UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 1996
CIRRUS LOGIC, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 0-17795 77-0024
(State or other jurisdiction of (Commission (I.R.S. Emp
incorporation or organization) file Number) Identificatio
3100 West Warren Avenue, Fremont, CA 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 623-8300
Not Applicable
(Former name or former address, if changed from last report)
<PAGE>
Item 5. Other Events
Under its Joint Venture Formation Agreement with Lucent Technologies,
Inc., as assignee of AT&T Corp., Cirrus Logic has agreed to provide
approximately $280 million of semiconductor manufacturing equipment to
Cirent Semiconductor GP ("Cirent") at its manufacturing facility in
Orlando, Florida. Approximately half of the equipment has already been
delivered to Orlando, and delivery of additional items is expected to
occur sporadically, as the items become available from manufacturers,
throughout 1997 and the first half of 1998. Cirrus Logic has elected t
finance the acquisition of this equipment by means of two related
leveraged lease facilities.
Under each leveraged lease facility, certain items of the equipment are
purchased by an institution serving as owner participant, using a
combination of its own funds as an equity investment, and the proceeds
of issuances of notes secured by its interests in the leases. The
owner participant then leases the equipment to Cirent and Cirrus Logic,
as co-lessees. Cirrus Logic has agreed that its rights as co-lessee
under each lease may be exercised exclusively by Cirent. The basic
lease term for the equipment is 6.5 years, subject to early termination
early buyout, or renewal, all at Cirent's option, or termination by
reason of default.
The first leveraged lease facility, providing lease financing of
approximately $127 million, closed on October 31, 1996. Under this
facility, Ameritech Credit Corp. ("Ameritech"), as owner participant,
has purchased certain items of the manufacturing equipment currently on
site in Orlando.
The second leveraged lease provides incremental financing by AT&T
Commercial Finance Corporation, as owner participant, in an aggregate
amount of approximately $126 million for additional items of equipment
as they are delivered to the Orlando facility. This second lease close
into escrow on November 26, 1996. Disbursements from escrow will be
made periodically through the June 15, 1998 cut-off date, to fund items
of equipment then delivered, subject to compliance with customary
conditions precedent including the absence of any material adverse chan
Cirrus Logic has unconditionally guaranteed to the owner participants a
holders of the secured notes the payment and performances of Cirent's
obligations under both leveraged lease facilities.
Enclosed as Exhibit 99.1 to this Current Report on Form 8-K is the text
of the Particpation Agreement, dated as of October 31, 1996, the Lease
Agreement, dated as of October 31, 1996, and the Guaranty Agreement,
dated as of October 31, 1996.
On December 4, 1996, Cirrus Logic, Inc. (the "Registrant") gave public
notice of its intent, subject to market and other conditions, to raise
up to $175 million (excluding the proceeds of the over-allotment
option, if any) through a private placement of convertible subordinated
notes to qualified institutional investors and off-shore investors.
Enclosed as Exhibit 99.2 to this Current Report on Form 8-K
is the text of the December 4, 1996 Press Release.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Text of the Particpation Agreement, dated as of
October 31, 1996, the Lease Agreement, dated as of
October 31, 1996, and the Guaranty Agreement, dated
of October 31, 1996.
99.2 Text of the December 4, 1996 Press Release which
gave public notice of its intent, subject to market
and other conditions, to raise up to $175 million
(excluding the proceeds of the over-allotment option
if any) through a private placement of convertible
subordinated notes to qualified institutional
investors and off-shore investors.
CIRRUS LOGIC, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
CIRRUS LOGIC, INC.
(Registrant)
December 12, 1996 /s/ Thomas F. Kelly
Date Thomas F. Kelly
Executive Vice President, Finance and
Administration, Chief Financial Officer,
and Treasurer
(Principal Financial and Accounting Offic
EXHIBIT 99.1
EXECUTION C
PARTICIPATION AGREEMENT
dated as of October 31, 1996
by and among
CIRENT SEMICONDUCTOR, G.P.
as Lessee,
CIROR, INC.
as General Partner of the Lessee,
CIRRUS LOGIC, INC.
as Co-Lessee and as Guarantor,
AMERITECH CREDIT CORPORATION
as Owner Participant,
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Owner Trustee,
the institutions listed
on Schedule I hereto
as Lenders,
and
WILMINGTON TRUST COMPANY
as Indenture Trustee
Leveraged Lease of
Semiconductor Manufacturing Equipment
Orlando Facility
Orlando, Florida
TABLE OF CONTENTS
ARTICLE IDefinitions and Rules of Usage 2
ARTICLE IIFundings 2
2.1 Time and Place of Closing; Funding Dates 2
2.2 Funding 2
2.3 Funding Requests 3
2.4 Acquisition and Leasing of the Equipment 4
2.5 Failure to Fund 4
ARTICLE IIIClosing and Funding Conditions 4
3.1 Conditions Precedent to the Obligations of the
Participants and Agents on
the First Funding Date 4
3.2 Additional Conditions to Obligations of Lenders. 9
3.3 Conditions Precedent to the Obligations of the Lessee,
CIROR and
the Co-Lessee on the First Funding Date 9
3.4 Conditions Precedent to Fundings on Second Funding
Dates 10
ARTICLE IVRepresentations and Warranties 11
4.1 Representations and Warranties of the Lessee 11
4.2 Representations and Warranties of the Co-Lessee 12
4.3 Representations and Warranties of CIROR 18
4.4 Representations and Warranties of the Owner
Participant 20
4.5 Representations and Warranties of the Indenture
Trustee 21
4.6 Representations and Warranties of the Lenders 22
4.7 Representations and Warranties of the Owner Trustee 23
ARTICLE VCovenants 24
5.1 Covenants of the Owner Participant and the Owner
Trustee 24
5.2 Covenants of the Indenture Trustee 25
5.3 Covenants of the Lessee 25
5.4 Covenants of CIROR and Co-Lessee 26
5.5 Covenants of the Co-Lessee 28
5.6 Transfers of Notes. 32
5.7 Advertising; Trademarks. 32
ARTICLE VIIndemnities 32
6.1 General Indemnity 32
6.2 Payment of Taxes; General Tax Indemnity 35
ARTICLE VIITax Withholding 41
ARTICLE VIII[Intentionally Omitted] 42
ARTICLE IXExpenses 42
9.1 Transaction Expenses Payable by the Owner Participant 42
9.2 Transaction Expenses Payable by the Co-Lessee 42
9.3 Amendments, Waivers, etc. 42
9.4 Fees of Trustees 42
ARTICLE XRecomputation of Basic Rent, EBO Prices,Casualty
Values and Termination Values 43
10.1 Making of Adjustments 43
10.2 Limitations 43
10.3 Computation of Adjustments 43
10.4 Tax Assumption Changes 44
10.5 Adjustments Certificate; Lease Supplement 44
ARTICLE XITransfer of Owner Participant's Interests 45
11.1 Transfers 45
ARTICLE XIIRefunding 46
12.1 Refunding 46
12.2 Notice 48
ARTICLE XIII[Intentionally Omitted]
ARTICLE XIV Miscellaneous 48
ARTICLE XVNo Recourse to Owner Participant; No Implied
Obligations 49
ARTICLE XVINo Recourse to ATOR or Lucent; Limited Recourse
to the Lessee 49
ARTICLE XVIITax Treatment 50
List of Schedules and Appendices
Schedule I Parties and Addresses
Schedule II Commitments
Schedule III Pricing Assumptions
Schedule IV Filings and Recordings
Schedule V Average Treasury Rates
Schedule VI Equipment
Appendix A Definitions and Rules of Usage
Appendix B Form of Bill of Sale
Appendix C-1 Form of Funding Request (First Funding)
Appendix C-2 Form of Funding Request (Second Funding)
Appendix D-1 Form of Opinion of Co-Lessee's Counsel
Appendix D-2 Form of Opinion of Lessee's Counsel
Appendices D-3
and D-4 Forms of Opinions of Owner Participant's
Counsel
Appendix D-5 Form of Opinion of Owner Trustee's Counsel
Appendix D-6 Form of Opinion of Indenture Trustee's Counsel
Appendix D-7 Form of Opinion of Florida Counsel
Appendix E Form of Acceptance Certificate
Appendix F Form of Owner Participant Transfer Agreement
Appendix G Form of Lien Waiver
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT is made as of the
31st day of October, 1996, by and among CIRENT
SEMICONDUCTOR, G.P., a New York general partnership, as the
Lessee, CIROR, INC., a California corporation and a general partner
of the Lessee, CIRRUS LOGIC, INC., a California corporation, as
Co-Lessee and as Guarantor, AMERITECH CREDIT
CORPORATION, a Delaware corporation, as the Owner Participant,
the institutions designated as lenders on Schedule I hereto, as Lenders
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly stated herein, but solely in its capacity as Owner Trustee,
and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity except as expressly stated
herein, but solely in its capacity as Indenture Trustee. Capitalized
terms used in the following recitals shall be respectively defined as
described below in Article I.
WHEREAS, the Co-Lessee, CIROR, Lucent, as assignee of
AT&T, and ATOR have formed the Lessee to operate a
semiconductor manufacturing facility in Orlando, Florida;
WHEREAS, the Co-Lessee has agreed to enter into leasing
arrangements providing for the leasing of the Equipment listed on
Schedule VI hereto to the Lessee;
WHEREAS, subject to the terms and conditions set forth
herein, in the Lease and in the other Operative Documents, the Lessor
has agreed to purchase from the Co-Lessee and to lease to the Lessee
and the Co-Lessee, and the Lessee and the Co-Lessee have agreed to
lease from the Lessor, all of the Items of Equipment listed on
Schedule VI hereto, and the Guarantor has agreed to guarantee the
payment and performance of all of the Lessee's obligations under the
Lease and the other Operative Documents;
WHEREAS, each of the Lenders has agreed to Fund its
respective Commitment Percentage, and the Owner Participant has
agreed to Fund the Equity Amount, of the Lessor's Cost of the
Equipment, subject to the terms and conditions set forth herein;
WHEREAS, each of the Owner Trustee and the Indenture
Trustee has agreed to serve in the respective capacities assigned to
such Person in the Trust Agreement and the Indenture;
NOW THEREFORE, in consideration of the foregoing
premises, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
Definitions and Rules of Usage
Unless the context otherwise requires, terms used herein
without other definition shall have the respective meanings assigned to
such terms (whether directly or indirectly by reference) in Appendix A
hereto, and the rules of usage set forth in such Appendix A shall
likewise govern this Participation Agreement.
ARTICLE II
Fundings
II.1 Time and Place of Closing; Funding Dates.
(a) The closing of the transactions contemplated by
this Participation Agreement shall commence at the offices of Winston
& Strawn, 35 West Wacker Drive, Chicago, Illinois 60601, at 9:30
a.m. on November 1, 1996, which shall be the First Funding Date, or
at such other time and place as the parties hereto may agree.
(b) Second Funding Dates shall occur not more
frequently than monthly, as requested by the Co-Lessee by
presentation of a Funding Request to the Participants and the Agents,
in accordance with Section 2.3 hereof.
II.2 Funding. Subject to the terms and conditions of this
Participation Agreement and on the basis of the representations and
warranties hereinafter set forth:
(a) On the First Funding Date, (i) the Lenders will
purchase the Notes, having an aggregate principal amount of
$104,558,448.96, (ii) the Owner Participant shall make available the
Equity Amount by EFT, in each case no later than 12:00 noon Chicago
time, to the Indenture Trustee for the account of the Owner Trustee,
(iii) the Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver, to each Lender a Note in amount equal to
such Lender's Commitment Percentage (as set forth on Schedule II
hereto) of the principal amount of the Notes and (iv) the Indenture
Trustee, on behalf of the Owner Trustee, shall apply the proceeds of
the issuance of the Notes, together with the Equity Amount paid by
the Owner Participant, (A) to pay to the Co-Lessee the Lessor's Cost
of' the Items of Equipment for which settlement is being made on the
First Funding Date (less the Holdback Amount applicable thereto, if
any) and (B) to deposit the Holdback Amount, if any, into the
Holdback Account.
(b) On each Second Funding Date, the Indenture
Trustee, on behalf of the Owner Trustee, shall pay the Holdback
Amount for each Item of Equipment which is the subject of such
Second Funding Date to the Co-Lessee from the Holdback Account.
(c) The aggregate principal amount of Notes to be
issued hereunder and under the Indenture shall not exceed
$104,558,448.96. The Notes are to be issued under the Indenture and
secured by Liens granted thereunder, to be dated the date of original
issuance of such Notes, to bear interest at the rate of 10.22% per
annum prior to maturity (computed on the basis of a 360-day year
consisting of twelve 30-day months), such interest to be paid semi-
annually in arrears to and including the final maturity thereof on each
Rent Payment Date, to mature on the date which is six (6) years from
the date of original issuance of such Notes and are to be otherwise
substantially in the form attached to the Indenture as Exhibit B. The
Owner Trustee hereby agrees for the benefit of the parties hereto (but
subject to the terms and conditions hereof and of the Indenture) to
make payments in respect of each Note issued by it in accordance with
the terms and conditions specified in the Indenture and such Note.
The aggregate Equity Amount shall not exceed $22,076,551.04.
(d) The Participants' respective commitments under
this Section 2.2, and the Owner Trustee's commitment to purchase
Equipment pursuant to Funding Requests, shall expire at midnight
(Chicago time) on the Cut-off Date. The obligations of the
Participants hereunder shall be several and not joint and no Participan
shall be liable or responsible for the acts or defaults of any other
Participant. If on any Funding Date the applicable conditions to the
obligations of any Participant specified in Section 3 have not been
fulfilled, the Participants may thereupon elect to be relieved of all
further obligations under this Agreement. Nothing in this Section shal
operate to relieve the Co-Lessee or the Lessee from its obligations
hereunder or to waive any of the Participants' rights against the Co-
Lessee or the Lessee.
II.3 Funding Requests.
(a) First Funding Date. The Co-Lessee shall
deliver an appropriate Funding Request in substantially the form of
Appendix C-1 hereto to the Owner Participant, the Lenders, the
Owner Trustee and the Indenture Trustee at least two (2) Business
Days prior to the First Funding Date. Such Funding Request shall
(i) be irrevocable once delivered, (ii) specify such First Funding Date
(iii) be accompanied by a Schedule of Equipment describing in
reasonable detail the Items of Equipment for which settlement is to be
made on the First Funding Date and the aggregate Lessor's Cost
therefor; (iv) specify the Equity Amount for the First Funding Date;
(v) specify the aggregate principal amount of the Notes to be issued on
the First Funding Date; (vi) specify those Items of Equipment subject
to a Holdback Amount and the amount thereof; and (vii) be
accompanied by the schedules of Basic Rent, Casualty Values,
Termination Values and EBO Price and the principal amortization of
the Notes.
(b) Second Funding Dates. The Co-Lessee shall
deliver an appropriate Funding Request in substantially the form of
Appendix C-2 hereto to the Owner Trustee and the Indenture Trustee
at least two Business Days prior to the Second Funding Date for each
Item of Equipment originally subject to a Holdback Amount. Such
Funding Request shall (i) specify such Second Funding Date; (ii)
identify the Item or Items of Equipment to which such Second
Funding Date relates; and (iii) specify the Holdback Amount applicable
to each such Item of Equipment.
II.4 Acquisition and Leasing of the Equipment. On the
First Funding Date, (a) the Owner Trustee shall acquire title to each
Item of Equipment pursuant to a Bill of Sale and (b) the Lessor shall
lease to the Lessee and the Co-Lessee, and the Lessee and the Co-
Lessee shall lease from the Lessor, each Item of Equipment pursuant
to, and in accordance with the terms of, the Lease (including the Lease
Supplement and related Schedule of Equipment).
II.5 Failure to Fund. Notwithstanding any other provision
hereof, in the event that any one or combination of Participants
representing in the aggregate 8% or less of the Funding on the First
Funding Date fails, despite the satisfaction of all applicable conditio
set forth in Article III hereof, to Fund its Commitment Percentage or
the Equity Amount, as the case may be, of such Funding, the other
Participants agree nonetheless to keep available their respective
Commitment Percentages or the Equity Amount, as the case may be
(so long as the applicable conditions set forth in Article III hereof a
or remain satisfied), for a period of five (5) Business Days.
ARTICLE III
Closing and Funding Conditions
III.1 Conditions Precedent to the Obligations of the
Participants and Agents on the First Funding Date. The obligation of
each of (i) the Lenders, the Owner Participant, the Owner Trustee and
the Indenture Trustee to execute the applicable Operative Documents
to which each such Person is party on the First Funding Date, (ii) the
Lenders to purchase the Notes on the First Funding Date, (iii) the
Owner Participant to Fund the Equity Amount requested for the First
Funding Date and (iv) the Owner Trustee to purchase the Items of
Equipment specified in the Funding Request in respect of the First
Funding Date shall be subject in each case to the satisfaction, or
waiver by the Lenders, the Owner Participant, the Owner Trustee and
the Indenture Trustee, as the case may be, of the following conditions
prior to or on the First Funding Date (except that the obligation of an
party shall not be subject to such party's own performance or
compliance):
(a) First Funding Request. Each Participant and
Agent shall have received in a timely manner copies of an appropriate
Funding Request in respect of the First Funding Date as required by
Section 2.3(a).
(b) First Fundings. The Owner Trustee shall have
duly executed, and the Indenture Trustee shall have duly authenticated
and delivered to each Lender, a Note, dated the First Funding Date, in
a face amount equal to such Lender's Commitment Percentage of the
aggregate principal amount of the Notes, and such Notes shall mature,
bear interest and be payable as provided in the Indenture. The Lenders
shall have purchased the Notes and the Owner Participant shall have
made available the Equity Amount for such Funding Date.
(c) Authorization, Execution and Delivery of
Operative Documents. The following documents shall have been duly
authorized, executed and delivered by each designated party thereto
prior to or on the First Funding Date and shall be in full force and
effect on the First Funding Date without any event or condition having
occurred or existing which constitutes, or with the giving of notice or
lapse of time or both would constitute, a default thereunder or breach
thereof or would give any party thereto the right to terminate any
thereof or excuse any party from performing its obligations
thereunder:
(i) this Participation Agreement;
(ii) the Bill of Sale to the Owner Trustee
from the Co-Lessee conveying good and marketable title to the
Owner Trustee free and clear of all Liens and in form and
substance satisfactory to each Participant;
(iii) the Lease;
(iv) the Lease Supplement and related
Schedule of Equipment covering the Items of Equipment
delivered on the First Funding Date;
(v) the Indenture;
(vi) the Indenture Supplement covering the
Items of Equipment delivered on the First Funding Date;
(vii) the Trust Agreement;
(viii) the Guaranty;
(ix) the Tax Indemnity Agreement; and
(x) a side letter agreement executed by
Lucent in favor of each of the Lessor Parties containing (A)
Lucent's covenant that it will not purchase or bid for the
Equipment or any Item thereof in the event of any termination
or foreclosure sale and (B) Lucent's acknowledgment that its
only rights in and to the Equipment or any Item thereof are as
set forth in Sections 15.2, 15.3 and 15.4 of the Lease.
(d) Appraisal. The Owner Participant shall have
received an Appraisal satisfactory to such Participant in all respects
with respect to each Item of Equipment and the Lease, and each
Lender shall have received a letter from the Independent Appraiser
confirming the fair market value of the Equipment on the First Funding
Date is at least equal to the Lessor's Cost thereof and that the
economic useful life of the Equipment exceeds the Base Term of the
Lease.
(e) Insurance. The Participants, the Owner Trustee
and the Indenture Trustee shall have received the documentation
described in Section 22.1(d) of the Lease.
(f) Filings and Recordings. All filings, recordings
and similar actions reasonably requested by any Participant shall have
been duly made or taken including the filings, recordings and other
actions listed on Schedule IV hereto in order to protect the rights of
the Owner Trustee as owner of the Items of Equipment and as Lessor
under the Lease and to perfect the right, title and interest of the
Indenture Trustee therein under the Indenture, in each case as against
creditors of and purchasers from the Owner Trustee and the Lessee.
(g) Lessee Certificates. Each Participant and each
Agent shall have received an Officer's Certificate of the Lessee dated
the First Funding Date, the truth and accuracy of which shall be a
condition to the obligations of such Persons hereunder with respect to
the First Funding Date, to the effect that the warranties and
representations of the Lessee set forth in Section 4.1 hereof are true
and correct on the First Funding Date with the same effect as though
made on and as of that date (except to the extent that any such
representation or warranty expressly refers to a specific date, in whic
case such representation and warranty shall have been true and correct
on and as of such date).
(h) Co-Lessee Certificates. Each Participant and
each Agent shall have received an Officer's Certificate of the Co-
Lessee dated the First Funding Date, the truth and accuracy of which
shall be a condition to the obligations of such Persons hereunder with
respect to the First Funding Date, to the effect that the warranties an
representations of the Co-Lessee set forth in Section 4.2 hereof are
true and correct on the First Funding Date with the same effect as
though made on and as of that date (except to the extent that any such
representation or warranty expressly refers to a specific date, in whic
case such representation and warranty shall have been true and correct
on and as of such date).
(i) CIROR Certificate. Each Participant and each
Agent shall have received an Officer's Certificate of CIROR dated the
First Funding Date, the truth and accuracy of which shall be a
condition to the obligations of such Persons hereunder with respect to
the First Funding Date, to the effect that the warranties and
representations of CIROR set forth in Section 4.3 hereof are true and
correct on the First Funding Date with the same effect as though made
on and as of that date (except to the extent that any such
representation or warranty expressly refers to a specific date, in whic
case such representation and warranty shall have been true and correct
on and as of such date).
(j) Owner Participant Certificate. Each Lender and
each Agent shall have received an Officer's Certificate of the Owner
Participant dated the First Funding Date, the truth and accuracy of
which shall be a condition to the obligations of such Persons hereunder
with respect to the First Funding Date, to the effect that the warranti
and representations of the Owner Participant set forth in Section 4.4
hereof are true and correct on the First Funding Date with the same
effect as though made on and as of that date (except to the extent that
any such representation or warranty expressly refers to a specific date
in which case such representation and warranty shall have been true
and correct on and as of such date).
(k) Indenture Trustee Certificate. Each Participant
and the Owner Trustee shall have received an Officer's Certificate of
the Indenture Trustee dated the First Funding Date, the truth and
accuracy of which shall be a condition to the obligations of such
Persons hereunder with respect to the First Funding Date, to the effect
that the warranties and representations of the Indenture Trustee set
forth in Section 4.5 hereof are true and correct on the First Funding
Date with the same effect as though made on and as of that date
(except to the extent that any such representation or warranty
expressly refers to a specific date, in which case such representation
and warranty shall have been true and correct on and as of such date).
(l) Owner Trustee Certificate. Each Participant
and the Indenture Trustee shall have received an Officer's Certificate
of the Owner Trustee dated the First Funding Date, the truth and
accuracy of which shall be a condition to the obligations of such
Persons hereunder with respect to the First Funding Date, to the effect
that the warranties and representations of the Owner Trustee set forth
in Section 4.7 hereof are true and correct on the First Funding Date
with the same effect as though made on and as of that date (except to
the extent that any such representation or warranty expressly refers to
a specific date, in which case such representation and warranty shall
have been true and correct on and as of such date).
(m) Legal Opinions.
(i) Each Participant and each Agent shall
have received the respective legal opinions of:
(A) Co-Lessee's Counsel,
substantially in the form of Appendix D-1 hereto;
(B) Lessee's Counsel, substantially in
the form of Appendix D-2 hereto;
(C) Owner Participant's Counsel,
substantially in the respective forms of Appendices D-3 and D-
4 hereto;
(D) Owner Trustee's Counsel,
substantially in the form of Appendix D-5 hereto;
(E) Indenture Trustee's Counsel,
substantially in the form of Appendix D-6 hereto; and
(F) Florida Counsel, substantially in
the form of Appendix D-7 hereto.
(ii) In addition, the Owner Participant shall
have received an opinion of Winston & Strawn as Owner Participant's
Counsel addressing certain tax matters in form and substance
satisfactory to the Owner Participant, and the Lenders shall have
received an opinion of Lenders' Counsel as to such matters as the
Lenders may request, in form and substance satisfactory to the
Lenders.
(n) Taxes. All Taxes, if any, payable on or prior to
the First Funding Date, in connection with the execution, delivery,
recording and filing of the Operative Documents and in connection
with the consummation of the transactions contemplated by the
Operative Documents shall have been paid in full.
(o) Governmental Action. All Governmental
Action required or, in the reasonable opinion of such Participant or
such Agent, advisable as of the First Funding Date for the
consummation of the transactions contemplated hereby or by the other
Operative Documents shall have been obtained and shall be in full
force and effect and such Participant or Agent shall have received
copies of evidence of such Governmental Action, if any.
(p) CUSIP Number. Standard & Poor's CUSIP
Service Bureau shall have assigned a private placement number to the
Notes.
(q) Documents. Prior to or on the First Funding Date, each
Participant and each Agent shall have received (i) certified copies of
the Organic Documents of the Lessee, CIROR, the Co-Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee, (ii) good
standing certificates relating to each such Person certified by the
appropriate agency of the jurisdiction of such Person's organization a
in the case of the Lessee, ATOR and CIROR, the State of Florida and
(iii) such other evidence as to the due authority of each such Person
execute, deliver and perform its obligations under each document
executed by it or contemplated by the terms hereof to be executed by i
as such Participant and such Agent shall reasonably request.
(r) Sales and Use Taxes. All issues relating to
potential liability for federal, state and local sales and use and othe
taxes in connection with the transactions contemplated by the
Operative Documents and Agent shall have been resolved by the Co-
Lessee to the satisfaction of such Participant (which resolution may
include the Co-Lessee's agreement pursuant to Section 6.2 hereof to
fully indemnify under the Participation Agreement for all such
liabilities and taxes).
(s) Delivery Date. The Delivery Date for each Item
of Equipment shall have occurred, each Participant and each Agent
shall have received an Officer's Certificate of the Co-Lessee regarding
the occurrence of such Delivery Date, and each such Item of
Equipment shall have become subject to the Lease.
(t) Purchase Agreements; Invoices. Each
Participant shall have received a summary of all Purchase Documents
relating to the Items of Equipment delivered on the First Funding Date
(including the date of transfer of title with respect to each such Item
and invoices from the respective Sellers thereof specifying the amounts
comprising the respective purchase prices of such Items, certified as
true and correct on the First Funding Date by a Responsible Officer of
the Co-Lessee.
(u) Holdback Amount. The Holdback Amount
with respect to the Items of Equipment purchased shall have been
deposited with the Indenture Trustee as contemplated by Section 2.2
hereof.
(v) Lien Waiver. Each Participant and Agent shall
have received a landlord's waiver from Lucent with respect to the
Items of Equipment providing, among other things, for the agreement
of Lucent to the effect set forth in Section 5.3 of the Lease.
(w) Transaction Expenses. The Owner Participant
shall have paid or made arrangements, satisfactory to the parties
entitled thereto for the payment of all Transaction Expenses for which
invoices were received at least two (2) Business Days prior to the Firs
Funding Date.
(x) Arranger's Fee. The Co-Lessee shall have paid,
or made arrangements satisfactory to ATTCFC for the payment of, the
portion of the Arranger's Fee then due and payable.
(y) Other Matters. Each Participant and each
Agent shall have received copies of such other documents and
assurances as to such other matters as any such Person may have
reasonably requested in connection with the transactions contemplated
hereby.
III.2 Additional Conditions to Obligations of Lenders. The
obligation of the Lenders to make available their respective
Commitments to purchase the Notes on the First Funding Date shall be
subject to the satisfaction of (or waiver by the Lenders of) the
following additional conditions:
(a) Legal Investment. The Notes shall on the First
Funding Date qualify as a legal investment for each Lender under any
laws regulating investments to which it may be subject (without
recourse to provisions in any such law permitting limited investments
without restriction as to the character of the particular investment),
and each Lender shall have received such evidence as it may
reasonably request to establish compliance with this condition.
(b) Rating. Each Lender shall have received a copy
of the letter dated the First Funding Date from Duff & Phelps Credit
Rating Co. stating that the Notes are rated at least BBB- .
III.3 Conditions Precedent to the Obligations of the Lessee,
CIROR and the Co-Lessee on the First Funding Date. The obligations
of the Lessee, CIROR and the Co-Lessee to take the actions
contemplated hereby on the First Funding Date shall be subject to the
satisfaction, or waiver by the Lessee, CIROR or the Co-Lessee prior
to or on the First Funding Date, of the following conditions precedent
(except that the obligation of any such party shall not be subject to t
performance or compliance of the Lessee, CIROR or the Co-Lessee):
(a) Authorization, Execution and Delivery of
Operative Documents. Each of the Operative Documents shall have
been duly authorized, executed and delivered by each designated party
thereto (other than the Lessee, CIROR and the Co-Lessee) and shall
be in full force and effect on the First Funding Date, and the Lessee
and the Co-Lessee shall each have received an executed counterpart of
each Operative Document and any other document of which an
executed counterpart shall have been delivered to the Participants and
a copy of each such document of which a copy shall have been
delivered to the Participants.
(b) Certificates. Each of the Lessee and the Co-
Lessee shall have received the Officer's Certificates delivered pursuan
to Section 3.1(j) through (l), in form and substance satisfactory to su
Person.
(c) Legal Opinions. Each of the Lessee and the
Co-Lessee shall have received opinions addressed to each such Person,
of the counsel respectively specified in clauses (C), (D) and (E) of
Section 3.1(m).
(d) First Funding. The Owner Trustee shall have
made available to the Co-Lessee the aggregate Lessor's Cost (less the
aggregate applicable Holdback Amount) for the Items of Equipment
specified on the Funding Request in respect of the First Funding Date.
(e) Appraisal. Each of the Lessee and the Co-
Lessee shall have received a copy of the Appraisal.
(f) Illegality. In the opinion of the Lessee, the Co-
Lessee or Co-Lessee's Counsel, it would not be illegal under
Applicable Law for the Lessee, CIROR or the Co-Lessee to
consummate any of the transactions contemplated by the Operative
Documents.
(g) Sales and Use Taxes. All issues relating to
potential liability for federal, state or local sales or use taxes in
connection with the transactions contemplated by the Operative
Documents shall have been resolved to the satisfaction of the Lessee
and the Co-Lessee.
III.4 Conditions Precedent to Fundings on Second Funding
Dates. The obligation of the Indenture Trustee to pay the Holdback
Amount applicable to the Item or Items of Equipment to which a
Second Funding Date relates to the Co-Lessee on behalf of the Owner
Trustee shall be subject to the satisfaction of the following condition
precedent:
(a) Funding Request. The Indenture Trustee shall
have received an appropriate Funding Request in a timely manner as
contemplated by Section 2.3(b) hereof.
(b) Acceptance Certificate. Each Participant and
each Agent shall have received an appropriately completed Acceptance
Certificate evidencing the Lessee's final acceptance of such Item or
Items and that the Co-Lessee has paid to each relevant Seller the full
amount of the Holdback Amount for which funding is being requested.
(c) Lien Waiver. The Indenture Trustee shall have
received Lien waivers with respect to such Item or Items, each in
substantially the form attached hereto as Appendix G.
ARTICLE IV
Representations and Warranties
IV.1 Representations and Warranties of the Lessee. The
Lessee represents and warrants as follows:
(a) Due Incorporation, etc. The Lessee (i) is a
general partnership duly organized and validly existing under the laws
of the State of New York, (ii) has the power and authority to own or
hold under lease properties used in its business and to enter into and
perform its obligations under each of the Operative Documents to
which it is a party, (iii) has all Governmental Action required to carr
on its business as presently conducted and as contemplated, to own or
hold under lease the properties used in its business, including the
Equipment, and to enter into and perform its obligations under this
Agreement and each other Operative Document to which it is or is to
become a party, and (iv) is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
failure to be so qualified would reasonably be expected to have a
Material Adverse Effect.
(b) Due Authorization, Non-Contravention, etc.
The execution, delivery and performance of the Operative Documents
to which the Lessee is a party have been duly authorized by all
necessary partnership action on its part, do not and will not conflict
with, result in any violation of, or constitute any default under, any
provision of any Organic Document or Contractual Obligation of the
Lessee or any Applicable Law (but only in the case of any Applicable
Law, as to any such conflict, violation or default which would
reasonably be expected to have a Material Adverse Effect) and will not
result in or require the creation or imposition of any Lien (other than
Permitted Liens) on any of the properties of the Lessee.
(c) Due Execution. The Operative Documents to
which the Lessee is a party have been duly executed and delivered by,
and each such Operative Document constitutes the legal, valid and
binding obligation of, the Lessee enforceable in accordance with its
terms.
(d) No Violation, etc. Neither the execution,
delivery, and performance by the Lessee of this Participation
Agreement or any other Operative Document to which it is, or is to
become, a party, nor the consummation of the transactions
contemplated thereby will conflict with, or result in a breach of any o
the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any Lien (other than Permitted Liens)
pursuant to any Contractual Obligation of the Lessee which would
reasonably be expected to have a Material Adverse Effect, nor will
such actions result in any violation of the provisions of the Organic
Documents of the Lessee.
(e) Governmental Action. No Governmental
Action by, and no notice to or filing with, any Governmental Authority
is required for the due execution, delivery and performance by the
Lessee of the Operative Documents to which it is a party except for
such Governmental Actions, notices or filings as have been duly
obtained or made and are in full force and effect. There is no
proceeding pending or, to the best knowledge of the Lessee,
threatened which seeks, or which would reasonably be expected, to
rescind, terminate, modify or suspend any such Governmental Action.
The Lessee is not an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, or a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of
1935.
(f) Litigation. There is no pending or, to the best
knowledge of the Lessee, threatened litigation, action, arbitration or
proceeding affecting the Lessee or any of its properties, assets or
revenues before any Governmental Authority which questions the
validity or enforceability of any Operative Document or which,
individually or in the aggregate, if decided adversely to the interests
the Lessee, would reasonably be expected to have a Material Adverse
Effect.
(g) Location of Equipment. The Equipment is
located at the Orlando Facility. The address of the chief executive
office (as such term is used in Article 9 of the UCC) of the Lessee is
located, and the Equipment will be maintained, at 9333 South John
Young Parkway, Orlando, Florida 32819.
(h) Compliance with Applicable Law and
Governmental Action. The Lessee is in compliance with all Applicable
Law (including all Applicable Law relating to the ownership, use,
operation and lease of the Equipment) except to the extent that the
failure to comply with any such Applicable Law would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(i) ERISA. The Lessee is not entering into this
Participation Agreement or any transaction contemplated hereby or by
any other Operative Document to which it is, or is to become, a party,
directly or indirectly in connection with any arrangement or
understanding by it in any way involving any "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) or "plan" (within the
meaning of Section 4975(e)(1) of the Code) or any "plan assets" of
any such employee plan or plans. The representation and warranty in
the preceding sentence is made by the Lessee in reliance upon, and is
subject to the accuracy of the representations and warranties made by
the Participants in Sections 4.4(f) and 4.6(b) hereof.
(j) Defaults; Events of Loss. No Termination
Event or Lease Event of Default or Event of Loss or event that with
the passage of time or giving of notice or both would constitute a
Termination Event, Lease Event of Default or an Event of Loss has
occurred or is continuing.
(k) Sales Tax. All sales or use tax then due in
connection with the transactions contemplated by the Operative
Documents for which the Lessee is responsible under the Operative
Documents have been paid on the applicable Funding Dates.
IV.2 Representations and Warranties of the Co-Lessee. The
Co-Lessee represents and warrants as follows:
(a) Due Incorporation, etc. The Co-Lessee (i) is a
corporation duly incorporated and validly existing in good standing
under the laws of the State of California, (ii) has the corporate power
and authority to own or hold under lease its properties and to enter
into and perform its obligations under each of the Operative
Documents to which it is a party, (iii) has all Governmental Action
required to carry on its business as presently conducted and as
contemplated, to own or hold under lease the properties used in its
business and to enter into and perform its obligations under each
Operative Document to which it is or is to become a party, and (iv) is
duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the failure to be so qualified woul
reasonably be expected to have a Material Adverse Effect.
(b) Due Authorization, Non-Contravention, etc.
The execution, delivery and performance by the Co-Lessee of each of
the Operative Documents to which it is a party have been duly
authorized by all necessary corporate action, do not and will not
conflict with, result in any violation of, or constitute any default un
any provision of any Organic Document or Contractual Obligation of
the Co-Lessee or any Applicable Law (and, in the case of any
Applicable Law, such conflict, violation or default would reasonably
be expected to have a Material Adverse) and will not result in or
require the creation or imposition of any Lien (other than Permitted
Liens) on any of the properties, assets or revenues of the Co-Lessee.
(c) Governmental Action. No Governmental
Action by, and no notice to or filing with, any Governmental Authority
or regulatory body is required for the due execution, delivery and
performance by the Co-Lessee of each of the Operative Documents to
which it is a party, except for such Governmental Actions, notices or
filings as have been duly obtained or made and are in full force and
effect. There is no proceeding pending or, to the best knowledge of
Co-Lessee, threatened which seeks, or which would reasonably be
expected, to rescind, terminate, modify or suspend any such
Governmental Action. The Co-Lessee is not an "investment company"
or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940 or a "holding
company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding
Company Act of 1935.
