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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JANUARY 30, 1998 COMMISSION FILE NUMBER: 0-26968
----------------
ETEC SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 94-3094580
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
26460 CORPORATE AVENUE, HAYWARD, CALIFORNIA 94545
(ADDRESS AND ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (510)783-9210
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
21,965,974 shares of Common Stock were outstanding as of February 27, 1998.
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<PAGE>
Part 1. Financial Information
Item 1. Consolidated Financial Statements
ETEC SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
January 31, July 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $44,501 $55,975
Marketable securities.............................. 52,393 34,262
Accounts receivable, less allowance for
doubtful accounts of $1,199 and $1,136............ 69,448 54,879
Inventory.......................................... 79,134 67,202
Deferred tax assets................................ 22,822 22,822
Other current assets............................... 13,877 3,322
------------ ------------
Total current assets.............................. 282,175 238,462
Property, plant and equipment, net................. 43,667 42,013
Other assets....................................... 3,871 4,068
------------ ------------
$329,713 $284,543
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... $23,061 $20,830
Accrued and other liabilities...................... 71,165 53,028
Taxes payable...................................... 12,083 8,301
------------ ------------
Total current liabilities......................... 106,309 82,159
Deferred gain on sale of asset..................... 2,737 2,871
Other liabilities.................................. 1,609 1,872
------------ ------------
Total liabilities................................. 110,655 86,902
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred Stock, par value $0.01 per share;
10,000,000 shares authorized; none outstanding.... -- --
Common Stock, par value $0.01 per share; 60,000,000
and 40,000,000 shares authorized; 21,957,693 and
21,679,636 issued and outstanding................. 220 217
Warrants........................................... 600 631
Additional paid-in capital......................... 203,270 198,557
Cumulative translation adjustments................. (1,955) (719)
Net unrealized gain on investments................. 89 --
Retained earnings (accumulated deficit)............ 16,834 (1,045)
------------ ------------
Total stockholders' equity........................ 219,058 197,641
------------ ------------
$329,713 $284,543
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ETEC SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
------------------- -------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Products........................... $53,161 $45,309 $112,132 $81,711
Services........................... 9,007 8,371 18,401 16,856
--------- --------- --------- ---------
62,168 53,680 130,533 98,567
--------- --------- --------- ---------
Cost of revenue:
Products........................... 21,858 21,723 49,605 39,275
Services........................... 6,633 6,642 13,717 13,194
--------- --------- --------- ---------
28,491 28,365 63,322 52,469
--------- --------- --------- ---------
Gross profit......................... 33,677 25,315 67,211 46,098
--------- --------- --------- ---------
Operating expenses:
Research, development and
engineering....................... 13,555 8,115 24,332 14,596
Selling, general and
administrative.................... 8,096 6,290 17,373 12,185
--------- --------- --------- ---------
21,651 14,405 41,705 26,781
--------- --------- --------- ---------
Income from operations............... 12,026 10,910 25,506 19,317
Interest expense..................... (161) (266) (360) (510)
Other income, net.................... 1,124 1,027 2,149 1,821
--------- --------- --------- ---------
Income before income tax provision... 12,989 11,671 27,295 20,628
Income tax provision................. 4,338 4,085 9,416 6,058
--------- --------- --------- ---------
Net income........................... $8,651 $7,586 $17,879 $14,570
========= ========= ========= =========
Basic earnings per share............. $0.39 $0.37 $0.82 $0.72
========= ========= ========= =========
Weighted-average common shares....... 21,906 20,560 21,820 20,140
========= ========= ========= =========
Diluted earnings per share........... $0.38 $0.35 $0.78 $0.68
========= ========= ========= =========
Dilutive potential common shares..... 22,948 21,806 22,783 21,462
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ETEC SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
January 31,
---------------------
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................... $17,879 $14,570
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization.......................... 3,684 1,855
Deferred taxes......................................... -- (1,162)
Changes in assets and liabilities:
Accounts receivable.................................... (21,566) (28,850)
Factoring of accounts receivable....................... 6,200 --
Inventory.............................................. (12,247) (18,600)
Other current assets................................. (10,595) --
Other assets........................................... 37 478
Accounts payable....................................... 2,264 3,272
Accrued and other liabilities.......................... 21,932 23,279
---------- ----------
Net cash provided by (used in) operating activities.. 7,588 (5,158)
---------- ----------
Cash flows from investing activities:
Purchases of marketable securities, net................ (18,131) (10,520)
Capital expenditures for property and equipment, net... (5,331) (11,104)
Construction costs of new building..................... -- (3,555)
Proceeds from sale of plant............................ -- 5,000
---------- ----------
Net cash used in investing activities................ (23,462) (20,179)
---------- ----------
Cash flows from financing activities:
Repayment of debt and capital leases................... (50) (1,813)
Financing from intermediary............................ 1,882 1,202
Repurchase of warrants................................. -- (2,633)
Collection of notes receivable from stockholders....... 200 --
Proceeds from issuance of Common Stock................. 3,025 40,336
---------- ----------
Net cash provided by financing activities............ 5,057 37,092
---------- ----------
Effect of exchange rate changes on cash.................. (657) 576
---------- ----------
Net change in cash and cash equivalents.................. (11,474) 12,331
Cash and cash equivalents at the beginning
of the period.......................................... 55,975 44,472
---------- ----------
Cash and cash equivalents at the end of the period....... $44,501 $56,803
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest................. $360 $448
========== ==========
Cash paid during the period for income taxes............. $4,175 $6,124
========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Tax benefits from stock option transactions.............. $1,460 $606
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTE 1-BASIS OF PRESENTATION
In the opinion of the management of Etec Systems, Inc.
("Etec" or the "Company"), the unaudited consolidated
interim financial statements included herein have been
prepared on the same basis as the July 31, 1997 audited
consolidated financial statements and include all
adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the interim period
results.
The results of operations for current interim periods
are not necessarily indicative of results to be expected for
the current year or for any other period.
These consolidated financial statements should be read
in conjunction with the audited consolidated financial
statements and notes thereto for the fiscal year ended July
31, 1997 included in the Company's Annual Report on Form 10-
K (File No. 0-26968). The July 31, 1997 balance sheet
included herein was derived from audited consolidated
financial statements, but does not include all disclosures
required by generally accepted accounting principles.
For purposes of presentation, the Company has
indicated its interim fiscal periods as ending January 31,
1998 and January 31, 1997. As the Company's fiscal period
is accounted for on a 52-53 week year, the interim period
consolidated financial statements included herein represent
results for each of the three- and six-month periods ended
January 30, 1998 and January 31, 1997.
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results
could differ from those estimates.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130) and Statement of
Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (SFAS
131). SFAS 130 establishes standards for reporting and
display of comprehensive income and requires the Company to
report additional information on comprehensive income to
supplement the reporting of income. SFAS 130 is effective
for fiscal years beginning after December 15, 1997.
Comparative financial statements must be provided for all
periods presented and require reclassification adjustments.
The Company will adopt SFAS 130 in fiscal 1999 and does not
expect its provisions to have a material effect on the
Company's presentation of its consolidated financial
statements.
SFAS 131 establishes standards for reporting
information about operating segments in annual and interim
financial statements and also establishes standards for
related disclosures about products and services, geographic
areas and major customers. SFAS 131 is effective for fiscal
years beginning after December 15, 1997. The Company will
adopt SFAS 131 in fiscal 1999 and is currently studying its
provisions.
NOTE 2-CASH EQUIVALENTS AND MARKETABLE SECURITIES
At January 31, 1998, the Company's investments were
classified as available-for-sale. The difference between
the cost and fair value of those investments is shown as a
separate component of stockholders' equity. At January 31,
1998, these available-for-sale securities totaling
approximately $80.3 million were included in cash and cash
equivalents or marketable securities on the balance sheet.
The investment portfolio at January 31, 1998 is comprised of
money market funds, corporate debentures, asset-backed
obligations, U.S. Government agency securities, certificates
of deposit, commercial paper, auction-rate preferreds, and
municipal obligations.
NOTE 3--CERTAIN BALANCE SHEET COMPONENTS
January 31, July 31,
1998 1997
----------- -----------
(in thousands)
Accounts receivable, net:
Accounts receivable................... $59,108 $46,421
Financed receivables*................. 10,340 8,458
----------- -----------
$69,448 $54,879
=========== ===========
- ------------
* Financed receivables of $10.3 million and $8.5 million, at January 31,
1998 and July 31, 1997, respectively, are included in accounts
receivable, net, and are subject to a third-party financing arrangement
under which they are offset by liabilities of the same amounts.
January 31, July 31,
1998 1997
----------- -----------
(in thousands)
Inventory:
Purchased parts....................... $28,032 $20,325
Work-in-process....................... 37,520 35,972
Spares................................ 13,582 10,905
----------- -----------
$79,134 $67,202
=========== ===========
NOTE 4 -INCOME TAXES
The Company recorded provisions for income taxes for
the six months ended January 31, 1998 and 1997 of $9.4
million and $6.1 million, respectively. The Company's
provision for income taxes for the six months ended January
31, 1998 reflects the utilization of research and
development tax credits and tax benefits from the use of a
foreign sales corporation, partially offset by foreign
earnings taxed at higher rates. During the second quarter of
fiscal 1998, the Company reduced its fiscal 1998 effective
tax rate from the 35.5% used in the first quarter to 34.5%
in order to reflect revised estimates of certain tax
credits. The provision for the six months ended January 31,
1997 includes a $1.2 million benefit which reflects the
first quarter release of valuation allowances previously
recorded against the Company's deferred tax assets.
Management's evaluation of the recoverability of the
Company's deferred tax assets is based in part upon the
current product backlog and the Company's presumed ability
to increase manufacturing capacity. Management will
continue to evaluate the recoverability of the deferred tax
assets in future periods.
NOTE 5-LEASES
In November 1997, the Company completed the purchase
of approximately 15.2 acres of land in Hillsboro, Oregon at
a cost of approximately $2.4 million. The Company is having
a new facility constructed on this site to meet development
and manufacturing requirements for its advanced laser mask
pattern generation products and to back up its electron-beam
manufacturing capabilities in Hayward, California.
In December 1997, the Company entered into an
agreement to lease the facility to be constructed on the
land described above. The lessor of the buildings has
committed to spend up to $60.0 million for the construction
and the Company will act as construction agent for the
lessor. The lease term begins upon completion of
construction (which is expected in the middle of calendar
year 1999) and ends in November, 2004. With the approval of
the lessor, the Company may extend the lease term for up to
three one-year periods. The Company has the option to
purchase the facility at any time during the lease term at
the lessor's capitalized cost. If the Company does not
elect to purchase the property at the end of the lease term,
the Company is required to guarantee the minimum residual
value which shall not exceed $49.8 million.
In February 1998, the Company entered into an
agreement to amend the existing lease on its Hayward
facilities to accommodate a $50.0 million planned expansion
of product and research and development facilities and up to
an $11.0 million renovation of production facilities via
construction lease allowances. The initial term of the
lease expires in May, 2014, and, if not cancelled by the
Company, will be automatically extended for three five-year
renewal periods and one additional eight-month renewal
period.
NOTE 6-STOCKHOLDERS' EQUITY
At the Company's Annual Meeting of Shareholders on
December 2, 1997, the shareholders approved an amendment to
the Company's Articles of Incorporation increasing the
number of authorized shares of Common Stock to 60,000,000
shares. The Articles of Incorporation also authorize the
issuance of up to 10,000,000 shares of Preferred Stock with
a par value of $0.01 per share, having rights and
preferences to be designated by the Company's Board of
Directors.
NOTE 7-NET INCOME PER SHARE
The Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" (SFAS 128) during
the second quarter of fiscal 1998. This statement
simplifies the standards for computing earnings per share
(EPS) previously defined in Accounting Principles Board
Opinion No. 15, "Earnings Per Share". All prior-period
earnings per share data have been presented in accordance
with SFAS 128. SFAS 128 requires presentation of both basic
EPS and diluted EPS on the face of the statement of income.
Basic EPS is computed by dividing net income available to
common stockholders (numerator) by the weighted-average
common shares (denominator) during the period. Diluted EPS
gives effect to all dilutive potential common shares
outstanding during the period including stock options and
warrants, using the treasury stock method. In computing
diluted EPS, the average stock price for the period is used
in determining the number of shares assumed to be purchased
from the exercise of stock options and warrants.
The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share
computations under SFAS 128:
NOTE 7-NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
----------- ----------- --------- ---------
1998 1997 1998 1997
----------- ----------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
BASIC EPS COMPUTATION
Net income................................. $8,651 $7,586 $17,879 $14,570
=========== =========== ========= =========
Weighted-average common shares............. 21,906 20,560 21,820 20,140
=========== =========== ========= =========
Basic earnings per share................... $0.39 $0.37 $0.82 $0.72
=========== =========== ========= =========
DILUTED EPS COMPUTATION
Net income................................. $8,651 $7,586 $17,879 $14,570
=========== =========== ========= =========
Weighted-average common shares............. 21,906 20,560 21,820 20,140
Plus shares from assumed conversion:
Effect of dilutive options and warrants.. 1,042 1,246 963 1,322
----------- ----------- --------- ---------
Dilutive potential common shares........... 22,948 21,806 22,783 21,462
=========== =========== ========= =========
Diluted earnings per share................. $0.38 $0.35 $0.78 $0.68
=========== =========== ========= =========
ANTIDILUTIVE SECURITIES*
Options outstanding at end of period....... 247 87 153 91
=========== =========== ========= =========
Weighted-average exercise price............ $55.35 $36.02 $59.14 $35.71
=========== =========== ========= =========
</TABLE>
- ------------
* Antidilutive securities consist of options not included in the
computation of diluted earnings per share because the exercise price of
each of these options was greater than the average market price of the
Company's Common Stock during the period. Options outstanding during
the three- and six-month periods ended January 31, 1998 expire during
fiscal years 2007 and 2008. Options outstanding during the three- and
six-month periods ended January 31, 1997 expire during fiscal years 2006
and 2007.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
A. Results of Operations
Quarters Ended January 31, 1998 and January 31, 1997
Revenue. Revenues are primarily comprised of sales of
ALTA, MEBES, and CORE systems, accessories and upgrades, and
the provision of technical support, maintenance and other
services. The Company derives most of its revenues from the
sale of a small number of systems and upgrades. As such,
any delay in the recognition of revenue for a single system
or upgrade can have a material adverse effect on the
Company's consolidated results of operations in a particular
period. For example, one system, originally scheduled to be
shipped late in the second quarter of fiscal 1998, was
delayed until the third quarter of fiscal 1998 due to a
failure in a critical subassembly.
Product revenue increased 17% to $53.2 million from
$45.3 million for the quarters ended January 31, 1998 and
1997, respectively. This increase reflects a shift in
product mix toward higher-priced products and generally
higher average selling prices.
Service revenue increased 8% to $9.0 million from $8.4
million for the quarters ended January 31, 1998 and 1997,
respectively, due primarily to generally higher service
activity caused by an increase in the number of systems
under service contracts.
