the Property to
the Lessor and the Participants to secure the loans); (iii) the possession by
the Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(iv) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of the Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under Applicable Law. The Lessor and the
Lessee shall, to the extent consistent with the Lease, take such actions and
execute, deliver, file and record such other documents, financing statements,
mortgages and deeds of trust as may be necessary to ensure that, if the Lease
and this Lease Supplement were deemed to create a security interest in the
Property in accordance with this Section, such security interest would be deemed
to be a perfected security interest of first priority under Applicable Law and
will be maintained as such throughout the Term.
(d) Specifically, without limiting the generality of subsection (a), (b)
and (c) of this Section 5, the parties hereto intend and agree that, for
purposes of filing federal, state and local returns, reports and other
statements relating to income or franchise taxes, or any other taxes imposed
upon or measured by income, (i) the Lessee shall be entitled to take any
deduction, credit, allowance or other reporting position consistent with its
status as owner of the Property; and (ii) neither the Lessor nor any Participant
shall take an initial position on its federal, state and local returns, reports
and other statements relating to income or franchise taxes that is inconsistent
with the Lessee's status as owner of the Property.
(e) If the transaction evidenced by the Lease and the other Operative
Documents can no longer be treated as an operating lease pursuant to GAAP for
accounting purposes, all provisions in the Operative Documents limiting the
Lessee's obligation to pay the Lease Balance or Asset Termination Value
(including the Remarketing Option) on the Expiration Date shall no longer apply.
If any such change in
<PAGE> 58
accounting treatment shall occur, the Lessee shall enter into such amendments to
the Operative Documents as the Lessor or the Required Participants may
reasonably request to reflect the foregoing.
SECTION 6. Lease Events of Default and Remedies. Sections 17.2 through
17.5 of the Lease, which are hereby incorporated by reference, set forth the
remedies available to Lessor in the event of a Lease Event of Default. Such
remedies include, without limitation, the following provision: "Subject to
Article XXII below, in the event that a court of competent jurisdiction rules
that this Lease constitutes a mortgage, deed of trust or other secured
financing, and subject to the availability of such remedy under applicable law,
then the Lessor and the Lessee agree that the Lessee hereby mortgages and grants
to Lessor a Lien against the Property WITH POWER OF SALE, for the purpose of
securing all of Lessee's obligations hereunder (including the payment of Basic
Rent, Supplemental Rent, the Asset Termination Value and Purchase Option Price)
(collectively, the "Obligations")."
SECTION 7. Purchase Option. Sections 19 and 20 of the Lease contain
various purchase options which may be exercised by Lessee during the term of the
Lease subject to the terms and conditions of said Sections 19 and 20 of the
Lease.
SECTION 8. Liens. (a) THIS LEASE IS SUPERIOR TO A MORTGAGE IN FAVOR OF
ABN AMRO BANK N.V. AS INDENTURE TRUSTEE (THE "INDENTURE TRUSTEE") UNDER THE
PARTICIPATION AGREEMENT DATED AS OF SEPTEMBER 28, 1998, AMONG THE LESSEE, THE
LESSOR, THE INDENTURE TRUSTEE AND THE PARTICIPANTS, EXCEPT AS AMENDED OR
SUPPLEMENTED.
(b) NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR, THE BANK, ANY
PARTICIPANT NOR THE INDENTURE TRUSTEE IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE
HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT
NO MECHANICS'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL
ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR IN AND TO THE PROPERTY.
SECTION 9. Ratification. Except as specifically modified hereby, the
terms and provisions of the Lease are hereby ratified and confirmed and remain
in full force and effect.
SECTION 10. Original Lease Supplement. The single executed original of
this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED
COUNTERPART" on the signature page thereof and containing the receipt of the
Indenture Trustee therefor on or following the signature page thereof shall be
the Original Executed Counterpart of this Lease Supplement (the "Original
Executed Counterpart"). To the extent that this Lease Supplement constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security
<PAGE> 59
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart other than the Original Executed Counterpart.
SECTION 11. GOVERNING LAW. THE LEASE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES.