(d) Due Execution. This Participation Agreement
and each other Operative Document to which the Co-Lessee is a party
have been duly executed and delivered by, and each such Operative
Document constitutes the legal, valid and binding obligation of, the
Co-Lessee, enforceable in accordance with its terms.
(e) No Violation, etc. Neither the execution,
delivery, and performance by the Co-Lessee of the Participation
Agreement or any other Operative Document to which it is, or is to
become, a party, nor the consummation of the transactions
contemplated thereby will conflict with, or result in a breach of any o
the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any Lien (other than Permitted Liens)
pursuant to any Contractual Obligations of the Co-Lessee which
would reasonably be expected to have a Material Adverse Effect, nor
will such actions result in any violation of the provisions of the
Organic Documents of the Co-Lessee.
(f) Litigation. There is no pending or, to the best
knowledge of the Co-Lessee, threatened litigation, action, arbitration
or proceeding affecting the Co-Lessee or any of its properties, assets
or revenues before any Governmental Authority which questions the
validity or enforceability of any Operative Document or which,
individually or in the aggregate, if decided adversely to the interests
the Co-Lessee, would reasonably be expected to have a Material
Adverse Effect.
(g) Compliance with Applicable Law and
Governmental Action. The Co-Lessee is in compliance with all
Applicable Law (including all Applicable Law relating to the
ownership, use, operation and lease of the Equipment) except to the
extent that the failure to comply with any such Applicable Law would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(h) No Public Offering.
(i) Neither the Co-Lessee nor Salomon
Brothers Inc (the only Person authorized or employed by the
Co-Lessee or the Lessee as agent, broker, dealer or otherwise
in connection with the offering or sale of the Notes or any
similar securities) has offered any of the Notes or similar
securities, or solicited offers to buy any thereof from, or
otherwise approached or negotiated with respect thereto with,
any prospective purchaser, other than the Lenders and not
more than 160 other institutional investors, each of which was
offered such Notes at private sale for investment and each of
which the Co-Lessee or such agent had reasonable grounds to
believe, and did believe, and as to the Lenders after reasonable
inquiry does believe, has such knowledge and experience in
financial and business matters that it is capable of evaluating
the merits and risks of investment in such Notes. Neither the
Co-Lessee nor any Person authorized to act on its behalf will
take any action which would subject the issuance or sale of any
Notes, or any interest in the Lease or any other debt or other
instrument issued or to be issued to finance the Equipment to
the registration requirements of Section 5 of the Securities Act.
(ii) Neither the Co-Lessee nor ATTCFC
(the only Person authorized or employed by the Co-Lessee or
the Lessee as agent, broker, dealer or otherwise in connection
with the offering or sale of the beneficial interest in the Trust
Estate or any similar securities) has offered the beneficial
interest in the Trust Estate or similar securities, or solicited
offers to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any prospective
purchaser, other than the Owner Participant and not more than
30 other institutional investors, each of which was offered such
beneficial interest at private sale for investment and each of
which the Co-Lessee or such agent had reasonable grounds to
believe, and did believe, and as to the Owner Participant after
reasonable inquiry does believe, has such knowledge and
experience in financial business matters that it is capable of
evaluating the merits and risks of investment in such beneficial
interest. Neither the Co-Lessee nor any Person authorized to
act on its behalf will take any action which would subject the
issuance or sale of any beneficial interest in the Trust Estate, or
any interest in the Lease or any other debt or other instrument
issued or to be issued to finance the Equipment to the
registration requirements of Section 5 of the Securities Act.
(i) ERISA. The Co-Lessee is not entering into this
Participation Agreement or any transaction contemplated hereby or by
any other Operative Document to which it is, or is to become, a party,
directly or indirectly in connection with any arrangement or
understanding by it in any way involving any "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) or "plan" (within the
meaning of Section 4975(e)(1) of the Code) or any "plan assets" of
any such employee plan or plans. None of the execution and delivery
of the Operative Documents, the creation of the beneficial interest in
the Trust Estate nor the issuance and sale of the Notes will constitute
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code. The representation and warranty in the
second sentence of this Section 4.2(i) is made by the Co-Lessee in
reliance upon, and is subject to the accuracy of the representations an
warranties made by the Participants in Sections 4.4(f) and 4.6(b)
hereof.
(j) Title. On each Funding Date, all UCC financing
statements, Purchase Documents and other documents, if any
necessary or advisable to establish and protect the Lessor's right, tit
and interest in and to the Equipment to be acquired by it and to perfec
for the benefit of the Indenture Trustee and the Lenders the Lien and
security interest in the Trust Indenture Estate created pursuant to the
Indenture will have been duly executed by all necessary and
appropriate Persons and filed or recorded and the Indenture, together
with such filings and recordings, will on each Funding Date create a
valid and perfected first priority Lien and security interest in the Tr
Indenture Estate effective as against creditors of and purchasers from
the Lessee, the Co-Lessee and, assuming that the representations and
warranties of the Owner Trustee herein are true and correct, the
Owner Trustee. Upon delivery of any Equipment pursuant to the Bill
of Sale, the Owner Trustee will thereupon have good, valid and
marketable title to such Equipment free and clear of all Liens other
than Permitted Liens described in clauses (a) through (c) of the
definition thereof and, as to each Item of Equipment subject to a
Holdback Amount, the Lien in favor of the applicable Seller in the
amount thereof (such Lien to terminate on or before the Second
Funding Date in respect of such Equipment).
(k) No Default, etc. The Co-Lessee is not in
default, and no condition exists that with notice or lapse of time or
both would constitute a default under any mortgage, deed of trust,
indenture, contract or other instrument or agreement to which the Co-
Lessee is a party or by which it or any of its properties or assets may
be bound which individually or in the aggregate would have a Material
Adverse Effect.
(l) Location of Equipment. The Equipment is
located at the Orlando Facility.
(m) Taxes. Each of the Co-Lessee and the Lessee
has filed or caused to be filed all tax returns required to be filed by
and has paid all Taxes shown to be due and payable on such returns
(other than those that are not yet delinquent and those that the Co-
Lessee is contesting in good faith and none of which are material).
(n) Equipment. On the First Funding Date, each
Item of Equipment delivered on such date, taken as a whole, and each
major component thereof, is substantially complete such that it is
available to perform the function for which it was designed.
(o) Defaults; Events of Loss. No Termination
Event, Lease Event of Default, Indenture Event of Default or Event of
Loss or event that with the passage of time or giving of notice or both
would constitute a Termination Event, Lease Event of Default,
Indenture Event of Default or an Event of Loss has occurred and is
continuing.
(p) Sales Tax. All sales, use, transfer, recording
and similar taxes due in connection with the transactions contemplated
by the Operative Documents have been paid on the applicable Funding
Date or such transactions are exempt from such taxes.
(q) Financial Statements and Condition. The
audited consolidated balance sheets and consolidated statements of
income and retained earnings and cash flows of the Co-Lessee and its
subsidiaries set forth in the Co-Lessee's annual report on Form 10-K
for the fiscal year ended March 31, 1996 (copies of which have been
delivered to the Participants), fairly present, in conformity in all
material respects with generally accepted accounting principles, the
consolidated financial position of the Co-Lessee and its subsidiaries a
of such date and the results of their operations for the period then
ended. The unaudited consolidated balance sheets and consolidated
statements of income and retained earnings and cash flows of the Co-
Lessee and its subsidiaries set forth in the Co-Lessee's quarterly repo
on Form 10-Q for the fiscal quarter ended June 30, 1996 (copies of
which have been delivered to the Participants), fairly present, in
conformity in all material respects with generally accepted accounting
principles consistently applied, the consolidated financial position of
the Co-Lessee and its subsidiaries as of such date and the results of
their operations for the period then ended, subject to the absence of
footnotes and normal year-end adjustments. Since March 31, 1996,
there has been no material adverse change to the Co-Lessee's business,
assets, operations, prospects or condition (financial or otherwise) as
shown on the financial statements as of such date.
(r) Chief Executive Office. The chief executive
office (as such term is used in Article 9 of the UCC) of the Co-Lessee
is located at 3100 West Warren Avenue, Fremont, California 94538.
(s) Ownership of the Lessee. CIROR and ATOR
are the sole general partners of the Lessee. No other partnership
interests have ever been issued by the Lessee and no subscription,
warrant, option, convertible security or other right (contingent or
otherwise) to purchase or acquire partnership interests in the Lessee i
authorized or outstanding.
(t) Ownership of CIROR. The Co-Lessee is the
sole beneficial and record owner of one hundred percent (100%) of the
issued and outstanding shares of capital stock of CIROR, all of which
shares are duly authorized, validly issued and outstanding, fully paid
and nonassessable, free and clear of all encumbrances, Liens and
charges. No other shares of any class of capital stock have ever been
issued by CIROR and no subscription, warrant, option, convertible
security or other right (contingent or otherwise) to purchase or acquir
any shares of any class of capital stock of CIROR is authorized or
outstanding.
(u) Environmental Matters. The Lessee Parties
hold and are in material compliance with all licenses, permits and
authorizations required under Environmental Law with respect to the
ownership, use and operation of the Equipment; the Lessee Parties are
in compliance with all Environmental Laws applicable to the
ownership, use and operation of the Equipment, except for such non-
compliance as will not have a Material Adverse Effect; no Lien has
been attached to any of the Equipment pursuant to any Environmental
Law; neither the Lessee nor the Co-Lessee has received written notice
of any claim or investigation, or notice of violation, pending or
threatened, based on or related to Environmental Law relating to the
ownership, use and operation of the Equipment; the Co-Lessee does
not have knowledge of any events, conditions or circumstances
involving Hazardous Substances that could reasonably be anticipated
to lead to a claim against the Co-Lessee under Environmental Law
applicable to the ownership, use and operation of the Equipment,
except for claims that would not reasonably be expected to have a
Material Adverse Effect.
(v) Insurance. The Equipment is covered by the
insurance required by Article XXII of the Lease and all premiums in
respect of such insurance have been paid in full.
(w) Margin Regulations. None of the transactions
contemplated by the Operative Documents (including, without
limitation, the use of the proceeds from the sale of the Notes) will
result in a violation of Section 7 of the Exchange Act or any
regulations issued thereunder or Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. None of the proceeds from the sale of the Notes will be
used to purchase or carry (or refinance any borrowing the proceeds of
which were used to purchase or carry) any "margin stock" within the
meaning of any such Regulations.
(x) Disclosure. The financial statements referred to
in Section 4.2(q) do not, nor does the Private Placement Offering
Memorandum dated August 1996 prepared by Salomon Brothers, Inc
or any written statement furnished by the Co-Lessee or the Lessee or
on behalf of the Co-Lessee or the Lessee in connection with the
negotiation of the Lease or any other Operative Document, contain
any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not
misleading. There is no fact which the Co-Lessee has not disclosed in
writing which would reasonably be expected to have a Material
Adverse Effect.
(y) Broker's Fee. No broker's or finder's or
placement fee or commission will be payable with respect to the
transactions contemplated by the Operative Documents as a result of
any action by the Co-Lessee, CIROR or the Lessee, except for the fees
of Salomon Brothers, Inc, which shall be included in Transaction
Expenses, and the Co-Lessee agrees that it will hold each Participant
and Agent harmless from any claim, demand or liability for any other
broker's or finder's or placement fees or commission alleged to have
been incurred as a result of any action by the Co-Lessee, CIROR or
the Lessee in connection with this transaction.
(z) Lessee and CIROR Representations. The
representations and warranties of the Lessee set forth in Section 4.1
and the representations and warranties of CIROR set forth in Section
4.3 are true and correct.
IV.3 Representations and Warranties of CIROR. CIROR
represents and warrants as follows:
(a) Due Incorporation, etc. CIROR (i) is a
corporation duly incorporated and validly existing in good standing
under the laws of the State of California, (ii) has the power and
authority to own or hold under lease its properties and to enter into
and perform its obligations under each of the Operative Documents to
which it is a party, (iii) has all Governmental Action required to carr
on its business as presently conducted and as contemplated, to own or
hold under lease the properties used in its business and to enter into
and perform its obligations under each Operative Document to which
it is, or is to become, a party, and (iv) is duly qualified to do busin
as a foreign corporation and is in good standing in each jurisdiction
where the failure to be so qualified would reasonably be expected to
have a Material Adverse Effect.
(b) Due Authorization; Non-Contravention, etc.
The execution, delivery and performance of the Operative Documents
to which CIROR is a party have been duly authorized by all necessary
action on its part, do not and will not conflict with, result in any
violation of, or constitute any default under, any provision of any
Organic Document or Contractual Obligation of CIROR or any
Applicable Law (but only in the case of any Applicable Law, as to any
such conflict, violation or default which would reasonably be expected
to have a Material Adverse Effect).
(c) Governmental Action. No Governmental
Action by, and no notice to or filing with, any Governmental Authority
is required for the due execution, delivery and performance by
CIROR of each of the Operative Documents to which it is a party,
except for such Governmental Actions, notices or filings as have been
duly obtained or made and are in full force and effect. There is no
proceeding pending or, to the best knowledge of CIROR, threatened
which seeks, or which would reasonably be expected, to rescind,
terminate, modify or suspend any such Governmental Action. CIROR
is not an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment
Company Act of 1940, or a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate", of a "holding
company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of
1935.
(d) Due Execution. The Operative Documents to
which CIROR is a party have been duly executed and delivered by, and
each such Operative Document constitutes the legal, valid and binding
obligation of, CIROR enforceable in accordance with its terms.
(e) Litigation. There is no pending or, to the best
knowledge of CIROR, threatened litigation, action, arbitration or
proceeding affecting the Lessee or any of its properties, assets or
revenues before any Governmental Authority which questions the
validity or enforceability of any Operative Document or which,
individually or in the aggregate, if decided adversely to the interests
CIROR, would have a Material Adverse Effect.
(f) Chief Executive Office. The chief executive
office (as such term is used in Article 9 of the UCC) of CIROR is
located at 3100 West Warren Avenue, Fremont, California 94538.
(g) Compliance with Applicable Law and
Governmental Action. CIROR is in compliance with all Applicable
Law (including all Applicable Law relating to the ownership, use,
operation and lease of the Equipment) except to the extent that the
failure to comply with any such Applicable Law would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(h) No Public Offering. Neither CIROR nor any
Person acting on its behalf has directly or indirectly offered or sold,
purported to offer or sell, any interest in the Trust Estate, the Notes
or any securities similar thereto, or any interest in the Equipment or
the Lease, or has otherwise approached or negotiated with any Person
with respect thereto and neither CIROR nor any Person authorized to
act on its behalf will take any action which would subject the issuance
or sale of any interest in the Trust Estate, any Notes or any interest
the Lease or any other debt instrument issued or to be issued to
finance the Equipment to the registration requirements of Section 5 of
the Securities Act of 1933, as amended.
(i) No Prohibited Transaction. None of the
execution and delivery of the Operative Documents, the creation of the
beneficial interest in the Trust Estate nor the issuance and sale of
Notes will constitute a prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code (the
representation in this sentence being made in reliance upon and subject
to the accuracy of the representations made by the Participants in
Sections 4.4(f) and 4.6(b)).
(j) Title. On each Funding Date, all UCC financing
statements, Purchase Documents and other documents, if any,
necessary or advisable to establish and protect the Owner Trustee's
right, title and interest in and to the Equipment to be acquired by it
to perfect for the benefit of the Indenture Trustee and the Lenders the
security interest in the Trust Indenture Estate created pursuant to the
Indenture will have been duly executed by all necessary and
appropriate Persons and filed or recorded and the Indenture, together
with such filings and recordings, will on each Funding Date create a
valid and perfected first priority Lien and security interest in the Tr
Indenture Estate, effective as against creditors of and purchasers from
the Lessee, the Co-Lessee and, assuming that the representations and
warranties made by the Owner Trustee herein are true and correct, the
Owner Trustee. Upon delivery of any Equipment pursuant to the Bill
of Sale, the Owner Trustee will thereupon have good, valid and
marketable title to such Equipment free and clear of all Liens other
than Permitted Liens described in clauses (a) through (c) of the
definition thereof and, as to each Item of Equipment subject to a
Holdback Amount, the Lien in favor of the applicable Seller in the
amount thereof (such Lien to terminate on or before the Second
Funding Date in respect of such Equipment).
(k) No Default, etc. CIROR is not in default, and
no condition exists that with notice or lapse of time or both would
constitute a default, under any mortgage, deed of trust, indenture,
contract or other instrument or agreement to which CIROR is a party
or by which it or any of its properties or assets may be bound which
individually or in the aggregate would have a Material Adverse Effect.
(l) Location of Equipment. The Equipment is
located at the Orlando Facility.
(m) Taxes. CIROR has filed or caused to be filed all
tax returns required to be filed by it and has paid all Taxes shown to
due and payable on such returns (other than those that are not yet
delinquent and those that CIROR is contesting in good faith).
(n) Defaults; Events of Loss. No Termination
Event, Lease Event of Default, Indenture Event of Default or Event of
Loss or event that with the passage of time or giving of notice or both
would constitute a Termination Event, Lease Event of Default,
Indenture Event of Default or an Event of Loss has occurred and is
continuing.
(o) Sales Tax. All sales or use tax then due in
connection with the transactions contemplated by the Operative
Documents for which CIROR is responsible under such documents
shall have been paid on the applicable Funding Dates.
(p) Ownership of Lessee. CIROR owns a 40%
general partnership interest in the Lessee, free and clear of any Liens
or rights of third parties.
IV.4 Representations and Warranties of the Owner
Participant. The Owner Participant represents and warrants as
follows:
(a) Due Incorporation, etc. It is a corporation duly
organized and validly existing in good standing under the laws of its
jurisdiction of incorporation, and has the corporate power and
authority to enter into and perform its obligations under the Operative
Documents to which it is a party.
(b) Due Authorization, Non-Contravention, etc.
The execution, delivery and performance of the Operative Documents
to which it is a party have been duly authorized by all necessary
corporate action, do not and will not conflict with, result in any
violation of, or constitute any default under, any provision of any of
Organic Documents or Contractual Obligations or any Applicable Law
(but only, in the case of any Applicable Law, as to any such conflict,
violation or default which would reasonably be expected to have a
material adverse effect on its business, assets, operations or conditio
(financial or otherwise), or its ability to perform its obligations und
the Operative Documents to which it is a party) and will not result in
or require the creation of any Lien (other than Permitted Liens that ar
not also Owner Participant Liens) on any part of the Equipment or on
any of its properties and no Governmental Action by, and no notice to
or filing with, any Governmental Authority or regulatory body is
required for the due execution, delivery and performance by such
Owner Participant of the Operative Documents to which it is a party,
except for such Governmental Actions, notices or filings as have been
duly obtained or made and are in full force and effect.
(c) Due Execution. The Operative Documents to
which it is a party have been duly executed and delivered by, and each
such Operative Document constitutes the legal, valid and binding
obligation of, the Owner Participant enforceable in accordance with its
terms.
(d) No Public Offering; Brokers. Neither the
Owner Participant nor any Person acting on its behalf has directly or
indirectly offered or sold, nor will it offer or sell, the Notes or any
interest in the Equipment or the Lease, or any similar securities, or h
otherwise approached or negotiated, nor will it approach or negotiate,
with any Person with respect thereto, so as to bring any of the
transactions contemplated hereby within the purview of Section 5 of
the Securities Act. It is acquiring its interest in the Trust Estate f
own account for investment and not with a view to, or for sale in
connection with, any distribution but subject to any requirement of law
that the disposition of its property shall at all times be and remain
within its control. It has not retained or employed, nor will it retai
employ, any broker or finder to act on its behalf in connection with th
transactions contemplated by the Operative Documents and has not
authorized, nor will it authorize any broker or finder retained or
employed by any other Person so to act.
(e) Owner Participant Liens. The Equipment and
the Trust Estate are free of Owner Participant Liens.
(f) ERISA. No part of the funds to be used by it to
acquire any interest in the Equipment constitutes assets of an
"employee benefit plan" (as such term is defined in Section 3(3) of
ERISA) or any "plan" (as such term is defined in Section 4975(e)(1) of
the Code).
(g) Eligibility. It has a tangible net worth,
determined in accordance with GAAP, in excess of $50,000,000.
(h) Litigation. There is no pending or, to the best
knowledge of such Owner Participant, threatened litigation, action,
arbitration or proceeding affecting such Owner Participant or any of it
properties, assets or revenues before any Governmental Authority
which questions the validity or enforceability of any Operative
Document or which, individually or in the aggregate, if decided
adversely to such Owner Participant, would reasonably be expected to
have a material adverse effect on its ability to perform its obligation
under the Operative Documents to which it is a party.
IV.5 Representations and Warranties of the Indenture
Trustee. The Indenture Trustee in its individual capacity represents
and warrants to each of the other parties hereto that:
(a) Due Organization. It is a banking corporations
duly organized and validly existing in good standing under the laws of
the State of Delaware and has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Participation Agreement and the other Operative Documents to which
it is a party.
(b) Due Authorization. This Participation
Agreement and the other Operative Documents to which it is party
have been duly authorized, executed and delivered by the Indenture
Trustee and constitute the legal, valid and binding obligations of the
Indenture Trustee enforceable against the Indenture Trustee in
accordance with the terms hereof and thereof.
(c) Non-Contravention. Neither the execution and
delivery by the Indenture Trustee of this Participation Agreement and
the other Operative Documents to which it is party, nor the
authentication by it of the Notes, nor the consummation by it of the
transactions contemplated hereby or thereby, nor the compliance by it
with any of the terms or provisions thereof will contravene any law of
the State of Delaware, or any political subdivision thereof, or any
United States federal law governing the banking or trust powers of the
Indenture Trustee or any judgment or order applicable to or binding on
it, or contravene or result in any breach of, or constitute any default
under, its Organic Documents or Contractual Obligations to which it is
a party or by which any of its properties may be bound.
(d) Governmental Action. Neither the execution
and delivery by the Indenture Trustee of this Participation Agreement
and the other Operative Documents to which it is or is to be party, nor
the performance by it of any of the transactions contemplated hereby
or thereby requires the consent or approval of, the giving of notice to
the registration with, or the taking of any other action in respect of,
any governmental authority of the State of Delaware, or any political
subdivision thereof, or any United States federal governmental
authority governing the banking or trust powers of the Indenture
Trustee.
(e) Litigation. There is no pending or, to the best
knowledge of the Indenture Trustee, threatened litigation, action,
arbitration or proceeding affecting the Indenture Trustee or any of its
properties, assets or revenues before any Governmental Authority
which questions the validity or enforceability of any Operative
Document or which, individually or in the aggregate, if decided
adversely to the Indenture Trustee, would reasonably be expected to
have a material adverse effect on its ability to perform its obligation
under the Operative Documents to which it is a party.
IV.6 Representations and Warranties of the Lenders. Each
Lender severally represents and warrants as follows:
(a) Notes for Investment Only. It is acquiring the
Notes for its own account or for one or more separate accounts
maintained by it for investment and not with a view to, or for sale in
connection with, any distribution, provided that the disposition of its
property shall at all times be and remain within its control.
(b) ERISA. At least one of the following
statements is an accurate representation as to each source of funds (a
"Source") to be used by such Lender to pay the purchase price of the
Notes to be purchased by it hereunder:
(i) the Source is an insurance company
"general account" within the meaning of Department of Labor
Prohibited Transaction Class Exemption ("PTCE") 95-60
(issued July 12, 1995) and the acquisition of the Notes satisfies
the conditions of PTCE 95-60; or
(ii) the Source is an insurance company
pooled separate account and the acquisition of the Notes
satisfies the conditions of PTCE 90-1 (issued January 29,
1990); or
(iii) the Source is a bank collective
investment fund and the acquisition of the Notes satisfies the
conditions of PTCE 91-38 (issued July 12, 1991); or
(iv) the Source is one or more pension
funds, trust funds or agency accounts, each of which is a
"governmental plan" as defined in Section 3(32) of ERISA; or
(v) the Source is an "investment fund"
managed by a qualified professional asset manager or "QPAM"
(as defined in Part V of PTCE 84-14, issued March 13, 1984),
and the acquisition of the Notes satisfies the conditions of
PTCE 84-14; or
(vi) the Source does not include assets of
any "plan", as defined in Section 3(3) of ERISA.
IV.7 Representations and Warranties of the Owner Trustee.
The Owner Trustee in its individual capacity and as Owner Trustee
(where noted) represents and warrants to each of the other parties
hereto that:
(a) Due Organization. It is a national banking
association duly organized and validly existing in good standing under
the laws of the United States of America and has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Trust Agreement and
(assuming due authorization, execution and delivery of the Trust
Agreement by the Owner Participant) has all requisite corporate power
and authority as Owner Trustee to execute and deliver the other
Operative Documents to which it is or is to be a party.
(b) Due Authorization. This Agreement and the
Trust Agreement have been duly authorized, executed and delivered
by the Owner Trustee in its individual capacity and constitute the lega
valid and binding obligations of the Owner Trustee enforceable against
the Owner Trustee in accordance with the terms hereof and thereof.
Assuming the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant, the Operative Documents to
which it is a party in its capacity as Owner Trustee have been duly
authorized, executed and delivered by it and constitute the legal, vali
and binding obligations of it in its capacity as Owner Trustee
enforceable against it in accordance with the terms thereof.
(c) Non-Contravention. Neither the execution and
delivery by it, either in its individual capacity or in its capacity as
Owner Trustee, as the case may be, of any of the Operative
Documents to which it is or is to be a party, nor the consummation by
it of the transactions contemplated thereby nor compliance by it with
any of the terms or provisions thereof will contravene any Applicable
Law or any judgment or order applicable to or binding on it, or
contravene or result in any breach of, or constitute any default under,
its Organic Documents or Contractual Obligations to which it is a
party or by which any of its properties may be bound.
(d) Governmental Action. Neither the execution
and delivery by it, either in its individual capacity or in its capacit
Owner Trustee, as the case may be, of each of the Operative
Documents to which it is or is to be a party, nor the performance of it
obligations thereunder requires the consent or approval of or the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Governmental Authority.
(e) Location. The chief executive office (as such
term is used in Article 9 of the UCC) of the Owner Trustee is located
at 79 South Main Street, Salt Lake City, Utah 84111.
(f) Title. On the First Funding Date, the Owner
Trustee will have whatever title to the Items of Equipment as was
conveyed to it by the Co-Lessee.
(g) Litigation. There is no pending or, to the best
knowledge of the Owner Trustee, threatened litigation, action,
arbitration or proceeding affecting the Owner Trustee or any of its
properties, assets or revenues before any Governmental Authority
which questions the validity or enforceability of any Operative
Document or which, individually or in the aggregate, if decided
adversely to the Owner Trustee, would reasonably be expected to have
a material adverse effect on its ability to perform its obligations und
the Operative Documents to which it is a party.
(h) Liens; Conveyances. The Trust Estate is free
and clear of any Lessor Liens attributable to the Owner Trustee.
Except as contemplated by the Operative Documents, the Owner
Trustee has not conveyed any interest in the Trust Estate to any
Person.
ARTICLE V
Covenants
V.1 Covenants of the Owner Participant and the Owner
Trustee.
(a) Liens. Each of the Owner Participant and the
Owner Trustee severally agrees that at all times the Trust Estate shall
be free of any Owner Participant Liens or Lessor Liens, respectively,
attributable to it. The Owner Participant and the Owner Trustee each
severally agrees that it will, at its own cost and expense, promptly ta
such action as may be necessary duly to discharge any Owner
Participant Lien or Lessor Lien, respectively, attributable to it and w
make restitution and hold harmless each other Indemnified Person
from and against any costs or expenses (including Fees and Expenses)
and any reduction in the amount payable out of the Trust Indenture
Estate to each present or future holder of a Note in respect of the
Notes, incurred, in each case, as a result of the imposition or
enforcement of any such Owner Participant Lien or Lessor Lien
attributable to it; provided, that the Owner Participant may in good
faith by appropriate proceedings contest claims or charges resulting in
any such Owner Participant Lien as long as such proceeding does not
involve any material danger of the sale, forfeiture or loss (or loss of
use) of any Item of Equipment or any other part of the Trust Estate or
the Trust Indenture Estate, or any interest therein. The agreements of
the Owner Trustee set forth in this Section 5.1(a) are made only in its
individual capacity and not as Owner Trustee.
(b) No Amendments. Each of the Owner Trustee
and the Owner Participant agrees that until expiration or earlier
termination of the Lease it will not terminate the Trust Agreement or
amend the Trust Agreement in any manner which would be materially
adverse to the Lessee, the Co-Lessee or the Indenture Trustee without
the prior written consent of the Indenture Trustee and, so long as no
Termination Event or Lease Event of Default has occurred and is
continuing, the Lessee and the Co-Lessee.
(c) Change to Principal Place of Business or Chief
Executive Office, etc. The Owner Trustee shall notify the Owner
Participant, the Indenture Trustee and the Lessee in writing at least
30 days prior to any change to its principal place of business, chief
executive office, name or organizational structure or to the place
where the Owner Trustee maintains records concerning the
transactions contemplated hereby.
V.2 Covenants of the Indenture Trustee. The Indenture
Trustee agrees, in its individual capacity, that:
(a) Discharge of Liens. The Indenture Trustee shall
not create or permit to exist, and shall, at its own cost and expense,
promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate
which result from claims against it in its individual capacity not rela
to its Lien and security interest in the Trust Indenture Estate or the
administration of the Trust Indenture Estate.
(b) Discharge of Indenture. The Indenture Trustee
shall release the Lien of the Indenture when directed to do so pursuant
to Section 9.01 thereof.
V.3 Covenants of the Lessee. The Lessee, at the Co-
Lessee's cost, expense and liability, shall cause to be promptly and du
taken, executed, acknowledged and delivered all such further acts,
documents (including Bills of Sale) and assurances as any Participant,
the Owner Trustee or the Indenture Trustee may from time to time
reasonably request in order to carry out more effectively the intent an
purposes of this Participation Agreement and the other Operative
Documents, and the transactions contemplated hereby and thereby.
The Lessee, at the Co-Lessee's own cost, expense and liability, shall
cause the financing statements (and continuation statements with
respect thereto) and documents enumerated and described in
Schedule IV to be recorded or filed at such places and times in such
manner, and shall take all such other actions or cause such actions to
be taken, as may be necessary or requested by the Owner Trustee or
the Indenture Trustee, in order to establish, preserve, protect and
perfect the good and marketable title of the Owner Trustee to the
Equipment, and the Owner Trustee's rights under this Participation
Agreement and the other Operative Documents and, so long as any
Notes are outstanding under the Indenture, the first priority Lien and
security interest of the Indenture Trustee in the Trust Indenture Estat
and the Indenture Trustee's rights under this Participation Agreement
and the other Operative Documents referred to and included under the
Granting Clauses of the Indenture (including, without limitation, the
filing of financing statements in appropriate jurisdictions and filing
offices relating to any site to which any portion of the Equipment may
be relocated and the filing of continuation statements in appropriate
jurisdictions and filing offices). The Lessee shall promptly from time
to time furnish to the Owner Participant or the Owner Trustee such
information as may be required to enable the Owner Participant or the
Owner Trustee, as the case may be, to timely file any reports and
obtain any licenses or permits required to be filed or obtained by the
Owner Trustee as the lessor under the Lease or as the owner of the
Equipment or the Owner Participant as the beneficiary of the Trust
Estate with any Governmental Authority (including environmental and
tax authorities).
V.4 Covenants of CIROR and Co-Lessee.
CIROR and the Co-Lessee, jointly and severally,
covenant as follows:
(a) Further Assurances. CIROR, at its own cost,
expense and liability, shall cause to be promptly and duly taken,
executed, acknowledged and delivered all such further acts, documents
(including Bills of Sale) and assurances as any Participant, the Owner
Trustee or the Indenture Trustee may from time to time reasonably
request in order to carry out more effectively the intent and purposes
of this Participation Agreement and the other Operative Documents,
and the transactions contemplated hereby and thereby. CIROR, at its
own cost, expense and liability, shall cause the financing statements
(and continuation statements with respect thereto) and documents
enumerated and described in Schedule IV to be recorded or filed at
such places and times in such manner, and shall take all such other
actions or cause such actions to be taken, as may be necessary or
requested by the Owner Trustee or the Indenture Trustee, in order to
establish, preserve, protect and perfect the good and marketable title
of the Owner Trustee to the Equipment, and the Owner Trustee's
rights, under this Participation Agreement and the other Operative
Documents and, so long as any Notes are outstanding under the
Indenture, the first priority Lien and security interest of the Indentu
Trustee in the Trust Indenture Estate and the Indenture Trustee's
rights under this Participation Agreement and the other Operative
Documents referred to and included under the Granting Clauses of the
Indenture (including, without limitation, the filing of financing
statements in appropriate jurisdictions and filing offices relating to
site to which any portion of the Equipment may be relocated and the
filing of continuation statements in appropriate jurisdictions and fili
offices). CIROR shall promptly from time to time furnish to the
Owner Participant or the Owner Trustee such information as may be
required to enable the Owner Participant or the Owner Trustee, as the
case may be, to timely file any reports and obtain any licenses or
permits required to be filed or obtained by the Owner Trustee as the
lessor under the Lease or as the owner of the Equipment or the Owner
Participant as the beneficiary of the Trust Estate with any
Governmental Authority (including environmental and tax authorities).
(b) Maintenance of Corporate Existence, etc.
CIROR shall at all times maintain its existence as a corporation in
good standing under the laws of the State of California. CIROR shall
do or shall cause to be done all things necessary to preserve and keep
in full force and effect its rights (charter and statutory) and franchi
(c) Merger, Sale, etc. CIROR shall not consolidate
with or merge into any other Person, or convey, transfer or lease all o
substantially all of its assets to any Person, except as contemplated b
the Operative Documents.
(d) Change to Principal Place of Business or Chief
Executive Office, Etc. CIROR shall provide the Owner Trustee, the
Owner Participant and the Indenture Trustee with ten (10) Business
Days' prior written notice of any change to its chief executive office,
principal place of business, name or corporate structure or to the plac
where business records are maintained for CIROR or the Lessee.
(e) CIROR to Defend Title. CIROR covenants that
it shall, at all times, at its own cost and expense, warrant and defend
the title of the Owner Trustee to the Trust Estate and the Lien and
security interest of the Indenture Trustee in and to the Trust Indentur
Estate against any Lien (other than Permitted Liens), claims and
demands of or against CIROR or the Lessee and all other Persons
claiming through CIROR or the Lessee.
(f) Furnishing of Information. CIROR agrees to
furnish to each Participant, the Owner Trustee and the Indenture
Trustee:
(i) Within 120 days after the close of each
fiscal year of CIROR, a certificate of the Chief Financial
Officer, Comptroller, Treasurer or an Assistant Treasurer of
CIROR stating whether, to the knowledge of such officer,
there exists on the date of such certificate, any Termination
Event, Lease Event of Default, Event of Loss or event which
with notice or lapse of time or both would become a
Termination Event or Lease Event of Default or Event of Loss
and, if any Termination Event, Lease Event of Default or Event
of Loss or any such event exists, specifying the nature and
period of existence thereof and the action CIROR is taking and
proposes to take with respect thereto; such certificate shall
specifically state that no such default exists that relates to a
breach by CIROR of its obligations under this Section 5.4,
including, without limitation, CIROR's obligations thereunder
with respect to the filing of financing statements, precautionary
financing statements and continuation statements (or, if any
such default exists, such certificate shall specify the nature and
period of existence thereof and the action CIROR is taking and
proposes to take with respect thereto).
(ii) immediately upon CIROR becoming
aware of the existence of a Termination Event, Incipient
Termination Event or Lease Event of Default, a written notice
specifying the nature of the Termination Event, Incipient
Termination Event or Lease Event of Default and what action
CIROR is taking or proposes to take with respect thereto; and
(iii) all reports and permits required under
Applicable Law to be filed or delivered by any Lessor Party
with respect to the Equipment.
(g) Lessee Merger, Sale, etc. CIROR shall not
permit the Lessee to consolidate with or merge into any other Person,
or convey, transfer or lease all or substantially all of its assets to
Person, except as contemplated by the Operative Documents. CIROR
shall not permit the Lessee to hold any equity interest in any Person.
(h) Environmental Matters. CIROR shall cause the
Lessee to (i) comply in all material respects with all Environmental
Laws, including, without limitation, to obtain, comply with and
maintain any and all licenses, approvals, registrations, notifications
permits required by Environmental Laws with respect, in any way
whatsoever, to any Item of Equipment and (ii) conduct all
investigations, studies and testing, and all remedial and removal
actions, required under any Environmental Law with respect, in any
way whatsoever, to any Item of Equipment and comply in all material
respects with all lawful orders and directives of all Governmental
Authorities issued under any Environmental Law with respect, in any
way whatsoever, to any Item or the release or threat of release of any
Hazardous Substance from any Item, except to the extent that the
same are being contested in good faith by appropriate proceedings.
(i) Maintenance of Lessee's Existence, etc.
So long as the Lessee shall be the lessee under the Lease, CIROR shall
cause the Lessee at all times to maintain its existence as a partnershi
in good standing under the laws of the State of New York and shall
cause the Lessee to do or cause to be done all things necessary to
preserve and keep in full force and effect the Lessee's rights (charter
and statutory) and franchises.