Gross Profit. The Company's gross profit on product
revenue increased 33% to $31.3 million from $23.6 million
for the quarters ended January 31, 1998 and 1997,
respectively. The increase in gross profit on product
revenue was due to an increase in product revenue and a
higher gross margin on product revenue, which increased to
59% for the quarter ended January 31, 1998 from 52% for the
quarter ended January 31, 1997. The increase in product
gross margin is primarily attributable to changes in product
mix and generally higher average selling prices for the
Company's products. There can be no assurance that the
Company will be able to maintain an increase in gross margin
on product revenue in future periods.
The Company's gross profit on service revenue
increased 37% to $2.4 million from $1.7 million for the
quarters ended January 31, 1998 and 1997, respectively.
Gross margin on service revenue was 26% and 21% for the
quarters ended January 31, 1998 and 1997, respectively. The
increases in gross profit and gross margin reflect increased
revenues from an increase in the number of systems under
service contract and higher productivity. There can be no
assurance that the Company will be able to maintain an
increase in gross margin on service revenue in future
periods.
Research, Development and Engineering. The Company's
research, development and engineering expenses continue to
reflect its commitment to increased levels of product
development. These expenses, net of third-party funding
under cooperative development agreements, increased to $13.6
million, representing 22% of revenue, from $8.1 million,
representing 15% of revenue, for the quarters ended January
31, 1998 and 1997, respectively. The Company recorded
expenses of approximately $2.8 million during the second
quarter of fiscal 1998 which were associated with preparing
beta tools for shipment from the Company's facility in
Tucson, Arizona, and with developing the new MEBES 0.18
micron system. These additional costs were partially offset
by an increase in funding of $1.8 million in the second
quarter of fiscal 1998 over the second quarter of fiscal
1997. This increase is primarily attributable to the
achievement of milestones under a multimillion dollar cost
reimbursement and development agreement with a private
consortium. The Company expects future increases in net
spending due to its commitment to product development,
but net spending is expected to decline in the near term.
Selling, General and Administrative. Selling, general
and administrative expenses increased 29% to $8.1 million,
representing 13% of revenue, from $6.3 million, representing
12% of revenue, for the quarters ended January 31, 1998 and
1997, respectively. Selling, general and administrative
expenses increased primarily due to increased headcount, and
also due to increased market development fees and sales
commissions associated with increased laser beam system
sales in Asia. During the quarter ended January 31, 1998,
the Company shipped its final system under this market
development fee contract. As such, no market development
fees will be due with respect to future sales.
Income Tax Provision. The Company recorded provisions
for income taxes for the quarters ended January 31, 1998 and
1997 of $4.3 million and $4.1 million, respectively. The
Company's provision for income taxes for the quarter ended
January 31, 1998 reflects the utilization of research and
development tax credits and tax benefits from the use of a
foreign sales corporation, partially offset by foreign
earnings taxed at higher rates. During the second quarter of
fiscal 1998, the Company reduced its fiscal 1998 effective
tax rate from the 35.5% used in the first quarter to 34.5%
in order to reflect revised estimates of certain tax
credits. The provision for the six months ended January 31,
1997 includes a $1.2 million benefit which reflects the
first quarter release of valuation allowances previously
recorded against the Company's deferred tax assets.
Management's evaluation of the recoverability of the
Company's deferred tax assets is based in part upon the
current product backlog and the Company's presumed ability
to increase manufacturing capacity. Management will
continue to evaluate the recoverability of the deferred tax
assets in future periods.
Six Months Ended January 31, 1998 and January 31, 1997
Revenue. Product revenue increased 37% to $112.1
million from $81.7 million for the six months ended January
31, 1998 and 1997, respectively. This increase reflects the
sale of four additional systems, changes in product mix
toward higher-priced products, and generally higher average
selling prices.
Service revenue increased 9% to $18.4 million from
$16.9 million for the six months ended January 31, 1998 and
1997, respectively, due primarily to generally higher
service activity caused by an increase in the number of
systems under service contracts.
Gross Profit. The Company's gross profit on product
revenue increased 47% to $62.5 million from $42.4 million
for the six months ended January 31, 1998 and 1997,
respectively. The increase in gross profit on product
revenue was due to an increase in product revenue and a
higher gross margin on product revenue, which increased to
56% for the six months ended January 31, 1998 from 52% for
the six months ended January 31, 1997. The increase in
product gross margin is primarily attributable to changes in
product mix and generally higher average selling prices for
the Company's products. There can be no assurance that the
Company will be able to maintain the increase in gross
margin on product revenue in future periods.
The Company's gross profit on service revenue
increased 28% to $4.7 million from $3.7 million for the six
months ended January 31, 1998 and 1997, respectively. Gross
margin on service revenue was 25% and 22% for the six months
ended January 31, 1998 and 1997, respectively. The
increases in gross profit and gross margin reflect increased
revenues from an increase in the number of systems under
service contracts and increased productivity, partially
offset by headcount additions below plan. There can be no
assurance that the Company will be able to maintain an
increase in gross margin on service revenue in future
periods.
Research, Development and Engineering. The Company's
research, development and engineering expenses continue to
reflect its commitment to increased levels of product
development. These expenses, net of third-party funding
under cooperative development agreements, increased to $24.3
million, representing 19% of revenue, from $14.6 million,
representing 15% of revenue, for the six months ended
January 31, 1998 and 1997, respectively. The Company
recorded expenses of approximately $2.0 million associated
with the write-down of certain inventories related to the
Company's Tucson, Arizona operations to net realizable value
and incurred costs of approximately $1.9 million associated
with the new MEBES 0.18 micron system. These increased
expenses were partially offset by an increase in funding of
$3.1 million in the first six months of fiscal 1998 over the
first six months of fiscal 1997. This increase in funding
is attributable to the achievement of milestones under a
multimillion dollar cost reimbursement and development
agreement with a private consortium. The Company expects
future increases in net spending due to its commitment to
product development, but net spending is expected to decline
in the near term.
Selling, General and Administrative. Selling, general
and administrative expenses increased 43% to $17.4 million,
representing 13% of revenue, from $12.2 million,
representing 12% of revenue, for the six months ended
January 31, 1998 and 1997, respectively. Selling, general
and administrative expenses increased primarily due to
increased headcount and increased market development fees
and sales commissions associated with increased laser beam
system sales in Asia. During the quarter ended January 31,
1998, the Company shipped its final system under the market
development fee contract.
Income Tax Provision. The Company recorded provisions
for income taxes for the six months ended January 31, 1998
and 1997 of $9.4 million and $6.1 million, respectively. The
Company's provision for income taxes for the six months
ended January 31, 1998 reflects the utilization of research
and development tax credits and tax benefits from the use of
a foreign sales corporation, partially offset by foreign
earnings taxed at higher rates. The Company's provision for
income taxes for the six months ended January 31, 1997
includes a $1.2 million benefit which reflects the first
quarter release of valuation allowances previously recorded
against the Company's deferred tax assets. Management's
evaluation of the recoverability of the Company's deferred
tax assets is based in part upon the current product backlog
and the Company's presumed ability to increase manufacturing
capacity. Management will continue to evaluate the
recoverability of the deferred tax assets in future periods.
B. Liquidity and Capital Resources
In addition to its operational cash flows, in fiscal
1997 and fiscal 1996, the Company raised approximately
$108.0 million from its initial public offering, two
additional public offerings, and a private placement. In
fiscal 1997, the Company received $5.0 million from the sale
and leaseback of its headquarters campus. In fiscal 1998,
the Company received commitments of up to $121.0 million for
the construction of additional manufacturing facilities
during fiscal 1998 and fiscal 1999 under operating lease
arrangements. The Company believes that approximately $53.0
million will be used in fiscal 1998 and approximately $68.0
million will be used in fiscal 1999.
The Company's capital budget for fiscal 1998 of $80.0
million included the $53.0 million in facility construction
which was subsequently converted to a construction allowance
under an operating lease. The remaining $27.0 million is
planned for other capital expenditures. The Company spent
approximately $5.3 million for net capital expenditures in
the first six months of fiscal 1998 primarily to purchase
testing, process lab and other equipment. In addition, the
Company spent approximately $8.6 million for renovation of
existing production facilities at the Company's Hayward
campus in the first six months of fiscal 1998, and was
reimbursed for these costs by the lessor in February, 1998.
In October 1997, the Company purchased approximately
4.2 acres of land in Hayward, California for $0.9 million.
This site provides the Company flexibility for future
expansion of its Hayward-based operations. In addition, in
November 1997, the Company completed the purchase of
approximately 15.2 acres of land in Hillsboro, Oregon for
approximately $2.4 million. The Company is having a new
facility constructed on this site to meet development and
manufacturing requirements for its advanced laser mask
pattern generation products and to back up its electron-beam
manufacturing capabilities in Hayward, California. The new
facilities in Hayward and Hillsboro are expected to be
completed in the middle of calendar year 1999.
As of January 31, 1998, the Company had cash and cash
equivalents and marketable securities of $96.9 million. The
Company believes that existing cash balances (including cash
equivalents and marketable securities), together with
existing sources of liquidity, including cash flows from
operating activities and amounts available under the
existing $50.0 million revolving line of credit, will
provide adequate cash to fund its operations for at least
the next twelve months. The Company also believes that
success in its industry requires substantial capital in
order to maintain the flexibility to take advantage of
opportunities as they arise. As such, the Company may
effect additional equity or debt financings in the future to
fund such activities.
Operating Activities
Net cash provided by operating activities for the six
months ended January 31, 1998 was $7.6 million. Net cash
used in operating activities for the six months ended
January 31, 1997 was $5.2 million.
Cash flows from operating activities for the six
months ended January 31, 1998 primarily reflected net income
of $17.9 million; increases in noncash items (which include
depreciation and amortization) of $3.7 million; increases in
accounts receivable of $21.6 million; factoring of accounts
receivable of $6.2 million; and increases in inventory of
$12.2 million, other current assets (consisting of reimbursable
renovation costs of $8.6 million) of $10.6 million, accounts
payable of $2.3 million, and accrued and other liabilities of $21.9
million (primarily due to increases in advances from customers of
approximately $16.0 million).
Cash flows from operating activities for the six
months ended January 31, 1997 primarily reflected net income
of $14.6 million; increases in noncash items of $0.7 million
(which include depreciation and amortization of $1.9
million, largely offset by $1.2 million of deferred taxes);
and increases in accounts receivable of $28.9 million,
inventory of $18.6 million, accounts payable of $3.3 million,
and accrued and other liabilities of $23.3 million.
Fluctuations in accounts receivable, inventory, and
current liabilities for the above periods were caused
primarily by the timing of system orders, the timing of
revenue recognition, the increase in unit shipments, the
factoring of accounts receivable and the timing of payments
to vendors. Prior to the shipment of a system, the Company
receives payment for a portion of the system sales price.
Such payments are generally received when the Company
accepts an order and at various points when the system is
being installed and thereafter. Therefore, the amount of
customer advances at each reporting period fluctuates based
on the number of systems that are on order, the timing of
when orders are accepted, and each system's status within
the manufacturing cycle. Advances from customers increased
to $27.5 million at January 31, 1998 from $11.5 million at
July 31, 1997.
Investing Activities
Net cash used in investing activities for the six
months ended January 31, 1998 was $23.5 million compared to
$20.2 million for the six months ended January 31, 1997.
Cash flows from investing activities for the six months
ended January 31, 1998 reflected net purchases of marketable
securities of $18.1 million and net capital expenditures of
$5.3 million. Cash flows from investing activities for the
six months ended January 31, 1997 primarily reflected net
purchases of marketable securities of $10.5 million and net
capital expenditures of $11.1 million.
Financing Activities
Net cash provided by financing activities for the six
months ended January 31, 1998 was $5.1 million compared to
the six months ended January 31, 1997 of $37.1 million.
Cash flows from financing activities for the six months
ended January 31, 1998 primarily reflected proceeds from
issuance of Common Stock of $3.0 million. Cash flows from
financing activities for the six months ended January 31,
1997 primarily reflected proceeds from issuance of Common
Stock of $40.3 million. The decrease in net cash provided
by financing activities is primarily attributable to the
fact that there was no public offering of the Company's
Common Stock during the first six months of fiscal 1998 as
there was during the first six months of fiscal 1997.
C. Certain Factors that May Affect Future Results
Statements in this report which are prefaced with
words such as "expects," "anticipates," "believes" and
similar words and other statements of similar sense, are
forward-looking statements. These statements are based on
the Company's current expectations and estimates as to
prospective events and circumstances which may or may not be
within the Company's control and as to which there can be no
firm assurances given. These forward-looking statements,
like any other forward-looking statements, involve risks and
uncertainties that could cause actual results to differ
materially from those projected or anticipated.
In addition to other risks and uncertainties that may
be described elsewhere in this document, certain risks and
uncertainties that could affect the Company's financial
results include, but are not limited to, the following:
reduced orders or backlog due to changes in capital spending
decisions of customers or potential customers; the timely
development, market acceptance and successful production of
new products and enhancements in an environment of rapid
technological change; limitations on the Company's ability
to carry out a rapid expansion of its manufacturing
capabilities; significant variations in quarterly or annual
results due to factors affecting even a small number of
systems, such as a delay in completion of manufacturing or
testing of a single system to a future fiscal period; and
risks associated with foreign operations, such as foreign
exchange risk, general market conditions, import-export
controls, and political risks.
Year 2000 Issue
The Company has formed a project team to review its
existing products, services, processes, systems, facilities
and key business partners to ensure they are adequately able
to address the issues expected to arise in connection with
the upcoming change in the century. The Company's project to
achieve this is based on the Government Accounting Office
model. Using this model, the Company is developing an
action plan to implement the system and programming changes
necessary to address, on an enterprise-wide basis, year 2000
issues, and is in the process of assessing the schedule for
and cost of implementing this plan.
The Company believes that its Year 2000 project will
be completed on a timely basis; however, there can be no
assurance that unexpected delays or increased costs
associated with implementation will not have an adverse
effect on the Company's operations.
In addition, the Company has not yet fully determined
the extent to which its business may be impacted by third
parties whose products and services may not be ready for the
year 2000. There can be no assurance that the systems of
other companies which the Company deals with, or on which
the Company's systems rely, will be able to adequately
address the year 2000 issue, or that the failure to do so
will not have an adverse effect on the Company's operations.
Part II-Other Information
Item 2. Changes in Securities
Registrant's Eighth Amended and Restated Articles of
Incorporation were amended on December 2, 1997 to provide
for the issuance of 70,000,000 shares of stock. Of said
shares, 60,000,000 shares are Common Stock with a par value
of $0.01 per share and 10,000,000 shares are Preferred Stock
with a par value of $0.01 per share. The Board of Directors
has the authority, without any action by the shareholders,
to fix the number of shares to be included in any series of
Preferred Stock.