SECTION 12. Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely
as Owner Trustee, as Lessor
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
PEOPLESOFT, INC.,
a Delaware corporation, as Lessee
By: _______________________________________
Mark G. Thompson, Treasurer
STATE OF DELAWARE )
) SS.:
COUNTY OF NEW CASTLE )
Before me, the undersigned, a Notary Public within and for the
State and County aforesaid, personally appeared , with
whom I am
<PAGE> 60
personally acquainted (or proved to me on the basis of satisfactory
evidence), and who, upon oath, acknowledged himself to be a of WILMINGTON TRUST
COMPANY, the within named bargainor, a corporation, and that he as such , being
duly authorized so to do, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such .
WITNESS my hand and seal, at office, on this the ____ day of
September, 1998.
______________________________
Notary Public
My Commission Expires:
_______________________________
STATE OF CALIFORNIA )
) SS.:
COUNTY OF ALAMEDA )
Before me, the undersigned, a Notary Public in and for the State
and County aforesaid, personally appeared, Mark G. Thompson, with whom I am
personally acquainted (or proved to me on the basis of satisfactory evidence),
and who, upon oath, acknowledged himself to be the Treasurer of PEOPLESOFT,
INC., the within named bargainor, a corporation, and that he as such Treasurer
being duly authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by himself as
such Treasurer.
WITNESS my hand and seal, at office, on this the ____ day of
September, 1998.
______________________________
Notary Public
My Commission Expires:
_______________________________
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as of September 28, 1998.
<PAGE> 61
ABN AMRO BANK N.V., as Indenture Trustee
By: _________________________________
Name: _________________________________
Title: _________________________________
By: _________________________________
Name: _________________________________
Title: _________________________________
SCHEDULE 1
TO THE LEASE SUPPLEMENT NO. 1
Property Description
EXHIBIT B TO THE LEASE
[FORM OF EQUIPMENT SCHEDULE]
EQUIPMENT SCHEDULE NO.
Forming a part of Master Lease dated as of September 28, 1998 (the "Lease"),
between Wilmington Trust Company, not in its individual capacity, but solely as
Owner Trustee, as Lessor (the "Lessor"), and PeopleSoft, Inc., a Delaware
corporation, as Lessee (the "Lessee").
1. EQUIPMENT. The Equipment leased hereunder shall be as set forth in the
schedule attached hereto as Annex A.
TOTAL PROPERTY IMPROVEMENTS COST: $____________
2. TERM. Upon and after the date of execution hereof, the Equipment shall
be subject to the terms and conditions provided herein and in the Lease (which
is incorporated herein by reference).
3. RENT. From and after the date hereof, the Basic Rent for said Equipment
during the Basic Lease Term shall be payable on the dates and in the amounts set
forth in Article III of the Lease which is incorporated herein by reference.
4. LESSEE CONFIRMATION. Lessee hereby confirms and warrants to Lessor that
the Equipment: (a) was duly delivered to Lessee on or prior to the date hereof
at the
<PAGE> 62
locations specified in Section 5 hereof; (b) has been received, inspected and
determined to be in compliance with all applicable specifications and that the
Equipment is hereby accepted for all purposes of the Lease; and (c) is a part of
the "Equipment" referred to in the Lease and is taken subject to all terms and
conditions therein and herein provided.
5. LOCATION OF EQUIPMENT. The locations of the Equipment are specified
on the Schedule of Equipment attached hereto as Annex A.
6. FINANCING STATEMENTS. Annex B attached hereto specifies the location
of all UCC financing statements or other similar documents under applicable law
covering the Equipment. Date of Execution: ____________, ____
WILMINGTON TRUST COMPANY, PEOPLESOFT, INC.,
not in its individual capacity, a Delaware corporation
but solely as Owner Trustee
By: _________________________ By: _________________________
Name: _________________________ Name: _________________________
Title: _________________________ Title: _________________________
ANNEX A TO
EQUIPMENT SCHEDULE
EQUIPMENT
Approved by _____________________________ Page No. ___ of ___ total pages
(Lessee to initial each
page)
Attached Bill of Sale dated Equipment located at:
_______________, ____
and Street No.
Equipment Schedule No. ___. City County State Zip
<PAGE> 63
This location is owned, x leased, x mortgaged.
Manufacturer and/or
Vendor Name & Description Equipment Cost
Invoice No.
See Schedule 1 Attached
ANNEX B TO
EQUIPMENT SCHEDULE
FINANCING STATEMENTS COVERING
EQUIPMENT
Secured Party Statement No. Filing Date Filing Location
------------- ------------- ----------- ---------------
DOCUMENT NUMBER: 364154.5
SEPTEMBER 28, 1998