V.5 Covenants of the Co-Lessee.
(a) Further Assurances. The Co-Lessee, at its own
cost, expense and liability, shall cause to be promptly and duly taken,
executed, acknowledged and delivered all such further acts, documents
(including Bills of Sale) and assurances as any Participant, the Owner
Trustee or the Indenture Trustee may from time to time reasonably
request in order to carry out more effectively the intent and purposes
of this Participation Agreement and the other Operative Documents,
and the transactions contemplated hereby and thereby. The Co-
Lessee, at its own cost, expense and liability, shall cause the financi
statements (and continuation statements with respect thereto) and
documents enumerated and described in Schedule IV to be recorded or
filed at such places and times in such manner, and shall take all such
other actions or cause such actions to be taken, as may be necessary or
requested by the Owner Trustee or the Indenture Trustee, in order to
establish, preserve, protect and perfect the good and marketable title
of the Owner Trustee to the Equipment, and the Owner Trustee's
rights under this Participation Agreement and the other Operative
Documents and, so long as any Notes are outstanding under the
Indenture, the first priority Lien and security interest of the Indentu
Trustee in the Trust Indenture Estate and the Indenture Trustee's
rights under this Participation Agreement and the other Operative
Documents referred to and included under the Granting Clauses of the
Indenture (including, without limitation, the filing of financing
statements in appropriate jurisdictions and filing offices relating to
site to which any portion of the Equipment may be relocated and the
filing of continuation statements in appropriate jurisdictions and fili
offices). The Co-Lessee shall promptly from time to time furnish to
the Owner Participant or the Owner Trustee such information as may
be required to enable the Owner Participant or the Owner Trustee, as
the case may be, to timely file any reports and obtain any licenses or
permits required to be filed or obtained by the Owner Trustee as the
lessor under the Lease or as the owner of the Equipment or the Owner
Participant as the beneficiary of the Trust Estate with any
Governmental Authority (including environmental and tax authorities).
The Co-Lessee will at the Co-Lessee's expense furnish to Owner
Trustee and the Indenture Trustee, annually and at the time
continuation statements are required to be filed, an opinion of counsel
satisfactory to Owner Trustee and the Indenture Trustee stating that
(1) all financing statements or other notices have been filed for recor
in all public offices wherein such filing is necessary to protect the r
title and interest of the Owner Trustee in and to the Equipment and to
perfect the Lien and security interest in the Trust Indenture Estate
created pursuant to the Indenture under the provisions of the UCC and
(2) all continuation statements and amendments to such financing
statements required to maintain the priority and perfection of such
Liens and security interests have been recorded, registered and filed a
necessary in order to maintain such priority and perfection.
(b) Maintenance of Corporate Existence, etc. The
Co-Lessee shall at all times maintain its existence as a corporation in
good standing under the laws of the State of California. The Co-
Lessee shall do or shall cause to be done all things necessary to
preserve and keep in full force and effect its rights (charter and
statutory) and franchises.
(c) Change to Principal Place of Business or Chief
Executive Office, Etc. The Co-Lessee shall provide the Owner
Trustee, the Owner Participant and the Indenture Trustee with ten (10)
Business Days' prior written notice of any change to its or the Lessee'
chief executive office, principal place of business, name or corporate
structure or to the place where the Co-Lessee or the Lessee maintains
its business records.
(d) Co-Lessee to Defend Title. The Co-Lessee
covenants that it shall, at all times, at its own cost and expense,
warrant and defend the title of the Owner Trustee to the Trust Estate
and the Lien and security interest of the Indenture Trustee in and to
the Trust Indenture Estate against any Lien (other than Permitted
Liens), claims and demands of or against the Lessee or the Co-Lessee
and all other Persons claiming through the Lessee or the Co-Lessee.
(e) Furnishing of Information. The Co-Lessee
agrees to furnish to each Participant and each Agent:
(i) Within 120 days after the close of each
fiscal year of the Co-Lessee occurring after the Document
Date, its Annual Report on Form 10-K which conforms to the
requirements therefor; provided, however, that if the Co-
Lessee ceases to file reports with the SEC pursuant to the
Exchange Act, it shall deliver instead (A) the audited
consolidated balance sheet of the Co-Lessee and its
consolidated Subsidiaries at the end of, and (B) the related
consolidated statements of income, statements of cash flow and
statements of shareholders' equity for such fiscal year, each of
which financial statements shall present fairly in all material
respects the consolidated financial position of the Co-Lessee
and its consolidated Subsidiaries at March 31 of such fiscal
year and the consolidated results of operations and cash flows
for such fiscal year, all in conformity with GAAP and be
accompanied by an opinion of the Co-Lessee's independent
certified public accountants, who shall be independent public
accountants of recognized national standing to such effect;
(ii) within sixty (60) days after the end of
each of the first three (3) quarters of each of its fiscal years, its
Quarterly Report on Form 10-Q which conforms to the
requirements therefor; provided, however, that if the Co-
Lessee ceases to file reports with the SEC pursuant to the
Exchange Act, it shall deliver instead (A) the unaudited
consolidated balance sheet of the Co-Lessee and its
consolidated Subsidiaries at the end of, and (B) the related
consolidated statements of income, shareholders' equity and
cash flows for, the interim period ending at the end of such
quarter, each of which financial statements will present fairly in
all material respects the consolidated financial position of the
Co-Lessee and its consolidated Subsidiaries at the end of such
quarter, and the consolidated results of operations and cash
flows for such quarter, all in conformity with GAAP,
accompanied by a statement of the Chief Financial Officer, the
Comptroller, Treasurer or an Assistant Treasurer of the Co-
Lessee to such effect;
(iii) simultaneously with the delivery of the
year-end financial statements referred to in (i) above, a
certificate of the Chief Financial Officer, the Comptroller,
Treasurer or an Assistant Treasurer of the Co-Lessee stating
that such officer has reviewed the activities of the Co-Lessee,
CIROR and the Lessee during the immediately preceding fiscal
year and whether, to the knowledge of such officer, there
exists on the date of such certificate any Termination Event,
Lease Event of Default, Indenture Event of Default, Event of
Loss or event which with notice or lapse of time or both would
become a Termination Event, Lease Event of Default,
Indenture Event of Default or Event of Loss, and, if any
Termination Event, Lease Event of Default, Indenture Event of
Default or Event of Loss or any such event exists, specifying
the nature and period of existence thereof and the action the
Co-Lessee is taking and proposes to take with respect thereto;
such certificate shall specifically state that no such default
exists that relates to a breach by the Co-Lessee of its
obligations under Section 5.5(a) hereof, including, without
limitation, the Co-Lessee's obligations thereunder with respect
to the filing of financing statements, precautionary financing
statements and continuation statements (or, if any such default
exists, such certificate shall specify the nature and period of
existence thereof and the action the Co-Lessee is taking and
proposes to take with respect thereto);
(iv) immediately upon the Co-Lessee
becoming aware of the existence of a Termination Event,
Incipient Termination Event or Lease Event of Default, a
written notice specifying the nature of such Termination Event,
Incipient Termination Event or Lease Event of Default and
what action the Co-Lessee is taking or proposes to take with
respect thereto;
(v) all reports and permits required under
Applicable Law to be filed or delivered by any Lessor Party
with respect to the Equipment;
(vi) promptly, all reports or statements
which the Co-Lessee may make to, or file with, the Securities
Exchange Commission or any successor agency thereto; and
(vii) promptly, such additional information
with respect to the financial condition or business of the Co-
Lessee as any Participant or the Indenture Trustee or the
Owner Trustee may reasonably request.
(f) Inspection. The Co-Lessee will permit each
Participant, the Owner Trustee and the Indenture Trustee, upon
reasonable notice and at a mutually convenient time and at their
expense so long as no Termination Event, Incipient Termination Event
or Lease Event of Default has occurred and is continuing (and
thereafter at the expense of the Co-Lessee), to visit the corporate
headquarters of the Co-Lessee and to discuss with the relevant officers
of the Co-Lessee the financial affairs and condition of the Co-Lessee
or any Subsidiary thereof insofar as these are relevant to their intere
hereunder and subject to any legal restrictions on disclosure.
(g) Merger, Consolidation, etc., of Co-Lessee. The
Co-Lessee covenants that it shall not consolidate or merge into any
Person, nor sell, transfer, convey or lease all or substantially all it
properties or assets as an entirety to any Person, unless:
(i) the successor entity formed by such
consolidation or into which it is merged or the successor entity
that acquires by conveyance, transfer or lease all or
substantially all its assets as an entirety shall be organized
under the laws of the U.S., a state thereof or the District of
Columbia, shall be authorized under all Applicable Laws to
operate the Equipment and perform the obligations of the Co-
Lessee under the Operative Documents to which it is a party to
the same extent as the Co-Lessee, shall have a tangible net
worth (as determined in accordance with GAAP) of not less
than ninety-seven percent (97%) of the tangible net worth of
Co-Lessee immediately prior to giving effect to such
transaction, shall execute and deliver to the Owner Trustee, the
Indenture Trustee and each Participant an agreement in form
and substance satisfactory to the Owner Trustee, the Indenture
Trustee and each Participant, containing an assumption by such
successor entity of the due and punctual performance of each
covenant and condition of the Operative Documents to be
performed or observed by the Co-Lessee;
(ii) immediately after giving affect to such
transaction, no Incipient Termination Event, Termination
Event or Lease Event of Default shall have occurred and be
continuing; and
(iii) the Co-Lessee or such successor entity,
as the case may be, shall have delivered to the Owner Trustee,
the Indenture Trustee and each Participant an Officer's
Certificate and an opinion of counsel satisfactory to the Owner
Trustee, the Indenture Trustee and each Participant, stating
that such consolidation, merger, sale, conveyance, transfer or
lease, and the assumption agreement required by clause (i)
above, comply with this Section 5.5, that all conditions
precedent relating to such action have been satisfied, that such
assumption agreement has been duly authorized, executed and
delivered by such successor entity and constitutes the legal,
valid and binding obligation of such successor entity,
enforceable against such successor entity in accordance with its
terms and that the rights of the Participants under the
Operative Documents will not be adversely affected thereby.
Upon any such consolidation or merger, or any sale,
conveyance, transfer or lease of substantially all the assets of the Co
Lessee in accordance with this Section 5.5(g), the successor entity
formed by such consolidation or into which the Co-Lessee shall be
merged or to which such sale, conveyance, transfer or lease shall be
made shall succeed to, and be substituted for, and may exercise every
right and power and shall be subject to each and every obligation of,
the Co-Lessee under the Operative Documents to which it is a party
with the same effect as if such successor corporation had been named
as the Co-Lessee therein. No such sale, conveyance, transfer or lease
of all or substantially all the assets of the Co-Lessee shall have the
effect of releasing the Lessee or, as the case may be, the Co-Lessee or
any successor entity that shall theretofore have become such in the
manner prescribed in this Section 5.5(g) from its liability under the
Operative Documents to which it is a party.
V.6 Transfers of Notes. Each Lender agrees that it will not
transfer any Note unless such Note is registered under the Securities
Act or an exemption from such registration is available. Each
transferee of a Note by its acceptance thereof, shall automatically be
bound by the terms and conditions of this Agreement and the other
Operative Documents and shall be deemed to have made to its
transferor and the other parties to this Agreement the representations
set forth in Section 4.6.
V.7 Advertising; Trademarks. Each Participant and Agent
agrees that it will not advertise, or otherwise publish for advertising
purposes in any news medium, the fact that it has furnished financing
or lease accommodations to any party hereto without first obtaining
the written consent of such party. Notwithstanding any other
provision of any Operative Document, no Participant or Agent will
have any right to use any trademark, trade name or trade dress of, or
otherwise refer to, any party hereto in any promotion or publication in
a news medium without first obtaining the written consent of such
party.
ARTICLE VI
Indemnities
All payments to be made by the Co-Lessee to any
Indemnified Person under this Article VI will be free of expense to
such Indemnified Person for collection or other charges. The Co-
Lessee's obligations to any Indemnified Person under the indemnities
provided in this Participation Agreement shall be those of a primary
obligor whether or not such Indemnified Person shall also be
indemnified with respect to the same matter under the terms of any
other agreement contemplated hereby or thereby, or any other
document or instrument whether or not related to the transactions
contemplated hereby or thereby, and the Persons seeking
indemnification from the Co-Lessee pursuant to any provisions of this
Participation Agreement may proceed directly against the Co-Lessee
without first seeking to enforce any other right of indemnification.
VI.1 General Indemnity. The Co-Lessee does hereby
assume liability for, and (whether or not any of the transactions
contemplated hereby shall be consummated and whether or not the
Lease, any Lease Supplement or other Operative Document has
expired or been terminated) agrees to defend, indemnify, protect,
release, save and hold harmless and keep whole each Indemnified
Person, on an After-Tax Basis, from and against any and all liabilities
(including but not limited to liabilities arising out of the doctrine o
strict liability or arising out of violation of regulatory requirements
any kind), obligations, losses, damages, penalties, claims, actions,
suits, judgments, costs, expenses, charges, fees and disbursements
(including out of pocket fees and expenses, Fees and Expenses and
costs of investigation), whether any of the foregoing be founded or
unfounded, of whatsoever kind and nature (collectively, the "Claims")
that may be imposed on, incurred by or asserted against any
Indemnified Person or any Equipment, (a) in any way relating to or
arising out of the Equipment or the Operative Documents (including,
without limitation, the performance or enforcement of all obligations
of the Lessee, CIROR or the Co-Lessee under the Operative
Documents and payments made pursuant thereto or any other
transactions contemplated thereby or the breach of any covenant or
agreement contained therein by Lessee, CIROR or Co-Lessee, or the
falsity of any representation or warranty made therein by Lessee,
CIROR or Co-Lessee,), or the design, manufacture, construction,
purchase, acceptance, possession, rejection, control, financing,
refinancing, modification, alteration, non-use, ownership, delivery,
nondelivery, use, operation, leasing, subleasing, condition,
maintenance, repair, sale, abandonment, storage, insurance, redelivery
or de-installation of the Equipment or any Item thereof (whether or
not such Equipment or Item is in compliance with the Operative
Documents), (b) in any way relating to or arising from other
disposition of, or the imposition of any Lien (or incurrence of any
liability to refund or pay over any amount as a result of any Lien) on,
the Equipment or any interest therein, including, without limitation,
any claim or penalty arising out of violations of Applicable Law, or in
tort (whether creating a strict liability or otherwise) or arising from
active or passive negligence of an Indemnified Person, latent or other
defects, whether or not discoverable by any Indemnified Person, or any
other Person, loss of or damage to any property or the environment,
death of or injury to any Person and any claim for patent, trademark or
copyright infringement, (c) the offer, issuance, sale or delivery of an
Note or any direct or beneficial interest under any Operative
Document, (d) all costs and expenses incurred by any Indemnified
Person in connection with any Termination Event, any Lease Event of
Default, any Event of Loss, any redemption, refunding, prepayment or
transfer of the Notes made in accordance with the Operative
Documents, any amendment, modification or supplement to any
Operative Document, or any transfer of all or any part of the right, ti
and interest of the Owner Trustee or any Owner Participant in the
Trust Estate or in, to and under any of the Operative Documents, (e)
arising from or in connection with the presence in or on, or release or
threatened release of any substance or by-product (including, without
limitation, Hazardous Substances) in or from any Item of Equipment
or any facility on which any Item of Equipment is located at any time,
(f) arising from or in connection with any transport, treatment,
recycling, storage, disposal or arrangement therefor, to, at or from an
facility of any substance (including, without limitation, any Hazardous
Substance) or by-product generated by any Item of Equipment of
facility on which any Item of Equipment is located at any time, (g)
arising from or in connection with any Environmental Law or any
published policy or guidance document issued in connection therewith
or demand of a Governmental Authority applicable in any way
whatsoever to any Item of Equipment or any facility on which any
Item of Equipment is located at any time, or (h) arising from or relate
to any prohibited transaction or other violation of Section 406 of
ERISA or Section 4975 of the Code; provided, however, that the Co-
Lessee shall not be required pursuant to this Section 6.1 to indemnify:
(i) any Indemnified Person for any Claim to
the extent resulting from acts or events occurring after
redelivery of all of the Items of Equipment in accordance with
the Lease (other than a redelivery pursuant to Article XVI
thereof) and payment of all Rent due and payable but only to
the extent not resulting from acts or events occurring prior to
such redelivery;
(ii) any Indemnified Person for loss or
liability to the extent resulting from such Indemnified Person's
own gross negligence or wilful misconduct (other than gross
negligence or wilful misconduct imputed to such Indemnified
Person by reason of its interest in the Equipment) or solely
from such Indemnified Person's breach (which in the case of
the Owner Trustee or the Indenture Trustee shall have resulted
from its gross negligence or wilful misconduct) of any of its
representations or warranties or covenants contained in any
Operative Document;
(iii) any Taxes other than any net additional
income Tax arising as a result of receipt of any indemnity
payment pursuant to this Section 6.1 and other than any Tax
imposed under or as a result of a violation of Section 406 of
ERISA or Section 4975 of the Code; or
(iv) the Owner Trustee or any Owner
Participant in connection with any claim resulting from any
Lessor Lien or any Owner Participant Lien, or the sale, lease or
other disposition by the Owner Trustee or any Owner
Participant of its rights in the Equipment or any part thereof or
any right to or interest in the Operative Documents except as
specifically contemplated by the Operative Documents or
following a Lease Event of Default.
The indemnities set forth in this Section 6.1 shall not
constitute a guarantee, representation or warranty to any Indemnified
Person of, or as to the value or useful life of, any Item of Equipment
or a guarantee, representation or warranty that any debt incurred by
any Owner Participant to finance its Commitment Percentage of any
Funding will be paid. Upon payment in full of any indemnity pursuant
to this Section 6.1, the Co-Lessee shall, to the extent of such payment
and so long as no Termination Event or Lease Event of Default shall
have occurred and be continuing, be subrogated to any rights of the
Indemnified Person in respect of the matter against which such
indemnity was given (other than with respect to any insurance policies
carried by such Indemnified Person).
Subject to the provisions of the following paragraph,
the Co-Lessee shall at its sole cost and expense be entitled to control
and shall assume full responsibility for, the defense of any Claim;
provided that the Co-Lessee shall keep the Indemnified Person which
is the subject of such proceeding fully apprised of the status of such
proceeding and shall provide such Indemnified Person with all
information with respect to such proceeding as such Indemnified
Person shall reasonably request.
Notwithstanding any of the foregoing to the contrary,
the Co-Lessee shall not be entitled to control and assume responsibilit
for the defense of such Claim unless it shall have confirmed in writing
to the relevant Indemnified Person that such Claim is covered by the
terms of the indemnity set forth herein and that it acknowledges its
liability to fully indemnify such Indemnified Person in respect thereof
or if (i) a Termination Event or Lease Event of Default shall have
occurred and be continuing, (ii) such proceeding will involve any
material danger of the sale, forfeiture or loss of, or the creation of
Lien (other than any Permitted Lien or a Lien which is adequately
bonded to the satisfaction of such Indemnified Person) on any Item of
Equipment, (iii) the amounts involved, in the good faith opinion of
such Indemnified Person, are likely to have an adverse effect on the
business of such Indemnified Person other than the ownership, leasing
and financing of the Equipment, (iv) in the good faith opinion of such
Indemnified Person, there exists an actual or potential conflict of
interest such that it is advisable for such Indemnified Person to retai
control of such proceeding or (v) such claim or liability involves the
possibility of criminal sanctions or liability to such Indemnified Pers
In any of the circumstances described above, the Indemnified Person
shall be entitled to control and assume responsibility for the defense
such claim or liability at the expense of the Co-Lessee. In addition,
any Indemnified Person may participate in any proceeding controlled
by the Co-Lessee pursuant to this Section 6.1, at its own expense in
respect of any such proceeding as to which the Co-Lessee shall have
acknowledged in writing its obligation to indemnify the Indemnified
Person pursuant to this Section 6.1, and at the expense of Co-Lessee
in respect of any such proceeding as to which the Co-Lessee shall not
have so acknowledged its obligation to the Indemnified Person
pursuant to this Section 6.1. The Co-Lessee may in any event
participate in all such proceedings at its own cost. Nothing contained
in this Section 6.1 shall be deemed to require an Indemnified Person to
contest any Claim or to assume responsibility for or control of any
judicial proceeding with respect thereto.
VI.2 Payment of Taxes; General Tax Indemnity.
(a) General Taxes. For the purpose of this Section
6.2 "Tax Indemnitee" shall mean each of the Owner Trustee (in its
individual capacity and as trustee), the Owner Participant and any
Affiliate thereof, the Indenture Trustee (in its individual capacity an
as trustee), each Lender and each of their respective successors,
transferees and assigns which are permitted under the terms of the
Operative Documents. The Co-Lessee agrees to pay and assume
liability for, and does hereby agree to indemnify, protect, defend and
hold harmless on an After-Tax Basis each Tax Indemnitee from and
against any and all Taxes imposed upon or payable by any Tax
Indemnitee (including amounts payable by any Tax Indemnitee solely
as withholding agent) or the Lessee or Co-Lessee or withheld from
any payment pursuant to the Operative Documents, whether imposed
against the Equipment or any Item of Equipment, any Modification, or
any part or portion thereof or interest therein, or the Notes, or
otherwise in connection with or relating to or on or with respect to (i
this Agreement or any of the other Operative Documents or any
amendment, supplement, waiver or consent thereto or the execution,
delivery or performance of any thereof; (ii) the Equipment, any Item of
Equipment, any Modification, or any interest therein; (iii) the
construction, purchase, acceptance, possession, rejection, ownership,
delivery, nondelivery, return, refinancing, use, non-use, operation,
leasing, subleasing, hire, condition, maintenance, modification, repair
substitution, replacement, insuring, improvement, sale, abandonment,
redelivery, location, transfer of title or other application or disposi
of the Equipment, any Item of Equipment, any Modification, or any
interest therein; (iv) the payment by or on behalf of the Lessee or Co-
Lessee of Rent or other amounts, receipts, income or earnings arising
from the Equipment with respect to the Lease or any other Operative
Document; (v) the payment of principal of, or interest or premium on,
or other amounts payable with respect to, or the sale, assignment,
transfer or other disposition of, any Note or (vi) otherwise with
respect to or in connection with the transactions contemplated by the
Operative Documents.
(b) The Co-Lessee will have no obligation under
Section 6.2(a) with respect to any one or more of the following (it
being understood that the Co-Lessee will have no obligation under
Section 6.2(a) for any Tax described in any of clauses (i) through (xi)
of this Section 6.2(b), regardless of whether such Tax is excluded by
any other clause in this Section 6(b)):
(i) Taxes imposed on a Tax Indemnitee by
the United States, or any state or local government authority therein
and measured by or imposed on the net income of such Tax
Indemnitee; provided, that there shall not be excluded under this
subparagraph (i) any Taxes on any supplemental amounts added to any
payment required to be made under this Section 6.2 so that such
payment is made on an After-Tax Basis;
(ii) Taxes that are imposed by the United
States or any state or local government authority therein and based on
or measured by capital, excess profits or conduct of business provided,
that there shall not be excluded under this subparagraph (ii) any Taxes
(A) imposed by any state or local taxing jurisdiction in which the
Equipment, any Item of Equipment the Lessee or the Co-Lessee is
located to the extent such Taxes exceed those which would have been
payable had the transactions contemplated by the Operative
Documents not occurred, (B) on any supplemental amounts added to
any payment required to be made under this Section 6.2 so that such
payment is made on an After-Tax Basis and (C) in the nature of sales,
use, transfer, value-added, ad valorem or similar Taxes;
(iii) Taxes imposed against or payable by a
Tax Indemnitee by or to any jurisdiction to the extent such Taxes
would not have been imposed but for such Tax Indemnitee's engaging
in such jurisdiction in activities unrelated to the transactions
contemplated by the Operative Documents;
(iv) Taxes imposed on or payable by a Tax
Indemnitee attributable to any voluntary sale, assignment, transfer or
other disposition (a "Transfer") by such Tax Indemnitee of any interest
in the Owner Trustee, the Equipment or any interest therein, the
Notes, or any interests or obligations arising under the Operative
Documents, (it being understood that any Transfer pursuant to the
closing of any of the transactions contemplated by the Operative
Documents, any Transfer pursuant to the exercise by the Lessee, Co-
Lessee or any Affiliate of such Persons of any rights or obligations
under any of the Operative Documents, and any Transfer after a
Termination Event or Lease Event of Default shall have occurred and
be continuing, shall not be treated as voluntary);
(v) with respect to the Equipment, Taxes
attributable to any period after the expiration or earlier termination
the Lease with respect to the Equipment and, if the Lessee is required
to return such Equipment to Owner Trustee, the return of the
Equipment to the Owner Trustee in accordance with the terms of the
Lease; provided, that with respect to the Equipment, there shall not be
excluded under this subparagraph (v) any Taxes to the extent such
Taxes relate to events or circumstances occurring or matters arising
prior to or simultaneously with such expiration or termination or, if
applicable, such return;
(vi) any Taxes imposed against or payable by
a Tax Indemnitee resulting from the gross negligence or willful
misconduct of such Tax Indemnitee;
(vii) Taxes imposed on or with respect to or
payable by the Owner Trustee based on, measured by or imposed with
respect to any fees paid to or accruable by the Owner Trustee in its
capacity as Owner Trustee;
(viii) Taxes imposed on a Tax Indemnitee as a
result of such Tax Indemnitee being a Non-U.S. Person;
(ix) Taxes which have been included in
Lessor's Cost to the extent actually paid on the First Funding Date;
(x) Taxes imposed upon the Owner
Participant for which Co-Lessee is obligated to indemnify the Owner
Participant pursuant to the Tax Indemnity Agreement;
(xi) Taxes to the extent actually paid by the
Lessor on the First Funding Date and included in Lessor's Cost.
(c) Calculation of General Tax Indemnity
Payments; Tax Savings. Any payment or indemnity to or for the
benefit of any Tax Indemnitee with respect to any Tax which is subject
to indemnification under Section 6.2(a) hereof shall (A) reflect the
current combined net savings actually realized by such Tax Indemnitee
thereof resulting from the current deduction of such indemnified Tax
and (B) include, after taking into account the savings described in
clause (A), the amount necessary to hold such Tax Indemnitee
harmless on an After-Tax Basis. If, by reason of any Tax payment
made to or for the account of a Tax Indemnitee by or on behalf of the
Co-Lessee pursuant to this Section 6.2 (or the circumstances or event
giving rise thereto), such Tax Indemnitee actually realizes a net tax
benefit, refund, saving, deduction or credit not previously taken into
account in computing such Tax payment, provided no Termination
Event or Lease Event of Default has occurred and is continuing, such
Tax Indemnitee shall pay to the Co-Lessee an amount equal to the sum
of (I) the actual net reduction in Taxes, if any, realized by such Tax
Indemnitee which is attributable to such net tax benefit, refund, savin
deduction or credit and (II) the actual net reduction in any Taxes
realized by such Tax Indemnitee as the result of any payment made by
such Tax Indemnitee pursuant to this sentence. The Tax Indemnitee
shall make such payment within 30 days after actually realizing such
reduction in Taxes. Notwithstanding the foregoing, no Tax
Indemnitee shall be required to make any payment to the Co-Lessee
pursuant to this Section 6.2(c) to the extent such payment would
exceed, in the aggregate at any time, the amount of all prior payments
made by or on behalf of the Co-Lessee to such Tax Indemnitee
pursuant to this Section 6.2 or if the amount of such payment is not
readily ascertainable by such Tax Indemnitee. Each Tax Indemnitee
(other than a Lender) agrees to use its reasonable efforts, and further
agrees to take such actions as the Co-Lessee or Lessee may reasonably
request, as long as such efforts or action does not expose such Tax
Indemnitee or any Affiliate thereof to a risk of material adverse
consequences (determined in good faith judgment of the Tax
Indemnitee), to realize any refunds, deductions or other tax benefits
that would reduce the Co-Lessee's indemnity obligations hereunder.
Any costs incurred by a Tax Indemnitee in pursuing the actions
contemplated by the preceding sentence shall be for the account of the
Co-Lessee. Any Taxes that are imposed on any Tax Indemnitee as a
result of the disallowance, unavailability, recapture or reduction of a
tax benefit, savings, deduction or credit referred to in this Section
6.2(c) as to which a Tax Indemnitee has made a payment to the Co-
Lessee or which was otherwise taken into account under this Section
6.2 shall be treated as a tax for which the Co-Lessee must indemnify
such Tax Indemnitee hereunder without regard to Section 6.2(b) or (d)
hereof.
(d) Contests.
(i) Initiation. If any written claim shall be
made against any Tax Indemnitee or if any proceeding shall be
commenced against any Tax Indemnitee for any Taxes as to which the
Co-Lessee may have an indemnity obligation pursuant to this Section
6.2, such Tax Indemnitee shall promptly notify the Co-Lessee and shall
not take any action with respect to such claim, proceeding or Tax
without the consent of the Co-Lessee (such consent not to be
unreasonably withheld or unreasonably delayed) for 30 days after the
receipt of such notice by the Co-Lessee, unless the Tax Indemnitee
shall be required by law or regulation to take action prior to the end
such 30-day period.
(ii) Control and Conditions. If requested by
the Co-Lessee within 30 days after receipt by the Co-Lessee of the
notice required by clause (i) with respect to the claim or proceeding
that is the subject of such notice, or, in the case of any claim or
proceeding with respect to which Co-Lessee (as opposed to the Tax
Indemnitee) receives notice, upon the request of the Co-Lessee, the
applicable Tax Indemnitee either (I) in the case of a Tax which may be
contested (A) in the name of the Co-Lessee, (B) independently from
any Tax that is not subject to indemnification by the Co-Lessee and
(C) without (in the good faith judgment of such Tax Indemnitee) any
adverse impact on such Tax Indemnitee, shall permit the Co-Lessee to
contest the validity, applicability or amount of such Taxes (being
hereinafter referred to as a "Co-Lessee-Controlled Contest"), or (II) i
the case of a Tax the contest of which is not a Co-Lessee-Controlled
Contest, shall itself, contest in good faith the validity, applicabilit
amount of such Taxes. Such contest shall be conducted by (A)
resisting payment thereof, (B) not paying the same except under
protest (which protest must be pursued using reasonable efforts in
appropriate administrative and/or judicial proceedings) if protest shal
be necessary and proper or (C) if payment shall be made, using
reasonable efforts to obtain a refund thereof in appropriate
administrative and/or judicial proceedings (it being understood that no
appeal to the United States Supreme Court shall be permitted
hereunder without the prior written consent of the Tax Indemnitee).
Notwithstanding the foregoing, in no event shall any
contest be required to commence or continue unless: (1) the amount
at issue (taking into account all similar and logically related claims)
exceeds $50,000; (2) Co-Lessee shall have agreed to pay the Tax
Indemnitee and shall pay on an After-Tax Basis as incurred all
reasonable out-of-pocket costs and expenses that such Tax Indemnitee
shall incur in connection with contesting such claim (including, withou
limitation, all reasonable costs, expenses, legal and accounting fees a
disbursements); (3) such Tax Indemnitee shall have in good faith
reasonably determined that the action to be taken will not result in an
material danger of sale, forfeiture or loss of the Equipment or the
creation of any Lien on the Equipment (unless the Co-Lessee shall
have adequately bonded such Lien or otherwise made provision to
protect the interests of such Tax Indemnitee and the Owner Participant
in the Equipment in a manner reasonably satisfactory to such Tax
Indemnitee and the Owner Participant) and that there is no risk of
criminal liability that may be imposed with respect to such Tax
Indemnitee; (4) if such contest shall involve payment of the claim, the
Co-Lessee shall advance the amount thereof plus interest, penalties
and additions to tax with respect thereto to such Tax Indemnitee on an
interest-free basis (with no additional net after-tax cost to such Tax
Indemnitee); (5) no Termination Event or Lease Event of Default shall
have occurred and be continuing; (6) the Co-Lessee shall have
provided a written acknowledgment to the appropriate Tax Indemnitee
of its obligation to indemnify such Tax Indemnitee to the extent the
contest is not successful; and (7) prior to initiating the contest the
Lessee shall have furnished the Tax Indemnitee with an opinion of tax
counsel selected by the Tax Indemnitee and reasonably satisfactory to
the Co-Lessee to the effect that a Reasonable Basis exists for such
contest.
(iii) Conduct. The Co-Lessee shall conduct
any Co-Lessee-Controlled Contest and the relevant Tax Indemnitee
shall control any contest other than a Co-Lessee-Controlled Contest.
The party conducting the contest ("Controlling Party") shall consult in
good faith with the other party ("Noncontrolling Party") and its
counsel with respect to the contest of such claim for Taxes (or claim
for refund) but the decisions regarding what actions to be taken shall
be made by the Controlling Party in its sole judgment. In addition, th
Controlling Party shall keep the Noncontrolling Party reasonably
informed as to the progress of the contest, and shall provide the
Noncontrolling Party with a copy of (or appropriate excerpts from)
any reports or claims issued by the relevant auditing agents or taxing
authority to the Controlling Party or any Affiliate thereof, in
connection with such claim or the contest thereof. The Controlling
Party shall be responsible for the selection of counsel, which counsel
must be reasonably satisfactory to the Noncontrolling Party.
(iv) Waiver of Indemnity. Notwithstanding
anything contained in this Section 6.2, a Tax Indemnitee shall not be
required to contest any claim or permit the Co-Lessee to contest any
claim and may settle any contest without the consent of the Co-Lessee
if such Tax Indemnitee (I) shall waive its right to indemnity under thi
Section 6.2 with respect to such claim for such Tax, and (II) shall pay
to the Co-Lessee any amount previously paid or advanced by the Co-
Lessee pursuant to clause (4) of the second paragraph of Section
6.2(d)(ii) with respect to such claim.
(e) Payments. Any Taxes payable hereunder by the
Co-Lessee shall be payable by the Co-Lessee, to the extent allowed,
directly to the appropriate taxing authority on or before the time, and
in the manner, prescribed by Applicable Law, without the necessity of
any prior demand by a Tax Indemnitee. Any amount payable by the
Co-Lessee to a Tax Indemnitee pursuant to this Section 6.2 shall be
paid within 10 days after receipt by the Co-Lessee of a written demand
therefor from such Tax Indemnitee accompanied by a written
statement describing in reasonable detail the amount so payable, but
shall in no event be payable before the date such Tax is due. Any
payments to be made pursuant to this Section 6.2 by Co-Lessee to a
Tax Indemnitee or by a Tax Indemnitee to Co-Lessee shall be made
directly to the Tax Indemnitee entitled thereto or the Co-Lessee, as th
case may be, in immediately payable funds at such bank or to such
account as specified by the payee in written directions to the payor, o
if no such direction shall have been given, by check of the payor
payable to the order of the payee and mailed to the payee by certified
mail, postage prepaid at its Address. Any amount payable under this
Section 6.2 that is not paid when due shall bear interest at the Overdu
Rate.
(f) Reports. If any report, return or statement (a
"Filing") is required to be filed with respect to any Tax that is subje
to indemnification under this Section 6.2, the Co-Lessee shall promptly
notify the appropriate Tax Indemnitee of such requirement in writing
and, if permitted by Applicable Law to do so, the Co-Lessee shall
timely file or cause to be filed such Filing with respect to such Tax
(except for any such Filing that a Tax Indemnitee has notified Co-
Lessee in writing that such Tax Indemnitee intends to file) and will (i
ownership of the Equipment or any part thereof or interest therein is
required to be shown on such Filing) show the ownership of the
Equipment in the name of the Owner Trustee, and send a copy of such
Filing to the appropriate Tax Indemnitee; provided, however, that such
Tax Indemnitee shall have furnished the Co-Lessee, at the Co-Lessee's
request and expense, with such information, not within the control of
the Co-Lessee, as is in such Tax Indemnitee's control or is reasonably
available to such Tax Indemnitee and necessary to file such Filing. If
the Co-Lessee is not permitted by Applicable Law to file any such
Filing, the Co-Lessee will promptly notify the appropriate Tax
Indemnitee of such requirement in writing and prepare and deliver to
the appropriate Tax Indemnitee a proposed form of such Filing within
a reasonable time, and in all events at least 10 days prior to the time
such Filing is required to be filed. If any Tax Indemnitee becomes
aware of any Tax due, or report, return or filing required with respect
to any Tax indemnified hereunder, it will promptly notify the Co-
Lessee of such requirement, it being understood that any good faith
failure to so notify the Co-Lessee shall not affect any Tax Indemnitee'
rights hereunder.
(g) Verification. At the Co-Lessee's request, the
amount of any indemnity payment by the Co-Lessee pursuant to this
Section 6.2 or any payment by a Tax Indemnitee (other than a Lender)
to the Co-Lessee pursuant to this Section 6.2 shall be verified by a
nationally recognized independent United States or international
accounting firm mutually acceptable to the Tax Indemnitee and the
Co-Lessee who shall be asked to verify, after consulting with the Tax
Indemnitee, whether the Tax Indemnitee's computations are correct
and to report its conclusions to both the Co-Lessee and the Tax
Indemnitee. Each Tax Indemnitee (other than a Lender) and the Co-
Lessee hereby agree to provide such firm with all information and
materials as shall be reasonably necessary or desirable in connection
therewith. The fee of such firm shall be paid by the Co-Lessee unless
such verification discloses an error adverse to the Co-Lessee at least
equal to 10% or more of the amount determined to be due by such
firm in which case such fees shall be paid by such Tax Indemnitee.