Item 4. Submission Of Matters To a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on December 2, 1997.
Matters voted upon at the meeting included:
1)Election of directors (listed below)
The following directors were elected to hold office until the next
Annual Meeting of Stockholders of the Company:
Directors Affirmative Negative Withheld
------------------------- ----------- --------- ---------
Stephen E. Cooper 19,505,207 0 118,557
Takeshi (John) Suzuki 19,542,694 0 81,070
Edward L. Gelbach 19,541,874 0 81,890
John M. McBennett 19,537,986 0 85,778
William Ryan 19,541,624 0 82,140
William Siegle 19,541,024 0 82,740
Thomas M. Trent 19,538,336 0 85,428
Robert L. Wehrli 19,541,006 0 82,758
2)Approval of amendment to Registrant's Eight Amended and Restated
Articles of Incorporation to increase the authorized number of
shares of Common Stock from 40,000,000 to 60,000,000 shares:
Votes in the affirmative: 17,039,880
Votes in the negative: 437,818
Votes withheld: 18,410
3)Approval of increase in number of shares of Common Stock available
for issuance under the 1995 Omnibus Incentive Plan from 1,975,000 to
2,975,000 shares:
Votes in the affirmative: 12,242,029
Votes in the negative: 5,226,298
Votes withheld: 27,781
4)Ratification of the appointment of Price Waterhouse LLP as
independent public accountants for the Company for the fiscal
year ended July 31, 1998:
Votes in the affirmative: 17,473,795
Votes in the negative: 6,625
Votes withheld: 15,688
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith:
Exhibit
No. Description
2 Certificate of Amendment to Articles of Incorporation dated December
2, 1997.
10.1 Lease Agreement by and between Registrant and Lease Plan North
America and the Participants Named Therein and ABN Amro N.V. dated
December 5, 1997.
10.2 Participation Agreement by and between Etec Systems, Inc. and Lease
Plan North America, Inc. and the Participants Name Herein and ABN
Amro Bank N.V., as Agent for the Participants dated December 5, 1997
10.3 Amendment dated November 12, 1997 to Purchase and Sale Agreement by
and between Registrant and Standard Insurance Corporation dated
August 13, 1997.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
SIGNATURE
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, on March 16, 1998.
ETEC SYSTEMS, INC.
(Registrant)
By /s/ William D. Snyder
William D. Snyder
Vice President and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
<PAGE>
ETEC SYSTEMS, INC.
INDEX OF EXHIBITS
EXHIBIT
NO. DESCRIPTION
2 Certificate of Amendment to Articles of Incorporation dated December
2, 1997.
10.1 Lease Agreement by and between Registrant and Lease Plan North
America and the Participants Named Therein and ABN Amro N.V. dated
December 5, 1997.
10.2 Participation Agreement by and between Etec Systems, Inc. and Lease
Plan North America, Inc. and the Participants Name Herein and ABN
Amro Bank N.V., as Agent for the Participants dated December 5, 1997
10.3 Amendment dated November 12, 1997 to Purchase and Sale Agreement by
and between Registrant and Standard Insurance Corporation dated
August 13, 1997.
27 Financial Data Schedule.
EXHIBIT 2
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION
The undersigned, being the President and Assistant
Secretary of Etec Systems, Inc., certify that the following
amendment to the Eighth Amended and Restated Articles of
Incorporation of Etec Systems, Inc., was approved by a vote
of the stockholders of Etec Systems, Inc. on December 2,
1997, representing a majority of the shares entitled to vote
thereon, in accordance with Sections 78.385, 78.390 and
78.403 General Corporation Law of the State of Nevada, being
(i) voting together as one class, 19,225,636
shares of the total of 21,875,934 shares of Common
Stock outstanding and entitled to vote.
The amendment, as approved, amends and restates the
first paragraph of Article Fourth of the Eighth Amended and
Restated Articles of Incorporation to read as follows:
"FOURTH: The total number of shares of stock
which the Corporation shall have authority to issue is
seventy million (70,000,000) shares. Of said shares,
sixty million (60,000,000) shares shall be common
stock ("Common Stock") with a par value of $0.01 per
share and ten million (10,000,000) shares shall be
preferred stock ("Preferred Stock") with a par value
of $0.01 per share."
IN WITNESS WHEREOF, the undersigned have
executed this certificate this 22nd day of December, 1997.
/s/ Stephen E. Cooper
Stephen E. Cooper
President
/s/ Saul E. Arnold
Saul E. Arnold
Assistant Secretary
EXHIBIT 10.1
LINE OF CREDIT INSTRUMENT
LEASE AGREEMENT,
CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS LEASE AGREEMENT, CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT
OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Agreement"
herein), dated as of December 5, 1997 is entered into by and among:
(1) ETEC SYSTEMS, INC., a Nevada corporation ("Lessee");
(2) LEASE PLAN NORTH AMERICA, INC., an Illinois
corporation ("Lessor"); and
(3) FIRST AMERICAN TITLE INSURANCE COMPANY OF OREGON, as
trustee under the deed of trust contained herein (in such
capacity, "Trustee").
RECITALS
A. Lessee has requested Lessor and the financial institutions
which are "Participants" under the Participation Agreement referred to
in Recital B below (such financial institutions to be referred to
collectively as the "Participants") to provide to Lessee a lease
facility pursuant to which:
(1) Lessor would (a) lease from Lessee certain land owned
by Lessee, (b) sublease to Lessee such land and lease to Lessee
certain improvements to be constructed on such land, (c) appoint
Lessee as Lessor's agent to make such improvements (which
improvements will be owned by Lessor), (d) make advances to
finance such improvements and to pay certain related expenses and
(e) grant to Lessee the right to purchase such improvements; and
(2) The Participants would participate in such lease
facility by (a) funding the advances to be made by Lessor and (b)
acquiring participation interests in the rental and certain other
payments to be made by Lessee.
B. Pursuant to a Participation Agreement dated of even date
herewith (the "Participation Agreement") among Lessee, Lessor, the
Participants and ABN AMRO Bank N.V., as agent for the Participants (in
such capacity, "Agent"), Lessor and the Participants have agreed to
provide such lease facility upon the terms and subject to the conditions
set forth therein, including without limitation the execution and
delivery of this Agreement setting forth the terms of the lease by
Lessor to Lessee of the property.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and the
mutual covenants herein contained, the parties hereto hereby agree as
follows:
SECTION 1. INTERPRETATION.
1.01. Definitions. Unless otherwise indicated in this Agreement
or any other Operative Document, each term set forth in Schedule 1.01 to
the Participation Agreement, when used in this Agreement or any other
Operative Document, shall have the respective meaning given to that term
in such Schedule 1.01 or in the provision of this Agreement or other
document, instrument or agreement referenced in such Schedule 1.01.
1.02. Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set
forth in Schedule 1.02 to the Participation Agreement shall apply to
this Agreement and the other Operative Documents.
SECTION 2. BASIC PROVISIONS.
2.01. Lease of the Property. Subject to the acquisition thereof
by Lessor pursuant to the Participation Agreement and the Ground Lease
either as of the date hereof or during the term hereof, Lessor agrees to
lease to Lessee and Lessee agrees to lease from Lessor the following
property (the "Property") to the extent of Lessor's estate, right, title
and interest therein, thereto or thereunder:
(a) All lots, pieces, tracts and parcels of land described
in Exhibit A (the "Land");
(b) All Improvements located on the Land;
(c) All Appurtenant Rights belonging, relating or
pertaining to any of the Land or Improvements;
(d) All Related Goods (including those described in
Exhibit B and in each Exhibit B Supplement), Related Permits and
Related Agreements related to any of the foregoing Land,
Improvements or Appurtenant Rights; and
(e) All accessions and accretions to and replacements and
substitutions for the foregoing.
(Lessee acknowledges that Lessor's only estate, right, title and
interest in the Land is through the Ground Lease and is a leasehold
interest only.)
2.02. Term.
(a) Original Term. The original term of this Agreement
shall commence on the Closing Date (the "Commencement Date") and
shall end on the first Business Day of November, 2004 (such date
as it may be extended pursuant to Subparagraph 2.02(b) to be
referred to as the "Scheduled Expiration Date"). (For purposes of
Oregon law, the Scheduled Expiration Date shall be the maturity
date if this Agreement is construed as the parties intend.)
(b) Extensions. Lessee may request Lessor to extend the
Scheduled Expiration Date in effect for three (3) additional
periods of one (1) year each, as provided in Subparagraph 2.09(b)
of the Participation Agreement. If Lessor and each Participant
consents to any such a request in accordance with such provision,
the current Scheduled Expiration Date shall be deemed extended by
one (1) year. Lessee acknowledges that neither Lessor nor any
Participant has any obligation or commitment (either express or
implied) to extend, or consent to the extension of, the Scheduled
Expiration Date at any time.
2.03. Rent.
(a) Base Rent.
(i) Lessee shall pay as base rent hereunder ("Base
Rent") for each Rental Period an amount equal to the product
of (A) the Rental Rate for such Rental Period, times (B) the
Outstanding Lease Amount on the first day of such Rental
Period, times (C) a fraction, the numerator of which is the
number of days in such Rental Period and the denominator of
which is 360. If the Rental Rate shall change during any
Rental Period, the Rental Rate for such Rental Period shall
be the weighted average of the Rental Rates in effect from
time to time during such Rental Period.
(ii) The Term shall consist of the following rental
periods (individually, a "Rental Period"):
(A) The period which begins on the
Commencement Date and ends on the first Business Day
in the first calendar month immediately following the
month in which the Commencement Date occurs;
(B) Each successive period thereafter which
begins on the last day of the immediately preceding
Rental Period and ends one (1) month thereafter on the
first Business Day of a calendar month through and
including the Commitment Termination Date; and
(C) Each successive period thereafter which
begins on the last day of the immediately preceding
Rental Period and ends one (1), two (2), three (3) or
six (6) months thereafter, as determined in accordance
with this clause (ii), on the first Business Day of a
calendar month through and including the Scheduled
Expiration Date.
Lessee may select a Rental Period of one (1), two (2), three
(3) or six (6) months for the Rental Period which begins on
the Commitment Termination Date or for any Rental Period
thereafter by delivering to Lessor, at least three (3)
Business Days prior to the first day of such Rental Period,
a written notice of such selection (a "Notice of Rental
Period Selection"); provided, however, that (1) each Rental
Period shall begin and end on the first Business Day of a
calendar month, (2) no Rental Period shall end after the
Scheduled Expiration Date, (3) no Rental Period shall be
longer than one (1) month if a Default has occurred and is
continuing on the date three (3) Business Days prior to the
first day of such Rental Period and (4) each Rental Period
for which Lessee fails to make a selection in accordance
with this clause (ii) shall be one (1) month. Each Notice
of Rental Period Selection shall be delivered by first-class
mail or facsimile as required by Subparagraph 2.02(a) and
Paragraph 7.01 of the Participation Agreement; provided,
however, that Lessee shall promptly deliver the original of
any Notice of Rental Period Selection initially delivered by
facsimile.
(iii) The rental rate for each Rental Period ("Rental
Rate") shall be the LIBOR Rental Rate for such Rental
Period, except as follows:
(A) The Rental Rate for the Rental Period that
begins on the Closing Date and ends on January 1, 1998
shall be the Alternate Rental Rate; or
(B) If any other Rental Period is less than
seven (7) days, the Rental Rate for such Rental Period
shall be the Alternate Rental Rate; or
(C) If the LIBOR Rental Rate is unavailable
for any Rental Period pursuant to Subparagraph 2.12(a)
or Subparagraph 2.12(b) of the Participation
Agreement, the Rental Rate for such Rental Period
shall be the Alternate Rental Rate.
(iv) Lessee shall pay Base Rent in arrears (A) on the
last day of each Rental Period and, in the case of any
Rental Period which exceeds three (3) months, each day
occurring every three (3) months after the first day of such
Rental Period (individually, a "Scheduled Rent Payment
Date") and (B) on the Expiration Date.
(b) Supplemental Rent. Lessee shall pay as supplemental
rent hereunder ("Supplemental Rent") all amounts (other than Base
Rent, the purchase price payable by Lessee for any purchase of the
Property by Lessee pursuant to the Purchase Agreement and the
Residual Value Guaranty Amount payable under the Purchase
Agreement) payable by Lessee under this Agreement and the other
Operative Documents. Lessee shall pay all Supplemental Rent
amounts on the dates specified in this Agreement and the other
Operative Documents for the payment of such amounts or, if no date
is specified for the payment of any such amount, upon the demand
of Lessor or any other Person to whom such amount is payable.
2.04. Use. Lessee may use the Property for office, research and
development, warehouse and manufacturing purposes, and for any other
purpose which is in compliance with applicable zoning laws and
ordinances for the Property.
2.05. "As Is" Lease. Lessee has conducted, or will conduct from
time to time with regard to property that may be added hereto after the
date hereof, all due diligence which it deems appropriate regarding the
Property and agrees that no Lessor Party has any obligation to conduct
any such due diligence. Lessee is leasing the Property "as is, with all
faults" without any representation, warranty, indemnity or undertaking
by any Lessor Party regarding any aspect of the Property, including (a)
the condition of the Property (including any Improvements to the
Property made prior to the Commencement Date or during the Term); (b)
title to the Property (including possession of the Property by any
Person or the existence of any Lien or any other right, title or
interest in or to any of the Property in favor of any Person); (c) the
value, habitability, usability, design, operation or fitness for use of
the Property; (d) the availability or adequacy of utilities and other
services to the Property; (e) any latent, hidden or patent defect in the
Property; (f) the zoning or status of the Property or any other
restrictions on the use of the Property; (g) the economics of the
Property; (h) any Casualty or Condemnation; or (i) the compliance of the
Property with any applicable Governmental Rule or Insurance Requirement;
provided, however, that Lessor shall be obligated to remove Lessor Liens
to the extent required in Subparagraph 5.04(b) of the Participation
Agreement. Without limiting the generality of the foregoing, Lessee
specifically waives any covenant of quiet enjoyment except as otherwise
provided in Subparagraph 5.04(b) of the Participation Agreement.
2.06. Nature of Transaction. As more fully provided in Paragraph
2.10 of the Participation Agreement, Lessee and the Lessor Parties
intend that the transaction evidenced by this Agreement and the other
Operative Documents constitute an operating lease in accordance with
FASB 13 for accounting purposes and a loan secured by the Property for
other purposes, including federal, state and local income tax purposes
and commercial, real estate and bankruptcy law purposes.