Any information provided to such firm by any Person shall be and
remain the exclusive property of such Person and shall be deemed by
the parties to be (and such firm will confirm in writing that they will
treat such information as) the private, proprietary and confidential
property of such Person, and no Person other than such Person and
such firm shall be entitled thereto, and all such materials shall be
returned to such Person. Such firm shall be requested to make its
determination within 30 days. If such firm shall determine that such
computations are incorrect, then such firm shall determine what it
believes to be the correct computations. The computations of the
accounting firm shall be final, binding and conclusive upon the Co-
Lessee and such Tax Indemnitee, and the Co-Lessee shall have no
right to inspect the books, records, tax returns or other documents
(including working papers) of or relating to such Tax Indemnitee or
Affiliate to verify such computations or for any other purpose;
provided that the Co-Lessee and each Tax Indemnitee agree that the
sole responsibility of the accounting firm shall be to verify the amoun
of an indemnity payable hereunder and that matters of interpretation of
this Agreement are not within the scope of the accounting firm's
responsibilities.
ARTICLE VII
Tax Withholding
The Lessee agrees that in the event the Lessee, the Lessor, the
Indenture Trustee or the Owner Participant is required by law to
withhold Taxes from any payment of Rent or any payment with
respect to the Notes, the Lessee or the Indenture Trustee, as
appropriate, shall make such withholding and shall pay the full amount
withheld to the applicable taxing authority or other authority in
accordance with Applicable Law, and except as otherwise provided in
this Article VII, the Lessee shall pay an additional amount such that,
after deduction of all amounts required to be withheld, the net amount
actually received by the Lessor and the Indenture Trustee will equal
the amount that would have been received absent such withholding.
Notwithstanding the previous sentence, (i) the Lessee will not pay any
such additional amount with respect to any withholding for United
States federal income Taxes required to be withheld by reason of the
status of any Lender as a Non-U.S. Person and (ii) with respect to
withholding of United States federal income Taxes which are required
to be withheld from any payment of Rent by reason of the status of any
Owner Participant as a Non-U.S. Person, Lessee shall pay only such
an additional amount, if any, as is required so that the amount of Rent
received by the Indenture Trustee is equal to the amount of principal,
interest and premium (if any) due to the Lenders from such Rent
payment. The Indenture Trustee shall comply with Section 2.04 of the
Indenture with respect to withholding taxes on payments due on the
Notes. If the Indenture Trustee fails to withhold a Tax required to be
withheld with respect to any Lender or any claim is otherwise asserted
by a taxing authority against the Owner Trustee or Owner Participant
for or on account of any amount required to be withheld from a
payment in respect of a Lender, the Lessee will indemnify the Owner
Trustee and the Owner Participant (without regard to the exclusions
set forth in Section 6.2(b) hereof) on an After-Tax Basis against any
Taxes required to be withheld and any interest, penalties and additions
to tax with respect thereto, along with any other costs (including
attorneys' fees) incurred in connection with any such claim.
ARTICLE VIII
[Intentionally Omitted]
ARTICLE IX
Expenses
IX.1 Transaction Expenses Payable by the Owner
Participant. If the transactions contemplated hereby are consummated,
the Owner Participant will pay all Transaction Expenses. Transaction
Expenses for which invoices are submitted after the final Funding Date
shall be paid within two Business Days of receipt thereof by the Owner
Participant (with a copy to the Co-Lessee); provided that all invoices
in respect of Transaction Expenses shall be submitted within six
months after the final Funding Date.
IX.2 Transaction Expenses Payable by the Co-Lessee. If the
transactions contemplated hereby are not consummated for any reason,
the Co-Lessee will pay all Transaction Expenses within two Business
Days of receipt of an invoice therefor; provided that all invoices in
respect of Transaction Expenses shall be submitted within six months
after the scheduled First Funding Date or, if no such date has been
scheduled, within six months after the last date of incurrence of
Transaction Expenses. If the transactions contemplated hereby are
consummated and the Transaction Expenses shall exceed the
percentages indicated in the Pricing Assumptions, upon the consent of
the Owner Participant the Co-Lessee will pay the amount of
Transaction Expenses which exceeds the percentages indicated in the
Pricing Assumptions within two Business Days of receipt of an invoice
therefor; provided that all invoices in respect of such Transaction
Expenses shall be submitted within six months after the final Funding
Date.
IX.3 Amendments, Waivers, etc. The Co-Lessee will pay all
costs and expenses for which appropriate bills and invoices are
submitted within six months after the incurrence thereof which have
been incurred in connection with the entering into or the giving or
withholding of any future amendments, supplements, waivers or
consents with respect to the Operative Documents, including, without
limitation, any amendments, waivers, or consents resulting from any
work-out, renegotiation or restructuring relating to the performance
by the Co-Lessee, the Lessee, CIROR or the Owner Trustee of its
obligations under the Operative Documents, whether or not the same
shall become effective.
IX.4 Fees of Trustees. The Co-Lessee will pay all
continuing fees and expenses of the Agents in connection with the
transactions contemplated by the Operative Documents, other than the
up-front fees of such Agents due and payable on the First Funding
Date and included in Transaction Expenses.
ARTICLE X
Recomputation of Basic Rent, EBO Prices,
Casualty Values and Termination Values
X.1 Making of Adjustments. In the event that:
(a) the Pricing Assumptions shall change as a result
of a Change in Tax Law or Interpretation prior to any Funding Date;
(b) the First Funding Date shall occur on a date
other than November 1, 1996;
(c) a Refunding pursuant to Article XII hereof and
Section 2.12 of the Indenture shall occur;
(d) any Tax Assumption Change shall occur prior
to the First Funding Date; or
(e) a Change in Tax Law or Interpretation shall
occur as a result of which the net after-tax book yield component of
Net Economic Return shall be reduced by at least 5% of the amount
thereof;
and in any such case, the Owner Participant shall elect to effect an
adjustment pursuant hereto;
then, the Basic Rent, EBO Price, Casualty Values and Termination
Values shall be adjusted from time to time by such amounts as shall be
appropriate to preserve for the benefit of the Owner Participant its Ne
Economic Return effective as of the first Rent Payment Date
thereafter.
X.2 Limitations. No adjustment pursuant to Section 10.1
shall result in Basic Rent payable on any Rent Payment Date being less
than the principal of and interest on the Notes payable on such Rent
Payment Date under the Indenture or any of (a) Casualty Value as of
any date Casualty Value is payable prior to expiration of the Base
Term of the Lease, (b) Termination Value as of any date Termination
Value is payable prior to expiration of the Base Term of the Lease or
(c) EBO Price as of the EBO Date (together with any Accrued Basic
Rent that would be payable on such date or the EBO Date) not being
at least equal to the principal amount of, and interest on, the Notes
outstanding under the Indenture on such date or the EBO Date to
which such payments relate.
X.3 Computation of Adjustments. Upon the occurrence of
an event requiring an adjustment to the Basic Rent, EBO Price,
Casualty Values or Termination Values pursuant to this Article X, the
Owner Participant shall make the necessary computations and, within
ninety (90) days of any Owner Participant's knowledge of such event,
furnish to the Co-Lessee a certificate complying with the requirements
of Section 10.5 hereof. In making any such computations, the Owner
Participant (a) shall utilize the same methods and assumptions
originally used to calculate the payments of Basic Rent, EBO Price,
Casualty Values and Termination Values (other than those
assumptions changed as a result of the event described in Section 10.1
necessitating such computations; it being agreed that such computation
shall reflect solely any changes of assumptions or facts resulting
directly from any such event necessitating such recalculation); and
(b) shall minimize to the maximum extent possible, but subject at all
times to the preservation of Net Economic Return, the present value
(discounted semi-annually at an interest rate per annum equal to the
Debt Rate) of the payments of Basic Rent. In no event shall any such
adjustment, in the judgment of the Owner Participant, result in this
Lease being treated as a "disqualified leaseback" or "long term
agreement" within the meaning of Section 467 of the Code and any
regulation (including any proposed regulation) or other interpretation
regarding Section 467 of the Code, or otherwise cause any adverse tax
consequences to the Owner Participant. If the Co-Lessee shall
disagree with any such determinations, such determinations and the
supporting data described below shall be reviewed and determined by
an independent accounting firm jointly chosen by the Owner
Participant and the Co-Lessee or, in the absence of agreement as to
such firm, by a third independent accounting firm jointly chosen by
two independent accounting firms, one chosen by the Owner
Participant and one chosen by the Co-Lessee. In connection with any
such review, the Owner Participant shall make available to such
accounting firm or firms on a confidential basis its pricing runs and i
related assumptions, but under no circumstances shall such pricing
runs or assumptions be made available to the Co-Lessee. The costs of
such verification shall be borne by the Co-Lessee, except that such
costs shall be borne by the Owner Participant if such verification
results in a reduction of more than 10 basis points in the amount of th
present value (discounted semi-annually at an interest rate per annum
equal to the Debt Rate) of the Basic Rent payments during the Base
Term from the amounts proposed by the Owner Participant.
X.4 Tax Assumption Changes. On or prior to the First
Funding Date, (a) the Owner Participant may give written notice to the
Co-Lessee (i) specifying an amendment to the Code, Treasury
regulations (including regulations under Section 467 of the Code),
revenue rulings or administrative or judicial interpretations
promulgated, issued, enacted or proposed after June 3, 1996, and on
or prior to the First Funding Date (a "Tax Assumption Change") which
amendment would have the effect of decreasing Net Economic Return
and (ii) setting forth the adjustments to the Basic Rent, EBO Prices,
Casualty Values and Termination Values required in the case of such
Tax Assumption Change or that would be required if such proposed
Tax Assumption Change were enacted, promulgated or issued,
computed as provided in Section 10.1 hereof and (b) the Co-Lessee
may give written notice to the Owner Participant specifying a Tax
Assumption Change, which Tax Assumption Change would have the
effect of increasing Net Economic Return to the Owner Participant.
X.5 Adjustments Certificate; Lease Supplement. In
connection with any adjustments pursuant to this Article X, the Owner
Participant shall provide to the Co-Lessee a certificate of a
Responsible Officer of such Owner Participant stating that all such
computations were made in good faith and were made so that any
increase in Net Economic Return was minimized consistent with the
adjustments required, and (b) stating that all the requirements of
Article X were complied with. In connection with any adjustment
pursuant to this Article X, the Owner Trustee and the Lessee Parties
shall enter into a Lease Supplement setting forth the revised schedules
of Basic Rent, Casualty Value, Termination Value and EBO Price, and
the Co-Lessee shall deliver a copy of such Lease Supplement to the
Indenture Trustee and each Participant, and shall deliver the chattel
paper original of such Lease Supplement to the Indenture Trustee.
ARTICLE XI
Transfer of Owner Participant's Interests
XI.1 Transfers.
(a) No Owner Participant shall assign, convey or
otherwise transfer all or any part of its right, title and interest in
the Trust Estate except as provided in this Section 11.1.
(b) An Owner Participant may assign, convey or
otherwise transfer all or any part of its right, title and interest in
Trust Estate to an Eligible Owner Participant.
(c) After giving effect to any such assignment,
conveyance or transfer, no Owner Participant shall hold an interest of
less than $20,000,000 in aggregate initial Lessor's Cost in the Trust
Estate and the aggregate number of Owner Participants shall not
exceed four (4).
(d) The assignment, conveyance or transfer shall be
effected in compliance with, or subject to an exemption from, the
registration requirements of the Securities Act, and the Lessee, the Co
Lessee and the Indenture Trustee shall each have received, at the
expense of the parties to such assignment, conveyance or transfer, an
opinion of counsel to that effect, in form and substance satisfactory t
each such Person and to Co-Lessee's Counsel.
(e) So long as no Termination Event or Incipient
Termination Event shall have occurred and be continuing, unless such
transfer or assignment shall have arisen in connection with the sale of
all or substantially all of the non-telecommunications leveraged lease
portfolio of Ameritech Credit Corporation, the transferee or assignee
shall not be a Competitor of the Co-Lessee or Lucent and shall not be
engaged in any material litigation or comparable proceeding in a role
adversarial to the Lessee, CIROR, ATOR, Lucent, the Co-Lessee or
any of their respective Affiliates.
(f) The Lessee, the Co-Lessee and the Indenture
Trustee shall each have received (i) an Owner Participant Transfer
Agreement, executed by the transferor and the transferee and in form
and substance reasonably acceptable to the Lessee, the Co-Lessee, and
the Indenture Trustee by which such transferee agrees to be bound by
and to undertake on its own behalf all of the terms, representations,
warranties and covenants of the transferring Owner Participant under
the Operative Documents, (ii) if applicable, a guaranty with respect to
the obligations of such transferee in form and substance reasonably
acceptable to the Lessee, the Co-Lessee and the Indenture Trustee and
(iii) an opinion of counsel reasonably acceptable to the Lessee, the Co
Lessee, Co-Lessee's Counsel and the Indenture Trustee as to the due
authorization and enforceability of such agreements.
(g) The transferring Owner Participant shall have
given written notice to the Lessee, the Co-Lessee and the Indenture
Trustee of any such transfer or assignment at least ten (10) days prior
to the effective date of such transfer or assignment, together with
drafts of the certificates, opinions and agreements to be delivered in
accordance with the foregoing conditions and such other evidence as is
necessary to establish compliance with the foregoing conditions.
(h) Upon any such assignment, conveyance or
transfer (including any subsequent assignment, conveyance or
transfer), (i) the transferee shall be deemed an "Owner Participant" fo
all purposes hereof, and shall be deemed to have made all payments in
respect of the right, title and interest so transferred, and shall have
ratable interest therein, and each reference in any Operative Document
to or encompassing such Owner Participant shall thereafter be deemed
to include a reference to such transferee and (ii) the transferor shall
have no further rights or interest hereunder or under any other
Operative Document, to the extent of the interest so transferred.
ARTICLE XII
Refunding
XII.1 Refunding. So long as no Termination Event or
Incipient Termination Event shall be in existence, and all Funding
Dates have been completed and subject to satisfaction of the terms and
conditions set forth in this Article XII and in Section 2.12 of the
Indenture, the Co-Lessee shall have the right to request the Owner
Participant to effect, and the Owner Participant, the Owner Trustee
and the Indenture Trustee will cooperate to effect, an optional
prepayment of all, but not less than all, of the Notes pursuant to
Section 2.12 of the Indenture as part of a refunding or refinancing, on
the terms set forth in this Article XII and such Section 2.12 (such
refunding or refinancing, a "Refunding"); provided, that the Lessee
shall have the right to so request only one Refunding during the term
of the Notes. In connection with a refunding or refinancing:
(a) there shall be no material change in the
Operative Documents except to the extent provided in
clause (c) and for the inclusion, if any, of additional covenants
upon the Co-Lessee which are acceptable to the Co-Lessee,
and specifically, there shall be no change in the Operative
Documents adverse to the Owner Participant or the Owner
Trustee, in any such Person's reasonable judgment, including
the provisions of the Indenture providing the Owner Trustee
with rights in the event of an Indenture Default or an Indenture
Event of Default;
(b) the Lessee, the Co-Lessee, the Owner
Participant, the Owner Trustee, the Indenture Trustee, and any
other appropriate parties will enter into an agreement, in form
and substance satisfactory to such Persons, providing for
(i) the issuance and sale by the Owner Trustee on the date
specified in such agreement (for the purposes of this
Article XII, the "Refunding Date") of debt securities in an
aggregate principal amount (in the lawful currency of the U.S.)
equal to the aggregate outstanding principal amount of the
Notes on the Refunding Date (the "Replacement Notes"),
(ii) payments by the Co-Lessee to the Person or Persons
entitled thereto of all other amounts, in respect of accrued
interest, and Make Whole Premium Amount, if any, payable on
such Refunding Date and all other amounts due and owing to
the Noteholders under the Operative Documents, and (iii) such
other provisions as are reasonably acceptable to the Owner
Participant, the Owner Trustee, the Indenture Trustee, the
Lessee and the Co-Lessee;
(c) the Lessee and the Owner Trustee will
amend the Lease to provide that Rent payable in respect of the
period from and after the Refunding Date shall be recalculated
to preserve the Net Economic Return which the Owner
Participant would have realized had such refunding or
refinancing not occurred; provided, that the net present value
of Rent shall be minimized to the extent consistent therewith,
and amounts payable in respect of Casualty Value, Termination
Value and EBO Price from and after the Refunding Date shall
be appropriately recalculated to preserve the Net Economic
Return which the Owner Participant would have realized had
such refunding or refinancing not occurred (it being agreed that
any recalculations pursuant to this clause (c) shall be performed
in accordance with the requirements of Article X);
(d) subject to subparagraph (a) above, the
Owner Trustee will enter into an agreement not materially
different from the Indenture to provide for the securing
thereunder of the Replacement Notes issued by the Owner
Trustee pursuant to this Article XII in like manner as the Notes
refunded;
(e) on the Refunding Date and as a
condition precedent to such Refunding, the entire principal
amount of Notes, together with accrued interest thereon, the
Make Whole Premium Amount, if any, and all other sums due
to the Lenders under the Operative Documents shall be prepaid
or paid in accordance with Section 2.12 of the Indenture;
(f) the Co-Lessee shall pay to the Owner
Participant a Refunding fee in an amount equal to $25,000;
(g) the Lessee, the Owner Participant, the
Owner Trustee and the Indenture Trustee shall have received
(i) such opinions of counsel as they may reasonably request
concerning compliance with Applicable Law relating to the sale
of securities and (ii) such other opinions of counsel and such
certificates and other documents, each in form and substance
satisfactory to them, as they may reasonably request in
connection with the terms and conditions of this Article XII;
(h) all necessary authorizations,
Governmental Actions, approvals and consents in connection
with such Refunding shall have been obtained;
(i) as a result of such Refunding, the Equity
Amount shall not increase or decrease; and
(j) the final stated maturity of the
Replacement Notes shall not extend beyond the final stated
maturity of the Notes being refunded;
provided, however, that (x) no Refunding of the Notes will be
permitted if, within thirty (30) days after receipt of a request pursua
to the first sentence of Section 12.2 from the Co-Lessee to effect a
refinancing pursuant to this Section 12.1 and of all relevant
information regarding the terms and conditions of such Refunding
necessary to render the determinations referred to below, the Owner
Participant or a Super-Majority in Interest of Noteholders reasonably
determines that there will be a risk of adverse tax consequences to the
Owner Participant or the Noteholders; and (y) the Co-Lessee shall
(i) compensate, on a reasonable basis, the Owner Participant for its
time and (ii) pay to or reimburse the Participants, the Owner Trustee
and the Indenture Trustee, on an After-Tax Basis, for all reasonable
costs and expenses (including Fees and Expenses) paid or incurred by
them, in either case, in connection with such Refunding or such
proposed Refunding.
XII.2 Notice. The Co-Lessee shall give the other parties
hereto written notice at least thirty (30) days prior to the deposit of
cash with the Indenture Trustee in connection with any desired
refinancing or refunding pursuant to this Article XII, which notice sha
set forth to the extent practicable the proposed terms and conditions o
such refunding or refinancing, including the desired date therefor. Th
Co-Lessee will promptly provide to the Participants, the Owner
Trustee and the Indenture Trustee final terms and conditions of any
such refunding or refinancing not less than three Business Days prior
to the execution and delivery of the documents contemplated
hereunder in connection therewith.
ARTICLE XIII
[Intentionally Omitted]
ARTICLE XIV
Miscellaneous
This Participation Agreement shall be governed by, and
construed in accordance with, all of the Documentary Conventions.
ARTICLE XV
No Recourse to Owner Participant; No Implied Obligations
(a) No Recourse. It is expressly agreed and
understood that no recourse may be had to any Owner Participant, and
no Owner Participant shall have any obligation or liability, with respe
to the obligations and liabilities of the Owner Trustee or the Trust
Estate (including, without limitation, the obligations and liabilities
the Owner Trustee under the Indenture with respect to the Notes).
(b) No Implied Obligations. No Participant shall
have any obligations to any other party hereto except for the express
obligations of such Participant set forth in the Operative Documents.
ARTICLE XVI
No Recourse to ATOR or Lucent; Limited Recourse to the Lessee
(a) Anything in the Operative Documents to the
contrary notwithstanding, none of the Lenders, the Indenture Trustee,
the Owner Participant or the Owner Trustee, nor any of their
respective successors or assigns, shall have any claim, remedy or right
to proceed against the Lessee, Lucent, ATOR or any of their
respective officers, employees or directors, whether by virtue of any
constitutional provision, statute or rule of law or by enforcement of
any penalty or assessment or otherwise, for the payment of any sum
owing on account of the obligations set forth in the Lease or the other
Operative Documents to which the Lessee is a party, including any
deficiency, or for the payment of any liability resulting from the brea
of any representation, agreement or warranty of any nature whatsoever
in the Lease or the other Operative Documents to which the Lessee is
a party from any source other than the Equipment and Directly-
Related Assets. The Lenders, the Indenture Trustee, the Owner
Participant and the Owner Trustee waive and release any personal
liability of the Lessee, Lucent, ATOR and their respective officers,
employees and directors for and on account of such liability, and the
Lenders, the Indenture Trustee, the Owner Trustee and the Owner
Participant agree to look solely to the Equipment and the Directly-
Related Assets for the satisfaction of such liability; provided, nothin
herein contained shall limit, restrict or impair the rights of the Owne
Trustee or the Indenture Trustee, as the case may be, to exercise
remedies upon a Lease Event of Default as provided in the Lease, to
bring suit and obtain a judgment against the Lessee, ATOR, Lucent or
any of their respective officers, employees or directors (provided
execution thereof shall be limited to the Equipment and Directly-
Related Assets unless the Lessee is unwilling or unable, except by
reason of an automatic stay under the Bankruptcy Code or any
comparable provision of Applicable Law, to specifically perform the
Lessee's obligations to return the Equipment when required, in which
event the Lessee shall be liable for the Fair Market Sales Value
thereof) or to exercise all rights and remedies provided under the
Lease with respect to the Equipment and Directly-Related Assets or
otherwise realize upon the Equipment and Directly-Related Assets. It
is further understood that nothing herein contained shall limit, restri
or impair the rights of the Owner Trustee or the Indenture Trustee, as
the case may be, to enforce the obligations of the Co-Lessee or
CIROR under this Agreement, the Guaranty and the other Operative
Documents to which it is a party.
(b) Each of the Lenders, the Indenture Trustee, the
Owner Participant and the Owner Trustee hereby agrees that the
Lessee shall have no obligation to any Person with respect to the
transactions contemplated by the Operative Documents except those
obligations expressly set forth in the Lease and the other Operative
Documents to which the Lessee is to be a party.
ARTICLE XVII
Tax Treatment
It is hereby agreed among the parties hereto that for
federal and state income tax purposes the Owner Participant will be
treated as the owner of each Item of Equipment as of the First Funding
Date and the Lessee will be treated as the lessee of each Item of
Equipment.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, intending to be legally bound, the
parties hereto have each caused this Participation Agreement to be
duly executed as of the date first above written.
CIRRUS LOGIC, INC.
By: /s/ Thomas F. Kelly
Name: Thomas F. Kelly
Title: Executive Vice President, Finance and Administration
and Chief Financial Officer and Treasurer
CIRENT SEMICONDUCTOR, G.P.
By: /s/ Paul J. Mostek
Name: Paul J. Mostek
Title: Member, Board of Governors
By: /s/ Harold A. Hoeschen, Jr.
Name: Harold A. Hoeschen, Jr.
Title: Alternate Member, Board of Governors
CIROR, INC.
By: /s/ Thomas F. Kelly
Name: Thomas F. Kelly
Title: Executive Vice President, Finance and Administration
and Chief Financial Officer and Treasurer
AMERITECH
CREDIT CORPORATION
By: /s/ R. Scott Horsley
Name: R. Scott Horsley
Title: President
FIRST SECURITY
BANK, NATIONAL
ASSOCIATION, not in
its individual capacity
(except as expressly set
forth herein) but solely as
Owner Trustee
By: /s/ Dan W. Brown
Name: Dan W. Brown
Title: Assistant Vice Prsident
WILMINGTON
TRUST COMPANY,
not in its individual
capacity (except as
expressly set forth
herein) but solely as
Indenture Trustee
By: /s/ James P. Lawler
Name: James P. Lawler
Title: Vice Prsident
[LENDERS]
By:
Name:
Title:
[Lenders' Counsel to
provide signature page
for each Lender]
<PAGE>
EXECUTION COPY
LEASE AGREEMENT
dated as of October 31, 1996
by and among
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
in its capacity as Owner Trustee for
THE ORLANDO SEMICONDUCTOR EQUIPMENT OWNER
TRUST,
as Lessor,
and
CIRENT SEMICONDUCTOR, G.P.,
as Lessee,
and
CIRRUS LOGIC, INC.,
as Co-Lessee.
Leveraged Lease of
Semiconductor Manufacturing Equipment
Orlando Facility
Orlando, Florida
NOTE: CERTAIN RIGHTS OF THE LESSOR UNDER THIS LEASE AGREEMENT AND IN
THE EQUIPMENT LEASED HEREUNDER HAVE BEEN ASSIGNED TO AND ARE SUBJECT T
A SECURITY INTEREST IN FAVOR OF WILMINGTON TRUST COMPANY, IN ITS
CAPACITY AS INDENTURE TRUSTEE, UNDER AND TO THE EXTENT SET FORTH IN TH
TRUST INDENTURE AND SECURITY AGREEMENT DATED AS OF OCTOBER 31, 1996,
BETWEEN FIRST SECURITY BANK, NATIONAL ASSOCIATION, IN ITS CAPACITY AS
OWNER TRUSTEE FOR THE OWNER TRUST, AND WILMINGTON TRUST COMPANY, IN IT
CAPACITY AS INDENTURE TRUSTEE, AS SUCH TRUST INDENTURE AND SECURITY
AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME I
ACCORDANCE WITH THE PROVISIONS THEREOF. THIS LEASE AGREEMENT HAS BEE
EXECUTED IN SEVERAL COUNTERPARTS. NO SECURITY INTEREST IN THE LESSOR=
RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE AGREEMENT AND THE
EQUIPMENT LEASED HEREUNDER MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART OF
THIS LEASE AGREEMENT CONTAINING THE RECEIPT THEREFOR EXECUTED BY
WILMINGTON TRUST COMPANY, IN ITS CAPACITY AS INDENTURE TRUSTEE, ON THE
SIGNATURE PAGE THEREOF.
LEASE AGREEMENT
This LEASE AGREEMENT (this ALease@) is entered into as of
October 31, 1996, by and among FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as otherwise specified herein, but solely i
capacity as Owner Trustee for THE ORLANDO SEMICONDUCTOR
EQUIPMENT OWNER TRUST under a Trust Agreement dated as of
October 31, 1996, for the benefit of the Owner Participant named therei
as Lessor, CIRENT SEMICONDUCTOR, G.P., a joint venture formed
as a New York general partnership owned by ATOR Corp. ("ATOR"), a
New York corporation and subsidiary of Lucent Technologies Inc.
("Lucent"), and Ciror, Inc. ("CIROR"), a California corporation and
wholly-owned subsidiary of Cirrus Logic, Inc., as Lessee, and CIRRUS
LOGIC, INC., a California corporation, as Co-Lessee.
ARTICLE I
Definitions and Usage
SECTION I.1 Definitions and Usage. Unless the context
otherwise requires, capitalized terms used herein shall have the respec
meanings assigned to them, whether directly or indirectly by reference,
Appendix A to the Participation Agreement, and the rules of usage set
forth in such Appendix A shall likewise govern this Lease.
ARTICLE II
Equipment Leases
SECTION II.1 Lease of Equipment; Lease Supplements. Subject
to the terms and conditions hereof, the Lessor hereby agrees to lease t
Lessee Parties, and the Lessee Parties hereby agree to lease from the
Lessor from time to time, for the term referred to in Section 2.2 hereo
Items of Equipment specified on Schedule VI to the Participation
Agreement, on the terms more particularly set forth on the Lease
Supplement and Schedule of Equipment, the forms of which are attached
hereto as Schedule A and Schedule B, delivered on the First Funding Dat
the execution and delivery of which shall constitute acceptance of the
of Equipment described therein for all purposes of this Lease and such
Items of Equipment shall be subject to the terms of this Lease from the
date thereof.
SECTION II.2 Lease Term. Immediately upon satisfaction of all
applicable conditions described in Article III of the Participation
Agreement on the First Funding Date, without necessity of any further a
or evidence by any party hereto, each Item of Equipment specified on a
Schedule of Equipment attached to the Lease Supplement delivered on the
First Funding Date shall be deemed delivered to the Lessor and leased b
the Lessor to the Lessee Parties for the Base Term and, if the Lessee e
to exercise its renewal option pursuant to Article XVIII hereof, for an
Renewal Term, in either case, all pursuant to the terms of this Lease,
unless this Lease shall have been earlier terminated in accordance wit
its terms.
ARTICLE III
Rent
SECTION III.1 Basic Rent. With respect to each Item of Equipment, the
Lessee Parties shall pay to the Lessor Basic Rent commencing on the
first Rent Payment Date and continuing on each Rent Payment Date
thereafter for the duration of the Base Term in an amount equal to the
product of (a) the applicable percentage specified for such Rent Payme
Date in Schedule C to this Lease and (b) the Lessor's Cost for such
Item. Schedule C to this Lease indicates whether an installment of Bas
Rent is payable in advance or in arrears. Lessor and Lessee Parties
agree that for tax purposes each installment of Basic Rent that is
indicated as payable in advance will be allocated for tax purposes ove
the six-month period beginning on the Rent Payment Date on which such
advance payment is scheduled to be made, and each installment of Basic
Rent that is indicated as payable in arrears will be accrued over the
six-month period ending on the Rent Payment Date on which such arrears
payment is scheduled to be made.
SECTION III.2 Supplemental Rent. The Lessee Parties shall pay
promptly to the Lessor, or to the Person entitled thereto as expressly
provided herein or in any other Operative Document, any and all
Supplemental Rent as the same shall become due and payable, including
any interest payable at the Overdue Rate as provided in Section 3.5 her
SECTION III.3 Minimum Amount of Basic Rent Payments, Etc..
(a) The amount of Basic Rent payable on each Rent Payment Date shall in
no event be less than the amount required to pay the amount of principa
of, and interest on, the Notes scheduled to be paid on such Rent Paymen
Date, and (b) the Casualty Value and Termination Value payable on any
date in accordance with the terms hereof and the EBO Price payable on t
EBO Date, together with Basic Rent and Supplemental Rent, if any, then
due and payable, shall in no event be less than the then outstanding
principal amount of the Notes, plus any accrued and unpaid interest or
premium thereon payable on such date (or the next succeeding Business
Day).
SECTION III.4 Method of Payment. All Rent payable to the Lessor at a
time prior to termination of the Indenture shall be paid by the Lessee
Parties on behalf of the Lessor directly to the Indenture Trustee at t
Indenture Trustee Office or such other place in the U.S. as the
Indenture Trustee shall specify in a written notice to the Lessee Parti
at least five (5) Business Days prior to the date such payment is due;
provided, that all Rent payable to the Lessor after receipt by the Less
Parties of notice from the Indenture Trustee stating that the Indenture
has been terminated following full satisfaction of the Notes and all
other amounts due thereunder and under the Indenture shall be paid to
the Lessor at its office set forth in Schedule I to the Participation
Agreement or at such other place in the U.S. as the Lessor shall speci
in a written notice to the Lessee Parties at least five (5) Business
Days prior to the date such payment is due. All Excluded Payments sha
be made at all applicable times (and whether or not the Lien of the
Indenture shall have been discharged) to the Person entitled thereto a
provided herein or in the applicable Operative Document, at the office
of such Person as set forth in Schedule I to the Participation Agreeme
or at such other office in the U.S. as such Person entitled thereto
shall specify in a written notice to the Lessee Parties. All payments
of Supplemental Rent shall be paid to the Person entitled thereto at t
office of such Person set forth in Schedule I to the Participation
Agreement or at such other office in the U.S. as such Person entitled
thereto shall specify in a written notice to the Lessee Parties at lea
five (5) Business Days prior to the date such payment is due. Each
payment of Rent shall be made by the Lessee Parties in immediately
available funds prior to 12:00 noon, New York time at the place of
payment, on the date when such payment shall be due.
SECTION III.5 Late Payment. In the event any Rent shall not be
paid on its due date to any Person, the Lessee Parties shall pay to the
appropriate Person on demand, as Supplemental Rent, interest (to the
extent permitted by Applicable Law) on such overdue amount from the due
date thereof (without regard to any grace period) to the date of paymen
thereof at the Overdue Rate.
SECTION III.6 Net Lease; No Set-off, Counterclaims, etc. THIS
LEASE IS A NET LEASE, AND NOTWITHSTANDING ANY
PROVISION OF THIS LEASE OR OF ANY OTHER OPERATIVE
DOCUMENT TO THE CONTRARY (BUT SUBJECT TO THE NON-
RECOURSE PROVISIONS SET FORTH IN ARTICLE XXIV HEREOF
AND ANY CORRESPONDING PROVISIONS OF THE OTHER
OPERATIVE DOCUMENTS, IF APPLICABLE), THE LESSEE
PARTIES= JOINT AND SEVERAL OBLIGATIONS TO PAY ALL
PAYMENTS OF RENT AS AND WHEN THE SAME SHALL
BECOME DUE AND PAYABLE IN ACCORDANCE WITH THE
TERMS OF THIS LEASE AND ANY OTHER OPERATIVE
DOCUMENT SHALL BE ABSOLUTE AND UNCONDITIONAL AND
SHALL NOT BE SUBJECT TO ANY ABATEMENT OR DIMINUTION
BY SET-OFF, DEDUCTION, COUNTERCLAIM, RECOUPMENT,
AGREEMENT, DEFENSE, SUSPENSION, DEFERMENT,
INTERRUPTION OR OTHERWISE, AND UNTIL SUCH TIME AS
ALL RENT REQUIRED TO BE PAID UNDER THIS LEASE OR ANY
OTHER OPERATIVE DOCUMENT SHALL HAVE BEEN PAID, THE
LESSEE PARTIES SHALL NOT HAVE ANY RIGHT TO
TERMINATE THIS LEASE OR TO BE RELEASED, RELIEVED OR
DISCHARGED FROM ITS OBLIGATION TO MAKE, AND SHALL
NOT SUSPEND, REDUCE OR DISCONTINUE, ANY PAYMENT OF
RENT FOR ANY REASON WHATSOEVER (EXCEPT AS MAY BE
EXPRESSLY PROVIDED HEREIN), including, without limitation:
(a) any default, misrepresentation, negligence, misconduct or othe
action or inaction of any kind by any Lessor Party, the Lessee, the
Co-Lessee or any other Person, whether under or in connection with thi
Lease, any other Operative Document or any other agreement relating to
this Lease or in connection with any unrelated transaction;
(b) the insolvency, bankruptcy, reorganization or
cessation of existence, or discharge or forgiveness of indebtedness of
Person referred to in clause (a) above;
(c) the invalidity, unenforceability or impossibility of
performance of this Lease or any other Operative Document for any
reason;
(d) any defect in the title, condition, design, operation or fitne
for use of, or any Lien or other restriction of any kind upon, all or
any part of any Item of Equipment, any loss or destruction of, or dama
to, any Item of Equipment or any interruption in or cessation of the
ownership, possession, operation or use of any Item of Equipment for a
reason whatsoever;
(e) any restriction, prevention or curtailment of or
interference with any Item of Equipment or the use thereof or any part
thereof for any reason whatsoever, including, without limitation, by an
Governmental Authority;
(f) any Applicable Law now or hereafter in force;
(g) any failure to obtain any required Governmental
Action for a transfer of rights or title to the Lessor, the Lessee, the
Co-Lessee or any other Person;
(h) any amendment or other change of, or any assignment of any
rights under, any Operative Document, or any waiver or other action or
inaction under or in respect of any Operative Document, or any exercis
or nonexercise of any right or remedy under or in respect of any
Operative Document, including, without limitation, the exercise of any
foreclosure or other remedy under the Indenture or this Lease or the sa
of any Item of Equipment or any portion thereof or interest therein; o
(i) any other cause, circumstance, happening or event whatsoever,
foreseen or unforeseen, whether similar or dissimilar to any of the
foregoing.
The Lessee Parties hereby waive and hereby agree to waive at any future
time at the request of the Lessor, to the extent now or then permitted
by Applicable Law, any and all rights that the Lessee Parties may have
or that at any time hereafter may be conferred upon either of them, by
statute, regulation or otherwise, to terminate, cancel, quit or surrend
this Lease other than in accordance with the express terms hereof. If
for any reason whatsoever this Lease shall be terminated other than in
accordance with the express terms hereof in whole or in part, by
operation of law or otherwise, the Lessee Parties nonetheless agree, t
the extent permitted by Applicable Law or unless the Lessor has
repossessed, retaken or required redelivery of the Equipment, to pay t
the Lessor (or, in the case of Supplemental Rent, to the Person entitl
thereto as provided herein or in the applicable Operative Document) an
amount equal to each Rent payment at the time and in the manner such
payment would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part. Each
Rent payment shall be final and the Lessee Parties agree not to seek t
recover all or any part of any such payment (except for amounts paid t
a Lessor Party which such Lessor Party in good faith agrees have been
paid in error) from any Lessor Party for any reason under any
circumstance whatsoever.
SECTION III.7 Obligations of Lessee Parties. For all purposes of
this Lease, any obligation hereunder which is stated to be an obligati
of the Lessee Parties shall be a joint and several obligation of each
Lessee Party, subject in the case of the Lessee to the non-recourse
provisions set forth in Article XXIV hereof.
SECTION III.8 Adjustments to Basic Rent, Casualty Value,
Termination Value and EBO Price. Basic Rent, Casualty Value,
Termination Value and the EBO Price shall be adjusted when required by
and in accordance with Article X of the Participation Agreement, and an
appropriate Lease Supplement shall be executed and delivered to reflect
all such adjustments.
ARTICLE IV
Representations, Warranties and Agreements as to Equipment
SECTION IV.1 Disclaimer of Warranties. AS BETWEEN THE
LESSOR AND THE LESSEE PARTIES, DELIVERY OF A LEASE
SUPPLEMENT PURSUANT TO ARTICLE II HEREOF SHALL BE
CONCLUSIVE PROOF OF ACCEPTANCE BY THE LESSEE
PARTIES OF EACH ITEM OF EQUIPMENT SPECIFIED ON THE
RELATED SCHEDULE OF EQUIPMENT AS BEING IN
COMPLIANCE WITH ALL REQUIREMENTS OF THIS LEASE. THE
LESSOR LEASES AND THE LESSEE PARTIES TAKE EACH SUCH
ITEM OF EQUIPMENT AND EACH COMPONENT PART THEREOF
"AS IS" AND "WHERE IS", AND THE LESSEE PARTIES
ACKNOWLEDGE THAT NONE OF THE LESSOR PARTIES HAS
MADE, NOR SHALL BE DEEMED TO HAVE MADE, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, MERCHANTABILITY, DESIGN, QUALITY,
DURABILITY, OPERATION OR FITNESS FOR USE OR PURPOSE
OF EACH SUCH ITEM OF EQUIPMENT OR ANY COMPONENT
PART THEREOF OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO EACH SUCH ITEM OF EQUIPMENT OR ANY
COMPONENT PART THEREOF OR OTHERWISE, IT BEING
AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE
BORNE, AS BETWEEN THE LESSOR AND THE LESSEE PARTIES,
BY THE LESSEE PARTIES IN THE EVENT OF ANY DEFECT OR
DEFICIENCY IN ANY SUCH ITEM OF EQUIPMENT OR ANY
COMPONENT PART THEREOF, OF ANY NATURE WHETHER
PATENT OR LATENT, AND THAT NONE OF THE LESSOR
PARTIES SHALL HAVE ANY RESPONSIBILITY OR LIABILITY
WITH RESPECT THERETO, except that the Lessor hereby represents, warran
and covenants that each such Item of Equipment shall be free of Lessor
Liens on the First Funding Date applicable to such Item. The provision
of this Section 4.1 have been negotiated, and the foregoing provisions
are intended to be a complete exclusion and negation of any other
warranties made by any Lessor Party, express or implied, with respect
any Item of Equipment or any component part thereof, whether arising
pursuant to the UCC or any other Applicable Law now or hereafter in
effect or otherwise. Nothing contained in this Section 4.1 shall in an
way diminish or otherwise affect any right the Lessee Parties may have
with respect to any Item of Equipment against any third Person. None o
the Lessor Parties shall at any time be required to inspect any Item of
Equipment or any component part thereof, and any actual inspection by a
Lessor Party shall not be deemed to affect or modify the provisions of
this Section 4.1.
SECTION IV.2 Lessee To Exercise Certain Rights. The Lessor hereby
authorizes the Lessee, at the Lessee=s expense, to exercise in the nam
of and on behalf of the Lessor and the Lessee Parties, as their
interests may appear, the right and power to deal with any Seller or
manufacturer (including agents and consultants thereof) of any Item of
Equipment or any component part thereof and the right to enforce (by
legal action or otherwise) against such Seller or manufacturer all
rights, powers and privileges of the Lessor and to receive all benefit
of the Lessor with respect to such Seller or manufacturer, under any
express or implied warranty or indemnity or otherwise; provided,
however, that the Co-Lessee shall indemnify each Indemnified Person an
hold each such Indemnified Person harmless from and against any and al
claims, costs, expenses, damages, losses and liability incurred or
suffered by such Indemnified Person in connection with, as a result of
or incidental to, any action or inaction by the Lessee pursuant to the
above authorization; provided, further, however, that if a Lease Event
of Default, an Incipient Termination Event or a Termination Event shal
have occurred and be continuing (and until all Lease Events of Default
Incipient Termination Events and Termination Events then outstanding
shall no longer be continuing) the Lessor may terminate the authority
the Lessee under this Section 4.2. Any amount paid under any such
warranty or other such claim or in lieu of performance of any such
warranty or claim shall be paid over, held and applied as set forth in
Section 10.2 or 10.3, as applicable. After the end of the Lease Term
with respect to any Item of Equipment (except with respect to any Item
of Equipment that the Lessee shall have purchased pursuant to Article
or XIX hereof) or after the termination of this Lease with respect to
such Item of Equipment pursuant to Article XVI, (a) the Lessee Parties
shall have no further rights, powers, privileges or benefits under thi
Section 4.2 and (b) all amounts payable by any Seller or manufacturer
referred to above paid thereafter shall be paid to, and retained by, t
Lessor or any other Person as shall then be the owner of the Item of
Equipment as to which such payment is made.
ARTICLE V
Liens; Quiet Enjoyment
SECTION V.1 Liens. The Lessee Parties shall not directly or indirectl
create, incur, assume or suffer to exist any Lien (other than Permitte
Liens) on any Item of Equipment or the Trust Estate or the Trust
Indenture Estate. The Lessee Parties will promptly, at their own
expense, take such action as may be necessary duly to discharge any su
Lien. The Lessee Parties' obligations under this Section 5.1 with
respect to any such Lien on any Item of Equipment resulting from a cla
arising prior to the termination of this Lease with respect to such It
of Equipment shall survive such termination.
SECTION V.2 Quiet Enjoyment. Notwithstanding any other provision of
this Lease (but subject to Section 6.5 hereof), so long as no Lease
Event of Default shall have occurred and be continuing, as between the
Lessee Parties and the Lessor, the Lessee Parties shall have the
exclusive rights to possession and control of all Items of Equipment an
neither the Lessor nor any Person acting or claiming through the Lessor
will take any action that shall interfere with the peaceful and quiet
enjoyment or the possession and use or nonuse of any Item of Equipment
by the Lessee Parties, and the Lessee Parties shall have the right to
possess and use or not use such Item of Equipment in their sole
discretion, subject always to the terms and conditions of this Lease.
The foregoing is not intended to limit the inspection rights of the
Items of Equipment granted by the Lessee Parties pursuant to Sections
9.3 and 14.1 hereof.
SECTION V.3 Personal Property. The Lessee Parties and the Lessor agr
for the purposes of this Lease that each Item of Equipment and every
part thereof and title thereto is and shall be considered as and shall
remain personal and not real property to all Persons and for all
purposes. The Lessee Parties and the Lessor agree that each Item of
Equipment and every part thereof and title thereto is severed and shall
be and shall remain severed from any real property and is readily
movable and, even if physically attached to such property, it is the
intention of the Lessee Parties and the Lessor that each Item of
Equipment and every part thereof and title thereto (a) shall retain th
character of personal property, (b) shall be removable, (c) shall be
treated as personal property with respect to the rights of all Persons
whomsoever, (d) shall not become part of any real property and (e) by
virtue of its nature as personal property, shall not be affected in an
way by any instrument dealing with any real property.
SECTION V.4 Landlord's Waiver. Prior to the First Funding
Date, the Lessee Parties shall obtain a landlord's waiver from Lucent w
respect to the Items of Equipment providing, among other things, for th
agreement of Lucent to the effect set forth in Section 5.3.
ARTICLE VI
Operation; Maintenance
SECTION VI.1 Operation and Maintenance. Subject to the provisions of
Section 6.5 hereof, the Lessee Parties shall at all times at their own
expense during the Lease Term:
(a) use each Item of Equipment for its intended purpose
and purposes incidental or reasonably related thereto and permit each s
Item to be used or operated only by qualified personnel and in accordan
with good business practice;
(b) keep and maintain in proper order all appropriate books, recor
and title documents relating to each Item of Equipment, all services
rendered and all funds expended for operation and maintenance of each
such Item and the acquisition, construction and installation of
Modifications thereto and the payment of the purchase price of such
Modifications, all in accordance with the standards applied by Lucent
with respect to similar equipment owned or leased by it in the U.S.;
(c) operate and maintain each such Item in accordance
with the higher of (i) the standards applied by Lucent with respect to
similar equipment owned or leased by it in the U.S., and (ii) the
manufacturer=s recommendations and warranty requirements;
(d) inspect, service, maintain, store, use, operate, repair,
replace, modify and improve each Item of Equipment in compliance in all
material respects with Applicable Law (including all applicable
environmental and occupational safety laws), and in compliance in all
material respects with all applicable licenses and permits relating to
each such Item issued by any Governmental Authority and in compliance
with all insurance required by this Lease and the other Operative
Documents; provided, that as long as no Lease Event of Default,
Incipient Termination Event or Termination Event shall have occurred a
be continuing, the Lessee Parties may in good faith by appropriate
proceedings contest the validity or application of any such Applicable
Law in any reasonable manner which does not involve any risk of the
imposition of criminal liability on any Lessor Party or any material
danger of the sale, forfeiture or loss of the Equipment or any part or
interest therein or title thereto, or any material danger of any fine,
penalty, or other imposition upon the Lessor Parties for which the
Co-Lessee has not acknowledged its obligation to indemnify the Lessor
Parties pursuant to the Operative Documents, but only so long as the
Lessee Parties simultaneously contest the validity or application of
such Applicable Law with respect to all similarly affected Items of
Equipment operated by the Lessee Parties and located at the Orlando
Facility; provided, further, that the Lessee Parties shall promptly giv
the Lessor notice of any contest relating to any Item or group of Items
of Equipment having a Lessor=s Cost equal to or greater than $5,000,000
and
(e) in case of any damage to any Item of Equipment, other than
damage constituting an Event of Loss, whether or not any insurance
proceeds on account of such damage shall be sufficient for the purpose
the Lessee Parties shall at their election, in either case at their own
expense, (i) promptly commence and complete the repair of such Item of
Equipment (and in any event complete such repair before the end of the
Lease Term or any earlier termination) so as to restore such Item to it
fair market value, residual value, condition, remaining useful life, a
utility immediately prior to such damage or (ii) replace such Item of
Equipment in accordance with Section 10.1 hereof with an Item having a
least equivalent fair market value, residual value, condition, remaini
useful life, and utility to that of the damaged Item immediately prior
to the damage (assuming, in either case, such Item was then in the
condition and state of repair required to be maintained by the terms o
this Lease), with such alterations and additions as may be made at the
Lessee Parties' election pursuant to and subject to the conditions of
Section 6.4 hereof.
SECTION VI.2 Replacement of Parts. If any part that was originally
incorporated or installed in or attached to any Item of Equipment at t
time such Item was accepted hereunder, or any part thereafter
incorporated or installed in or attached to such Item of Equipment in
replacement of or substitution for such original part or any such
replacement part shall become worn out, lost, stolen, destroyed, damage
seized, confiscated, beyond repair or otherwise permanently rendered
unfit for use, the Lessee Parties, at their own expense, shall promptl
replace such part, or cause the same to be replaced, by a replacement
part which is free and clear of all Liens (other than Permitted Liens)
and of such quality, and in such manner that such Item of Equipment
shall be in as good an operating condition as, and have a fair market
value, residual value, condition, remaining useful life and utility at
least equivalent to the fair market value, residual value, condition,
remaining useful life and utility of, such Item of Equipment immediate
prior to such replacement of such part (assuming such Item of Equipmen
was, at the time of such replacement, in the condition and state of
repair required by the terms hereof). Any such part removed from an
Item of Equipment shall remain the property of the Lessor, no matter
where located, until such part shall be replaced by a part which has
been incorporated or installed in or attached to such Item of Equipmen
and which meets the requirements for replacement specified in the
preceding sentence. Immediately upon a replacement part becoming
incorporated or installed in or attached to an Item of Equipment as abo
provided, without further act, (a) title to the replaced part shall
thereupon vest in the Lessee Parties, free and clear of all rights of
the Lessor, and shall no longer be part of such Item of Equipment
hereunder, (b) title to such replacement part shall thereupon vest in
the Lessor, free and clear of all Liens (except for Permitted Liens) a
(c) such replacement part shall become subject to this Lease and to th
Lien of the Indenture and be deemed part of such Item of Equipment for
all purposes to the same extent as the parts originally incorporated o
installed in or attached to such Item of Equipment. The Lessee Partie
shall provide the Lessor with a Bill of Sale or other conveyance
document for each replacement part the cost of which exceeds $10,000
and, in any event, any replacement part identified by a serial number.
In all events, all replacement parts with respect to an Item of
Equipment shall be so replaced at or before the required time of retur
of such Item of Equipment in accordance with the terms of Section 9.2
hereof.
SECTION VI.3 Relocation. The Lessee Parties may not relocate any Ite
of Equipment to any location other than the Orlando Facility without t
prior consent of the Lessor and the Indenture Trustee, which consent
shall not be unreasonably withheld or delayed; provided, that in any
event the Lessee Parties shall have provided to each of the Lessor
Parties (a) written notice of the intention to relocate such Item of
Equipment in accordance with the terms hereof at least thirty (30) days
prior to the date such relocation is commenced, (b) such UCC financing
statements and other documents as may be necessary or advisable to
maintain and perfect the interest of the Lessor therein and the Lien of
the Indenture thereon, (c) evidence that such Item is covered by the
insurance required by Section 22.1 hereof at such new location, (d) an
acknowledgment from the owner of the facility to which such Item is
relocated to the effect that such owner shall acquire no interest in su
Item by virtue of such Item being installed in such facility, and (e) a
opinion of counsel that such relocation does not impair or adversely
affect the ownership of such Item by the Lessor and that the financing
statements and other documents described in clause (b) above have been
duly filed or recorded in all public offices wherein such filings or
recordings are necessary to protect the validity and effectiveness of
this Lease and the Indenture, including the maintenance of the perfecti
of the Lien of the Indenture Trustee thereon. All reasonable costs and
expenses (including Fees and Expenses) incurred by the Lessor Parties
connection with any relocation shall be paid by the Lessee Parties.
SECTION VI.4 Modification.
(a) The Lessee Parties shall at their expense make any Modificatio
to any Item of Equipment required (i) by Applicable Law or in order to
operate, maintain, service, store, or use such Item in accordance with
Applicable Law, as soon as practicable after any such requirement may
arise or (ii) in order for the Lessee Parties to comply with the
provisions of this Lease or any insurance required by this Lease or any
other Operative Document (all such Modifications being referred to here
as ARequired Modifications@); provided, however, that the Lessee Partie
may, so long as no Lease Event of Default, Incipient Termination Event
Termination Event shall have occurred and be continuing, in good faith
appropriate proceedings contest the validity or application of any
Applicable Law in any reasonable manner which does not involve any risk
of the imposition of criminal liability on any Lessor Party, or any
material danger of the sale, forfeiture or loss of such Item or any pa
or interest therein or title thereto, or any material danger of any
fine, penalty or other imposition upon any of the Lessor Parties for
which the Co-Lessee has not acknowledged its obligation to indemnify t
Lessor Parties pursuant to the Operative Documents, but only so long a
the Lessee Parties simultaneously contest the validity or application
such Applicable Law with respect to all other similarly affected Items
of Equipment operated by the Lessee Parties and located at the Orlando
Facility. The Lessee Parties shall promptly give the Lessor notice of
any contest relating to any Item or group of Items of Equipment having
Lessor=s Cost equal to or greater than $5,000,000. All Required
Modifications shall be completed in a good and workman-like manner. T
Lessee Parties at their expense, from time to time, may make any
Modification to any Item that the Lessee in its reasonable discretion
may deem desirable in the proper conduct of the Lessee's business (al
such Modifications which are not Required Modifications being referred
to herein as AOptional Modifications@); provided, however, that the
Lessee Parties shall not have the right to make any such Optional
Modification that, in the reasonable business judgment of the Lessor
would reasonably be expected to (A) materially impair such Item from
being operated as designed, (B) diminish the then fair market value,
residual value, condition, remaining useful life or utility (including
without limitation its projected utility at the end of the Lease Term t
parties other than the Lessee Parties) of such Item immediately prior t
such Optional Modification, assuming the applicable Item was then at
least in the condition and state of repair required to be maintained b
the terms of this Lease, or (C) change its basic characteristic as
semiconductor manufacturing related equipment. All Optional
Modifications shall be completed in a good and workman-like manner, wi
reasonable dispatch.
(b) Title to each Modification shall vest as follows:
(i) in the case of each (A) Required Modification or (B) other
Nonseverable Modification, whether or not the Lessor shall have financ
or provided financing (in whole or in part) for such Modification, the
Lessor shall, without further act, effective on the date such
Modification shall have been incorporated into the modified Item of
Equipment, acquire title to such Modification free and clear of all Lie
other than Permitted Liens; or
(ii) in the case of each Severable Modification, the Lessee Parties
shall retain title to such Modification and the Lessee Parties may
(subject to the next following paragraph) remove such Modification at
their expense at any time so long as the modified Item of Equipment
remains in or is restored by the Lessee Parties to the condition
required by this Lease.
Immediately upon title to a Modification vesting in the Lessor pursuan
to this Section 6.4(b), such Modification shall, without further act,
become subject to this Lease and to the Lien of the Indenture and be
deemed part of the applicable Item for all purposes. In the case of
clause (ii) of this Section 6.4(b), the Lessor shall have the right,
upon sixty (60) days= written notice to the Lessee Parties, to purchas
any such Severable Modification (other than a Severable Modification
which (i) if manufactured or developed by any Lessee Party, Lucent or
any of their respective Affiliates, is not or has not been sold or
licensed to unrelated third parties, or (ii) if acquired by any Lessee
Party from any Person which is not an Affiliate of such Lessee Party,
may be so sold without breach of an existing contract or license) at i
Fair Market Sales Value, determined if necessary by the Appraisal
Procedure, upon termination of this Lease with respect to such Item.
(c) [Intentionally Omitted].
(d) [Intentionally Omitted].
(e) Subject to compliance with Applicable Law and subject to the
last sentence of Section 6.4(b), the Lessee Parties may remove, at the
expense, any Severable Modification not purchasable by the Lessor;
provided, that the Lessee Parties, at their expense shall repair any
damage to such Item caused by such removal so as not to diminish the
fair market value, residual value, condition, remaining useful life or
utility of such Item immediately prior to the Modification (assuming
such Item was then in the condition and state of repair required by th
Lease); provided further, that in the event the Lessee Parties shall n
have removed any Severable Modification to which the Lessee Parties
shall have title as provided in Section 6.4(b)(ii) prior to the end of
the Lease Term, title to such Severable Modification shall vest in the
Lessor upon the expiration of such Lease Term.
SECTION VI.5 Lessee's Use of Equipment. The Co-Lessee hereby
acknowledges and agrees that its use, maintenance and operation of the
Equipment and the exercise of its other rights hereunder shall be solel
through the Lessee, in the Co-Lessee's capacity as sole shareholder of
CIROR, as general partner of the Lessee.
ARTICLE VII
[Intentionally Omitted]
ARTICLE VIII
Obsolescence Termination
SECTION VIII.1 Item Obsolescence. Unless a Lease Event of Default,
Incipient Termination Event or Termination Event shall have occurred an
be continuing, the Lessee shall have the right to terminate the Lease
with respect to any Item of Equipment having a minimum Lessor's Cost of
$500,000 at any time after the second anniversary of the First Funding
Date, on a Rent Payment Date (an "Obsolescence Termination Date") upon
giving at least one hundred twenty (120) days' prior written notice
(subject to revocation as described below) to the Lessor and the
Indenture Trustee (which notice shall specify the Item to be terminated
and the Obsolescence Termination Date) (the "Termination Notice") if th
Lessee has determined that such Item has become (a) uneconomic or
surplus to the Lessee=s operating requirements as determined by the
Lessee in its reasonable business judgment, other than as a result of a
Event of Loss, or (b) uneconomic to operate due to burdensome
governmental regulations, and the Lessee has provided an Officer's
Certificate to the Lessor and the Indenture Trustee to such effect in
each case; provided, that the Lessee may exercise its right of
termination pursuant to this Section 8.1 not more than once every six
(6) calendar months; provided, further, that such right of termination
may not be exercised with respect to any Item of Equipment if the
aggregate Lessor's Cost of all other Items of Equipment subject to thi
Lease after such termination would be less than $100,000,000. The
Lessee may rescind its Termination Notice as to any Item of Equipment
later than forty-five (45) days prior to the scheduled Obsolescence
Termination Date; provided, that the Lessor has not exercised its
election to retain such Item of Equipment pursuant to Section 8.2
hereof. The total number of such rescissions during the Lease Term fo
any Item of Equipment shall not exceed two (2).
SECTION VIII.2 Retention by Lessor. At any time within thirty (30)
days after receipt by the Lessor and the Indenture Trustee of a
Termination Notice, the Lessor may give the Lessee Parties notice of it
irrevocable election to retain any such Item. If the Lessor shall have
elected to retain any such Item in accordance with the preceding
sentence, on the Obsolescence Termination Date for such Item (a) the
Lessee shall deliver to the Lessor such Item of Equipment in accordanc
with the conditions for return set forth in Section 9.2 hereof, (b) th
Lessee shall pay to the Lessor or, so long as the Indenture has not be
discharged in accordance with its terms, the Indenture Trustee, by EFT
any Accrued Basic Rent due on or prior to such Obsolescence Terminatio
Date with respect to such Item of Equipment, (c) the Co-Lessee shall p
to the Lessor or, so long as the Indenture has not been discharged in
accordance with its terms, the Indenture Trustee, by EFT any other
unpaid Supplemental Rent (including the Make Whole Premium Amount
payable on such date under the Indenture, but not including any Casual
Value or Termination Value) due on or prior to such Obsolescence
Termination Date with respect to such Item of Equipment plus all other
sums due and payable on such Obsolescence Termination Date to the
Lenders by the Lessor under the Indenture, the Participation Agreement
or the Notes and (d) the Lessor shall pay to the Indenture Trustee by
EFT funds in an amount sufficient to pay a principal amount of the Not
equal to the Loan Value for such Item of Equipment. Subject to the
receipt by the Indenture Trustee of such funds, upon return by the
Lessee of such Item of Equipment to the Lessor pursuant to clause (a)
above such Item of Equipment shall cease to be leased hereunder or
subject to the provisions of any other Operative Document. If the
Lessor fails to make the full amount of such payment to the Indenture
Trustee, (i) the Lessee may make such payment on the Obsolescence
Termination Date (together with all other amounts payable by the Lesse
and the Co-Lessee under this Section 8.2), in which event all liability
of the Lessee Parties to pay Rent for such Item of Equipment following
such Obsolescence Termination Date shall cease, the Lease Term with
respect to such Item of Equipment shall cease and the Lessor will be
obligated to convey title to such Item of Equipment to the Lessee
Parties (without representation or warranty except as to the Lessor=s
ability and authority to conduct such transfer and convey title to suc
Items free and clear of Lessor Liens) and (ii) if the Lessee elects not
to make the payment described in clause (i) on the Obsolescence
Termination Date, the Lessor shall thereafter no longer be entitled to
exercise its election to retain such Item of Equipment. If the Lessee
elects not to make the payment contemplated in clause (i) of the
preceding sentence, this Lease shall continue in full force and effect
with respect to such Item of Equipment. Notwithstanding any election
the Lessor to retain an Item of Equipment, the Co-Lessee shall pay all
reasonable costs and expenses (including Fees and Expenses) of all
parties relating to the termination of the obligation of the Lessee
Parties to lease such Item of Equipment; provided, that the Co-Lessee
shall not be liable for any costs and expenses incurred by the Lessor
after such termination or to modify such Equipment for any purpose oth
than to ensure that the condition of such Equipment complies with that
required hereof or, except as set forth in clause (i) above, as a resu
of its failure to make any payment to the Indenture Trustee.
SECTION VIII.3 Bids for Terminated Items. During the period from the
giving of such Termination Notice for any Item of Equipment until ten
(10) days prior to the Obsolescence Termination Date and so long as th
Lessor shall not have exercised its option pursuant to Section 8.2 to
retain such Item, the Co-Lessee, as non-exclusive agent for the Lessor
and at the Co-Lessee's expense, shall use its best efforts to obtain t
highest possible bids from Persons other than the Lessee, the Co-Lesse
CIROR, ATOR, Lucent, any of their respective Affiliates or any Person
acting on behalf of or in conjunction with such parties in connection
with such bid (collectively, the "Non-Bidding Parties" for purposes of
this Article VIII) to purchase such Item of Equipment on the
Obsolescence Termination Date, and the Co-Lessee shall during such
period, from time to time at the request of the Lessor, inform the
Lessor in writing of the results of its efforts and shall notify the
Lessor in writing, at least ten (10) days prior to the scheduled
Obsolescence Termination Date, of the amount of each such bid (which m
include bids to purchase such Item of Equipment for scrap or salvage
only) that has theretofore been submitted and the name and address of
the party submitting such bid. Each such bid (a "Qualifying Bid") (a)
shall be a bona fide bid for payment in full in cash, and (b) shall no
involve any consideration to be received by any of the Non-Bidding
Parties from the purchaser or be connected, directly or indirectly, wit
any transaction between the purchaser and any of the Non-Bidding
Parties. The Lessor and the Owner Participant shall have the right,
directly or through agents or brokers, to solicit bids, to inspect any
bid received by the Co-Lessee or to submit a bid itself, but shall be
under no duty to make or solicit bids or to inquire into the efforts o
the Co-Lessee to obtain bids.
If, other than as a result of the Lessor's election to retain such Item
of Equipment as provided in Section 8.2 hereof, neither the Lessor nor
the Co-Lessee shall have received any Qualifying Bid as to any Item of
Equipment on or prior to the tenth day before the scheduled Obsolescenc
Termination Date, the Termination Notice as to such Item of Equipment
shall be deemed to be rescinded and such Item of Equipment shall remain
subject to this Lease. If the Termination Notice is deemed rescinded
pursuant to the preceding sentence, this Lease shall continue as to suc
Item in full force and effect, without in any way prejudicing the right
of the Lessee to terminate the Lease at a later date with respect
thereto; provided, that such continuation shall constitute a rescissio
for purposes of Section 8.1 hereof. In such event, the Co-Lessee shal
reimburse the Lessor Parties for all reasonable fees and expenses
(including Fees and Expenses) incurred in connection with any such
rescission of a Termination Notice.
If the Lessor or the Co-Lessee shall have received a Qualifying Bid on
or prior to the tenth day before the Obsolescence Termination Date, the
Lessor shall on the Obsolescence Termination Date, provided the
conditions of Section 8.4 hereof shall have been met, transfer the Item
of Equipment to which such bid relates to the bidder that shall have
submitted the highest Qualifying Bid for such Item of Equipment upon
receipt in immediately available funds of the amount specified in such
bid. The Co-Lessee shall certify to the Lessor and the Owner
Participant that the conditions of the first paragraph of Section 8.3
with respect to the Qualifying Bid have been met, including that the
bidder is not a Non-Bidding Party. Such transfer and assignment shall
be without any representation, warranty or recourse whatsoever except
to the Lessor=s ability and authority to conduct the transaction and
convey title to such Item of Equipment free and clear of Lessor Liens.
Such funds shall be retained by the Lessor or, for so long as the
Indenture shall be in effect, paid by the Lessor forthwith upon receip
to the Indenture Trustee for application as provided in Section 3.02(
of the Indenture. The Lessor shall execute and deliver such documents
evidencing such transfer and take such further action as the purchaser
shall reasonably request. All out-of-pocket costs and expenses
(including Fees and Expenses and any sales, transfer or similar taxes)
of the Lessor Parties incurred in connection with any sale and transfe
of any Item of Equipment pursuant to this Article VIII shall be paid b
the Co-Lessee.
SECTION VIII.4 Conditions of Termination; Effect of Termination. As
conditions to the transfer by the Lessor of any Item on the applicable
Obsolescence Termination Date to the successful bidder pursuant to the
last paragraph of Section 8.3 hereof, (a) any necessary Governmental
Actions in connection therewith shall have been obtained by and at the
expense of the Lessee Parties, (b) the Lessee shall on such Obsolescen
Termination Date pay to the Lessor or, so long as the Indenture has no
been discharged in accordance with its terms, the Indenture Trustee th
sum of (i) any Accrued Basic Rent due with respect to such Item of
Equipment as of such Obsolescence Termination Date and (ii) the excess
if any, of the Termination Value for such Item of Equipment, computed
of such Obsolescence Termination Date, over the net proceeds actually
realized by the Lessor from any sale thereof, and (c) the Co-Lessee
shall on such Obsolescence Termination Date pay to the Lessor or, so
long as the Indenture has not been discharged in accordance with its
terms, the Indenture Trustee the sum of (i) any Make Whole Premium
Amount payable on such Obsolescence Termination Date pursuant to the
Indenture, (ii) any other Rent (including any amounts for costs and
expenses payable by the Co-Lessee as required in the immediately
preceding paragraph) with respect to such Item of Equipment due and
unpaid as of such Obsolescence Termination Date and (iii) any penaltie
premium or other amounts payable under the Indenture or the Notes in
connection with the principal amount of the Notes being prepaid on suc
date (the amounts payable pursuant to clauses (b) and (c) collectively
the "Obsolescence Termination Payment"). Upon payment by the Lessee a
the Co-Lessee of their respective shares of all Obsolescence Terminati
Payments as to any terminated Item of Equipment, the obligation of the
Lessee Parties to pay Basic Rent with respect to such Item of Equipmen
shall terminate, such Item of Equipment shall no longer be subject to
this Lease and the Lease Term with respect to such Item of Equipment
shall end. If, other than as a result of the Lessor's election to
retain such Item of Equipment as provided for in Section 8.2 and the
compliance by the Lessor and the Lessee Parties with their respective
obligations in connection therewith, on or as of the Obsolescence
Termination Date no sale of such Item of Equipment shall have occurred
or the Lessee or the Co-Lessee shall not have complied in full with th
Section 8.4, this Lease shall continue in full force and effect with
respect to such Item of Equipment in accordance with the terms hereof
without prejudice to the Lessee Parties' right to exercise their
termination right under Section 8.1 hereof thereafter and the Co-Lessee
shall pay the expenses (including Fees and Expenses) incurred by the
Lessee Parties and the Lessor Parties in connection with the proposed
sale.
SECTION VIII.5 Replacement. Notwithstanding the Lessee's right to
terminate this Lease pursuant to Section 8.1, the Lessee shall have th
right to replace any obsolete Item of Equipment with the most recent or
updated version of such Item, subject to the fulfillment, at the
Co-Lessee's sole cost and expense, of the terms, provisions and
conditions set forth in Sections 10.1(a)(i) and 10.1(b) hereof.
ARTICLE IX
Return of Equipment
SECTION IX.1 Notice of Return. Unless the Lessee exercises its renew
option under Article XVIII or its purchase options under Article XI or
XIX or Lucent exercises its purchase options under Section 15.3(b), th
Lessee Parties shall provide the Lessor with irrevocable written notice
of their decision to return all Items of Equipment to the Lessor at th
end of the Lease Term thereof at least one hundred eighty (180) days
prior to the expiration of the Lease Term.
SECTION IX.2 Return of Equipment.
(a) Upon termination of this Lease with respect to an Item of
Equipment pursuant to Article VIII or in connection with the exercise
the Lessor of its remedies under Article XVI hereof, or at such other
time as required under this Lease, the Lessee Parties shall, at the Co-
Lessee's risk, cost and expense, dismantle each affected Item of
Equipment in accordance with appropriate methods and procedures for
de-installation, identify such Item with appropriate tags and markings
crate (in a manner appropriate for the safe and proper shipment of suc
Equipment) and catalogue all such Items, and deliver such Items to the
Lessor at the nearest Delivery Site in the manner appropriate for
handling Items of Equipment of that type. The Lessor shall bear all
shipping costs from the Delivery Site.
(b) At the time of return, any Item of Equipment shall be, at the
cost and expense of the Co-Lessee (except to the extent that any such
Item of Equipment has not been maintained in accordance with Lucent=s
standards for comparable equipment, in which case, at the cost and
expense of Lessee) (i) free and clear of all Liens other than Owner
Participant Liens and Lessor Liens, (ii) clean, (iii) in good operating
condition (subject to normal wear and tear), (iv) eligible for warranty
and continued maintenance and service if the original Seller or
manufacturer thereof makes such continued warranty available for its
equipment (provided that the Co-Lessee's liability for expenses incurr
by it to make Items of Equipment eligible for such continued warranty
shall be limited to an amount not in excess of five percent (5%) of th
Fair Market Sales Value of each Item of Equipment at the time of the
return and that the calculation of the Fair Market Sales Value shall
assume that such Items of Equipment are eligible for such warranty), (
in compliance with (A) the maintenance and operations provisions of th
Lease, (B) industry operating standards for comparable equipment in th
U.S. and (C) Lucent=s own standards, practices and procedures for
maintenance of comparable equipment, applied without discrimination
among the Items of Equipment and other equipment owned, leased or used
by Lucent in the U.S., (vi) detoxified or decontaminated, if applicabl
to allow for subsequent use in accordance with the applicable
manufacturer=s practices for such Item of Equipment and Applicable Law
(vii) properly identified with labels, tags, plates or by any other
method providing clear identification, (viii) otherwise capable of bei
serviced, maintained, stored, used and operated in compliance with all
Applicable Law, (ix) capable of performing and can properly be
configured and assembled to perform the task for which it was original
designed and intended, (x) free of all fluid leakage in all areas, (xi
adequately coated with protective coating, if necessary, and (xii)
properly assembled except to the extent disassembly is necessary or
appropriate for the purposes of crating and delivering the Equipment in
accordance with appropriate methods and procedures for de-installation.
Simultaneously with the return of any Item or part thereof, the Lessee
Parties shall deliver to the Lessor the plans and specifications with
respect to such Item, all operating, maintenance, repair and inspectio
software, records, manuals, logs, plans, specifications, drawings,
schedules and similar papers (and any documents and permits relating t
environmental matters) relating to such Item necessary or useful for t
continued operation and maintenance of such Item, and title documents
and copies of operating permits with respect to such Item; provided,
that the Lessee Parties shall not be required to provide any of the
foregoing documents and records unless the Lessee either actually has
possession of the foregoing documents and records or the foregoing
documents and records should have been retained in accordance with the
Lessee=s or (if the Lessee has no applicable policy) Lucent's (as to
similar items of equipment in the United States) normal document
retention policies. Effective at the time of such return, the Co-Less
shall also secure for the benefit of the Lessor or its successors and
assigns any software licenses and other rights not then possessed by t
Lessor and necessary for the normal operation of any Item of Equipment
by Lessor (or such successors and assigns).
If for any reason the Lessee Parties shall not have returned the
applicable Item of Equipment as required by the provisions of this
Article IX on the required day, (A) the Lessee Parties shall pay to the
Lessor on demand additional Basic Rent for such Item of Equipment on a
per diem basis for each day after such day until full compliance with
this Article IX, which Basic Rent shall be in an amount per diem equal
to the greater of (1) the average daily rate of Basic Rent for such It
of Equipment payable during the Base Term and (2) the Fair Market Rent
Value for such Item of Equipment, and (B) the Co-Lessee shall pay to th
Lessor an amount equal to Basic Rent in respect of such Item of
Equipment payable during the Base Term for a six-month period (as
liquidated damages for the loss of a bargain and not as a penalty), suc
compensation to be in addition to and not a substitute for such liabili
as the Lessee Parties may have as a result of such failure to return
such Item of Equipment. Without limiting the generality of any of the
other terms of this Lease or the Participation Agreement, the Co-Lesse
shall be liable for any costs and expenses (including Fees and Expense
incurred by the Lessor Parties as a result of the failure of the Lesse
Parties duly to perform and comply with any of the terms of this Artic
IX.
SECTION IX.3 Lessor Assignment, Lease or Sale of Returned Item. The
Lessee Parties agree that during the last six (6) months of the Lease
Term with respect to each Item of Equipment, they will cooperate in al
reasonable respects with efforts of the Lessor to lease or sell such It
of Equipment, including aiding qualified potential lessees or purchaser
by providing reasonable access at the Orlando Facility (or such other
location where the relevant Equipment has been moved in accordance wit
this Lease) to the applicable Item of Equipment as then being used and
to the records relating to maintenance and performance thereof for
inspection thereof during normal business hours upon prior written
notice to the Lessee Parties; provided, that such cooperation shall be
subject to the Clean Room Operating Procedures and Section 25.1 hereof
and, provided further, that it is understood that Lessee's obligation
hereunder to provide such access shall be only at such times and under
such circumstances as are reasonably appropriate in connection with
Lessor's marketing efforts.