2.07. Security, Etc. In order to secure the Lessee Obligations
and otherwise to assure the Lessor Parties the benefits hereof in the
event that the transaction evidenced by this Agreement and the other
Operative Documents is, pursuant to the intent of Lessee and the Lessor
Parties, treated as a loan for certain purposes, Lessee hereby makes the
following grants and agrees as follows:
(a) Real Property Security. As security for the Lessee
Obligations, Lessee hereby irrevocably and unconditionally grants,
conveys, transfers and assigns to Trustee, as beneficiary (in
trust for the benefit of the Lessor Parties), with power of sale
and right of entry and possession, all estate, right, title and
interest of Lessee in the following property, whether now owned or
leased or hereafter acquired, (collectively, the "Real Property
Collateral"):
(i) The Land;
(ii) All Improvements located on the Land;
(iii) All Appurtenant Rights belonging, relating or
pertaining to any of the foregoing Land or Improvements;
(iv) All Subleases of and all Issues and Profits
accruing from any of the foregoing Land, Improvements or
Appurtenant Rights to the extent that such Subleases and
Issues and Profits constitute real property;
(v) All Related Goods, Related Permits and Related
Agreements related to any of the foregoing Land,
Improvements or Appurtenant Rights to the extent that such
Related Goods, Related Agreements and Related Permits
constitute real property;
(vi) All other Property to the extent that such
property constitutes real property; and
(vii) All proceeds of the foregoing, including
Casualty and Condemnation Proceeds.
(b) Personal Property Security. As security for the
Lessee Obligations, Lessee hereby irrevocably and unconditionally
assigns and grants to Lessor, for the benefit of the Lessor
Parties, a security interest in all estate, right, title and
interest of Lessee in the following property, whether now owned or
leased or hereafter acquired, (collectively, the "Personal
Property Collateral"):
(i) All Subleases of and all Issues and Profits
accruing from any of the Land, Improvements or Appurtenant
Rights to the extent that such Subleases and Issues and
Profits constitute personal property;
(ii) All Related Goods, Related Permits and Related
Agreements related to any of the Land, Improvements or
Appurtenant Rights to the extent that such Related Goods,
Related Agreements and Related Permits constitute personal
property;
(iii) All Cash Collateral and all other deposit
accounts, instruments, investment property and monies held
by any Lessor Party in connection with this Agreement or any
other Operative Document (including any Repair and
Restoration Account);
(iv) All other Property to the extent such Property
constitutes personal property; and
(v) All proceeds of the foregoing, including
Casualty and Condemnation Proceeds.
For purpose of the provisions of this Agreement related to the
creation and enforcement of this Agreement as a security agreement
and a fixture filing with respect to the Related Goods, Lessee is
the "debtor" and Lessor is the "secured party," acting for the
benefit of the Lessor Parties. This Agreement constitutes a
fixture filing for purposes of the Oregon Commercial Code with
respect to the Related Goods which are or are to become fixtures
on the Land or Improvements. The mailing addresses of Lessee and
of Lessor from which information concerning security interests
hereunder may be obtained are as set forth on the signature page
of this Agreement. A carbon, photographic or other reproduction
of this Agreement or of any financing statement related to this
Agreement shall be sufficient as a financing statement for any of
the purposes referenced herein.
(c) Absolute Assignment of Subleases, Issues, and Profits.
Lessee hereby irrevocably assigns to Lessor, for the benefit of
the Lessor Parties, all of Lessee's estate, right, title and
interest in, to and under the Subleases and the Issues and
Profits, whether now owned or hereafter acquired. This is a
present and absolute assignment for security purposes in
accordance with Oregon Revised Statute ("ORS") Section 93.805, and
Lessor's right to the Subleases and Issues and Profits is not
contingent upon, and may be exercised without possession of, the
Property.
(i) If no Event of Default has occurred and is
continuing, Lessee shall have a revocable license to collect
and retain the Issues and Profits as they become due. Upon
the occurrence and during the continuance of an Event of
Default, such license shall automatically terminate, and
Lessor may collect and apply the Issues and Profits pursuant
to Subparagraph 5.02(d) without further notice to Lessee or
any other party and without taking possession of the
Property. All Issues and Profits thereafter collected by
Lessee shall be held by lessee as trustee in a constructive
trust for the benefit of Lessor. Lessee hereby irrevocably
authorizes and directs the sublessees under the Subleases,
without any need on their part to inquire as to whether an
Event of Default has actually occurred or is then existing,
to rely upon and comply with any notice or demand by Lessor
for the payment to Lessor of any rental or other sums which
may become due under the Subleases or for the performance of
any of the sublessees' undertakings under the Subleases.
Collection of any Issues and Profits by Lessor shall not
cure or waive any default or notice of default hereunder or
invalidate any acts done pursuant to such notice.
(ii) The foregoing irrevocable assignment shall not
cause any Lessor Party to be (A) a mortgagee in possession;
(B) responsible or liable for (1) the control, care,
management or repair of the Property or for performing any
of Lessee's obligations or duties under the Subleases, (2)
any waste committed on the Property by the sublessees under
any of the Subleases or by any other Persons, (3) any
dangerous or defective condition of the Property, or (4) any
negligence in the management, upkeep, repair or control of
the Property resulting in loss or injury or death to any
sublessee, licensee, employee, invitee or other Person; or
(C) responsible for or impose upon any Lessor Party any duty
to produce rents or profits. No Lessor Party, in the
absence of gross negligence or willful disregard on its
part, shall be liable to Lessee as a consequence of (y) the
exercise or failure to exercise any of the rights, remedies
or powers granted to Lessor hereunder or (z) the failure or
refusal of Lessor to perform or discharge any obligation,
duty or liability of Lessee arising under the Subleases.
SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.
3.01. Maintenance, Repair, Etc.
(a) General. Lessee shall not permit any waste of the
Property, except for ordinary wear and tear, and shall, at its
sole cost and expense, maintain the Property in good working
order, mechanical condition and repair and make all necessary
repairs thereto, of every kind and nature whatsoever, whether
interior or exterior, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required
by all applicable Governmental Rules and Insurance Requirements
and on a basis consistent with the operation and maintenance of
commercial properties comparable in type and location to the
Property and in compliance with prudent industry practice.
(b) New Improvements. Lessee shall make or cause to be
made all of the New Improvements authorized and required by the
Construction Agency Agreement in accordance with the Construction
Agency Agreement.
(c) Other Modifications. Lessee, at its sole cost and
expense, may from time to time make alterations, renovations,
improvements and additions to the Property and substitutions and
replacements therefor (collectively, "Modifications") in addition
to the New Improvements; provided that:
(i) No Modification impairs the value, utility or
useful life of the Property or any part thereof from that
which existed immediately prior to such Modification;
(ii) All Modifications are made expeditiously and, in
no case unless Lessee currently is exercising either the
Term Purchase Option or the Expiration Date Purchase Option,
shall Modifications in an aggregate amount of $1,000,000
remain uncompleted later than six (6) months prior to the
Scheduled Expiration Date;
(iii) All Modifications are made in a good and
workmanlike manner and in compliance with all applicable
Governmental Rules and Insurance Requirements;
(iv) Subject to Paragraph 3.12 relating to permitted
contests, Lessee pays all costs and expenses and discharges
(or cause to be insured or bonded over) any Liens arising in
connection with any Modification not later than the earlier
of (A) sixty (60) days after the same shall be filed (or
otherwise becomes effective) and (B)unless Lessee currently
is exercising either the Term Purchase Option or the
Expiration Date Purchase Option, six (6) months prior to the
Scheduled Expiration Date;
(v) At least one (1) month prior to the commencement
of (A) any Modifications which are anticipated to cost
$1,000,000 or more in the aggregate, or (B) any
Modifications which cause the total of all Modifications
undertaken during the previous twelve-month period to exceed
an aggregate cost of $2,500,000, Lessee shall deliver to
Lessor, with sufficient copies for Agent and each
Participant, a brief written description of such
Modifications; and
(vi) All Modifications otherwise comply with this
Agreement and the other Operative Documents.
(d) Abandonment. Lessee shall not abandon the Property or
any material portion thereof for any period in excess of thirty
(30) consecutive days during the term hereof, except as a part of
any New Improvements or Modifications as permitted herein or in
the other Operative Documents.
(e) Maintenance. Lessee shall maintain the Property and
each material portion thereof in a manner consistent with other
similar properties in the same area, except as a part of any New
Improvements or Modifications as permitted herein.
3.02. Risk of Loss. Lessee assumes all risks of loss arising from
any Casualty or Condemnation which arises or occurs prior to the
Expiration Date or while Lessee is in possession of the Property and all
liability for all personal injuries and deaths and damages to property
suffered by any Person or property on or in connection with the Property
which arises or occurs prior to the Expiration Date or while Lessee is
in possession of the Property, except in each case to the extent any
such loss or liability is primarily caused by the gross negligence or
willful misconduct of a Lessor Party. Lessee hereby waives any and all
applicable existing or future Governmental Rules permitting the
termination of this Agreement as a result of any Casualty or
Condemnation, and Lessor shall in no event be answerable or accountable
for any risk of loss of or decrease in the enjoyment and beneficial use
of the Property as a result of any such event.
3.03. Insurance.
(a) Coverage. Lessee, at its sole cost and expense, shall
carry and maintain the following insurance coverage:
(i) At all times during the Term, commercial
liability insurance covering claims for injuries or death
sustained by persons or damage to property while on the
Property, and workers' compensation insurance;
(ii) At all times after commencement of construction
of the structure, (A) unless covered by builders' risk
insurance pursuant to clause (ii) of Subparagraph 3.03(a),
property insurance covering loss or damage by earthquake in
an amount not less than the then current probable maximum
loss (as determined by a seismic expert reasonably approved
by Lessor and Agent) and (B) property insurance covering
loss or damage by fire, flood and other risks (other than
earthquake) in an amount not less than the then current
replacement cost of the Improvements on the Property;
(iii) During the construction of any Improvements,
builders' risk insurance covering fire, flood, earthquake
and other normal insured risks; and
(iv) At all times during the Term as appropriate,
such other insurance of the types customarily carried by a
reasonably prudent Person owning or operating properties
similar to the Property in the same geographic area as the
Property.
Except as otherwise specifically required above, such insurance
shall be in amounts, in a form and with deductibles approved by
Lessor.
(b) Carriers.
(i) Any primary insurance carried and maintained by
Lessee pursuant to this Paragraph 3.03 shall be underwritten
by an insurance company which (A) has, at the time such
insurance is placed and at the time of each renewal thereof,
a general policyholder rating of "A" and a financial rating
of at least 13 from A.M. Best and Company or any successor
thereto (or if there is none, an organization having a
similar national reputation) or (B) is otherwise approved by
Lessor and Required Participants.
(ii) Any "differences in conditions" insurance carried
and maintained by Lessee in addition to insurance carried
and maintained by Lessee in accordance with clause (b)(i) of
this Paragraph 3.03 shall be underwritten by an insurance
company which has, at the time such insurance is placed and
at the time of each renewal thereof, a general policyholder
rating of at least "B+" and a financial rating of at least 7
from A.M. Best and Company or any successor thereto (or if
there is none, an organization having a similar national
reputation). With respect to the foregoing, at no time
shall "differences in conditions" insurance underwritten by
any such "B+/7" rated insurance company exceed in the
aggregate 20% of the total insurance coverage limits in
place pursuant to this Paragraph 3.03 or be in the "primary"
or "first excess" position.
(c) Terms. Each insurance policy maintained by Lessee
pursuant to this Paragraph 3.03 shall provide as follows, whether
through endorsements or otherwise:
(i) Lessor and Agent shall be named as additional
insureds, in the case of each policy of liability insurance,
and additional loss payees, in the case of each policy of
property insurance.
(ii) In respect of the interests of Lessor in the
policy, the insurance shall not be invalidated by any action
or by inaction of Lessee or by any Person having temporary
possession of the Property while under contract with Lessee
to perform maintenance, repair, alteration or similar work
on the Property, and shall insure the interests of Lessor
regardless of any breach or violation of any warranty,
declaration or condition contained in the insurance policy
by Lessee, Lessor or any other additional insured (other
than by such additional insured, as to such additional
insured); provided, however, that the foregoing shall not be
deemed to (A) cause such insurance policies to cover matters
otherwise excluded from coverage by the terms of such
policies or (B) require any insurance to remain in force
notwithstanding non-payment of premiums except as provided
in clause (iii) below.
(iii) If the insurance policy is cancelled for any
reason whatsoever, or substantial change is made in the
coverage that affects the interests of Lessor, or if the
insurance coverage is allowed to lapse for non-payment of
premium, such cancellation, change or lapse shall not be
effective as to Lessor for thirty (30) days after receipt by
Lessor of written notice from the insurers of such
cancellation, change or lapse.
(iv) No Lessor Party shall have any obligation or
liability for premiums, commissions, assessments, or calls
in connection with the insurance.
(v) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment
or otherwise, that it may have against any Lessor Party.
(vi) The insurance shall be primary without right of
contribution from any other insurance that may be carried by
any Lessor Party with respect to its interest in the
Property.
(vii) The insurer shall waive any right of subrogation
against any Lessor Party.
(viii) All provisions of the insurance, except
the limits of liability, shall operate in the same manner as
if there were a separate policy covering each insured party.
(ix) The insurance shall not be invalidated should
Lessee or any Lessor Party waive, in writing, prior to a
loss, any or all rights of recovery against any Person for
losses covered by such policy, nor shall the insurance in
favor of any Lessor Party or Lessee, as the case may be, or
their respective rights under and interests in said policies
be invalidated or reduced by any act or omission or
negligence of any Lessee Party or Lessor, as the case may
be, or any other Person having any interest in the Property.
(x) All insurance proceeds with a value of less than
five million Dollars ($5,000,000) in respect of any loss or
occurrence with respect to the Property shall be paid to and
adjusted solely by Lessee and all other insurance proceeds
shall be paid to Lessor and adjusted jointly by Lessor and
Lessee, except that, from and after the date on which the
insurer receives written notice from Lessor that an Event of
Default has occurred and is continuing (and unless and until
such insurer receives written notice from Lessor that all
Events of Default have been cured), all losses shall be
adjusted solely by, and all insurance proceeds shall be paid
solely to, Lessor.
(xi) Each policy shall contain a standard form
mortgagee endorsement in favor of Lessor.
(d) Evidence of Insurance. Lessee, at its sole cost and
expense, shall furnish to Lessor from time to time upon the
request of Lessor such certificates or other documents as Lessor
may reasonably request to evidence Lessee's compliance with the
insurance requirements set forth in this Paragraph 3.03.
(e) Release of Lessor Parties. Lessee hereby waives,
releases and discharges each Lessor Party and its directors,
officers, employees, agents and advisors from all claims
whatsoever arising out of any loss, claim, expense or damage to or
destruction covered or coverable by insurance required under this
Paragraph 3.03, notwithstanding that such loss, claim, expense or
damage may have been caused by any such Person, and, as among
Lessee and such Persons, Lessee agrees to look to the insurance
coverage only in the event of such loss.
(f) Forced Placement of Insurance. Pursuant to Oregon
Revised Statutes Section 746.201, Lessor hereby provides Lessee
with the following notice:
"WARNING"
Unless you provide us with evidence of the insurance
coverage as required by our contract or loan agreement, we
may purchase insurance at your expense to protect our
interest. This insurance may, but need not, also protect
your interest. If the collateral becomes damaged, the
coverage we purchase may not pay any claim you make or any
claim made against you. You may later cancel this coverage
by providing evidence that you have obtained property
coverage elsewhere.