SECTION IX.4 Governmental Approvals. The Lessee Parties shall use
reasonable efforts, at the expense of the Lessor, in transferring or
obtaining all orders, licenses, consents, registrations, permits,
authorizations, approvals or exemptions under or by any Governmental
Authority which may be necessary for the Lessor or its designee, as the
case may be, to operate, lease or purchase any returned Item of Equipme
SECTION IX.5 Additional Parts. At any time after the Lessee has
notified the Lessor that it has determined not to renew this Lease
pursuant to Article XVIII or purchase the Equipment pursuant to Articl
XI or XIX, or the Equipment is otherwise to be returned to the Lessor,
the Lessee Parties shall at the Lessor=s request, advise the Lessor of
the nature and condition of all Severable Modifications owned by the
Lessee Parties pursuant to Section 6.4(b)(ii) hereof which the Lessee
Parties have removed or intend to remove from the Equipment in
accordance with Section 6.4(e) hereof. The Lessee Parties may elect t
retain any Severable Modification not purchased or purchasable by Less
pursuant to the last paragraph of Section 6.4(b). The Lessee Parties
may (and shall, if so directed by Lessor), at their sole cost, expense
and risk, remove from any Item any other Severable Modification which
not owned by the Lessor in accordance with the provisions of Section
6.4(b)(ii) hereof and which is not purchased by the Lessor pursuant to
this Section 9.5; provided, that any such Modification not removed
pursuant to this Section 9.5 shall be deemed to be part of the Item to
which it relates for all purposes hereof and title to such Modificatio
shall thereupon vest in the Lessor free and clear of all Liens, other
than Lessor Liens and Owner Participant Liens.
ARTICLE X
Loss, Destruction, Condemnation, Damage, etc.
SECTION X.1 Replacement; Payment of Casualty Value.
(a) Upon the occurrence of an Event of Loss, or an event which wit
the passage of time would become an Event of Loss, with respect to any
Item of Equipment, the Lessee Parties shall promptly give the Lessor a
the Indenture Trustee notice thereof and notify the Lessor and the
Indenture Trustee within forty-five (45) days thereafter which of the
following options the Lessee Parties shall perform with respect thereto
(i) the Lessee Parties shall replace the Item of Equipment which
suffered the Event of Loss as soon as practicable, but in any event
within one (1) year from the date of such Event of Loss, with a
replacement Item of Equipment which has a then fair market value,
residual value, condition, remaining useful life and utility at least
equal to the fair market value, residual value, condition, remaining
useful life and utility of the Item of Equipment which suffered the
Event of Loss immediately prior to such Event of Loss (assuming such
Item of Equipment was then in the condition and state of repair requir
by this Lease); provided, that (A) in the case of any replacement whic
cannot practicably be effected within ninety (90) days from the
occurrence of such Event of Loss, the Lessee shall provide to the Less
and the Indenture Trustee an Officer's Certificate setting forth in
reasonable detail the date on which such replacement Item is expected
become available and the reasons that such replacement cannot be
effected within such ninety (90) day period, and (B) the Co-Lessee
agrees to indemnify the Owner Participant, in a manner satisfactory to
such Owner Participant, for any adverse tax consequences from such
replacement and provide to the Owner Participant an Officer=s
Certificate to such effect; or
(ii) the Co-Lessee shall pay to the Lessor or, so long as the
Indenture has not been discharged in accordance with its terms, the
Indenture Trustee on a date as of which monthly Casualty Values are
determined (a ALoss Payment Date@) and specified by the Lessee Parties,
which shall be a Loss Payment Date within the earlier of (A) three (3)
Business Days after receipt of insurance proceeds, and (B) ninety (90)
days after the occurrence of the Event of Loss, the amounts required t
be paid by Section 10.1(d) hereof;
provided, that if a Lease Event of Default, Incipient Termination Event
or Termination Event shall have occurred and be continuing, the Lessee
Parties may elect only the option set forth in clause (ii) above, and
failure of the Lessee Parties to make an election within the time peri
specified above shall be deemed an election of the option set forth in
clause (ii) above.
(b) The Lessee Parties= right to replace any Item as provided in
Section 10.1(a) above shall be subject to the fulfillment, at the
Co-Lessee's sole cost and expense, of the following conditions preceden
(i) each of the Lessor Parties shall have received Officer=s
Certificates of the Lessee and the Co-Lessee to the effect that as of
the date of such replacement no Lease Event of Default, Termination
Event or Incipient Termination Event shall have occurred and be
continuing;
(ii) on the date of such replacement, the following documents shall
have been duly authorized, executed and delivered by the respective
party or parties thereto and shall be in full force and effect, and an
executed counterpart of each thereof shall have been delivered to each
of the Lessor Parties:
(A) a Lease Supplement with a Schedule
of Equipment covering the replacement Item;
(B) so long as the Indenture shall not
have been discharged and satisfied, an Indenture Supplement covering th
replacement Item;
(C) a full warranty (as to title) bill of sale, in substantially t
same form as the Bill of Sale, covering the replacement Item, executed
by the Seller thereof in favor of the Lessor;
(D) evidence of the filing in such places as are deemed reasonably
necessary by the Lessor and the Indenture Trustee of (1) so long as th
Indenture shall not have been discharged, such UCC financing statement
and fixture filings covering the security interests created by the
Indenture, and (2) such "precautionary" UCC financing statements and
fixture filings covering the leasehold interests created by this Lease
as are deemed necessary and desirable by the Lessor and the Indenture
Trustee to protect the ownership interest of the Lessor and the Lien a
security interest of the Indenture Trustee in the replacement Item;
(E) an opinion, satisfactory in form and substance to each of the
Lessor Parties, of the Co-Lessee's Counsel (or other counsel
satisfactory to the Lessor Parties) (1) as to the effectiveness,
validity and enforceability of the documents referred to in clauses (A)
through (D) above and the filing and recordation of the documents
described in clause (D) above and (2) of the same scope and tenor and
covering the matters as the respective opinions of the Co-Lessee's
Counsel, the Lessee's Counsel and Florida Counsel delivered on the Fir
Funding Date;
(iii) on such replacement date, the Lessor shall receive good title
the replacement Item, free and clear of Liens (other than Permitted
Liens);
(iv) each of the Lessor Parties shall have received upon reasonable
request certain information with respect to the replacement Item, with
such information to include descriptions of the fair market value,
residual value, condition, remaining useful life and utility of such
Item (including an appraisal if requested by any Lessor Party); and
(v) either (A) the Owner Participant shall have received an opinio
of independent tax counsel (selected by the Owner Participant and
reasonably acceptable to the Co-Lessee) reasonably satisfactory to the
Owner Participant to the effect that there shall be no adverse tax
consequences resulting from such replacement or (B) the Co-Lessee shal
have agreed to indemnify the Owner Participant in a manner satisfactor
to the Owner Participant for any such adverse tax consequence, provide
that the Owner Participant shall be obligated to accept such an
indemnity only if (1) Co-Lessee shall be Investment Grade and (2) the
Owner Participant shall have determined that it is more likely than no
that no such adverse tax consequences will occur or (C) the Co-Lessee
shall have made a payment to the Owner Participant in an amount that,
an After-Tax Basis, shall equal the total amount of Taxes that (in the
judgment of the Owner Participant) could be payable by the Owner
Participant as a result of such replacement.. (c) Upon satisfaction
of the conditions set forth in Section 10.1(b), (i) this Lease shall
continue with respect to any replacement Item as though no Event of Lo
had occurred, (ii) the Lessor shall convey "as is" "where is", without
recourse or warranty (except as to the ability and authority of the
Lessor to transfer and convey such Item free and clear of Lessor Liens
and Owner Participant Liens), to the Lessee Parties all right, title a
interest of the Lessor in and to the Item being replaced by executing
and delivering to the Lessee Parties such Bills of Sale and other
documents and instruments as the Lessee Parties may reasonably request
to evidence such conveyance, and (iii) the Lessor shall assign to the
Lessee Parties all claims it may have against any other Person arising
from the event which gave rise to the replacement.
(d) If an Event of Loss occurs with respect to any Item of Equipme
and the Lessee Parties have elected not to replace or do not replace (
are not entitled pursuant to this Section 10 to replace), such Item as
provided in Section 10.1(a)(i), the Co-Lessee shall pay or cause to be
paid to the Lessor or, so long as the Indenture has not been discharged
in accordance with its terms, the Indenture Trustee in immediately
available funds on the Loss Payment Date specified by the Lessee Parti
pursuant to Section 10.1(a)(ii), an amount equal to (A) the Accrued
Basic Rent payable on such Loss Payment Date with respect to the Item
suffering the Event of Loss, together with all unpaid Basic Rent, if
any, payable before such Loss Payment Date, plus (B) all unpaid
Supplemental Rent (except for Casualty Value) due on or before such Lo
Payment Date, plus (C) the Casualty Value for the Item suffering the
Event of Loss as of such Loss Payment Date, plus (D) any Make Whole
Premium Amount payable on such date pursuant to the Indenture. Upon
compliance by the Co-Lessee with this paragraph (d) and receipt of a
discharge of the Lien of the Indenture with respect to the Item
suffering such Event of Loss, the Lessor shall transfer such Item to t
Lessee Parties on an Aas is@ Awhere is@ basis, free and clear of all
Lessor Liens and Owner Participant Liens, without any other recourse t
or representation or warranty (except as to the ability and authority
the Lessor to convey and transfer such Item free and clear of Lessor
Liens and Owner Participant Liens), expressed or implied, by the Lesso
or the Owner Participant by executing and delivering to the Lessee
Parties such Bills of Sales and other documents or instruments that the
Lessee Parties may reasonably request to evidence such conveyance. Upo
the compliance with the provisions of this paragraph (d) with respect t
such Item, the Lessee Parties' obligation to pay Basic Rent with respec
to such Item shall cease, but the Co-Lessee's obligation to pay any
applicable Supplemental Rent, before, on or after such date shall rema
unchanged.
SECTION X.2 Application of Payments Upon an Event of Loss. Subject t
the provisions of Section 10.4 hereof, any payments received at any ti
by the Lessor or by the Lessee Parties with respect to an Item of
Equipment (including insurance proceeds or warranty payments but
excluding Excluded Payments) from any Governmental Authority or other
Person as a result of the occurrence of an Event of Loss with respect t
such Item of Equipment shall be applied as follows:
(a) any such payment received at any time by the Lessee Parties
shall be promptly paid to the Lessor or, so long as the Indenture has
not been discharged in accordance with its terms, the Indenture Trustee
for application pursuant to the following provisions of this Section
10.2, except that the Lessee Parties may retain any amounts which the
Lessor shall at such time be obligated to pay to the Lessee Parties
under such provisions;
(b) (i) if the Lessee Parties have elected to replace such Item of
Equipment pursuant to Section 10.1(a)(i), such payments shall be held
the Lessor or, so long as the Indenture has not been discharged in
accordance with its terms, the Indenture Trustee and applied to pay, or
reimburse the Lessee Parties for the payment of, the cost of replacing
such Item of Equipment, upon satisfaction of the conditions set forth
Section 10.1(b) or (ii) if the Lessee Parties have elected or are deem
to have elected the option set forth in Section 10.1(a)(ii), so much o
such payments as shall not exceed all amounts required to be paid by t
Co-Lessee pursuant to Section 10.1(d) hereof shall be held by the Lesso
or, so long as the Indenture shall not have been discharged in accordan
with its terms, the Indenture Trustee and shall be applied in reduction
of the Co-Lessee's obligation to pay such amounts if not already paid
the Co-Lessee, or, if already paid by the Co-Lessee, shall be applied
reimburse the Co-Lessee for its payment of such amounts; and
(c) the balance, if any, of such payments remaining thereafter,
shall be allocated among the Lessor, the Lessee, the Co-Lessee and oth
Persons having a claim thereto as their respective interests may appea
SECTION X.3 Seizure, Requisition, Application of Payments Not Relatin
to an Event of Loss. In the event of a loss, condemnation,
confiscation, theft or seizure of, or requisition of title to or use of
or damage to, any Item of Equipment or any part thereof not resulting
an Event of Loss, the Lessee Parties shall promptly notify the Lessor
and the Indenture Trustee thereof and all obligations of the Lessee
Parties under this Lease with respect to such Item of Equipment shall
continue to the same extent as if such event had not occurred. Subjec
to the provisions of Section 10.4 hereof and the obligations of the
Lessee Parties under Article VI hereof, insurance proceeds, government
awards, warranty payments or other payments received at any time by th
Lessor or the Lessee Parties from any insurer under insurance carried
the Lessee Parties but not the Lessor or the Owner Participant, any
Governmental Authority or other Person with respect to any loss,
condemnation, confiscation, theft or seizure of, or requisition of tit
to or use of, or damage to any Item of Equipment or any part thereof n
constituting an Event of Loss shall be paid to the Lessor or, so long
the Indenture has not been discharged in accordance with its terms, th
Indenture Trustee and applied to pay, or reimburse the Lessee Parties
for the payment of the cost of repairing such Item of Equipment, upon
receipt of evidence reasonably satisfactory to the Lessor and the
Indenture Trustee that such Item has been restored to the condition
required by the terms of this Lease.
SECTION X.4 Applications During Lease Event of Default, Incipient
Termination Event or Termination Event. Any amount that shall be
payable to the Lessee Parties pursuant to this Lease arising out of any
insurance, warranty, governmental award or otherwise received in respec
of the Equipment shall not be paid to the Lessee Parties or, if it shal
have been previously paid to the Lessee Parties, shall not be retained
by the Lessee Parties but shall be paid to the Lessor or, so long as t
Indenture has not been discharged in accordance with its terms, the
Indenture Trustee, if at the time of such payment any Lease Event of
Default, Incipient Termination Event or Termination Event shall have
occurred and be continuing. In such event, all such amounts shall be
paid to and held by the Lessor or the Indenture Trustee, as the case m
be, in trust as security for the obligations of the Lessee Parties to
make payments under any other Operative Document or to pay Rent
hereunder or applied by the Lessor or the Indenture Trustee, as the ca
may be, toward payment of any of such obligations of the Lessee Partie
at the time due hereunder or under such other Operative Document. At
such time as there shall not be continuing any Lease Event of Default,
Incipient Termination Event or Termination Event, all such amounts at
the time held by the Lessor or the Indenture Trustee, as the case may
be, in excess of the amount, if any, that the Lessor or the Indenture
Trustee, as the case may be, shall have elected to apply as above
provided shall be paid to the Lessee Parties.
SECTION X.5 [Intentionally Omitted].
SECTION X.6 Application of Article VI. Article VI shall not
apply to any Item of Equipment after an Event of Loss has occurred with
respect to such Item of Equipment; provided, that the foregoing shall n
limit the respective obligations of the Lessee and the Co-Lessee under
Article VI hereof with respect to any replacement Item of Equipment.
ARTICLE XI
Early Buy-Out Option
SECTION XI.1 Early Buy-Out.
(a) So long as no Lease Event of Default, Incipient Termination
Event or Termination Event shall have occurred and be continuing, the
Lessee shall have the right, upon not more than three hundred sixty
(360) days' nor less than one hundred eighty (180) days' irrevocable
notice to the Lessor prior to the EBO Date (the "EBO Notice Date"), to
purchase all, but not less than all, Items of Equipment on the EBO Dat
at the EBO Price. As a condition to such purchase the Lessee shall be
obligated to pay on the EBO Date (i) the EBO Price for such Item, (ii)
Accrued Basic Rent as of the EBO Date, and (iii) all other Rent due an
payable on or prior to the EBO Date including, without limitation, the
Make Whole Premium Amount, if any, with respect to the Notes being
prepaid on such EBO Date.
(b) Payment. If the Lessee shall have elected to purchase the
Equipment as set forth in Section 11.1(a), payment by the Lessee of th
EBO Price therefor and all other amounts payable pursuant to Section
11.1(a) hereof shall be made by EFT on the EBO Date against delivery
(after payment by the Lessee of such amounts) of (i) a Bill of Sale
transferring and assigning to the Lessee all right, title and interest
the Lessor in and to such Equipment free and clear of Lessor Liens,
Owner Participant Liens and the Lien of the Indenture, without other
recourse, representation or warranty (except as to the Lessor=s abilit
to conduct such transfer and convey such Item free and clear of such
Liens) and, on an "as is" "where is" basis and (ii) an instrument
executed by the Lessor and the Indenture Trustee (in recordable form)
terminating their respective interests in such Equipment and the
Operative Documents to which either the Lessor or the Indenture Truste
as the case may be, is a party.
ARTICLE XII
[Intentionally Omitted]
ARTICLE XIII
Assignment and Sublease
SECTION XIII.1 Lessee Assignments. Neither Lessee Party shall assign,
transfer or sublease any Item of Equipment or its interest therein
without the prior written consent of the Lessor and the Indenture Trust
SECTION XIII.2 Lessor Assignments. The Lessor shall not transfer or
assign any part of its right, title and interest in this Lease or any
Item of Equipment leased hereunder without the prior written consent of
the Indenture Trustee and, so long as no Lease Event of Default or
Termination Event has occurred and is continuing, the Lessee and the Co
Lessee; provided that the Lessor may transfer or assign any part of its
right, title and interest in this Lease or any Item of Equipment lease
hereunder to (a) the Indenture Trustee pursuant to the Indenture and (
a successor owner trustee permitted by the Operative Documents, in eac
case without consent; provided, further, that any permitted such
transfer or assignment shall be subject to all of the terms and
conditions of this Lease and the other Operative Documents (including,
without limitation, the limitations on recourse set forth in Article
XXIV of this Lease and Article XVI of the Participation Agreement).
ARTICLE XIV
Inspection; Markings
SECTION XIV.1 Rights to Information. So long as no Lease Event of
Default, Incipient Termination Event or Termination Event has occurred
and is continuing, each of the Lessor Parties may at its own expense,
upon reasonable prior notice to the Lessee Parties during the normal
business hours of the Lessee, no more frequently than once in any
calendar year (except that the Owner Participant shall also be entitled
to participate in a group visit described in the immediately following
proviso), inspect (subject to the Clean Room Operating Procedures and
Section 25.1 hereof) the Items of Equipment and the books and records o
the Lessee relating to the maintenance and performance of such Items of
Equipment and make copies and extracts therefrom, and may discuss such
matters with the Lessee's officers; provided, that the rights of the
Lenders and Indenture Trustee under this Section may only be exercised
by them in a group visit, and, if Lessee so requests, any Lender
(including for purposes of calculation the holdings of Affiliates of
such Lender) holding less than 5% of the then outstanding principal
amount of the Notes shall be excluded from such group visit; provided
further, that if there shall be more than one Owner Participant, the
rights of such Owner Participants under this Section may only be
exercised by them in a group visit. Upon the occurrence and during th
continuance of a Lease Event of Default, an Incipient Termination Even
or a Termination Event, each of the Lessor Parties may inspect the Ite
of Equipment and such books and records at any time, which inspections
shall be at the expense of the Co-Lessee; provided, that (a) Lessee is
notified at least twenty-four (24) hours prior to any such inspection,
(b) each of the Lessor Parties agrees to comply with the Clean Room
Operating Procedures, (c) each of the Lessor Parties agrees to maintai
the confidentiality of all nonpublic information disclosed to such
Person in the course of any such visit or inspection in accordance wit
Section 25.1 hereof and (d) during the pendency of an Incipient
Termination Event, and for the sixty (60) days next following the
occurrence of any Termination Event not cured by Lucent, the Lessor
Parties may themselves inspect the Equipment hereunder and they may
cause their agents, appraisers, or any manufacturers or used equipment
dealers to inspect the Equipment, but they may not (unless Lessee shall
otherwise agree) request inspection rights for other prospective
purchasers. The Lessor and the Indenture Trustee also shall have the
right to obtain information regarding the condition and state of repai
of any Item of Equipment, compliance by the Lessee with Article VI
hereof and the absence of a Lease Event of Default, an Incipient
Termination Event or a Termination Event (including all information
necessary duly to determine the Fair Market Sales Value and the Fair
Market Rental Value of each Item of Equipment as and when required to
determined under this Lease). None of the Lessor Parties shall have a
duty to make any inspection or inquiry or shall incur any liability or
obligation by reason of not making any such inspection or inquiry nor
shall any such inspection or inquiry reduce the Lessee Parties'
liabilities under the Operative Documents.
SECTION XIV.2 Markings. The Co-Lessee shall affix to each Item of
Equipment identifying labels, plates or tags each setting forth the
following legend:
"This Equipment is owned by First Security
Bank, National Association, as Owner
Trustee for The Orlando Semiconductor
Equipment Owner Trust, is leased by said
Owner Trustee to Cirent Semiconductor,
G.P. and Cirrus Logic, Inc., and is subject to
a security interest granted to Wilmington
Trust Company, as Indenture Trustee under
a Trust and Indenture Agreement between
the Owner Trustee and the Indenture
Trustee.";
provided, however, that such labels, plates or tags do not, in the
Lessee's reasonable judgment, interfere with the Clean Room Operating
Procedures or such Item's operation. The Lessee Parties covenant and
agree to replace any label, plate or tag which may be removed or
destroyed or become illegible, and the Co-Lessee shall indemnify each
Indemnified Person against any liability, loss or expense incurred by
such Indemnified Person as a result of the failure to maintain such
markings notwithstanding the proviso in the immediately preceding
sentence.
ARTICLE XV
Termination Events; Lucent Rights; Lease Event of Default
SECTION XV.1 Termination Events. Each of the following events shall
constitute a Termination Event (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of
law or pursuant to or in compliance with any judgment, decree or order
any court or any order, rule or regulation of any Governmental Authorit
(a) the Lessee Parties shall fail to make any payment of (i)
Casualty Value, Termination Value, EBO Price, Accrued Basic Rent or any
Make-Whole Premium Amount payable concurrently therewith pursuant to t
terms hereof when due, (ii) Basic Rent when due and such failure shall
continue unremedied for a period of five (5) days after the date due a
(iii) Supplemental Rent (other than in respect of Casualty Value,
Termination Value, EBO Price or Make Whole Premium Amount or, unless
otherwise elected in writing by the Owner Participant, payments under
the Tax Indemnity Agreement) for a period of ten (10) Business Days
after the due date; or
(b) either Lessee Party or CIROR, as the case may be,
shall fail to perform or observe any covenant, condition or agreement s
forth in Section 5.1 (Liens), Article IX (Return of Equipment), Section
13.1 (Lessee Assignments) and Article XXII (Insurance) hereof and
Sections 5.4(g) and 5.5(g) of the Participation Agreement (Merger,
Consolidation, etc.,); or
(c) either Lessee Party or CIROR, as the case may be, shall fail t
perform or observe any other covenant, condition or agreement to be
performed or observed by it under any of the Operative Documents (othe
than any such covenant, condition or agreement in the Tax Indemnity
Agreement unless the Owner Participant shall so elect in writing) to
which it is a party and such failure shall continue unremedied for a
period of thirty (30) days after the earlier of (i) the date the
appropriate Lessee Party or CIROR, as the case may be, has actual
knowledge of such failure or (ii) notice thereof shall have been given
to the appropriate Lessee Party or CIROR, as the case may be, by eithe
the Lessor, or, so long as the Indenture shall be in effect, the
Indenture Trustee; provided, however, that the continuation of any suc
failure (other than a failure curable by payment of money) for a perio
longer than such thirty (30) day period shall not constitute a
Termination Event if (i) such default is curable but cannot be cured
within such thirty (30) day period and (ii) the Lessee, the Co-Lessee
CIROR, as the case may be, is diligently pursuing the cure of such
default; provided further, however, that any such failure (other than a
failure curable by payment of money) shall constitute a Termination Eve
if such failure is not cured within the earlier of the last day of the
applicable Lease Term and ninety (90) days from the earlier of (i) the
date the appropriate Lessee Party or CIROR, as the case may be, has
actual knowledge of such failure or (ii) the date notice thereof has
been given to the appropriate Lessee Party or CIROR, as the case may b
or
(d) any representation or warranty made by either Lessee Party or
CIROR, as the case may be, in any of the Operative Documents (other th
any such representation and warranty contained in the Tax Indemnity
Agreement) or in any statement, report, schedule, notice or other
writing furnished by either Lessee Party or CIROR, as the case may be,
in connection therewith shall prove to have been false or incorrect in
any material respect at the time made or given and remains a
misrepresentation or breach of warranty which is adverse to the Lessor
Parties at the time discovered; provided, however, that no such
misrepresentation or breach of warranty shall constitute a Termination
Event if (i) such misrepresentation or breach of warranty is curable an
(ii) the Lessee, the Co-Lessee or CIROR, as the case may be, is
diligently pursuing the cure of such misrepresentation or breach of
warranty within thirty (30) days after such Person has received notice
thereof and upon such cure the original misrepresentation shall not
remain material and adverse; or
(e) any of the Lessee, the Co-Lessee, CIROR or ATOR (i) shall
commence a voluntary Insolvency Proceeding, (ii) shall seek the
appointment of a trustee, receiver, liquidator, sequestrator, custodian
or other similar official of the Lessee, the Co-Lessee, CIROR or ATOR,
or any substantial part of such Person=s property, (iii) shall acquies
in or consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary Insolvency Proceedin
commenced against it, (iv) shall make a general assignment for the
benefit of creditors, or (v) shall fail generally to pay its undispute
debts as they become due; or
(f) an involuntary Insolvency Proceeding shall be commenced agains
the Lessee, the Co-Lessee, CIROR or ATOR seeking liquidation,
reorganization or other relief with respect to such Person or its debt
under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidato
assignee, sequestrator, custodian or other similar official of it or a
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed or unstayed for a period of ninety
(90) consecutive days; or
(g) the Guaranty shall for any reason become invalid, not binding
unenforceable or repudiated in any manner by the Guarantor thereunder)
or
(h) the Lessee's or Co-Lessee's default under or failure to comply
with any term or provision of any other lease agreement, participation
agreement or any other agreement or undertaking in connection with a
lease financing (not including any such financing provided by any
Affiliate of Lessee or Lucent other than Cirrus) relating to equipment
located at the Orlando Facility as a result of which the lessor
thereunder or any assignee of such lessor would have the right to
exercise remedies thereunder; or
(i) (i) the Lessee shall be dissolved or terminated or (ii) the
Co-Lessee, CIROR, ATOR or Lucent shall determine to dissolve the Lesse
or (iii) either Co-Lessee or Lucent shall not continue, directly or
indirectly, to maintain its respective interest in the Lessee or the
respective partners thereof.
SECTION XV.2 Certain Rights of Lucent.
(a) In the event of any default by the Lessee Parties in the payme
of any installment of Basic Rent and subject to Section 15.4 hereof,
Lucent may, without consent of any Lessor Party, pay the sum equal to
the amount of all, but not less than all, of such Basic Rent (includin
interest at the Overdue Rate) as shall then be due and payable.
(b) In the event of any default by the Lessee Parties or
the Guarantor in any obligation under the Operative Documents other tha
the payment of Basic Rent, if such default can be remedied by the payme
of money alone, Lucent may, subject to Section 15.4 hereof, perform suc
obligation on behalf of the Lessee Parties or the Guarantor.
(c) Solely for the purpose of determining whether there exists a
Termination Event, (i) any payment by Lucent, pursuant to, and in
compliance with, paragraph (a) of this Section 15.2 shall be deemed to
remedy any Termination Event by the Lessee Parties in the payment of
installments of Basic Rent theretofore due and payable and (ii) any
performance by Lucent of any obligation of either Lessee Party under th
Lease pursuant to, and in compliance with, paragraph (b) of this Secti
15.2 shall be deemed to remedy any Termination Event to the same exten
that like performance by the Lessee or, as the case may be, the Co-
Lessee itself would have remedied such Termination Event (but any such
payment or performance shall not relieve the Lessee Parties of their du
to pay all Rent and the Lessee Parties to perform all of their
respective obligations pursuant to the Lease).
(d) If, on the basis specified in paragraph (c) of this Section
15.2, such Termination Event shall have been remedied, then any
declaration pursuant to Article XVI hereof that the Lease is in default
based upon such Termination Event, shall be deemed to be rescinded;
provided, that until this Lease has terminated or the obligations of th
Lessee Parties hereunder have been satisfied, Lucent shall not attempt
recover any such amount paid by it on behalf of the Lessee Parties
pursuant to this Section 15.2; provided, further, that
(i) this Section 15.2 shall not apply with respect to any default
the payment of Basic Rent, if such cure by Lucent shall have been
effected with respect to (A) each of the two Rent Payment Dates
immediately preceding the date of such default or (B) more than four
aggregate Rent Payment Dates; provided that, when aggregated with any
cures effected by the Owner Trustee or the Owner Participant pursuant t
Section 4.03 of the Indenture, no such cures shall have been effected
with respect to (1) each of the three Basic Rent payment dates
immediately preceding the date of such default or (2) more than six
Basic Rent payment dates, and
(ii) Lucent shall not be entitled to cure other
Termination Events if the aggregate unreimbursed amount of such cures
made by Lucent pursuant to this Section 15.2 and by the Owner Participa
and the Owner Trustee pursuant to Section 4.03 of the Indenture exceeds
in the aggregate $8,000,000.
(iii) Lucent shall not (without the prior written consent of the
Super-Majority in Interest of Noteholders and the Owner Participant or
if the Indenture shall have been discharged, the prior written consent
of the Owner Participant) have the right to cure any Incipient
Termination Event or Termination Event except as specified in this
Section 15.2.
SECTION XV.3 Additional Rights of Lucent. Upon the occurrence of an
Incipient Termination Event or a Termination Event not waived by Lesso
and subject to Section 15.4 hereof, Lucent shall have the following
rights in addition to those specified in Section 15.2 hereof:
(a) Lucent shall have the right (but not the obligation), to assum
all (and not less than all) the obligations of the Lessee Parties unde
this Lease and the other Operative Documents to which the Lessee Parti
are parties (other than the Guaranty) provided that the following
conditions are met:
(i) at the time Lucent enters into such assumption, Lucent's senio
unsecured debt obligations are rated at least Investment Grade;
(ii) the agreement evidencing such assumption shall be in form and
substance satisfactory to the Lessor and the Indenture Trustee and sha
constitute a full recourse obligation of Lucent;
(iii) Lucent shall, prior to or simultaneously with such assumption,
have cured all Incipient Termination Events and Termination Events the
existing, provided that such cure shall not be required if
(A) such Termination Event or Incipient Termination Event is not
capable of cure by Lucent, and
(B) the continuation of the circumstances
underlying such uncurable Termination Event or Incipient Termination
Event does not remain material and adverse to the interests of the Less
Parties after such assumption.
It is understood and agreed that the Termination Events under Section
15.1(g) or (i) or Termination Events arising solely from the bankruptcy
insolvency or other adverse financial condition of the Co-Lessee
(including any bankruptcy of Lessee) shall not be considered Terminati
Events or Incipient Termination Events, as the case may be, the
continuation of which shall remain so material and adverse within the
meaning of clause (B) above; and
(iv) Lucent shall have provided an opinion of counsel reasonably
satisfactory to the Lessor and the Indenture Trustee to the effect tha
such assumption has been duly authorized, executed and delivered by
Lucent and constitutes the legal, valid and binding obligation of Luce
enforceable in accordance with its terms and as to such other matters
may be reasonably requested by the Lessor or the Indenture Trustee.
(b) Lucent shall have the right (but not the obligation) to purcha
all, but not less than all, Items of Equipment at a purchase price equ
to the sum of (i) the greater of (A) the aggregate Casualty Value of t
Items of Equipment as of the immediately preceding Determination Date
and (B) the aggregate Fair Market Sales Values of the Items of Equipme
plus (ii) Accrued Basic Rent to the date of such purchase plus (iii) t
Make Whole Premium Amount payable with respect to the Notes pursuant t
Section 2.14(d) of the Indenture plus (iv) all other amounts then due
and owing by the Lessee Parties under the Operative Documents (includi
interest at the Overdue Rate on any such amounts not paid when due fro
the due date thereof to the date of purchase). Upon payment by Lucent
of all amounts described above to the Indenture Trustee, so long as th
Indenture Trustee has not been discharged in accordance with its terms
and thereafter the Lessor, (A) the Lessor shall transfer the Items of
Equipment to Lucent on an "as is", "where is" basis without
representation or warranty of any kind (except as to the Lessor's
ability and authority to conduct the transaction and transfer title to
such Items free and clear of Owner Participant Liens and Lessor Liens)
and (B) this Lease shall terminate.
SECTION XV.4 Restrictions on Exercise of Rights. Lucent's rights in
respect of any event under Sections 15.2 and 15.3 hereof and to make a
payments required thereby shall terminate (i) in the case of an event
described in Section 15.2(a), five (5) Business Days after such event
has become a Termination Event, and (ii) in the case of any other event
60 days after such event has become a Termination Event.
Notwithstanding anything to the contrary in Sections 15.2 and 15.3,
Lucent shall not be entitled to any rights under such Sections unless
Lucent shall (if so requested by Lessor or any Participant) deliver th
certificate of a Designated Officer certifying that the subject
Termination Event or Incipient Termination Event was not caused by
Lucent for the purpose of creating such rights (together with an
incumbency certificate in respect of such Designated Officer and, unle
such Designated Officer is the Chief Executive Officer or Chief
Operating Officer of Lucent, evidence that a copy of such certificate
has been provided to one of such officers).
SECTION XV.5 Lease Event of Default. The following shall constitute
Lease Event of Default: a Termination Event shall have occurred and be
continuing and either (a) Lucent has given notice to the Lessor and th
Indenture Trustee that it will not exercise its applicable rights unde
Section 15.2 or 15.3 hereof with respect to such Termination Event, (b
the applicable time periods specified in Section 15.4 hereof shall hav
elapsed without the exercise by Lucent of its applicable rights under
Sections 15.2 and 15.3 hereof as provided in, and subject to the
conditions of, such Sections, it being understood that "exercise" mean
the payment in full of all amounts required to be paid thereunder and
the execution of all documentation required thereby or (c) Lessee shal
continue to operate all or any portion of the Equipment and Lessee (or
Lucent) shall not upon demand have paid to Lessor in respect thereof a
amount equal to the product of (i) the average daily Basic Rent during
the Base Term multiplied by (ii) sixty (60).
ARTICLE XVI
Remedies
SECTION XVI.1 Remedies. Upon the occurrence of any Lease Event of
Default and at any time thereafter so long as the same shall be
continuing, the Lessor may, at its option, by notice to the Lessee
Parties, declare this Lease to be in default; provided, that upon the
occurrence of a Termination Event described in Section 15.1(e) or (f)
with respect to the Lessee Parties which has become a Lease Event of
Default in accordance with Section 15.5, this Lease shall automaticall
be in default without notice thereof to the Lessee Parties, and at any
time thereafter the Lessor may do one or more of the following with
respect to each Item of Equipment as the Lessor in its sole discretion
shall elect, to the full extent permitted by Applicable Law:
(a) The Lessor may, by notice to the Lessee Parties,
terminate this Lease.
(b) The Lessor may (i) make written demand that the Lessee Parties
and the Lessee Parties shall, at the Co-Lessee's expense, return all
Items of Equipment to the Lessor in the manner and condition required
Article IX as if such Items of Equipment were being returned at the en
of the Lease Term, and the Lessor shall not be liable for the
reimbursement of the Lessee Parties for any costs and expenses incurred
by the Lessee Parties in connection therewith or (ii) at the Co-Lessee
expense, but subject to the Clean Room Operating Procedures and to the
procedures set forth below, within six (6) months (provided, that such
period shall be tolled upon the occurrence and during the continuation
any automatic stay under Section 362 of the Bankruptcy Code or any
comparable provision of other Applicable Law which shall affect Lessor'
right to repossess any of the Equipment) after the occurrence of such
Lease Event of Default, enter upon the site where such Items of
Equipment are located and take immediate possession of any or all of
such Items of Equipment or any part thereof (to the exclusion of the
Lessee Parties) and remove such Items of Equipment from the site witho
liability accruing to the Lessor for or by reason of such entry or
taking of possession or removal, and the Lessee hereby grants to the
Lessor such access to the facilities of the Lessee where the Items of
Equipment are or may be located (including, without limitation, any
Aclean room@) as may be necessary for the Lessor properly to package a
prepare the Items of Equipment for removal. During the existence and
continuation of any Lease Event of Default, the Lessee Parties shall
cause the Equipment to be operated or not to be operated as may be
agreed with the Lessor, the Lessee Parties shall cooperate with the
Lessor in effecting an orderly disposition of the Equipment and Lessor
shall not be entitled to remove Equipment other than in connection wit
a reasonable orderly progression of dismantlement set out and agreed t
by the Lessor and effectuated by the Lessee Parties. If the Lessor
shall not have taken any action to exercise any right set forth in the
first sentence of this Section 16.1(b) with respect to any Equipment
within six (6) months (provided, that such period shall be tolled upon
the occurrence and during the continuation of any automatic stay under
Section 362 of the Bankruptcy Code or any comparable provision of other
Applicable Law which shall affect any of the Equipment) after the
occurrence of such Lease Event of Default, the Lessor shall be deemed t
have abandoned such Equipment, such Equipment shall become the propert
of Lessee and Lessor shall have no obligation or liability in respect
thereof. (c) The Lessor (whether or not the Lessor shall have
exercised or shall thereafter at any time exercise its rights under
paragraphs (b) and (d) of this Section 16.1), by notice to the Lessee
Parties specifying a payment date not earlier than ten (10) days nor
more than thirty (30) days from the date of such notice, may require t
Co-Lessee to pay to the Lessor and the Co-Lessee hereby agrees that it
will pay to the Lessor, on the payment date specified in such notice,
which date shall be a date on which monthly Casualty Values are
determined (the ADetermination Date@), as liquidated damages for loss
a bargain, and not as a penalty, and in lieu of any further payments o
Basic Rent and Renewal Rent hereunder in respect of the Items of
Equipment specified by Lessor (which may be all or only part of such
Items), an amount (reduced by any amounts previously paid by the
Co-Lessee pursuant to paragraph (e) below in respect of such Items)
equal to the sum of (i) all unpaid Accrued Basic Rent as of the
Determination Date, plus (ii) an amount equal to the Casualty Value fo
all such Items calculated as of the Determination Date, together with
interest, if any, at the Overdue Rate on the amount of such Accrued
Basic Rent and Casualty Value from the Determination Date as of which
Accrued Basic Rent and Casualty Value is computed until the date of
actual payment; and upon such payment of liquidated damages and all
other Rent then due and payable hereunder, the Lessor shall transfer al
such Items of Equipment (without any representation, recourse or warran
whatsoever other than the ability and authority of the Lessor to condu
such transfer and convey title to such Items free and clear of Owner
Participant Liens and Lessor Liens) to the Lessee Parties and the Lesso
shall execute and deliver such documents evidencing such transfer and
take such further action as the Co-Lessee shall reasonably request.