You are responsible for the cost of any insurance
purchased by us. The cost of this insurance may be added to
your contract or loan balance. If the cost is added to your
contract or loan balance, the interest rate on the
underlying contract or loan will apply to this added amount.
The effective date of coverage may be the date your prior
coverage lapsed or the date you failed to provide proof of
coverage.
The coverage that we purchase may be considerably more
expensive than insurance you can obtain on your own and may
not satisfy any need for property damage coverage or any
mandatory liability insurance requirements imposed by
applicable law.
As used in the above notice, (i) "you" and "your" shall refer to
Lessee, (ii) "we", "us" and "our" shall refer to Lessor, (iii)
"contract or loan agreement" shall refer to the Participation
Agreement, this Agreement and the other Operative Documents, (iv)
"collateral" shall refer to the Property, (v) "contract or loan
balance" shall refer to the Outstanding Lease Amount and (vi)
"interest rate" shall refer to Rental Rate.
3.04. Casualty and Condemnation.
(a) Notice. Lessee shall give Lessor prompt written
notice of the occurrence of any Material Casualty affecting, or
the institution of any proceedings for the Condemnation of, the
Property or any portion thereof.
(b) Repair or Purchase Option. After the occurrence of
any Material Casualty or Condemnation affecting the Property or
any portion thereof, Lessee shall either (i) repair and restore
the Property as required by Subparagraph 3.04(c) or (ii) exercise
the Term Purchase Option and purchase the Property pursuant to the
Purchase Agreement; provided, however, that Lessee may not elect
to repair and restore the Property if such casualty or
condemnation is a Major Casualty or Major Condemnation or if an
Event of Default has occurred and is continuing, unless Lessor and
the Required Participants shall consent in writing. Not later
than one (1) month after the occurrence of any Material Casualty
or Condemnation, Lessee shall deliver to Lessor a written notice
indicating whether it elects to repair and restore or purchase the
Property.
(c) Repair and Restoration. If Lessee elects to repair
and restore the Property following any Material Casualty or
Condemnation, Lessee shall diligently proceed to repair and
restore the Property to the condition in which it existed
immediately prior to such Material Casualty or Condemnation and
shall use reasonable efforts to complete all such repairs and
restoration as soon as reasonably practicable, but not later than
the earlier of (y) six (6) months after the occurrence of the
Material Casualty or Condemnation and (z) six (6) months prior to
the Scheduled Expiration Date unless Lessee currently is
exercising either the Term Purchase Option or the Expiration Date
Purchase Option,. Lessee shall use its own funds to make such
repairs and restoration, except to the extent any Casualty and
Condemnation Proceeds are available and are released to Lessee for
such purpose pursuant to Subparagraph 3.04(f). Lessee's exercise
of the repair and restoration option shall, if Lessor or Required
Participants direct, be subject to satisfaction of the following
conditions:
(i) Within two (2) months after the occurrence of
the Material Casualty or Condemnation, Lessee shall deposit
in a deposit account acceptable to and controlled by Lessor
(a "Repair and Restoration Account") of funds (including any
Casualty and Condemnation Proceeds which are available and
are released to Lessee pursuant to Subparagraph 3.04(f)) in
the amount which Lessor determines is needed to complete and
fully pay all costs of the repair or restoration (including
taxes, financing charges, insurance and rent during the
repair period).
(ii) As soon as reasonably possible and in no event
later than six (6) months after the occurrence of the
Material Casualty or Condemnation, Lessee shall establish an
arrangement for lien releases and disbursement of funds
acceptable to Lessor and in a manner and upon such terms and
conditions as would be required by a prudent interim
construction lender.
(iii) As soon as reasonably possible and in no event
later than six (6) months after the occurrence of the
Material Casualty or Condemnation, Lessee shall deliver to
Lessor the following, each in form and substance acceptable
to Lessor;
(A) Evidence that the Property can, in
Lessor's reasonable judgment, with diligent
restoration or repair, be returned to a condition at
least equal to the condition thereof that existed
prior to the Casualty or partial Condemnation causing
the loss or damage within the earlier to occur of (A)
six (6) months after the occurrence of the Casualty or
Condemnation and (B) unless Lessee currently is
exercising either the Term Purchase Option or the
Expiration Date Purchase Option, six (6) months prior
to the Scheduled Expiration Date;
(B) Evidence that all necessary governmental
approvals can be timely obtained to allow the
rebuilding and reoccupancy of the Property;
(C) Copies of all plans and specifications for
the work;
(D) Copies of all contracts for the work,
signed by a contractor reasonably acceptable to
Lessor;
(E) A cost breakdown for the work;
(F) A payment and performance bond for the
work or other security satisfactory to Lessor;
(G) Evidence that, upon completion of the
work, the size, capacity and total value of the
Property will be at least as great as it was before
the Casualty or Condemnation occurred; and
(H) Evidence of satisfaction of any additional
conditions that Lessor or Required Participants may
reasonably establish to protect their rights under
this Agreement and the other Operative Documents.
All plans and specifications for the work must be reasonably
acceptable to Lessor, except that Lessor's approval shall
not be required if the restoration work is based on the same
plans and specifications as were originally used to
construct the Property. To the extent that the funds in a
Repair and Restoration Account include both Casualty and
Condemnation Proceeds and other funds deposited by Lessee,
the other funds deposited by Lessee shall be used first.
Lessee acknowledges that the specific conditions described
above are reasonable.
(d) Prosecution of Claims for Casualty and Condemnation
Proceeds. Lessee shall proceed promptly and diligently to
prosecute in good faith the settlement or compromise of any and
all claims for Casualty and Condemnation Proceeds; provided,
however, that any settlement or compromise of any such claim
shall, except as otherwise provided in clause (x) of Subparagraph
3.03(c), be subject to the written consent of Lessor and Required
Participants, which consents shall not be unreasonably withheld.
Lessor may participate in any proceedings relating to such claims,
and, after the occurrence and during the continuance of any Event
of Default, Lessor is hereby authorized, in its own name or in
Lessee's name, to adjust any loss covered by insurance or any
Casualty or Condemnation claim or cause of action, and to settle
or compromise any claim or cause of action in connection
therewith, and Lessee shall from time to time deliver to Lessor
any and all further assignments and other instruments required to
permit such participation.
(e) Assignment of Casualty and Condemnation Proceeds.
Lessee hereby absolutely and irrevocably assigns to Lessor all
Casualty and Condemnation Proceeds and all claims relating
thereto. Except as otherwise provided in clause (x) of
Subparagraph 3.03(c), Lessee agrees that all Casualty and
Condemnation Proceeds are to be paid to Lessor and Lessee hereby
authorizes and directs any insurer, Governmental Authority or
other Person responsible for paying any Casualty and Condemnation
Proceeds to make payment thereof directly to Lessor alone, and not
to Lessor and Lessee jointly. If Lessee receives any Casualty and
Condemnation Proceeds payable to Lessor hereunder, Lessee shall
promptly pay over such Casualty and Condemnation Proceeds to
Lessor. Lessee hereby covenants that until such Casualty and
Condemnation Proceeds are so paid over to Lessor, Lessee shall
hold such Casualty and Condemnation Proceeds in trust for the
benefit of Lessor and shall not commingle such Casualty and
Condemnation Proceeds with any other funds or assets of Lessee or
any other Person. Except as otherwise provided in clause (x) of
Subparagraph 3.03(c), Lessor may commence, appear in, defend or
prosecute any assigned right, claim or action, and may adjust,
compromise, settle and collect all rights, claims and actions
assigned to Lessor, but shall not be responsible for any failure
to collect any such right, claim or action, regardless of the
cause of the failure.
(f) Use of Casualty and Condemnation Proceeds.
(i) If (A) no Event of Default has occurred and is
continuing, (B) Lessee exercises the repair and restoration
option pursuant to Subparagraphs 3.04(b) and 3.04(c) and (C)
Lessee complies with any conditions imposed pursuant to
Subparagraph 3.04(c); then Lessor shall release any Casualty
and Condemnation Proceeds to Lessee for repair or
restoration of the Property, but may condition such release
and use of the Casualty and Condemnation Proceeds upon
deposit of the Casualty and Condemnation Proceeds in a
Repair and Restoration Account. Lessor shall have the
option, upon the completion of such restoration of the
Property, to apply any surplus Casualty and Condemnation
Proceeds remaining after the completion of such restoration
to the payment of Rent and/or the reduction of the
Outstanding Lease Amount, notwithstanding that such amounts
are not then due and payable or that such amounts are
otherwise adequately secured.
(ii) If (A) an Event of Default has occurred and is
continuing, (B) Lessee fails to or is unable to comply with
any conditions imposed pursuant to Subparagraph 3.04(c) or
(C) Lessee elects to exercise the Term Purchase Option and
purchase the Property pursuant to the Purchase Agreement;
then, at the absolute discretion of Lessor and the Required
Participants, regardless of any impairment of security or
lack of impairment of security, but subject to applicable
Governmental Rules governing use of Casualty and
Condemnation Proceeds, if any, Lessor may (1) apply all or
any of the Casualty and Condemnation Proceeds it receives to
the expenses of Lessor Parties in obtaining such proceeds;
(2) apply the balance to the payment of Rent and/or the
reduction of the Outstanding Lease Amount, notwithstanding
that such amounts are not then due and payable or that such
amounts are otherwise adequately secured and/or (3) release
all or any part of such proceeds to Lessee upon any
conditions Lessor and the Required Participants may elect.
(iii) Lessor shall apply any Casualty and Condemnation
Proceeds which are to be used to reduce the Outstanding
Lease Amount only on the last day of a Rental Period unless
a Default has occurred and is continuing.
(iv) Application of all or any portion of the
Casualty and Condemnation Proceeds, or the release thereof
to Lessee, shall not cure or waive any Default or notice of
default or invalidate any acts done pursuant to such notice.
3.05. Taxes. Subject to Paragraph 3.12 relating to permitted
contests, Lessee shall promptly pay when due all Indemnified Taxes
imposed on or payable by Lessee or any Lessor Party in connection with
the Property, this Agreement or any of the other Operative Documents, or
any of the transactions contemplated hereby or thereby. As promptly as
possible after any Indemnified Taxes are payable by Lessee, Lessee shall
send to Lessor for the account of the applicable Lessor Party a
certified copy of an original official receipt received by Lessee
showing payment thereof. If Lessee fails to pay any such Indemnified
Taxes when due to the appropriate taxing authority or fails to remit to
Lessor the required receipts or other required documentary evidence,
Lessee shall indemnify the Lessor Parties for any incremental taxes,
interest or penalties that may become payable by the Lessor Parties as a
result of any such failure. The obligations of Lessee under this
Paragraph 3.05 shall survive the payment and performance of the Lessee
Obligations and the termination of this Agreement.
3.06. Environmental Matters.
(a) Lessee's Covenants. Lessee shall not cause or permit
Hazardous Materials to be used, generated, manufactured, stored,
treated, disposed of, transported or present on or released or
discharged from the Property in any manner that is reasonably
likely to have a Material Adverse Effect. Lessee may use
Hazardous Materials in connection with the operation of its
business (or the business of permitted subtenants) so long as such
use is consistent with the preceding sentence. Lessee shall
immediately notify Lessor in writing of (i) any knowledge by
Lessee that the Property does not comply with any Environmental
Laws; and (ii) any claims against Lessee or the Property relating
to Hazardous Materials or pursuant to Environmental Laws. In
response to the presence of any Hazardous Materials on, under or
about the Property, Lessee shall immediately take, at Lessee's
sole expense, all remedial action required by any Environmental
Laws or any judgment, consent decree, settlement or compromise in
respect to any claim based thereon.
(b) Inspection By Lessor. Upon reasonable prior notice to
Lessee, Lessor, its employees and agents, may from time to time
(whether before or after the commencement of a nonjudicial or
judicial foreclosure proceeding), enter and inspect the Property
for the purpose of determining the existence, location, nature and
magnitude of any past or present release or threatened release of
any Hazardous Materials into, onto, beneath or from the Property,
provided that any such Person so entering and inspecting the
Property shall do so without materially disrupting the operations
of Lessee.
(c) Indemnity. Without in any way limiting any other
indemnity contained in this Agreement or any other Operative
Document, Lessee agrees to defend, indemnify and hold harmless the
Lessor Parties and the other Indemnitees from and against any
claim, loss, damage, cost, expense or liability directly or
indirectly arising out of (i) the use, generation, manufacture,
storage, treatment, release, threatened release, discharge,
disposal, transportation or presence of any Hazardous Materials
which are found in, on, under or about the Property or (ii) the
breach of any covenant, representation or warranty of Lessee
relating to Hazardous Materials or Environmental Laws contained in
this Agreement or any Operative Document. This indemnity shall
include (A) the costs, whether foreseeable or unforeseeable, of
any investigation, repair, cleanup or detoxification of the
Property which is required by any Governmental Authority or is
otherwise necessary to render the Property in compliance with all
Environmental Laws; (B) all other direct or indirect consequential
damages (including any third party claims, claims by any
Governmental Authority, or any fines or penalties against the
Indemnitees; and (C) all court costs and attorneys' fees
(including expert witness fees and the cost of any consultants)
paid or incurred by the Indemnitees. Lessee shall pay immediately
upon Lessor's demand any amounts owing under this indemnity.
Lessee shall use legal counsel reasonably acceptable to Lessor in
any action or proceeding arising under this indemnity. The
obligations of Lessee under this Subparagraph 3.06(c) shall
survive the payment and performance of the Lessee Obligations and
the termination of this Agreement.
(d) Legal Effect of Section. Lessee and Lessor agree that
(i) this Paragraph 3.06 and clause (i) of Subparagraph 4.01(u) of
the Participation Agreement are intended as Lessor's written
request for information (and Lessee's response) concerning the
environmental condition of the real property security as required
by California Code of Civil Procedure Section 726.5 and (ii) each
representation and warranty and covenant herein and therein
(together with any indemnity applicable to a breach of any such
representation and warranty) with respect to the environmental
condition of the Property is intended by Lessor and Lessee to be
an "environmental provision" for purposes of California Code of
Civil Procedure Section 736.
3.07. Liens, Easements, Etc.
(a) Lessee's Covenants. Subject to Paragraph 3.12
relating to permitted contests, Lessee shall not create, incur,
assume or permit to exist any Lien or easement on or with respect
to any of the Property of any character, whether now owned or
hereafter acquired, except for the following ("Permitted Property
Liens"):
(i) Liens in favor of a Lessor Party securing the
Lessee Obligations and other Lessor Liens;
(ii) Liens and easements in existence on the
Commencement Date to the extent reflected in the title
insurance policies delivered to Agent pursuant to Paragraph
3.01 of and Schedule 3.01 to the Participation Agreement and
approved by Lessor;
(iii) Liens for taxes or other Governmental Charges
not at the time delinquent or thereafter payable without
penalty; and
(iv) Liens of carriers, warehousemen, mechanics,
materialmen and vendors and other similar Liens imposed by
law incurred in the ordinary course of business for sums not
overdue.
Subject to Paragraph 3.12 relating to permitted contests, Lessee
shall promptly (A) pay all Indebtedness of Lessee and other
obligations prior to the time the non-payment thereof would give
rise to a Lien on the Property and (B) discharge, at its sole cost
and expense, any Lien on the Property which is not a Permitted
Property Lien.
(b) No Consents. Nothing contained in this Agreement
shall be construed as constituting the consent or request of any
Lessor Party, express or implied, to or for the performance by any
contractor, mechanic, laborer, materialman, supplier or vendor of
any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or
to the Property or any part thereof. NOTICE IS HEREBY GIVEN THAT
NO LESSOR PARTY IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE
HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES
OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF ANY LESSOR
PARTY IN AND TO THE PROPERTY.
3.08. Subletting. Lessee may, in the ordinary course of business,
sublease the Property or any portion thereof to any Person, provided,
that (a) Lessee remains directly and primarily liable for performing its
obligations under this Agreement and all other Lessee Obligations; (b)
each sublease is subject to and subordinated to this Agreement; (c) each
sublease has a term which expires on or prior to the Scheduled
Expiration Date (or, if longer, includes a provision that the sublease
terminates on the Expiration Date if such Expiration Date occurs prior
to the Scheduled Expiration Date unless Lessee purchases the Property on
the Expiration Date pursuant to the Purchase Agreement); (d) each
sublease prohibits the sublessee from engaging in any activities on the
Property other than those permitted by Paragraph 2.04; and (e) no
sublease has a Material Adverse Effect. Any sublease which does not
satisfy each of the requirements of the immediately preceding sentence
shall be null and void as to the Lessor Parties and their successor and
assigns. Except for such permitted subleases, Lessee shall not assign
any of its rights or interests under this Agreement to any other Person.
3.09. Utility Charges. Lessee shall pay all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service
and all other utilities and services to, on or in connection with the
Property during the Term.
3.10. Removal of Property. Lessee shall not remove any
Improvements from the Land or any other Property from the Land or
Improvements, except that, during the Term, Lessee may remove any
Modification or any trade fixture, machinery, equipment, inventory or
other personal property if such Modification or property (a) was not
financed by an Advance, (b) is not required by any applicable
Governmental Rule or Insurance Requirement and (c) is readily removable
without impairing the value, utility or remaining useful life of the
Property.
3.11. Compliance with Governmental Rules and Insurance
Requirements. Lessee, at its sole cost and expense, shall, unless its
failure is not reasonably likely to have a Material Adverse Effect, (a)
comply, and cause its agents, sublessees, assignees, employees,
invitees, licensees, contractors and tenants, and the Property to
comply, with all Governmental Rules and Insurance Requirements relating
to the Property (including the construction, use, operation,
maintenance, repair and restoration thereof, whether or not compliance
therewith shall require structural or extraordinary changes in the
Improvements or interfere with the use and enjoyment of the Property),
and (b) procure, maintain and comply with all licenses, permits, orders,
approvals, consents and other authorizations required for the
construction, use, maintenance and operation of the Property and for the
use, operation, maintenance, repair and restoration of the Improvements.
3.12. Permitted Contests. Lessee, at its sole cost and expense,
may contest any alleged Lien or easement on any of the Property or any
alleged Governmental Charge, Indebtedness or other obligation which is
payable by Lessee hereunder to Persons other than the Lessor Parties or
which, if unpaid, would give rise to a Lien on any of the Property,
provided that (a) each such contest is diligently pursued in good faith
by appropriate proceedings; (b) the commencement and continuation of
such proceedings suspends the enforcement of such Lien or easement or
the collection of such Governmental Charge, Indebtedness or obligation;
(c) Lessee has established adequate reserves for the discharge of such
Lien or easement or the payment of such Governmental Charge,
Indebtedness or obligation in accordance with GAAP and, if the failure
to discharge such Lien or easement or the failure to pay such
Governmental Charge, Indebtedness or obligation might result in any
civil liability for any Lessor Party, Lessee has provided to such Lessor
Party a bond or other security satisfactory to such Lessor Party; (d)
the failure to discharge such Lien or easement or the failure to pay
such Governmental Charge, Indebtedness or obligation could not result in
any criminal liability for any Lessor Party; (e) the failure to
discharge such Lien or easement or the failure to pay such Governmental
Charge, Indebtedness or obligation is not otherwise reasonably likely to
have a Material Adverse Effect; and (f) unless Lessee currently is
exercising either the Term Purchase Option or the Expiration Date
Purchase Option, any such contest is completed and such Lien or easement
is discharged (either pursuant to such proceedings or otherwise) or such
Governmental Charge, Indebtedness or obligation is declared invalid,
paid or otherwise satisfied not later than six (6) months prior to the
Scheduled Expiration Date.
3.13. Lessor Obligations; Right to Perform Lessee Obligations. No
Lessor Party shall have any obligation to (a) maintain, repair or make
any improvements to the Property, (b) maintain any insurance on the
Property, (c) perform any other obligation of Lessee under this
Agreement or any other Lessee Obligation, (d) make any expenditure on
account of the Property (except to make Advances as required by the
Participation Agreement) or (e) take any other action in connection with
the Property, this Agreement or any other Operative Document, except as
expressly provided herein or in another Operative Document; provided
however, that Lessor may, in its sole discretion and without any
obligation to do so, perform any Lessee Obligation not performed by
Lessee when required. Lessor may enter the Property or exercise any
other right of Lessee under this Agreement or any other Operative
Document to the extent Lessor determines in good faith that such entry
or exercise is reasonably necessary for Lessor to perform any such
Lessee Obligation not performed by Lessee when required. Lessee shall
reimburse Lessor and the other Lessor Parties, within five (5) Business
Days after demand, for all fees, costs and expenses incurred by them in
performing any such obligation or curing any Default.
3.14. Inspection Rights. During the Term, Lessee shall permit any
Person designated by Lessor, upon reasonable notice and during normal
business hours, to visit and inspect any of the Property.
SECTION 4. EXPIRATION DATE.
4.01. Termination by Lessee Prior to Scheduled Expiration Date.
Subject to the terms and conditions of the Purchase Agreement, Lessee
may, at any time prior to the Scheduled Expiration Date, terminate this
Agreement and purchase the Property pursuant to Section 2 of the
Purchase Agreement. Lessee shall notify Lessor of Lessee's election so
to terminate this Agreement and purchase the Property by delivering to
Agent a Notice of Term Purchase Option Exercise pursuant to and in
accordance with the provisions of Paragraph 2.02 of the Purchase
Agreement.
4.02. Surrender of Property. Unless Lessee purchases the Property
on the Expiration Date pursuant to the Purchase Agreement, Lessee shall
vacate and surrender the Property to Lessor on the Expiration Date in
its then-current condition, subject to compliance by Lessee on or prior
to such date of its obligations under this Agreement and the other
Operative Documents (including the completion of the New Improvements
and all Modifications, the completion of all permitted contests and the
removal of all Liens which are not Permitted Property Liens of the types
described in clauses (i), (ii) (iii) or (vi) of Subparagraph 3.07(a)).
4.03. Holding Over. If Lessee does not purchase the Property on
the Expiration Date pursuant to the Purchase Agreement but continues in
possession of any portion of the Property after the Expiration Date,
Lessee shall pay rent for each day it so continues in possession,
payable upon demand of Lessor, at a per annum rate equal to the
Alternate Rental Rate plus two percent (2.0%) and shall pay and perform
all of its other Lessee Obligations under this Agreement and the other
Operative Documents in the same manner as though the Term had not ended;
provided, however, that this Paragraph 4.03 shall not be interpreted to
permit such holding over or to limit any right or remedy of Lessor for
such holding over.
SECTION 5. DEFAULT.
5.01. Events of Default. The occurrence or existence of any one
or more of the following shall constitute an "Event of Default"
hereunder:
(a) Non-Payment. Lessee shall (i) fail to pay on the
Expiration Date any amount payable by Lessee under this Agreement
or any other Operative Document on such date, (ii) fail to pay
within five (5) Business Days after any Scheduled Rent Payment
Date any Base Rent payable on such Scheduled Rent Payment Date
(other than the Base Rent payable on the Expiration Date) or (iii)
fail to pay within five (5) Business Days after the same becomes
due, any Supplemental Rent or other amount required under the
terms of this Agreement or any other Operative Document (other
than any such amount payable on the Expiration Date or Base Rent);
or
(b) Specific Defaults. Lessee or any of its Subsidiaries
shall fail to observe or perform any covenant, obligation,
condition or agreement set forth in Subparagraph 3.01(d),
Paragraph 3.03 or Subparagraph 3.07(a) hereof, in Subparagraph
2.01(c), Paragraph 5.02 or Paragraph 5.03 of the Participation
Agreement or in Paragraph 3.01 of the Construction Agency
Agreement; or
(c) Other Defaults. Lessee or any of its Subsidiaries
shall fail to observe or perform any other covenant, obligation,
condition or agreement contained in this Agreement or any other
Operative Document and such failure shall continue for a period of
thirty (30) days after written notice thereof from Lessor;
provided, however, that in the event that such failure cannot
reasonably be cured within such thirty (30) day period, such
failure shall not constitute an Event of Default hereunder so long
as Lessee shall have commenced to cure such failure within such
thirty (30) day period and shall thereafter diligently pursue such
cure to completion, provided further that such failure shall in
all events be cured by the earlier of (i) the Expiration Date and
(ii) one hundred and eighty days (180) days after Lessor's notice
thereof; or
(d) Representations and Warranties. Any representation,
warranty, certificate, information or other statement (financial
or otherwise) made or furnished by or on behalf of Lessee or any
of its Subsidiaries to any Lessor Party in or in connection with
this Agreement or any other Operative Document, or as an
inducement to any Lessor Party to enter into this Agreement or any
other Operative Document, shall be false, incorrect, incomplete or
misleading in any material respect when made or furnished and
Lessee shall not have cured the facts or circumstances causing
such representation, warranty, certificate or other statement to
be false, incorrect, incomplete or misleading within thirty (30)
days of notice thereof from Lessor; or
(e) Cross-Default. Lessee or any of its Subsidiaries (i)
shall fail to make any payment when due on account of any
Indebtedness or Contingent Obligation of such Person (excluding
the Lessee Obligations but including all other Indebtedness and
Contingent Obligations of Lessee or any of its Subsidiaries to any
Lessor Party) and such failure shall continue beyond any period of
grace provided with respect thereto, if the amount of such payment
exceeds $10,000,000 or the effect of such failure is to cause, or
permit the holder or holders thereof to cause, Indebtedness and/or
Contingent Obligations in an aggregate amount exceeding
$10,000,000 to become due or (ii) shall default in the observance
or performance of any other agreement, term or condition contained
in any agreement or instrument evidencing such Indebtedness or
Contingent Obligation, if the effect of such default is to cause,
or permit the holder or holders thereof to cause, Indebtedness
and/or Contingent Obligations in an aggregate amount exceeding
$10,000,000 to become due; or
(f) Insolvency, Voluntary Proceedings. Lessee or any of
its Subsidiaries shall (i) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian of itself or of
all or a substantial part of its property, (ii) be unable, or
admit in writing its inability, to pay its debts generally as they
mature, (iii) make a general assignment for the benefit of its or
any of its creditors, (iv) be dissolved or liquidated in full or
in part, (v) become insolvent (as such term may be defined or
interpreted under any applicable statute), (vi) commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any
official in an involuntary case or other proceeding commenced
against it, or (vi) take any action for the purpose of effecting
any of the foregoing; or
(g) Involuntary Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of
Lessee or any of its Subsidiaries or of all or a substantial part
of the property thereof, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief
with respect to Lessee or any of its Subsidiaries or the debts
thereof under any bankruptcy, insolvency or other similar law now
or hereafter in effect shall be commenced and an order for relief
entered or such proceeding shall not be dismissed or discharged
within sixty (60) days of commencement; or
(h) Judgments. (i) A final judgment or order for the
payment of money in excess of $10,000,000 (exclusive of amounts
covered by insurance issued by an insurer not an Affiliate of
Lessee and otherwise satisfying the requirements set forth in
Subparagraph 5.01(d)) shall be rendered against Lessee or any of
its Subsidiaries and the same shall remain undischarged for a
period of sixty (60) days during which execution shall not be
effectively stayed or (ii) any judgment, writ, assessment, warrant
of attachment, tax lien or execution or similar process shall be
issued or levied against a substantial part of the property of
Lessee or any of its Subsidiaries and such judgment, writ, or
similar process shall not be released, stayed, vacated or
otherwise dismissed within sixty (60) days after issue or levy; or
(i) Operative Documents. Any Operative Document or any
material term thereof shall cease to be, or be asserted by Lessee
or any of its Subsidiaries not to be, a legal, valid and binding
obligation of Lessee or any of its Subsidiaries enforceable in
accordance with its terms; or
(j) ERISA. Any Reportable Event which constitutes grounds
for the termination of any Employee Benefit Plan by the PBGC or
for the appointment of a trustee by the PBGC to administer any
Employee Benefit Plan shall occur, or any Employee Benefit Plan
shall be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by the PBGC to administer any Employee
Benefit Plan; or
(k) Change of Control. Any Change of Control shall occur;
or
(l) Major Casualty or Condemnation. Any Major Casualty or
Major Condemnation affecting the Property shall occur; or
(m) Material Adverse Effect. Any event(s) or condition(s)
which has a Material Adverse Effect shall occur or exist.
5.02. General Remedies. In all cases, upon the occurrence or
existence of any Event of Default and at any time thereafter unless such
Event of Default is waived, Lessor may, with the consent of the Required
Participants, or shall, upon instructions from the Required
Participants, exercise any one or more of the following rights and
remedies (except that the remedy set forth in the first sentence of
Subparagraph 5.02(a) shall be automatic):
(a) Termination of Commitments. If such Event of Default
is an Event of Default of the type described in Subparagraph
5.01(f) or Subparagraph 5.01(g) affecting Lessee, immediately and
without notice the obligation of Lessor to make Advances and the
obligations of the Participants to fund Advances shall
automatically terminate. If such Event of Default is any other
Event of Default, Lessor may by written notice to
Lessee, terminate the obligation of Lessor to make Advances and
the obligations of the Participants to fund Advances.
(b) Appointment of a Receiver. Lessor may apply to any
court of competent jurisdiction for, and obtain appointment of, a
receiver for the Property.
(c) Specific Performance. Lessor may bring an action in
any court of competent jurisdiction to obtain specific enforcement
of any of the covenants or agreements of Lessee in this Agreement
or any of the other Operative Documents.