(d) The Lessor or any agent may sell any Item of Equipment at publ
or private sale, as the Lessor may determine, or may otherwise dispose
of, hold, use, operate, lease (whether for a period greater or less th
the balance of what would have been the Base Term or any Renewal Term,
as the case may be) to any third party or keep idle such Item of
Equipment, all on such terms and conditions and at such place or place
as the Lessor may determine in its sole discretion and free and clear
all rights of the Lessee Parties and without any duty to account to the
Lessee Parties with respect to such action or inaction or any proceeds
with respect thereto except as hereinafter set forth in this Section
16.1. If the Lessor shall have effected a disposition for value of an
such Item of Equipment pursuant to this paragraph (d) (and prior there
shall not have exercised its rights under paragraph (e) below with
respect to such Item unless the Lessor has not been paid thereunder an
has rescinded such exercise), the Lessor may demand that the Co-Lessee
pay the Lessor on a Determination Date, and the Co-Lessee hereby agree
to pay to the Lessor, as liquidated damages for the loss of a bargain
and not as a penalty, in lieu of all Basic Rent and Renewal Rent with
respect to such Item of Equipment due after the date on which such
disposition shall occur, an amount equal to the sum of (A) all unpaid
Accrued Basic Rent as of such Determination Date, plus (B) the amount,
if any, by which the Casualty Value of such Item of Equipment, compute
as of the Determination Date, shall exceed the net proceeds of such
disposition plus (C) interest at the Overdue Rate on the amount of suc
Accrued Basic Rent and deficiency from the Determination Date as of
which the Casualty Value shall have been computed until the date of
actual payment plus (D) all other Rent then due and payable hereunder.
(e) Whether or not the Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (d)
above with respect to an Item of Equipment, the Lessor may, at any time
prior to the time that such Item of Equipment shall have been transferr
to the Lessee Parties pursuant to paragraph (c) above or sold by the
Lessor pursuant to paragraph (d) above, demand that the Co-Lessee pay
the Lessor, and the Co-Lessee hereby agrees to pay to the Lessor on th
first Business Day occurring at least ten (10) days after, in the case
of clause (A) or (B) below, the determination of the Fair Market Sales
Value or Fair Market Rental Value, as the case may be, or in the case
clause (C) below, the later of the date of such demand and the date of
determination of the amount due thereunder, as liquidated damages for
loss of a bargain and not as a penalty (in lieu of all payments of Bas
Rent becoming due after the payment date), an amount with respect to
each specified Item of Equipment equal to the sum of (i) all unpaid
Accrued Basic Rent with respect to such Item due as of the relevant da
set forth above plus (ii) whichever of the following amounts the Lesso
in its sole discretion, shall specify in such notice (together with
interest on such amount at the Overdue Rate from the scheduled payment
date to the date of actual payment): (A) an amount equal to the excess
if any, of the Casualty Value for such Item, computed as of the Rent
Payment Date next preceding the date on which such payment is due, ove
the Fair Market Rental Value of such Item of Equipment for the remaind
of the Base Term or the Renewal Term, as the case may be, after
discounting such Fair Market Rental Value semiannually (effective on t
Rent Payment Dates) to present worth as of the scheduled payment date
the Debt Rate, or if no Notes shall be outstanding, the Reference Rate
or (B) an amount equal to the excess, if any, of the Casualty Value fo
such Item of Equipment as of such Rent Payment Date over the Fair Mark
Sales Value of such Item of Equipment, or (C) an amount equal to the
excess of (1) the present value as of such Rent Payment Date specified
in such notice of all installments of Basic Rent with respect to such
Item until the end of the Base Term (or the Renewal Term, as the case
may be, if such demand for payment is made during a Renewal Term),
discounting semi-annually at the applicable rate specified in clause
(A), over (2) the present value as of such Rent Payment Date of the Fa
Market Rental Value of such Item of Equipment until the end of the Bas
Term or the Renewal Term, as the case may be, discounted semi-annually
at such applicable rate, plus (iii) all other Rent then due and payabl
hereunder.
(f) The Lessor may exercise any other right or remedy which may be
available to it under Applicable Law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for the breac
hereof or to rescind this Lease.
For the avoidance of doubt, it is understood that Lessor may exercise
one or more remedies in respect of some Items of Equipment and one or
more other remedies in respect of other Items of Equipment, and that t
total amounts specified to be paid by Co-Lessee under this Section 16.
shall be aggregate amounts determined by adding the specified amounts
individually determined in the case of each Item of Equipment.
No termination of this Lease, in whole or in part, or exercise of any
remedy under this Article XVI shall, except as specifically provided
herein, relieve the Lessee Parties of any of their liabilities and
obligations hereunder, all of which then outstanding shall survive suc
termination, repossession or exercise of remedy. In addition, the
Co-Lessee shall be liable for any and all unpaid Supplemental Rent due
hereunder before, after or during the exercise of any of the foregoing
remedies, including all Fees and Expenses and other costs and expenses
incurred by any Lessor Party by reason of the occurrence of any
Termination Event or Lease Event of Default or the exercise of the
remedies of the Lessor with respect thereto. At any sale of any Item
Equipment or any part thereof pursuant to this Article XVI, any Lessor
Party may bid for and purchase such property.
SECTION XVI.2 Lessor Rights. To the fullest extent permitted by
Applicable Law, each and every right, power and remedy herein
specifically given to the Lessor or otherwise in this Lease shall be
cumulative and shall be in addition to every other right, power and
remedy herein specifically given or now or hereafter existing at law,
equity or by statute, and each and every right, power and remedy wheth
specifically given herein or otherwise existing may be exercised from
time to time and as often and in such order as may be deemed expedient
by the Lessor, and the exercise or the beginning of the exercise of an
power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Lessor in the exercise of any
right, power or remedy or in the pursuit of any remedy shall impair an
such right, power or remedy or be construed to be a waiver of any
default on the part of the Lessee Parties or to be an acquiescence
therein. No express or implied waiver by the Lessor of any Lease Even
of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Lease Event of Default.
SECTION XVI.3 Exercise of Other Rights or Remedies. In addition to a
rights and remedies provided in this Article XVI, the Lessor may
exercise any other right or remedy that may be available to it under
Applicable Law or proceed by appropriate court action to enforce the
terms hereof or to recover damages for the breach hereof.
ARTICLE XVII
Right to Perform for Lessee
SECTION XVII.1 Right To Perform. If the Lessee Parties or either of
them shall fail to make any payment of Rent required to be made by the
hereunder or shall fail to perform or comply with any of their other
agreements contained herein or in any other Operative Document or in an
other agreement entered into in connection therewith, the Lessor or
Lucent may (but shall have no duty to do so) make such payment or
perform or comply with such agreement, and the amount of such payment
and the amount of all expenses of the Lessor (including Fees and
Expenses) incurred in connection with such payment or the performance
or compliance with such agreement, as the case may be, together with
interest thereon at the Overdue Rate, shall be deemed Supplemental Ren
payable by the Lessee Parties upon demand. This Section 17.1 is not,
however, intended in any way (a) as between the Owner Participant and
the Lessor, on the one hand, and the Indenture Trustee and the Lenders
on the other hand, to expand or otherwise vary the cure rights of the
Owner Participant and the Lessor as set forth in Section 4.03 of the
Indenture, or the limitations on the exercise thereof therein set fort
or (b) as between the Lessor Parties, on the one hand, and Lucent, on
the other hand, to expand or otherwise vary the cure rights of Lucent
set forth in Sections 15.2 and 15.3 hereof, or the limitations on
exercise thereof herein set forth. Further, no such payment or
performance by the Lessor shall be deemed to waive any Lease Event of
Default or relieve the Lessee Parties of their respective obligations
hereunder.
SECTION XVII.2 Lessor is Lessee Parties' Agent and Attorney. Without
in any way limiting the obligations of the Lessee Parties or the Lesso
hereunder, the Lessee Parties hereby irrevocably appoint the Lessor as
their agent and attorney-in-fact hereunder, with full power of
substitution and authority solely to the extent necessary to permit the
Lessor, at any time at which the Lessee Parties are obligated to delive
any Item of Equipment to the Lessor, to demand and take such Item of
Equipment in the name and on behalf of the Lessee Parties from
whomsoever shall be in control thereof at that time.
ARTICLE XVIII
Renewal Options
SECTION XVIII.1 Renewal Notice.
(a) Not less than one hundred eighty (180) days before expiration
the Base Term (the "Renewal Notice Date"), the Lessee may deliver to t
Lessor a notice of the Lessee's election to renew this Lease in respec
of all, but not less than all, Items of Equipment for a single renewal
period of two (2) years (or such other period of time as the Lessor an
the Lessee shall mutually agree) (the "Renewal Term").
(b) The Lessee Parties shall pay Rent (the "Renewal Rent") during
the Renewal Term equal to the aggregate Fair Market Rental Value of su
Items of Equipment, determined as set forth in Section 18.2, but not
less than (on an annual basis) 50% of average annual Basic Rent during
the Base Term for such Items of Equipment.
(c) In the event the Lessee elects to renew this Lease,
the Renewal Term for the Equipment will commence on the day
immediately following the expiration of the Base Term and continue unti
the end of the Renewal Term.
(d) The notice of the Lessee to renew shall be
irrevocable and the option to renew this Lease shall expire if the Less
does not deliver a renewal notice by the Renewal Notice Date.
(e) Notwithstanding the foregoing, the Lessee shall have
no right to renew this Lease if (i) any Lease Event of Default, Incipie
Termination Event or Termination Event exists on the Renewal Notice
Date or the commencement of such Renewal Term or (ii) the Lessee has
already given irrevocable notice pursuant to Article XI or XIX to purch
such Items of Equipment.
SECTION XVIII.2 Lease Supplement; Renewal Rent. At the end
of the expiration of the Base Term for the Equipment, if the Lessee sha
have elected to renew this Lease with regard to the Equipment, the Less
and the Lessor shall execute a Lease Supplement with the applicable
Schedule of Equipment specifying the Renewal Rent and Casualty Values
with respect to each Item; provided, however, that the Lessee shall be
obligated to pay Renewal Rent at the Fair Market Rental Value (but not
less than (an annual basis) 50% of the average annual amount of Basic R
during the Base Term for each such Item of Equipment) for the Renewal
Term or, if such Fair Market Rental Value has not yet been established,
the rate in effect immediately prior to the commencement of the Renewal
Term even if a Lease Supplement is not executed. Casualty Values for
each Item of Equipment during the Renewal Term shall be equal to the
greater of the Casualty Value and the Fair Market Sales Value for each
such Item on the last day of the Base Term.
SECTION XVIII.3 Determination of Fair Market Rental Value. The Fair
Market Rental Value and Fair Market Sales Value for each Item of
Equipment during such Renewal Term, shall be mutually agreed by the
Lessor and the Lessee or, failing such agreement, determined by the
Appraisal Procedure, in either case determined at least sixty (60)
Business Days prior to commencement of such Renewal Term. Renewal Ren
shall be payable in semi-annual installments in arrears. All other
terms of this Lease and the other Operative Documents shall continue i
full force and effect during each such Renewal Term in accordance with
the provisions hereof and thereof.
ARTICLE XIX
Purchase Options
SECTION XIX.1 Purchase Notice.
(a) Not more than three hundred sixty (360) days nor
less than one hundred eighty (180) days before expiration of the Lease
Term (the "Purchase Notice Date"), the Lessee may deliver to the Lessor
a notice of the Lessee's election to purchase all, but not less than al
Items of Equipment at a purchase price equal to the aggregate Fair Mark
Sales Value of such Items of Equipment, calculated as of the end of the
Lease Term.
(b) The notice of the Lessee to purchase all Items of
Equipment shall be irrevocable and the option to purchase shall expire
the Lessee does not deliver a purchase notice before the Purchase Notic
Date.
(c) Notwithstanding the foregoing, the Lessee shall have
no right to purchase the Equipment if (i) any Lease Event of Default,
Incipient Termination Event or Termination Event exists on the Purchase
Notice Date or any Lease Event of Default, Incipient Termination Event
Termination Event arising under Section 15.1(a) hereof exists on the
purchase date or (ii) the Lessee has already given irrevocable notice
pursuant to Article XVIII to renew this Lease.
SECTION XIX.2 Transfer of Item. At the expiration of the Lease Term,
if the Lessee shall have elected to purchase the Items of Equipment
pursuant to Section 19.1 hereof and shall have paid all Rent then due a
payable hereunder, the Lessor shall transfer (without any representatio
recourse or warranty whatsoever except as to the ability and authority
the Lessor to conduct such transfer and convey title to such Items free
and clear of Lessor Liens) all such Items of Equipment to the Lessee
against payment by the Lessee of the purchase price in immediately
available funds and the Lessor shall execute and deliver such document
evidencing such transfer and take such further action as the Lessee
shall reasonably request.
SECTION XIX.3 Determination of Fair Market Sales Value. In the event
the Lessee elects to purchase the Equipment under this Article XIX, the
Fair Market Sales Value of each Item of Equipment shall be mutually
agreed to by the Lessee and the Lessor or, failing such agreement,
determined in accordance with the Appraisal Procedure, in either case
determined at least sixty (60) Business Days prior to the end of the
Lease Term.
ARTICLE XX
Further Assurances
SECTION XX.1 Further Action by Lessee. The Lessee Parties, at the
Co-Lessee's expense, shall promptly and duly execute and deliver to ea
of the Lessor Parties such documents and assurances and take such
further action as the Lessor (and, for so long as the Indenture shall b
in effect, the Indenture Trustee) may from time to time reasonably
request in order to carry out more effectively the intent and purpose
this Lease and the other Operative Documents and to establish and
protect the rights and remedies created or intended to be created in
favor of the Lessor hereunder and thereunder, to establish, perfect an
maintain the right, title and interest of the Lessor in and to the Ite
of Equipment and the Lien and security interest in the Trust Indenture
Estate provided for in the Indenture, subject to no Lien other than
Permitted Liens, including, if reasonably requested by any of the Less
Parties, the recording or filing of counterparts or appropriate
memoranda hereof, or of such financing statements or other documents
with respect to the Equipment and the Lessor agrees to execute and
deliver promptly such of the foregoing financing statements or other
documents as may require execution by the Lessor. The Lessee Parties
agree to cause the timely execution, delivery and filing of continuatio
statements as to the financing statements theretofore filed so as to
preserve the security interest in the Trust Indenture Estate. To the
extent permitted by Applicable Law, the Lessee Parties hereby authoriz
any such financing statements to be filed without the necessity of the
signature of the Lessee Parties or copies of this Lease to be filed in
lieu of any such financing statements, without the necessity of notice
to the Lessee Parties.
SECTION XX.2 Notice of Lease Event of Default and Termination Event.
Promptly after learning of the occurrence or existence of any Lease
Event of Default, Incipient Termination Event or Termination Event, th
Lessee Parties shall so notify the Lessor and, for so long as the
Indenture shall be in effect, the Indenture Trustee and set forth in
reasonable detail the circumstances surrounding such Lease Event of
Default, Incipient Termination Event or Termination Event and shall
specify what actions the Lessee Parties have taken or intend to take to
cure such Lease Event of Default, Incipient Termination Event or
Termination Event.
SECTION XX.3 Information Regarding Items. The Lessee Parties shall
promptly furnish the Lessor and, for so long as the Indenture shall be
in effect, the Indenture Trustee information at such times and in such
format as is regularly produced by the Lessee concerning the condition,
maintenance and use of the Items of Equipment as the Lessor or the
Indenture Trustee may reasonably request.
ARTICLE XXI
Trust Indenture Estate as Security for Lessor's Obligations to Lenders
SECTION XXI.1 Assignment to Indenture Trustee. In order to secure th
indebtedness evidenced by the Notes issued or to be issued by the Less
pursuant to the Indenture, the Indenture, among other things, provides
for the assignment (to the extent provided therein) by the Lessor to t
Indenture Trustee of its right, title and interest to the Equipment, th
Guaranty and this Lease and for the creation of a Lien and security
interest in favor of the Indenture Trustee for the benefit of the
holders of the Notes in and to the Trust Indenture Estate as described
in the Granting Clauses of the Indenture. The Lessee Parties hereby (
acknowledge and consent to such assignment pursuant to the terms of th
Indenture and (b) agree to pay directly to the Indenture Trustee all
amounts of Rent (other than Excluded Payments) due to the Lessor
hereunder or under any other Operative Document that shall be required
to be paid to the Indenture Trustee pursuant to the Indenture or any
other Operative Document. Any payment by the Lessee Parties to the
Indenture Trustee, as aforesaid, of any amount payable hereunder shall
constitute payment of such amount for all purposes of this Lease. The
Lessee Parties agree that the right of the Indenture Trustee to receiv
such payments hereunder shall not be subject to any defense,
counterclaim, set-off or other right or defense or claim which the
Lessee Parties may be able to assert against the Lessor or any other
Person in an action brought on this Lease. Without limiting the
generality of the foregoing, unless and until the Lessee Parties shall
have received written notice from the Indenture Trustee that the
Indenture has been discharged, subject to the provisions of Section 6.
of the Indenture, the Lessee Parties hereby agree that the Indenture
Trustee shall have the right to exercise the rights of the Lessor unde
this Lease to give consents, approvals, waivers, notices or the like,
make elections, demands or the like and to take any other discretionar
action under this Lease as though named as the Lessor herein and, exce
as specifically permitted by said Section 6.10, no amendment or
modification of, or waiver by or consent of the Lessor in respect of,
any of the provisions of this Lease shall be effective unless the
Indenture Trustee shall have joined in such amendment, modification,
waiver or consent or shall have given its prior written consent theret
Notwithstanding such assignment of this Lease and the Guaranty, the
obligations of the Lessor to the Lessee Parties to perform the terms an
conditions of this Lease in accordance with the terms hereof shall rema
in full force and effect.
ARTICLE XXII
Insurance
SECTION XXII.1 Insurance.
(a) Obligation to Insure. The Lessee Parties shall at all times
carry and maintain, at their expense and with insurers rated A- or
better by A.M. Best, (i) "all-risk" property insurance on the Equipment
including, without limitation, flood, earthquake, windstorm and boiler
and machinery perils in a minimum amount equal to the Casualty Value
thereof, (ii) commercial general liability insurance including, withou
limitation, broad form property damage, bodily injury, premise and
operations, blanket contractual for oral and written contracts, sudden
and accidental pollution caused by a hostile fire and products/complet
operations in accordance with industry standards, and (iii) in the cas
of the Co-Lessee, business interruption insurance in accordance with
industry standards.
(b) Terms of Insurance Policies. Any insurance policies carried i
accordance with Section 22.1(a) hereof covering the Equipment, and any
policies taken out in substitution or replacement for any such policie
as applicable, (i) shall name the Indenture Trustee as sole loss payee
in the case of property insurance, (ii) shall name the Lessor Parties a
additional insureds (the AAdditional Insureds@) in the case of liabilit
insurance, (iii) may provide for self-insurance to the extent permitted
in Section 22.1(c) hereof, (iv) shall be primary without any right of
contribution from any other insurance which is carried by or may be
available to protect the Additional Insureds, (v) shall expressly provi
that with respect to liability policies all of the provisions thereof,
except the limits of insurer=s total liability set forth in each such
policy, shall operate in the same manner as if a separate policy cover
each insured, (vi) shall provide that in respect of the Additional
Insureds= interest in such policies the insurance shall not be
invalidated by any action or inaction of the Lessee Parties and shall
insure the respective interests of the Additional Insureds regardless
any breach or violation by the Lessee Parties of any warranty,
declaration or condition contained in such policy, (vii) shall provide
that the Additional Insureds are not liable for any insurance premiums
(viii) shall provide that if the insurers cancel such insurance for an
reason whatsoever, or if any material change is made in such insurance
which adversely affects the interests of any Additional Insured (or the
successors and assigns), or if such insurance lapses, such cancellatio
change or lapse shall not be effective as to the Additional Insureds (
their successors and assigns) for thirty (30) days after receipt by th
Additional Insureds (or their successor and assigns) of written notice
by such insurers of such cancellation, change or lapse, (ix) shall
require the insurers to waive any rights of subrogation, set-off or
counterclaim against any Additional Insured, and (x) shall otherwise
contain terms and conditions, including without limitation, the paymen
of deductible in connection with any such insurance, that are reasonab
satisfactory to the Lessor Parties.
(c) Self-Insurance by Lessee. The Lessee may self-insure under a
program applicable to all equipment operated by the Lessee at the
Orlando Facility, but in no case shall the self-insurance with respect
to the Equipment exceed $1,500,000 for any twelve-month policy year.
(d) Reports, Notices, Etc. The Lessee Parties shall provide to th
Lessor and the Indenture Trustee on the First Funding Date and
thereafter annually and on or before the expiration or any modification
of the Lessee Parties' relevant insurance policies (i) no-default
insurance certificates and (ii) a signed report of an insurance broker
reasonably acceptable in form and substance to the Lessor and the
Indenture Trustee, stating in reasonable detail the types of coverage
and limits carried and maintained on the Equipment and certifying that
such insurance complies with the terms and conditions of this Lease.
The Lessee Parties will cause such insurance broker to advise the Less
Parties in writing promptly of any default in the payment of any premi
and of any other act or omission on the part of any Lessee Party or an
Affiliate thereof of which it has knowledge and which might invalidate
cause cancellation of or render unenforceable all or any part of any
insurance carried by any Lessee Party with respect to the Equipment or
any Item thereof.
ARTICLE XXIII
Owner Trustee; Owner Participant
SECTION XXIII.1 Successor Trustee; Co-Trustee. In the case of the
appointment of any successor trustee pursuant to the terms of the Trust
Agreement, such successor trustee (in its capacity as Owner Trustee on
behalf of the Owner Trust) shall, upon written notice by such successor
trustee to the Lessee Parties, succeed to all the rights, duties, power
obligations and title of the Lessor hereunder and under the other
Operative Documents and shall be deemed to be the Lessor and the legal
owner (in each case, on behalf of the Owner Trust) of the Equipment fo
all purposes hereof and each reference herein and in the Operative
Documents to the ALessor@ shall mean any such successor trustee. The
Lessor or any successor trustee from time to time serving as the Lesso
hereunder may from time to time appoint one or more co-trustees or
separate trustees pursuant to the terms of the Trust Agreement to
exercise or hold any of or all the rights, powers and title of the
Lessor hereunder. No such appointment of any successor trustee,
co-trustee or separate trustee shall require any consent or approval b
the Lessee Parties or shall in any way alter the terms of this Lease o
the obligations of the Lessee Parties or the Lessor hereunder. The
appointment of one successor trustee, co-trustee or separate trustee
shall not exhaust the right to appoint further successor trustees,
co-trustees and separate trustees pursuant to the Trust Agreement, but
such right may be exercised repeatedly so long as this Lease may be in
effect.
ARTICLE XXIV
Limitation of Liability to the Lessee, ATOR or Lucent
SECTION XXIV.1 Limitations of Liability.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE,
ANY OTHER OPERATIVE DOCUMENT OR APPLICABLE LAW,
NEITHER THE LESSOR NOR THE INDENTURE TRUSTEE NOR
ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS, SHALL
HAVE ANY CLAIM, REMEDY OR RIGHT TO PROCEED AGAINST
THE LESSEE, LUCENT, ATOR OR ANY OF THEIR RESPECTIVE
OFFICERS, EMPLOYEES OR DIRECTORS, WHETHER BY VIRTUE
OF ANY CONSTITUTIONAL PROVISION, STATUTE OR RULE OF
LAW OR BY ENFORCEMENT OF ANY PENALTY OR
ASSESSMENT OR OTHERWISE, FOR THE PAYMENT OF ANY
SUM OWING ON ACCOUNT OF THE OBLIGATIONS SET FORTH
HEREIN, INCLUDING ANY DEFICIENCY, OR FOR THE PAYMENT
OF ANY LIABILITY RESULTING FROM THE BREACH OF ANY
REPRESENTATION, AGREEMENT OR WARRANTY OF ANY
NATURE WHATSOEVER IN THIS LEASE OR ANY OTHER
OPERATIVE DOCUMENTS TO WHICH THE LESSEE IS A PARTY
FROM ANY SOURCE OTHER THAN THE EQUIPMENT AND
DIRECTLY-RELATED ASSETS. EACH OF THE LESSOR AND THE
INDENTURE TRUSTEE HEREBY WAIVES AND RELEASES ANY
PERSONAL LIABILITY OF THE LESSEE, LUCENT, ATOR AND
THEIR RESPECTIVE OFFICERS, EMPLOYEES AND DIRECTORS
FOR AND ON ACCOUNT OF SUCH LIABILITY, AND THE LESSOR
AGREES TO LOOK SOLELY TO THE EQUIPMENT AND THE
DIRECTLY-RELATED ASSETS FOR THE SATISFACTION OF SUCH
LIABILITY; PROVIDED, NOTHING HEREIN CONTAINED SHALL
LIMIT, RESTRICT OR IMPAIR THE RIGHTS OF THE LESSOR OR
THE INDENTURE TRUSTEE, AS THE CASE MAY BE, (a) TO
EXERCISE REMEDIES UPON A LEASE EVENT OF DEFAULT AS
PROVIDED FOR IN THIS LEASE, (b) TO BRING SUIT AND OBTAIN
A JUDGMENT AGAINST THE LESSEE, ATOR, LUCENT OR ANY
OF THEIR RESPECTIVE OFFICERS, EMPLOYEES OR DIRECTORS
(PROVIDED EXECUTION THEREOF SHALL BE LIMITED TO THE
EQUIPMENT AND DIRECTLY-RELATED ASSETS UNLESS
LESSEE IS UNWILLING OR UNABLE, EXCEPT BY REASON OF AN
AUTOMATIC STAY UNDER THE BANKRUPTCY CODE OR ANY
COMPARABLE PROVISION OF APPLICABLE LAW, TO
SPECIFICALLY PERFORM LESSEE'S OBLIGATIONS TO RETURN
THE EQUIPMENT OR ANY ITEM THEREOF WHEN REQUIRED, IN
WHICH EVENT LESSEE SHALL BE LIABLE FOR THE FAIR
MARKET SALES VALUE THEREOF), (c) TO EXERCISE ALL
RIGHTS AND REMEDIES PROVIDED UNDER THIS LEASE WITH
RESPECT TO THE EQUIPMENT AND DIRECTLY-RELATED
ASSETS OR OTHERWISE REALIZE UPON THE EQUIPMENT AND
DIRECTLY-RELATED ASSETS, OR (d) TO LIMIT OR OTHERWISE
AFFECT ANY LIABILITIES OF LUCENT, ATOR AND THEIR
RESPECTIVE AFFILIATES FOR AMOUNTS PAYABLE IN
CONNECTION WITH SELF INSURANCE PROVIDED BY SUCH
ENTITIES. IT IS FURTHER UNDERSTOOD THAT NOTHING
HEREIN CONTAINED SHALL LIMIT, RESTRICT OR IMPAIR THE
RIGHTS OF THE OWNER TRUSTEE OR THE INDENTURE
TRUSTEE, AS THE CASE MAY BE, TO ENFORCE THE
OBLIGATIONS OF THE CO-LESSEE OR CIROR UNDER THIS
LEASE, THE GUARANTY AND THE OTHER OPERATIVE
DOCUMENTS TO WHICH IT IS A PARTY.
ARTICLE XXV
Confidentiality
SECTION XXV.1 Confidentiality. The Lessor Parties agree to take norm
and reasonable precautions in accordance with their normal procedures
and exercise due care to maintain the confidentiality of all written
information relating to the Lessee Parties and their respective
Affiliates, which has been identified in writing as "confidential" by t
Lessee Parties, and neither the Lessor Parties nor any of their
Affiliates shall use any such information for any purpose or in any
manner other than pursuant to the terms contemplated by this Lease;
except to the extent such information (a) was or becomes generally
available to the public other than as a result of a disclosure by the
Lessor Parties, or (b) was or becomes available on a non-confidential
basis from a source other than the Lessee Parties; provided, that such
source is not bound by a confidentiality agreement with either of the
Lessee Parties known to the Lessor Parties; and provided, further, tha
any Lessor Party may disclose such information (i) at the request or
pursuant to any requirement of any Governmental Authority to which suc
Lessor Party is subject or in connection with an examination of such
Lessor Party by any such Governmental Authority including, without
limitation, the National Association of Insurance Commissioners and an
other industry regulators, (ii) pursuant to subpoena or other court
process, (iii) when required to do so in accordance with the provision
of any Applicable Law, (iv) to each Lessor Party's independent auditor
and other professional advisors and (v) to any Person and in any
proceeding necessary in any Lessor Party's judgment to protect such
Lessor Party's interests in connection with any claim or dispute
involving the Lessor Party. Notwithstanding the foregoing, the Lesse
Parties authorize the Lessor Parties to disclose to any participant or
assignee or purchaser of Equipment (each, a "Transferee"), to any
prospective Transferee and to any Affiliate, such financial and other
information in the Lessor Parties' possession concerning the Lessee
Parties or their respective Affiliates which has been delivered to the
Lessor Parties pursuant to this Lease or the Participation Agreement;
provided, that unless otherwise agreed by the Lessee Parties, the
Transferee agrees in writing to such Lessor Parties to keep such
information confidential to the same extent required of the Lessor
Parties hereunder.
ARTICLE XXVI
Miscellaneous
SECTION XXVI.1 Documentary Conventions. This Lease shall
be governed by, and construed in accordance with, all the Documentary
Conventions.
SECTION XXVI.2 Effective Upon Delivery. This Lease shall take
effect upon delivery hereof.
SECTION XXVI.3 Intent to Treat as a Lease. This Lease
constitutes an agreement of lease as to the Equipment, and nothing here
shall be construed as conveying to the Lessee Parties any right, title
interest in or to the Equipment except as lessee.
SECTION XXVI.4 Third Party Beneficiary. Lucent shall be
deemed a third party beneficiary of this Lease for purposes of enabling
Lucent to exercise its rights under Sections 15.2, 15.3, 15.4 and 15.5
hereof.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, intending to be legally bound, the
parties hereto have each caused this Lease Agreement to be duly execute
as of the date first above written.
FIRST SECURITY BANK,
NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Owner Trustee, on behalf
of THE ORLANDO
SEMICONDUCTOR
EQUIPMENT OWNER
TRUST, as LESSOR
By:
Name:
Title:
CIRENT
SEMICONDUCTOR, G.P.,
as LESSEE
By:
Name:
Title:
By:
Name:
Title:
CIRRUS LOGIC, INC., as
CO-LESSEE
By:
Name:
Title:
Receipt of this original counterpart of the foregoing Lease
Agreement is hereby acknowledged on this 1st day of November, 1996. /
WILMINGTON TRUST
COMPANY, in its capacity as
Indenture Trustee
By:
Name:
Title:
Schedule A to Lease
FORM OF
LEASE SUPPLEMENT
This Lease Supplement No. (this "Lease Supplement"), dat
_________, 199_ (such date being the AEffective Date@ of this Lease
Supplement), is a part of the Lease Agreement, dated as of October 31,
1996 (the ALease@), by and among FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity, except as otherwise
specified herein, but solely in its capacity as Owner Trustee for THE
ORLANDO SEMICONDUCTOR EQUIPMENT OWNER TRUST under a Trust Agreement
dated as of October 31, 1996, for the benefit of the Owner Participant
named therein, as Lessor, CIRENT SEMICONDUCTOR, G.P., a joint venture
formed as a New York general partnership owned by ATOR Corp. ("ATOR"),
New York corporation and subsidiary of Lucent Technologies Inc.
("Lucent"), and Ciror, Inc. ("CIROR"), a California corporation and
wholly-owned subsidiary of Cirrus Logic, Inc., as Lessee, and CIRRUS
LOGIC, INC., a California corporation, as Co-Lessee (the Lessee and th
Co-Lessee collectively referred to hereinafter as the "Lessee Parties"
and is incorporated therein by this reference. Capitalized terms used
in this Lease Supplement shall have the meanings given to them in the
Lease, whether directly or indirectly by reference, unless otherwise
defined herein.
1. Description and Lessor's Cost of Items.
The Items of Equipment subject to this Lease Supplement are
described on Schedule I hereto (the "Related Schedule of Equipment").
The aggregate Lessor's Cost for the Items of Equipment described on the
Related Schedule of Equipment is $___________.
2. Deliveries; Obligations.
The Lessee Parties confirm that on the Effective Date hereof (a) each
Item of Equipment described on the Related Schedule of Equipment has
been delivered to the Lessee and such Item of Equipment has become
subject to the Lease; and (b) the Lessee Parties have become obligated
to pay Rent on each successive Rent Payment Date to the Lessor and
perform each other obligation with respect to the Items of Equipment a
provided in the Lease, this Lease Supplement and each Operative Docume
3. Rent.
3.1 With respect to each Item of Equipment described on the Relate
Schedule of Equipment, the Rent Payment Dates shall be each ______ and
______ during the [Base] [Renewal] Term, commencing on
___. The Lessee [Parties] shall pay to the Lessor ___ consecutive
installments of [Basic] [Renewal] Rent therefor in the manner prescrib
by Section 3.4 of the Lease.
3.2 The [Base] [Renewal] Term for the Schedule of
Equipment is ____months and shall commence on the first day of such
Term and expire on _________, 199__.
4. Representations and Warranties. The Lessee and the Co-
Lessee hereby make the representations and warranties set forth in
Sections 4.1 and 4.2, respectively, of the Participation Agreement.
5. Documentary Conventions. This Lease Supplement shall be
governed by, and construed in accordance with, all the Documentary
Conventions.
6. Ratification. Except as expressly supplemented hereby, the
Lease, the other Operative Documents and all other documents,
instruments and agreements related thereto, including all Lease
Supplements thereto made as of the date hereof, are hereby ratified and
confirmed in all respects and shall continue in full force and effect.
The Lease (as supplemented) and this Lease Supplement shall be read an
construed as a single document. All referenced to the Lease shall
hereafter include this Lease Supplement.
7. Effective Upon Delivery. This Lease Supplement shall take
effect upon delivery hereof.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
This Lease Supplement is hereby duly executed by the parties
hereto as of the date first written above.
FIRST SECURITY BANK,
NATIONAL
ASSOCIATION, in its
capacity as Owner Trustee,
on behalf of THE
ORLANDO
SEMICONDUCTOR
EQUIPMENT OWNER
TRUST, as LESSOR
By: /s/ Dain W. Brown
Name: Dain W. Brown
Title: Assistant Vice President
CIRENT
SEMICONDUCTOR, G.P., as LESSEE
By: /s/ Paul J. Mostek
Name: Paul J. Mostek
Title: Member, Board of Governors
By: /s/ Harold A. Hoeschen, Jr.
Name: Harold A. Hoeschen, Jr.