(d) Collection of Issues and Profits. Lessor may collect
Issues and Profits as provided in Subparagraph 2.07(c) and apply
the proceeds to pay Lessee Obligations.
(e) Protection of Property. Lessor may enter, take
possession of, manage and operate all or any part of the Property
or take any other actions which it reasonably determines are
necessary to protect the Property and the rights and remedies of
the Lessor Parties under this Agreement and the other Operative
Documents, including (i) taking and possessing all of Lessee's
books and records relating to the Property; (ii) entering into,
enforcing, modifying, or canceling subleases on such terms and
conditions as Lessor may consider proper; (iii) obtaining and
evicting tenants; (iv) fixing or modifying sublease rents; (v)
collecting and receiving any payment of money owing to Lessee;
(vi) completing any unfinished Improvements; and/or (vii)
contracting for and making repairs and alterations.
(f) Other Rights and Remedies. In addition to the
specific rights and remedies set forth above in this Paragraph
5.02 and in Paragraph 5.03 and Paragraph 5.04, Lessor may exercise
any other right, power or remedy permitted to it by any applicable
Governmental Rule, either by suit in equity or by action at law,
or both.
5.03. Lease Remedies. If the transaction evidenced by this
Agreement and the other Operative Documents is treated as a lease, upon
the occurrence or existence of any Event of Default and at any time
thereafter unless such Event of Default is waived, Lessor may, with the
consent of the Required Participants, or shall, upon instructions from
the Required Participants, exercise any one or more of the following
rights and remedies in addition to those rights and remedies set forth
in Paragraph 5.02:
(a) Termination of Lease. Lessor may, by written notice
to Lessee, terminate this Agreement on a Termination Date which is
prior to the Scheduled Expiration Date, subject to Subparagraph
3.02(1) of the Purchase Agreement. Such Termination Date shall be
the last day of a Rental Period unless Required Participants shall
otherwise direct. On such Termination Date (which shall then be
the Expiration Date), Lessee shall pay all unpaid Base Rent
accrued through such date, all Supplemental Rent due and payable
on or prior to such date and all other amounts payable by Lessee
on the Expiration Date pursuant to this Agreement and the other
Operative Documents. Lessee also shall pay to Lessor, in addition
to all accrued Base Rent, the worth at the time of such payment of
the amount by which the unpaid Base Rent through the Scheduled
Expiration Date exceeds the amount of such rental loss for the
same period that Lessee proves could reasonably be avoided.
(b) Continuation of Lease. Lessor may exercise the rights
and remedies provided by Oregon law, including the right to
continue this Agreement in effect after Lessee's breach and
abandonment and recover Rent as it becomes due. Acts of
maintenance or preservation, efforts to relet the Property, the
appointment of a receiver upon Lessor's initiative to protect its
interest under this Agreement or withholding consent to or
terminating a sublease shall not of themselves constitute a
termination of Lessee's right to possession.
(c) Removal and Storage of Property. Lessor may enter the
Property and remove therefrom all Persons and property, store such
property in a public warehouse or elsewhere at the cost of and for
the account of Lessee and sell such property and apply the
proceeds therefrom pursuant to applicable Oregon law.
5.04. Loan Remedies. If the transaction evidenced by this
Agreement and the other Operative Documents is treated as a loan, upon
the occurrence or existence of any Event of Default and at any time
thereafter unless such Event of Default is waived, Lessor may, with the
consent of the Required Participants, or shall, upon instructions from
the Required Participants, exercise any one or more of the following
rights and remedies in addition to those rights and remedies set forth
in Paragraph 5.02:
(a) Acceleration of Lessee Obligations. Lessor may, by
written notice to Lessee, terminate this Agreement on a
Termination Date which is prior to the Scheduled Expiration Date,
subject to Subparagraph 3.02(1) of the Purchase Agreement, and
declare all unpaid Lessee Obligations due and payable on such
Termination Date. Such Termination Date shall be the last day of
a Rental Period unless Required Participants shall otherwise
direct. On such Termination Date (which shall then be the
Expiration Date), Lessee shall pay all unpaid Base Rent accrued
through such date, all Supplemental Rent due and payable on or
prior to such date and all other amounts payable by Lessee on the
Expiration Date pursuant to this Agreement and the other Operative
Documents.
(b) Uniform Commercial Code Remedies. Lessor may exercise
any or all of the remedies granted to a secured party under the
Oregon Uniform Commercial Code.
(c) Judicial Foreclosure. Lessor may bring an action in
any court of competent jurisdiction to foreclose the security
interest in the Property granted to Lessor by this Agreement or
any of the other Operative Documents.
(d) Power of Sale. Lessor may cause some or all of the
Property, including any Personal Property Collateral, to be sold
or otherwise disposed of in any combination and in any manner
permitted by applicable Governmental Rules.
(i) Sales of Personal Property. Lessor may dispose
of any Personal Property Collateral separately from the sale
of Real Property Collateral, in any manner permitted by
Chapter 79 of the Oregon Uniform Commercial Code, including
any public or private sale, or in any manner permitted by
any other applicable Governmental Rule. Any proceeds of any
such disposition shall not cure any Event of Default or
reinstate any Lessee Obligation. In connection with any
such sale or other disposition, Lessee agrees that the
following procedures constitute a commercially reasonable
sale:
(A) Lessor shall mail written notice of the
sale to Lessee not later than thirty (30) days prior
to such sale.
(B) Once per week during the three (3) weeks
immediately preceding such sale, Lessor will publish
notice of the sale in a local daily newspaper of
general circulation.
(C) Upon receipt of any written request,
Lessor will make the Property available to any bona
fide prospective purchaser for inspection during
reasonable business hours.
(D) Notwithstanding, Lessor shall be under no
obligation to consummate a sale if, in its judgment,
none of the offers received by it equals the fair
value of the Property offered for sale.
(E) If Lessor so requests, Lessee shall
assemble all of the Personal Property Collateral and
make it available to Lessor at the site of the Land.
Regardless of any provision of this Agreement or any
other Operative Document, Lessor shall not be
considered to have accepted any property other than
cash or immediately available funds in satisfaction of
any Lessee Obligation, unless Lessor has given express
written notice of its election of that remedy in
accordance with Oregon Uniform Commercial Code Section
9505 (ORS Section 79.5050).
The foregoing procedures do not constitute the only
procedures that may be commercially reasonable.
(ii) Lessor's Sales of Real Property or Mixed
Collateral. Lessor may choose to dispose of some or all of
the Property which consists solely of Real Property
Collateral in any manner then permitted by applicable
Governmental Rules. In its discretion, Lessor may also or
alternatively choose to dispose of some or all of the
Property, in any combination consisting of both Real
Property Collateral and Personal Property Collateral,
together in one sale to be held in accordance with the law
and procedures applicable to real property, as permitted by
Section 9501(4) of the Oregon Uniform Commercial Code (ORS
Section 79.5010(4)). Lessee agrees that such a sale of
Personal Property Collateral together with Real Property
Collateral constitutes a commercially reasonable sale of the
Personal Property Collateral. (For purposes of this power of
sale, either a sale of Real Property Collateral alone, or a
sale of both Real Property Collateral and Personal Property
Collateral together in accordance with Oregon Uniform
Commercial Code Section 9501(4) (ORS Section 79.5010(4)),
will sometimes be referred to as a "Lessor's Sale.")
(A) Before any Lessor's Sale, Lessor shall
give such notice of default and election to sell as
may then be required by applicable Governmental Rules.
(B) When all time periods then legally
mandated have expired, and after such notice of sale
as may then be legally required has been given, Lessor
shall sell the property being sold at a public auction
to be held at the time and place specified in the
notice of sale.
(C) Neither Lessor nor Agent shall have any
obligation to make demand on Lessee before any
Lessor's Sale.
(D) From time to time in accordance with then
applicable law, Lessor may postpone any Lessor's Sale
by public announcement at the time and place noticed
for that sale.
(E) At any Lessor's Sale, Lessor shall sell to
the highest bidder at public auction for cash in
lawful money of the United States.
(F) Lessor shall execute and deliver to the
purchaser(s) a deed or deeds conveying the Property
being sold without any covenant or warranty
whatsoever, express or implied. The recitals in any
such deed of any matters or facts, including any facts
bearing upon the regularity or validity of any
Lessor's Sale, shall be conclusive proof of their
truthfulness. Any such deed shall be conclusive
against all Persons as to the facts recited in it.
(e) Foreclosure Sales.
(i) Single or Multiple. If the Property consists of
more than one lot, parcel or item of property, Lessor may:
(A) Designate the order in which the lots,
parcels and/or items shall be sold or disposed of or
offered for sale or disposition; and
(B) Elect to dispose of the lots, parcels
and/or items through a single consolidated sale or
disposition to be held or made under the power of sale
granted in Subparagraph 5.04(d), or in connection with
judicial proceedings, or by virtue of a judgment and
decree of foreclosure and sale; or through two or more
such sales or dispositions; or in any other manner
Lessor may deem to be in its best interests (any such
sale or disposition, a "Foreclosure Sale;" any two or
more, "Foreclosure Sales").
If Lessor chooses to have more than one Foreclosure Sale,
Lessor at its option may cause the Foreclosure Sales to be
held simultaneously or successively, on the same day, or on
such different days and at such different times and in such
order as it may deem to be in its best interests. No
Foreclosure Sale shall terminate or affect the security
interests granted to Lessor in the Property by this
Agreement on any part of the Property which has not been
sold, until all of the Lessee Obligations have been paid in
full.
(ii) Credit Bids. At any Foreclosure Sale, any
Person, including any Lessor Party, may bid for and acquire
the Property or any part of it to the extent permitted by
then applicable Governmental Rules. Instead of paying cash
for that property, Lessor may settle for the purchase price
by crediting the sales price of the Property against the
Lessee Obligations in any order and proportions as Lessor in
its sole discretion may choose.
5.05. Remedies Cumulative. The rights and remedies of Lessor
under this Agreement and the other Operative Documents are cumulative
and may be exercised singularly, successively, or together.
5.06. No Cure or Waiver. Neither the performance by Lessor of any
of Lessee's obligations pursuant to Paragraph 3.13 nor the exercise by
Lessor of any of its other rights and remedies under this Agreement or
any other Operative Document (including the collection of Issues and
Profits and the application thereof to the Lessee Obligations) shall
constitute a cure or waiver of any Default or nullify the effect of any
notice of default or sale, unless and until all Lessee Obligations are
paid in full.
5.07. Exercise of Rights and Remedies. The rights and remedies
provided to Lessor under this Agreement may be exercised by Lessor
itself, by Agent pursuant to Subparagraph 2.02(c) of the Participation
Agreement, by a court-appointed receiver or by any other Person
appointed by any of the foregoing to act on its behalf. All of the
benefits afforded to Lessor under this Agreement and the other Operative
Documents shall accrue to the benefit of Agent to the extent provided in
Subparagraph 2.02(c) of the Participation Agreement.
SECTION 6. MISCELLANEOUS.
6.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Lessee or Lessor under this Agreement shall be given as provided in
Subparagraph 2.02(c) and Paragraph 7.01 of the Participation Agreement.
6.02. Waivers; Amendments. Any term, covenant, agreement or
condition of this Agreement may be amended or waived only as provided in
the Participation Agreement. No failure or delay by any Lessor Party in
exercising any right hereunder shall operate as a waiver thereof or of
any other right nor shall any single or partial exercise of any such
right preclude any other further exercise thereof or of any other right.
Unless otherwise specified in any such waiver or consent, a waiver or
consent given hereunder shall be effective only in the specific instance
and for the specific purpose for which given.
6.03. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Lessor Parties and Lessee and their
permitted successors and assigns; provided, however, that the Lessor
Parties and Lessee shall not sell, assign or delegate their respective
rights and obligations hereunder except as provided in the Participation
Agreement.
6.04. No Third Party Rights. Nothing expressed in or to be
implied from this Agreement is intended to give, or shall be construed
to give, any Person, other than the Lessor Parties and Lessee and their
permitted successors and assigns, any benefit or legal or equitable
right, remedy or claim under or by virtue of this Agreement or under or
by virtue of any provision herein.
6.05. Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Agreement nor the
legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
6.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules, except as otherwise provided in
Subparagraph 7.14 of the Participation Agreement.
6.07. Counterparts. This Agreement may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
6.08. Nature of Lessee's Obligations.
(a) Independent Obligation. The obligation of Lessee to
pay the amounts payable by Lessee under this Agreement and the
other Operative Documents and to perform the other Lessee
Obligation are absolute, unconditional and irrevocable obligations
which are separate and independent of the obligations of the
Lessor Parties under this Agreement and the other Operative
Documents and all other events and circumstances, including the
events and circumstances set forth in Subparagraph 6.08(c).
(b) No Termination or Abatement. This Agreement and the
other Operative Documents and Lessee's obligation to pay Rent and
to pay and perform all other Lessee Obligations shall continue in
full force and effect without abatement notwithstanding the
occurrence or existence of any event or circumstance, including
any event or circumstance set forth in Subparagraph 6.08(c).
(c) Full Payment and Performance. Lessee shall make all
payments under this Agreement and the other Operative Documents in
the full amounts and at the times required by the terms of this
Agreement and the other Operative Documents without setoff,
deduction or reduction of any kind and shall perform all other
Lessee Obligations as and when required, without regard to any
event or circumstances whatsoever, including (i) the condition of
the Property (including any Improvements to the Property made
prior to the Commencement Date or during the Term); (ii) title to
the Property (including possession of the Property by any Person
or the existence of any Lien or any other right, title or interest
in or to any of the Property in favor of any Person); (iii) the
value, habitability, usability, design, operation or fitness for
use of the Property; (iv) the availability or adequacy of
utilities and other services to the Property; (v) any latent,
hidden or patent defect in the Property; (vi) the zoning or status
of the Property or any other restrictions on the use of the
Property; (g) the economics of the Property; (vii) any Casualty or
Condemnation; (viii) the compliance of the Property with any
applicable Governmental Rule or Insurance Requirement; (ix) any
failure by any Lessor Party to perform any of its obligations
under this Agreement or any other Operative Document; or (x) the
exercise by any Lessor Party of any of its remedies under this
Agreement or any other Operative Document; provided, however, that
this Paragraph 6.08 shall not abrogate any right which Lessee may
have to recover damages from any Lessor Party for any material
breach by such Lessor Party of its obligations under this
Agreement or any other Operative Document to the extent permitted
hereunder or thereunder.
6.09. Non-Residential Trust Deed . Lessee as grantor warrants that
this Agreement, as a deed of trust or trust deed under Oregon law, is
not and will not at anytime constitute a residential trust deed, as that
term is defined in ORS 86.705 or its successor statutes. Lessee
warrants that it is engaging in this transaction exclusively for
business, commercial or investment purposes.
[The signature page follows.]
IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement
to be executed as of the day and year first above written.
LESSEE:
ETEC SYSTEMS, INC.
By:
Name:
Title:
Etec Systems, Inc.