Title: Alternate Member, Board of Governors
CIRRUS LOGIC, INC., as
CO-LESSEE
By: /s/ Thomas F. Kelly
Name: Thomas F. Kelly
Title: Executive Vice President, Finance and Administration
and Chief Financial Officer and Treasurer
Schedule B to Lease
FORM OF
SCHEDULE OF EQUIPMENT
Shall include the following information with respect to the Items of
Equipment to be listed hereon:
Serial Number
Type
Part Number
Suffix
Lessor's Cost of each Item
Holdback Amount (per Item)
Schedule C to Lease
Basic Rent
Schedule D to Lease
Casualty Values and Termination Values
TABLE OF CONTENTS
Page
ARTICLE I Definitions and Usage 1
SECTION 1.1 Definitions and Usage 1
ARTICLE II Equipment Leases 1
SECTION 2.1 Lease of Equipment; Lease Supplements 1
SECTION 2.2 Lease Term 1
ARTICLE III Rent 2
SECTION 3.1 Basic Rent. 2
SECTION 3.2 Supplemental Rent 2
SECTION 3.3 Minimum Amount of Basic Rent Payments, Etc. 2
SECTION 3.4 Method of Payment 2
SECTION 3.5 Late Payment 3
SECTION 3.6 Net Lease; No Set-off, Counterclaims, etc. 3
SECTION 3.7 Obligations of Lessee Parties 4
SECTION 3.8 Adjustments to Basic Rent, Casualty Value,
Termination Value and
EBO Price 5
ARTICLE IV Representations, Warranties and Agreements as to
Equipment 5
SECTION 4.1 Disclaimer of Warranties. 5
SECTION 4.2 Lessee To Exercise Certain Rights 6
ARTICLE V Liens; Quiet Enjoyment 6
SECTION 5.1 Liens. 6
SECTION 5.2 Quiet Enjoyment 6
SECTION 5.3 Personal Property. 7
SECTION 5.4 Landlord's Waiver 7
ARTICLE VI Operation; Maintenance 7
SECTION 6.1 Operation and Maintenance. 7
SECTION 6.2 Replacement of Parts 8
SECTION 6.3 Relocation. 9
SECTION 6.4 Modification. 9
SECTION 6.5 Lessee's Use of Equipment 11
ARTICLE VII [Intentionally Omitted] 11
ARTICLE VIII Obsolescence Termination 11
SECTION 8.1 Item Obsolescence 11
SECTION 8.2 Retention by Lessor 12
SECTION 8.3 Bids for Terminated Items 13
SECTION 8.4 Conditions of Termination; Effect of Termination
SECTION 8.5 Replacement 15
ARTICLE IX Return of Equipment 15
SECTION 9.1 Notice of Return 15
SECTION 9.2 Return of Equipment 15
SECTION 9.3 Lessor Assignment, Lease or Sale of Returned
Item. 17
SECTION 9.4 Governmental Approvals 17
SECTION 9.5 Additional Parts 17
ARTICLE X Loss, Destruction, Condemnation, Damage, etc. 17
SECTION 10.1 Replacement; Payment of Casualty Value. 17
SECTION 10.2 Application of Payments Upon an Event of Loss. 20
SECTION 10.3 Seizure, Requisition, Application of Payments Not
Relating to an
Event of Loss. 21
SECTION 10.4 Applications During Lease Event of Default,
Incipient Termination
Event or Termination Event 21
SECTION 10.5 [Intentionally Omitted] 22
SECTION 10.6 Application of Article VI 22
ARTICLE XI Early Buy-Out Option 22
SECTION 11.1 Early Buy-Out. 22
ARTICLE XII [Intentionally Omitted] 23
ARTICLE XIII Assignment and Sublease 23
SECTION 13.1 Lessee Assignments. 23
SECTION 13.2 Lessor Assignments. 23
ARTICLE XIV Inspection; Markings 23
SECTION 14.1 Rights to Information. 23
SECTION 14.2 Markings 24
ARTICLE XV Termination Events; Lucent Rights; Lease Event of Default
SECTION 15.1 Termination Events. 25
SECTION 15.2 Certain Rights of Lucent 26
SECTION 15.3 Additional Rights of Lucent 28
SECTION 15.4 Restrictions on Exercise of Rights 29
SECTION 15.5 Lease Event of Default 29
ARTICLE XVI Remedies 30
SECTION 16.1 Remedies. 30
SECTION 16.2 Lessor Rights. 33
SECTION 16.3 Exercise of Other Rights or Remedies. 33
ARTICLE XVII Right to Perform for Lessee 33
SECTION 17.1 Right To Perform. 33
SECTION 17.2 Lessor is Lessee Parties' Agent and Attorney 34
ARTICLE XVIII Renewal Options 34
SECTION 18.1 Renewal Notice. 34
SECTION 18.2 Lease Supplement; Renewal Rent 35
SECTION 18.3 Determination of Fair Market Rental Value 35
ARTICLE XIX Purchase Options 35
SECTION 19.1 Purchase Notice 35
SECTION 19.2 Transfer of Item. 36
SECTION 19.3 Determination of Fair Market Sales Value 36
ARTICLE XX Further Assurances 36
SECTION 20.1 Further Action by Lessee 36
SECTION 20.2 Notice of Lease Event of Default and Termination
Event 36
SECTION 20.3 Information Regarding Items. 37
ARTICLE XXI Trust Indenture Estate as Security for Lessor=s
Obligations to Lenders 37
SECTION 21.1 Assignment to Indenture Trustee. 37
ARTICLE XXII Insurance 38
SECTION 22.1 Insurance 38
ARTICLE XXIII Owner Trustee; Owner Participant 39
SECTION 23.1 Successor Trustee; Co-Trustee 39
ARTICLE XXIV Limitation of Liability to the Lessee, ATOR or Lucent
SECTION 24.1 Limitations of Liability 39
ARTICLE XXV Confidentiality 41
SECTION 25.1 Confidentiality. 41
ARTICLE XXVI Miscellaneous 41
SECTION 26.1 Documentary Conventions. 41
SECTION 26.2 Effective Upon Delivery. 41
SECTION 26.3 Intent to Treat as a Lease. 41
List of Schedules
Schedule A: Form of Lease Supplement
Schedule B: Form of Schedule of Equipment
Schedule C: Basic Rent
Schedule D: Casualty Values and Termination Values
/ This language is to be in the original counterpart only.
1/ This language is to be in the original counterpart only.
<PAGE>
EXECUTION COPY
_______________________________________________________________________
_______________________________________________________________________
GUARANTY AGREEMENT
Dated as of October 31, 1996
by
CIRRUS LOGIC, INC.,
as Guarantor
_______________________________________________________________________
_______________________________________________________________________
GUARANTY AGREEMENT
This GUARANTY AGREEMENT, dated as of October
31, 1996 is by CIRRUS LOGIC, INC., a California corporation (the
"Guarantor").
RECITALS
WHEREAS, the Guarantor is the beneficial and record
owner of 100% of the issued and outstanding capital stock of Ciror, Inc
a California corporation ("CIROR");
WHEREAS, CIROR is the beneficial and record owner of
a partnership interest in Cirent Semiconductor, G.P., a New York genera
partnership ("Lessee");
WHEREAS, concurrently with the execution and delivery
hereof, the Lessee and the Guarantor, as Co-Lessee, are entering into a
Lease Agreement dated as of October 31, 1996 (as amended, modified or
supplemented from time to time, the "Lease") with First Security Bank,
National Association, a national banking association, as Owner Trustee
for The Orlando Semiconductor Equipment Owner Trust (the "Lessor")
pursuant to the Trust Agreement, dated as of October 31, 1996 (as
amended, modified or supplemented from time to time, the "Trust
Agreement"), by and among First Security Bank, National Association
and Ameritech Credit Corporation, a Delaware corporation, as Owner
Participant (the "Owner Participant");
WHEREAS, the Lease is being entered into pursuant to
the Participation Agreement dated as of October 31, 1996 (as amended,
modified or supplemented from time to time, the "Participation
Agreement") by and among the Lessee, the Guarantor, as Co-Lessee,
CIROR, the Owner Participant, the Owner Trustee, the Persons
designated as Lenders on Schedule I to the Participation Agreement
(collectively, the "Lenders") and Wilmington Trust Company, a Delaware
banking corporation, as trustee (the "Indenture Trustee") under the Tru
Indenture and Security Agreement dated as of October 31, 1996 (as
amended, modified or supplemented from time to time, the "Indenture")
between the Owner Trustee and the Indenture Trustee;
WHEREAS, it is a condition to the consummation of the
transactions contemplated by the Participation Agreement that the
Guarantor guarantee the obligations of the Lessee under the Lease and
the Participation Agreement and the other Operative Documents, such
guarantee to be in favor of the Owner Trustee, the Owner Participant, t
Indenture Trustee and the Lenders and each such party's respective
successors and permitted assigns (each of such Persons (except the
Lessee and its successors and assigns) being herein referred to as a
"Guaranteed Party" and all such Persons being herein collectively refer
to as the "Guaranteed Parties");
WHEREAS, capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such terms
Appendix A to the Participation Agreement;
NOW THEREFORE, in order to induce the Guaranteed Parties to participat
in the transactions contemplated by the Participation Agreement and th
other Operative Documents and in consideration of the premises, and
other good and valuable consideration, receipt and adequacy of which a
hereby acknowledged, the Guarantor hereby
agrees as follows:
Section 1. Guaranty of Obligations.
(a) Guaranty. The Guarantor hereby acknowledges that it is fully
aware of the terms and conditions, and has received a copy of, the
Lease (including the Lease Supplement dated the First Funding Date),
Participation Agreement and the other Operative Documents to which
Lessee has become a party (as the same may be amended, modified or
supplemented from time to time, collectively, the "Guaranteed
Documents") and the transactions contemplated thereby, and hereby
absolutely, irrevocably and unconditionally guarantees, as primary
obligor and not as surety, without set-off or deduction, to the
Guaranteed Party or Guaranteed Parties entitled thereto under the term
of the Operative Documents (i) the due punctual and full payment by th
Lessee of all payment obligations of the Lessee under the Guaranteed
Documents, including, without limitation, all Basic Rent, Renewal Rent
Supplemental Rent, Casualty Value and Termination Value when due,
whether by acceleration or otherwise (including without limitation, wh
due by virtue of a Termination Event or a Lease Event of Default) , i
accordance with the terms thereof; and (ii) the performance of each and
every other covenant, agreement and obligation to be performed or
observed by the Lessee under the Guaranteed Documents (collectively, t
"Obligations").
The Guarantor hereby agrees that, in the event that the
Lessee fails to pay any Obligation for any reason on the date on which
such Obligation is required to be paid, the Guarantor will pay or cause
be paid such Obligation at the time specified in the Guaranteed
Documents, whether by acceleration or otherwise, and that in the case o
any extension of time of payment or renewal of any of the Obligations,
the same will be promptly paid in full when due (whether at extended
maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal (it being the intention hereof that Guarantor
shall promptly pay to each Guaranteed Party, as a payment obligation
directly due from Guarantor to such Guaranteed Party, amounts equal to
all amounts due to such Guaranteed Party which Lessee shall fail to
faithfully and properly pay when due under the Guaranteed Documents,
whether by acceleration or otherwise).
The Guarantor hereby agrees that, in the event that the
Lessee fails to perform any other Obligation for any reason on the date
which such Obligation is required to be performed, the Guarantor will
cause such Obligation to be performed when due to be performed by the
Lessee under the Guaranteed Documents, and that in the case of any
extension of time of performance or renewal of any of the Obligations,
the same will be promptly performed on the date performance is due
(whether by extension or otherwise) in accordance with the terms of suc
extension or renewal.
(b) Guaranty Consent The Guarantor hereby consents and agre
that any Guaranteed Party may, with or without any further notice to o
consent from the Guarantor and without in any manner affecting the
liability of the Guarantor hereunder, and upon such terms and conditio
as such Guaranteed Party may deem advisable: (a) modify, change,
compromise, release or extend the duration of the time for the
performance or payment of, any indebtedness, liability or obligation o
the Lessee under and pursuant to the terms of the Operative Documents
of any other Person secondarily or otherwise liable for any
indebtedness, liability or obligations of the Lessee under and pursuant
to the terms of the Operative Documents, or waive any default with
respect thereto; (b) sell, release, surrender, modify, impair, exchang
or substitute any and all property, of any nature and from whomsoever
received, held by, or on behalf of, any Guaranteed Party as direct or
indirect security for the payment or performance of any indebtedness,
liability or obligation of the Lessee under the Operative Documents or
of any other Person secondarily or otherwise liable for any
indebtedness, liability or obligation of the Lessee under the Operativ
Documents; and (c) settle, adjust or compromise any claim against any
other Person secondarily or otherwise liable for any indebtedness,
liability or obligation of the Lessee under the Operative Documents.
The Guarantor hereby ratifies and confirms any such extension, renewal
change, sale, release, waiver, surrender, exchange, modification,
amendment, impairment, substitution, settlement, adjustment or
compromise and agrees that the same shall be binding upon it, and here
waives any and all defenses, counterclaims or offsets which it might o
could have reason thereof, it being understood that the Guarantor shal
at all times be bound by this Guaranty Agreement and remain liable
hereunder except as expressly provided herein.
(c) Absolute Guarantee. The obligations of the
Guarantor hereunder shall be absolute and unconditional, shall remain i
full force and effect until irrevocable payment, performance or observa
in full of all of the Obligations by each of the Lessee and the Guarant
and shall not in any manner be affected by reason of any action taken o
not taken by any Guaranteed Party or any other Person or of any lack of
prior enforcement or retention of any rights against the Lessee or the
Guarantor or any illegality, unenforceability or invalidity of the
Obligations or the Guaranteed Documents, any other guarantee or other
obligations, or any other agreement or instrument referred to herein or
therein, or any substitution, release or exchange of any other guarante
of or security for any of the Obligations, or any other circumstance or
condition (whether or not the Guarantor or the Lessee shall have any
knowledge or notice thereof), including without limitation:
(i) any termination, amendment or modification of, or
deletion from, or addition or supplement to, or other change in
any of the Guaranteed Documents, or any other instrument or
agreement applicable to any of the parties to such agreements, or
to the Equipment or any part thereof, or any assignment,
mortgage or transfer of any thereof, or of any interest therein, or
any leasing or subleasing of the Equipment, or any furnishing or
acceptance of additional security, or any release of any security,
for the obligations of the Lessee under the Guaranteed
Documents, the failure of any security or the failure of any Person
to establish or maintain the priority or perfection of any interest in
any collateral security or the failure to provide for any insurance
on the Equipment or any part thereof;
(ii) any failure, omission or delay on the part of the
Lessee or any other Person to conform to or comply with any
term of any Guaranteed Document;
(iii) any exercise or nonexercise of any right, remedy,
power or privilege under or in respect of any Guaranteed
Document or any obligation or liability contained therein;
(iv) except to the extent thereof, any waiver by any
Guaranteed Party, or their successors or assigns, of the
performance or observance by Lessee of any Obligation, or any
default under any Guaranteed Document, or the extension or
renewal of any Guaranteed Document or any change in the
provisions of any Guaranteed Document, or any extension of time
for payment of Rent or any other Obligation, or of the time for
performance of any other obligations, covenants or agreements
under or arising out of any Guaranteed Document, or the
extension or the renewal of any thereof;
(v) the exchange, surrender, substitution or
modification of any collateral security for any of the Obligations;
(vi) any failure, omission or delay on the part of any
Guaranteed Party, or their successors or assigns, to give
Guarantor notice of any default, Incipient Termination Event,
Termination Event or Lease Event of Default under any
Guaranteed Document or to enforce, assert or exercise any right,
power or remedy conferred on it in this Guaranty, or any such
failure, omission or delay on the part of any Guaranteed Party in
connection with any Guaranteed Document or any other action on
the part of a Guaranteed Party;
(vii) any voluntary or involuntary bankruptcy,
insolvency, reorganization, arrangement, readjustment assignment
for the benefit of creditors, composition, receivership,
conservatorship, custodianship, liquidation, marshalling of assets
and liabilities, liquidation, or similar proceedings with respect to
the Lessee, the Guarantor, any other Person or any of their
respective properties or creditors, or the disaffirmance with
respect to the Lessee of the Lease or any of the other Guaranteed
Documents or with respect to Guarantor of this Guaranty in any
such proceeding or any action taken by any trustee or receiver or
by any court in any such proceeding;
(viii) any limitation on the liability or obligations of the
Lessee or the Guarantor or any discharge, termination,
cancellation, frustration, irregularity, invalidity or unenforceability
in whole or in part, of any of the Guaranteed Documents;
(ix) any defect in the title, compliance with
specifications, condition, design, operation or fitness for use of, or
any damage to or loss or destruction of, the Equipment, or any
interruption or cessation in the use of the Equipment or any
portion thereof by the Lessee or any other Person for any reason
whatsoever (including without limitation any governmental or
military authority, or any act of God or of the public enemy)
regardless of the duration thereof (even though such duration
would otherwise constitute a frustration of the Lease), whether or
not resulting from accident and whether or not without fault on
the part of the Lessee or any other Person;
(x) any merger, consolidation or dissolution of the
Lessee or the Guarantor into or with any other Person, or any
sale, lease or transfer of any of the assets of the Lessee or the
Guarantor to any other Person;
(xi) any compromise, settlement, release, renewal,
extension, indulgence, change in or waiver or modification of any
Obligation, or any failure to mitigate damages, or any release or
discharge, by operation of law or otherwise, of the Lessee or any
other Person from the performance or observance of any
obligation, covenant or agreement contained in any Guaranteed
Document;
(xii) any transfer or assignment by the Lessee or any
Guaranteed Party, or their successors or assigns of its interest, or
any part thereof, in and to any Guaranteed Document or the
assignment or transfer of any rights relating to any Obligation
contained in any Guaranteed Document, including, without
limitation, the full or partial assignment of any of the Guaranteed
Documents;
(xiii) any defense (other than payment to the Person
entitled thereto), setoff, cross-claim or counterclaim which may at
any time be available to or asserted by or against the Lessee or
Guarantor;
(xiv) any misrepresentation or breach of warranty made
by the Lessee in any Guaranteed Document or in any certificate or
document delivered in connection therewith;
(xv) the genuineness, legality, validity or enforceability
of any Guaranteed Document, or of any assignment or termination
of any Guaranteed Document;
(xvi) any change in the ownership of any shares of
capital stock of CIROR or any change in the partners of the
Lessee;
(xvii) any act or omission which would not have
discharged or affected the liability of the Guarantor had it been the
principal debtor instead of guarantor or by anything done or
omitted which but for this provision might operate to exonerate
the Guarantor; and
(xviii) any other condition or circumstance which might
otherwise constitute a legal or equitable discharge, release or
defense of a surety or guarantor, or which might otherwise limit
recourse against the Guarantor, including, without limitation, any
discharge, release, defense or limitation arising out of any laws of
the United States of America or any state thereof which would
either exempt, modify or delay the due or punctual payment and
performance of the obligations of the Guarantor hereunder, it
being agreed that the obligations of Guarantor hereunder shall not
be discharged except by payment or performance as herein
provided.
The Guarantor hereby irrevocably waives and shall not
assert any of the foregoing occurrences as a defense to its obligations
hereunder. Without limiting the foregoing, it is understood that repea
and successive demands may be made and recoveries may be made
hereunder as and when, from time to time, the Lessee shall default unde
the terms of any Guaranteed Document, and that this Guaranty shall
remain in force and effect and shall apply to each and every subsequent
default. No failure or delay in exercising any right under this Guaran
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right preclude any other or further exercise there
or the exercise of any other right of any Guaranteed Party under this
Guaranty or the Guaranteed Documents.
The obligations of the Guarantor set forth herein constitute the full
recourse obligations of the Guarantor enforceable against it to the fu
extent of all its assets and properties, notwithstanding any provision
in the Lease, the Participation Agreement or any other Operative
Document limiting the liability of the Lessee, ATOR, Lucent or any oth
Person, or any agreement by the Lessor, the Indenture Trustee or the
Participants to look for payment with respect thereto solely to certai
property as described in the Lease and the Participation Agreement.
Furthermore, the Guarantor hereby agrees that, in determining the amou
or extent of the Obligations guaranteed hereunder, and the amounts owe
by Guarantor in respect thereof, all such limited liability provisions
shall be disregarded, it being understood that, as a result thereof, t
Guarantor may in fact be liable hereunder for amounts in excess of the
amounts for which Lessee may be responsible.
(d) Guarantee of Payment and Performance. This Guaranty is a
guarantee of payment and performance and not of collection only and th
Guarantor hereby irrevocably waives any right to require that any acti
against the Lessee or any other Person be taken or exhausted prior to
action being taken against the Guarantor. The Guarantor hereby
specifically agrees that it shall not be necessary or required, and th
the Guarantor shall not be entitled to require, that the Guaranteed
Parties (i) file suit or proceed to obtain or assert a claim against t
Lessee or any other Person for the Obligations, (ii) make any effort a
collection of the Obligations from the Lessee or any other Person, (ii
foreclose against or seek to realize upon any security now or hereafte
existing for the Obligations, or (iv) file suit or proceed to obtain o
assert a claim for personal judgment against any other Person liable fo
the Obligations, or make any effort at collection of the Obligations fr
any such other Person, or exercise or assert any other right or remedy
which any Guaranteed Party is or may be entitled in connection with the
Obligations or any security or other guaranty therefor, (v) assert or
file any claim against the assets of the Lessee or any other guarantor
or any other Person liable for the Obligations, or any part thereof,
either before or as a condition to enforcing the liability of the
Guarantor under this Guaranty or requiring payment of the Obligations
the Guarantor hereunder, or (vi) join the Lessee or any other Person a
parties to any proceeding for the enforcement against the Guarantor of
any provision of this Guaranty. The Guaranteed Parties, or any of the
entitled to receive payments or the benefit of performance guaranteed
hereunder shall have the right to enforce this Guaranty irrespective o
whether or not legal proceedings or other enforcement efforts against
the Lessee or any other Person are pending, seeking resort to or
realization upon or from any of the foregoing.
(e) Waiver. The Guarantor hereby specifically agrees that it shal
not be necessary or required in order to enforce its obligations
hereunder that there be, and specifically irrevocably waives, diligence
presentment, demand, protest or notice of any kind whatsoever with
respect to this Guaranty or the Obligations, including without
limitation: (i) notice of acceptance of this Guaranty or notice of
nonpayment or nonperformance of any of the Obligations; (ii) demand fo
payment or performance from the Lessee; (iii) presentment for payment
upon the Lessee or the making of any protest; (iv) notice of the amoun
of the Obligations outstanding at any time; (v) notice of failure to
perform on the part of the Lessee or notice of dishonor or acceleratio
(vi) any requirement to exhaust any remedies exercisable upon a defaul
under any Guaranteed Document; (vii) any notice of any sale, transfer
other disposition of any right, title to or interest in the Equipment,
or any part thereof; or (viii) any other circumstance whatsoever which
might otherwise constitute a legal or equitable discharge, release or
defense of a guarantor or surety or which might otherwise limit recour
against the Guarantor. The Guarantor hereby agrees that any repayment
of the Obligations guaranteed hereunder or other act which tolls any
statute of limitations applicable thereto shall similarly operate to
toll such statute of limitations applicable to any liability of the
Guarantor hereunder. The Guarantor hereby irrevocably waives all righ
and benefits under any statute or rule of law requiring the holder or
holders of any promissory note to pursue the maker thereof, any securi
which said holder or holders may hold, or any other remedy before
proceeding against the Guarantor. The Guarantor hereby irrevocably
waives all rights and benefits under any applicable law (to the extent
applicable to the Guarantor hereunder) purporting to reduce a
guarantor's obligation in proportion to the principal obligation
guaranteed. The Guarantor does hereby irrevocably waive and relinquis
so far as it may lawfully and effectively do so, the benefit and
advantage of any and all valuation, stay, appraisement, extension or
redemption laws which, but for this provision, agreement and waiver,
might be applicable to any sale made under any judgment, order or decr
of any court or otherwise based on this Guaranty, or any other
Guaranteed Document or on the security interest of Indenture Trustee
under the Indenture.
(f) Lessee's Financial Position. The Guarantor hereby assumes ful
responsibility for keeping fully informed of the financial conditions
the Lessee and all other circumstances materially affecting the Lessee
ability to perform the Obligations, and agrees that no Guaranteed Part
will have any duty to report to the Guarantor any information which it
receives about the Lessee's financial condition, business or operation
or any circumstances bearing or its ability to perform its duties unde
the Operative Documents. The Guarantor hereby irrevocably waives any
and all notice of the creation, renewal, extension or accrual of any o
the Obligations and notice of or proof of reliance by any Guaranteed
Party upon this Guaranty or acceptance of this Guaranty. The
Obligations, and any of them, shall conclusively be deemed to have bee
created, contracted or incurred in reliance upon this Guaranty, and al
dealings between the Lessee or the Guarantor and any Guaranteed Party
shall likewise be conclusively presumed to have been had or consummate
in reliance upon this Guaranty.
Section 2. No Exercise, Demand or Acceptance of
Security. The Guarantor hereby covenants and agrees that:
(a) until all of the obligations of the Lessee under the
Guaranteed Documents have been fully paid, discharged or
satisfied in full, any rights which the Guarantor may have by
reason of performance by it of any of its obligations hereunder (i)
to be indemnified by the Lessee and/or (ii) to exercise rights of
subrogation to the extent permitted by applicable law, shall be
exercised by the Guarantor in such manner and upon such terms
as the Guaranteed Parties may in their reasonable discretion
require; and
(b) if the Lessee is wound up, goes into liquidation,
becomes bankrupt or makes any composition or arrangement with
its creditors, until all obligations of the Lessee under the
Guaranteed Documents have been fully paid, discharged or
satisfied in full, it shall not demand, accept, negotiate, assign,
charge or otherwise dispose of any monies, obligations or
liabilities now or hereafter due to it from the Lessee or any
promissory note, bill of exchange, guarantee, indemnity,
mortgage, charge or other security for the same or take any step
to enforce any right against the Lessee or claim any set-off or
counterclaim against the same or claim or prove in competition
with the Guaranteed Parties or any of them in the liquidation of
the Lessee or have the benefit of or share in any payment or
composition from the same or in any other guarantee, indemnity
or security now or hereafter held by the Guaranteed Parties for
any monies, obligations or liabilities owed to the same by the
Lessee.
Section 3. Bankruptcy, Etc. The Guarantor hereby agrees that if at an
time all or any part of any payment or performance theretofore applied
by any Guaranteed Party to any of the Obligations is or must be
rescinded or returned by such Guaranteed Party for any reason whatsoev
(including without limitation the insolvency, bankruptcy or
reorganization of the Lessee, Guarantor or any other Person), such
Obligations shall, for the purposes of this Guaranty, to the extent tha
such payment or performance is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such application
by such Guaranteed Party, and this Guaranty shall continue to be
effective as to such Obligations, all as though such application by su
Guaranteed Party had not been made. If an event permitting the
declaration of default under a Guaranteed Document shall at any time
have occurred and be continuing, and such declaration of default shall
at such time be prevented by reason of the pendency against the Lessee
the Guarantor or any other Person of a case or proceeding under a
bankruptcy or insolvency law, the Guarantor hereby agrees that, for
purposes of this Guaranty and its obligations hereunder, such Guarante
Document shall be deemed to have been declared in default with the sam
effect as if such Guaranteed Document had been enforceable in accordan
with the terms thereof, and the Guarantor shall forthwith pay the
amounts specified by any Guaranteed Party to be paid thereunder, any
interest thereon and any other amounts guaranteed hereunder without
notice or demand. The Guarantor hereby agrees that it will indemnify
each Guaranteed Party on demand for all reasonable costs and expenses
(including without limitation reasonable fees of counsel) incurred by
such Guaranteed Party in connection with such rescission or restoratio
including any such costs and expenses incurred in defending against an
claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or simila
law. In case any Guaranteed Document shall be terminated as a result
the rejection or disaffirmance thereof by any trustee, receiver,
liquidator, agent or other representative of Lessee or any of its
property in any assignment for the benefit of creditors or in any
bankruptcy, insolvency, reorganization, arrangement, readjustment,
liquidation, dissolution of Lessee, or similar proceeding, Guarantor's
obligations hereunder shall continue to the same extent as if such
Guaranteed Document had not been so rejected or disaffirmed. Guarantor
shall and does hereby irrevocably waive all rights and benefits that
might accrue to it by reason of any such assignment or proceeding and
Guarantor hereby agrees that it shall be liable for the full amount of
the Obligations irrespective of and without regard to any modification,
limitation or discharge of liability of Lessee that may result from or
connection with any such assignment or proceeding.
Section 4. Subrogation. Guarantor hereby irrevocably
and unconditionally waives any and all rights it may have or obtain, by
reason of the performance of the terms and provisions of this Guaranty,
to succeed to or be subrogated to the rights and privileges of any
Guaranteed Party against Lessee or against any collateral security or
guarantee or right of offset held by any Guaranteed Party for the payme
of the Obligations pursuant to the Operative Documents or otherwise.
Guarantor hereby further irrevocably waives all contractual, common law
statutory or other rights of reimbursement, contribution exoneration or
indemnity (or any similar right) from or against Lessee or any other
Person which may have arisen in connection with this Guaranty and
further agrees with the Lessee for the benefit of each of the Lessee's
creditors (including, without limitation, each of the Guaranteed Partie
that any such payment or performance by the Guarantor shall constitute
contribution of capital by the Guarantor to the Lessee (or an investmen
in the equity capital of the Lessee by the Guarantor). So long as the
Obligations remain outstanding, if any amount shall be paid by or on
behalf of Lessee to Guarantor on account of any of the rights waived in
this paragraph, such amount shall be held by Guarantor in trust,
segregated from other funds of Guarantor, be turned over to the
Guaranteed Party entitled thereto in the exact form received by Guarant
(duly endorsed by Guarantor to such Guaranteed Party, if required), to
applied against the Obligations, whether matured or unmatured, in such
order as such Guaranteed Party may determine. The provisions of this
paragraph shall survive the term of this Guaranty and the payment in fu
of the Obligations and the termination of the Guaranteed Documents.
Section 5. Amendments and Other Actions. Each Guaranteed Party may, i
its discretion, at any time and from time to time, without the
Guarantor's consent, and without affecting the liability of the
Guarantor under this Guaranty, agree to amendments, modification or
supplements to the Lease and the other Guaranteed Documents, give or
withhold consents, waivers or approvals, and exercise, or refrain from
exercising, rights under the Lease and the other Guaranteed Documents
(a) renew, extend (including extensions beyond the original term),
modify, release or discharge any Obligation of the Lessee, of
co-guarantors (whether hereunder or under a separate instrument) or of
any other party at any time directly or contingently liable for the
payment of any of said Obligations; (b) accept partial payments of sai
Obligations; (c) settle, release (by operation of law or otherwise),
compound, compromise, collect or liquidate any of said obligations and
the security therefor in any manner; (d) consent to the transfer of
security; or (e) bid and purchase at any sale of paper or security.
Section 6. Remedies. The Guarantor hereby agrees that,
as between the Guarantor and the Guaranteed Parties, the Obligations of
the Lessee may be declared to be forthwith due and payable or, to be
performed, as the case may be, as provided in the Guaranteed Documents
(and shall be deemed to have become automatically due and payable or,
to be performed, as the case may be, in the circumstances provided for
such Guaranteed Documents) for purposes of this Guaranty
notwithstanding any stay, injunction or other prohibition preventing su
declaration (or such Obligations from becoming automatically due and
payable or, to be performed, as the case may be), such Obligations
(whether or not due and payable or, to be performed, as the case may be
by the Lessee) shall forthwith become due and payable by the Guarantor
for purposes of this Guaranty.
Section 7. No Waiver. No failure on the part of any Guaranteed Party
to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by any
Guaranteed Party of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right,
power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
Section 8. Continuing Guaranty. This Guaranty is a continuing
guarantee, and shall apply to all Obligations whenever arising.
Section 9. Assignment; Payments. The Guarantor hereby
consents to the assignment by the Owner Trustee of its rights and
interests in this Guaranty Agreement to the Indenture Trustee pursuant
the terms and conditions set forth in the Indenture. Notwithstanding a
other provision of this Guaranty Agreement to the contrary, all amounts
payable hereunder to the Owner Trustee shall be paid by the Guarantor
directly to the Indenture Trustee as provided in the Indenture, a copy
which has been provided to the Guarantor, for so long as the Indenture
has not been discharged in accordance with its terms and thereafter to
Owner Trustee. Without limiting the foregoing, the Guarantor hereby
further consents and agrees that the Indenture Trustee may make any
claim or take any other action or proceeding hereunder either in its ow
name or in the name of the Owner Trustee as the Indenture Trustee may
deem necessary or appropriate to protect and preserve the right, title
interest of the Indenture Trustee and the holders of the Notes outstand
under the Indenture in the rights afforded hereby.
So long as the Indenture has not been discharged in
accordance with its terms, the Guarantor hereby agrees that, except as
otherwise provided in the Indenture, the Indenture Trustee shall be
entitled to the benefits of the rights of the Owner Trustee (but not th
Owner Participant) under this Guaranty Agreement and to enforce all
such rights as though the Indenture Trustee were named herein as the
Owner Trustee.
The Guarantor acknowledges that neither the Indenture
Trustee nor any holder of the Notes shall have any obligation to perfor
any duty, covenant or condition hereunder, including any duty, covenant
or obligation required to be performed by the Owner Trustee. The
Guarantor further acknowledges and agrees that the rights of the
Indenture Trustee and each holder of the Notes in and to any payments
hereunder in respect of obligations assigned by the Owner Trustee to th
Indenture Trustee and any other payments due to the Indenture Trustee
and each holder of the Notes hereunder shall not be subject to any
defense, setoff, or recoupment or reduction of any kind for any reason
whatsoever (whether asserted by counterclaim or otherwise). The
provisions of this Section 9 shall in no way prohibit or restrict the
Guarantor from maintaining any direct cause of action against the Owner
Participant, the Owner Trustee, any holder of a Note or the Indenture
Trustee for any breach of their respective obligations under any of the
Operative Documents.
Section 10. Payments. All payments by the Guarantor hereunder in
respect of any Obligation shall be made in immediately available funds
and otherwise as provided in the Guaranteed Documents pursuant to whic
such Obligations are created. All payments by the Guarantor hereunder
shall be made without deduction of or withholding for or on account of
or liability for any present or future Taxes collected by way of
withholding or deduction. If any such Taxes are so levied or imposed,
the Guarantor hereby agrees to pay such Taxes and an additional amount
such that the net amount actually received by the person entitled to
receive such payment shall, after such withholding, equal the full
amount of the payment then due and shall be free of expense to such
person for collection or other charges. The Guarantor will promptly,
and in any event within 30 days after the date on which the payment of
any such Taxes is due pursuant to applicable law, furnish certified
copies to such Guaranteed Party of tax receipts if available or, if no
available other evidence of payment by the Guarantor.
Section 11. Costs and Expenses. The Guarantor hereby
agrees to pay to the Guaranteed Parties any and all costs and expenses
(including reasonable legal fees and expenses) incurred by the Guarante
Parties in successfully enforcing this Guaranty, together with any
reasonable cost including attorney's fees incurred on account of the
bankruptcy or insolvency of Guarantor.
Section 12. Performance. Performance by the Guarantor
of any or all of the obligations of the Lessee under and pursuant to th
Guaranteed Documents shall, for all purposes thereof, constitute
performance by the Lessee of such obligations to the extent so performe
by the Guarantor hereunder.
Section 13. Further Assurances. The Guarantor hereby
agrees that, from time to time upon the written request of any of the
Guaranteed Parties, the Guarantor shall execute and deliver such furthe
documents and do such other acts and things as the Guaranteed Parties
reasonably request in order fully to effect the purposes of this Guaran
Section 14. Agents and Attorneys-in-Fact. Each
Guaranteed Party may employ agents and attorneys-in-fact in connection
herewith and shall not be responsible for the negligence or misconduct
any such agents or attorneys-in-fact selected by it in good faith.
Section 15. Miscellaneous. This Guaranty shall be
governed by, and construed in accordance with, all of the Documentary
Conventions.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Guarantor has executed
this Guaranty in favor of the Guaranteed Parties as of the date set for
above.
CIRRUS LOGIC,
INC.
Guarantor
By: /s/ Thomas F. Kelly
Name: Thomas F. Kelly
Title: Executive Vice President, Finance and Administration
and Chief Financial Officer and Treasurer
EXHIBIT 99.2
Financial New
Contacts:
Mark Singer
Director of Investor Relations
(510) 226-2399
CIRRUS LOGIC ANNOUNCES PRIVATE PLACEMENT OF CONVERTIBLE SUBORDINATED
NOTES
FREMONT, Calif. - Dec. 4, 1996 - Cirrus Logic Inc. (Nasdaq: CRUS) today
announced that it intends, subject to market and other conditions, to
raise up to $175 million (excluding the proceeds of the over-allotment
option, if any) through a private placement of convertible subordinated
notes to qualified institutional investors and off-shore investors.
The company stated that the purposes of the offering are principal
to repay certain indebtedness, for general working capital purposes and
expenditures associated with the company's investments in manufacturing
It is contemplated that the notes will be convertible into Cirrus Logic
common stock and will have a seven-year term. No other terms were
disclosed.
The securities to be offered will not be registered under the Sec
Act of 1933, as amended, or applicable state securities laws, and may n
be offered or sold in the United States absent registration under the
Securities Act and applicable state securities laws or available exempt
from the registration requirements.
# # #
Notes:
Cirrus Logic press releases may be obtained by fax by dialing
1-800-359-6414,
or by dialing 510-249-4200 from outside the United States,
or via Internet on the world wide web at http://www.cirrus.com/
Cirrus Logic is a registered trademark of Cirrus Logic Inc.