26460 Corporate Ave.
Hayward, CA 94545
Attn: Treasurer
Tel. No: (510) 887-3649
Fax. No: (510) 780-3845
LESSOR:
LEASE PLAN NORTH AMERICA, INC.
By:
Name:
Title:
Lease Plan North America, Inc.
c/o ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 711
Chicago, IL 60603
Attn: David M. Shipley
Tel. No: (312) 904-2183
Fax. No: (312) 904-6217
EXHIBIT 10.2
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Agreement" herein), dated as
of December 5, 1997, is entered into by and among:
(1) ETEC SYSTEMS, INC., a Nevada corporation ("Lessee");
(2) LEASE PLAN NORTH AMERICA, INC., an Illinois
corporation ("Lessor");
(3) Each of the financial institutions from time to time
listed in Schedule I hereto, as amended from time to time (such
financial institutions to be referred to collectively as the
"Participants"); and
(4) ABN AMRO BANK N.V., acting through its San Francisco
International Branch, as agent for the Participants (in such
capacity, "Agent").
RECITALS
A. Lessee has requested Lessor and the Participants to provide
to Lessee a lease facility pursuant to which:
(1) Lessor would (a) lease from Lessee the land described
in Exhibit A (as more fully defined in Schedule 1.01, the "Land"),
(b) sublease to Lessee the Land and lease to Lessee certain
improvements to be constructed on the Land, (c) appoint Lessee as
Lessor's agent to make such improvements (which improvements will
be owned by Lessor), (d) make advances to finance such
improvements and to pay certain related expenses and (e) grant to
Lessee the right to purchase such improvements; and
(2) The Participants would participate in such lease
facility by (a) funding the advances to be made by Lessor and (b)
acquiring participation interests in the rental and certain other
payments to be made by Lessee.
B. Lessor and the Participants are willing to provide such
lease facility upon the terms and subject to the conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and the
mutual covenants herein contained, the parties hereto hereby agree as
follows:
SECTION 1. INTERPRETATION.
1.01. Definitions. Unless otherwise indicated in this Agreement
or any other Operative Document, each term set forth in Schedule 1.01,
when used in this Agreement or any other Operative Document, shall have
the respective meaning given to that term in Schedule 1.01 or in the
provision of this Agreement or other document, instrument or agreement
referenced in Schedule 1.01.
1.02. Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set
forth in Schedule 1.02 shall apply to this Agreement and the other
Operative Documents.
SECTION 2. LEASE FACILITY.
2.01. Acquisition, Lease, Amount Limitations, Etc.
(a) Acquisition, Lease, Etc. Subject to the terms and
conditions of this Agreement (including the limitations set forth
in Subparagraph 2.01(b)):
(i) On a date specified by Lessee pursuant to
Subparagraph 2.03(a) for the acquisition by Lessor of its
leasehold interest in the Land (the "Closing Date"):
(A) Lessor and Lessee shall execute a ground
lease in the form of Exhibit N (the "Ground Lease"),
pursuant to which Lessee leases to Lessor the Land;
and
(B) Immediately upon the execution by Lessor
and Lessee of the Ground Lease, Lessor and Lessee
shall execute (1) a Lease Agreement in the form of
Exhibit B (the "Lease Agreement"), pursuant to which
Lessor leases to Lessee Lessor's leasehold interest in
the Land and Lessor's rights in the improvements to
the Land; (2) a Purchase Agreement in the form of
Exhibit C (the "Purchase Agreement"), pursuant to
which Lessor grants to Lessee the right to purchase
such improvements to the Land and (3) a Construction
Agency Agreement in the form of Exhibit D (the
"Construction Agency Agreement"), pursuant to which
Lessee agrees to construct the improvements to such
property; and
(ii) During the period (the "Commitment Period")
beginning on the date of this Agreement and ending on
December 1, 1999 (the "Outside Completion Date") or, if
earlier, the first Business Day of the first full calendar
month immediately succeeding the earlier of (A) the
Completion Date and (B) the date on which the Unused Total
Commitment is $0 (the earlier of the Outside Completion Date
and such first Business Day to be referred to as the
"Commitment Termination Date"), Lessor shall, at the request
of Lessee, make advances to Lessee (with funds provided by
the Participants) to pay Permitted Improvement Costs and
Permitted Transaction Expenses ("Improvement/Expense
Advances").
(b) Amount Limitations. The advance made by Lessor to
acquire its leasehold interest in the Land pursuant to the Ground
Lease and to acquire any other initial property on the Closing
Date (the "Acquisition Advance") and the Improvement/Expense
Advances made by Lessor (the Acquisition Advances and the
Improvement/Expense Advances to be referred to collectively as the
"Advances") shall be subject to the following limitations:
(i) The aggregate amount of the Acquisition Advance
made by Lessor on the Closing Date shall not exceed the
Closing Date Appraisal for the Property;
(ii) Until February 27, 1998, the aggregate amount of
all Advances made by Lessor (including the Acquisition
Advance and all Improvement/Expense Advances) shall not
exceed $3,000,000;
(iii) After February 27, 1998, the aggregate amount of
all Advances made by Lessor (including the Acquisition
Advance and all Improvement/Expense Advances) shall not
exceed the lesser of (A) Sixty Million Dollars ($60,000,000)
(the "Total Commitment") and (B) the Expiration Date
Appraisal for the Property; and
(iv) The aggregate amount of all Advances made by
Lessor (including the Acquisition Advance and all
Improvement/Expense Advances) during the period (the "364-
Day Commitment Period") beginning on the date of this
Agreement and ending on December 4, 1998 (the "364-Day
Commitment Termination Date") shall not exceed Thirty
Million Dollars ($30,000,000) (the "364-Day Commitment").
Of the Total Commitment, Thirty Million Dollars ($30,000,000) (the
"Two-Year Commitment") is available at any time during the entire
Commitment Period. Unless otherwise directed by Lessee, all
Advances made by Lessor on or prior to the 364-Day Commitment
Termination Date shall be allocated first to the 364-Day
Commitment and, after the 364-Day Commitment is reduced to zero,
to the Two-Year Commitment. All Advances made by Lessor after the
364-Day Commitment Termination Date shall be allocated to the Two-
Year Commitment, whether or not the 364-Day Commitment has been
reduced to zero.
(c) Expiration Date Appraisal. Not later than February
27, 1998, Lessee shall deliver to Lessor an Expiration Date
Appraisal for the Property, dated as of a recent date and in form
and substance satisfactory to Lessor and Agent.
(d) Tranches. Each Advance shall consist of a Tranche A
Portion, a Tranche B Portion and a Tranche C Portion. For
accounting purposes, the Tranche A Portion and Tranche B Portion
of each Advance shall constitute debt and the Tranche C Portion
shall constitute equity.
2.02. Participation Agreement.
(a) Advances. Each Participant severally, unconditionally
and irrevocably agrees with Lessor to participate in each Advance
made by Lessor in an amount equal to such Participant's
Proportionate Share of such Advance; provided, however, that the
aggregate amount of each Participant's Proportionate Share of all
Advances shall not exceed such Participant's Commitment. Each
Participant shall fund its Proportionate Share of each Advance as
provided in Subparagraph 2.05(a). Each Participant's
Proportionate Share of each Advance shall consist of such
Participant's Tranche A Portion, Tranche B Portion and Tranche C
Portion of such Advance.
(b) Payments. In consideration of each Participant's
participation in each Advance made by Lessor, such Participant
shall participate in the payments made by Lessee under this
Agreement and the other Operative Documents as provided in
Paragraph 2.06.
(c) Other Rights of Participants and Agent.
(i) Until all amounts payable to Agent and
Participants under this Agreement and the other Operative
Documents are paid in full, Lessee shall deliver all notices
for Lessor under this Agreement and the other Operative
Documents to Agent at the office or facsimile number and
during the hours specified in Paragraph 7.01. Agent shall
promptly furnish to Lessor and each Participant copies of
each such notice and, in the case of each request for an
Advance, shall notify each Participant of the amount of such
Participant's Proportionate Share of the Advance requested
thereby.
(ii) Lessor is not an agent for Participants or Agent
and may exercise or refrain from exercising its rights under
this Agreement and the other Operative Documents in its
discretion; provided, however that, until all amounts
payable to Agent and Participants under this Agreement and
the other Operative Documents are paid in full, (A) Lessor
shall, subject to the limitations set forth in Section VI,
be required to act or to refrain from acting upon
instructions of the Required Participants as provided in
Paragraph 6.03 and (B) Agent may exercise any or all of the
rights and remedies of Lessor, and shall be entitled to the
other benefits afforded Lessor, under this Agreement and the
other Operative Documents.
(iii) Neither Agent nor any Participant shall have any
right, title or interest in the Property except for the Lien
therein granted to Agent, for the benefit of the
Participants, in the Lessor Deed of Trust, the Assignment of
Lease and the Lessor Security Agreement.
2.03. Advance Requests.
(a) Acquisition Request. Lessee shall request Lessor to
enter into the Ground Lease and make the Acquisition Advance by
delivering to Agent an irrevocable written request in the form of
Exhibit E, appropriately completed (the "Acquisition Request"),
which specifies, among other things:
(i) The date selected by Lessor as the Acquisition
Date for the Land, which shall be a date that is a Business
Day on or prior to December 31, 1997; and
(ii) The amount of the Acquisition Advance, including
the amount of the Acquisition Price and the Permitted
Transaction Expenses included in such Acquisition Advance.
(b) Improvement/Expense Advance Requests. Lessee shall
request Lessor to make each Improvement/Expense Advance by
delivering to Lessor:
(i) An irrevocable written request in the form of
Exhibit F, appropriately completed (an "Improvement/Expense
Advance Request"), which specifies, among other things:
(A) The amount of such Advance, which shall be
in the amount of $500,000 or an integral multiple of
$100,000 in excess thereof;
(B) The date of such Advance, which shall be
the first Business Day of a month; and
(C) The Permitted Improvement Costs and
Permitted Transaction Expenses to be paid by such
Advance; and
(ii) If the proceeds of such Advance are to be used
to purchase Related Goods:
(A) A Supplement to Exhibit B to the Lease
Agreement in the form of Exhibit B(1) to the Lease
Agreement (an "Exhibit B Supplement"), which contains
a detailed description of such Related Goods; and
(B) Bills of sale for all such Related Goods
showing Lessor as the purchaser.
Lessee shall not request more than one (1) Improvement/Expense
Advance in any calendar month.
(c) Delivery of Advance Requests. Etc. Lessee shall
deliver the Acquisition Request to Lessor at least three (3)
Business Days before the Closing Date. Lessee shall deliver each
Improvement/Expense Advance Request to Lessor at least three (3)
Business Days before the date of such Advance. The Acquisition
Request and Improvement/Expense Advance Requests (collectively,
"Advance Requests") shall be delivered by first-class mail or
facsimile as required by Subparagraph 2.02(c) and Paragraph 7.01;
provided, however, that Lessee shall promptly deliver to Lessor
the original of any Advance Request initially delivered by
facsimile.
(d) Capitalization of Base Rent During Commitment Period.
On each Scheduled Rent Payment Date occurring under the Lease
Agreement during the Commitment Period, the Base Rent due on such
Scheduled Rent Payment Date shall be capitalized by automatically
treating the amount of such Base Rent as an Improvement/Expense
Advance made on such Scheduled Rent Payment Date. Agent shall
notify Lessor and each Participant of the amount of the Base Rent
due on each such Scheduled Rent Payment Date and so treated as an
Improvement/Expense Advance.
2.04. Fees.
(a) Agent's Fees. Lessee shall pay to Agent, for its own
account, agent's fees in the amounts and at the times set forth in
the Agent's Fee Letter (the "Agent's Fees").
(b) Commitment Fees. Lessee shall pay to Agent, for the
ratable benefit of the Participants as provided in clause (ii) of
Subparagraph 2.06(c), commitment fees (the "Commitment Fees") as
follows:
(i) Lessee shall pay Commitment Fees of one hundred
seventy-five thousandths of one percent (0.175%) per annum
on the daily average Unused 364-Day Commitment for the 364-
Day Commitment Period.
(ii) Lessee shall pay Commitment Fees of two hundred
seventy-five thousandths of one percent (0.275%) per annum
on the daily average Unused Two-Year Commitment for the
entire Commitment Period.
Lessee shall pay the Commitment Fees in arrears on the last
Business Day in each February, May, August and November
(commencing February 27, 1998) and on the Commitment Termination
Date (or if the Total Commitment is cancelled on a date prior to
such day, on such prior date).
(c) 364-Day Commitment Extension Fee. If Lessor and the
Participants consent to any extension of the 364-Day Commitment
Termination Date requested by Lessee pursuant to Subparagraph
2.09(a), Lessee shall pay to Agent, for the ratable benefit of
Lessor and the Participants as provided in clause (iii) of
Subparagraph 2.06(c), an extension fee (the "364-Day Commitment
Extension Fee") equal to one tenth of one percent (0.10%) of the
Unused 364-Day Commitment on the original 364-Day Commitment
Termination Date. Lessee shall pay the 364-Day Commitment
Extension Fee on or prior to the original 364-Day Commitment
Termination Date.
2.05. Funding of Advances.
(a) Participant Funding and Disbursement. Each
Participant shall, before 11:00 a.m. on the date of each Advance,
make available to Agent at its office specified in Paragraph 7.01,
in same day or immediately available funds, such Participant's
Proportionate Share of such Advance. After Agent's receipt of
such funds and upon fulfillment of the applicable conditions set
forth in Section III, Agent will promptly disburse such funds on
behalf of Lessor, in same day or immediately available funds, as
directed by Lessee in the Advance Request for such Advance.
(b) Participant Failure to Fund. Unless Agent shall have
received notice from a Participant prior to the date of any
Advance that such Participant will not make available to Agent
such Participant's Proportionate Share of such Advance, Agent may
assume that such Participant has made such portion available to
Agent on the date of such Advance in accordance with Subparagraph
2.05(a), and Agent may, in reliance upon such assumption, disburse
the full amount of such Advance on such date; provided, however,
that neither Agent nor Lessor shall have any obligation to make an
Advance requested hereunder in an amount which exceeds the
aggregate amount of funds actually received by Agent from the
Participants on account of their respective Proportionate Shares
of such Advance. If any Participant does not make the amount of
its Proportionate Share of any Advance available to Agent on or
prior to the date such Advance is made, Agent promptly shall
notify such Participant of such failure and such Participant shall
pay to Agent, on demand, interest which shall accrue on such
amount until made available to Agent at rates equal to (i) the
daily Federal Funds Rate during the period from the date of such
Advance through the third Business Day thereafter and (ii) the
Base Rate plus two percent (2.0%) thereafter. A certificate of
Agent submitted to any Participant with respect to any amounts
owing under this Subparagraph 2.05(b) shall be conclusive absent
manifest error. If any Participant's Proportionate Share of any
Advance is not in fact made available to Agent by such Participant
within three (3) Business Days after the date of such Advance,
Lessee shall pay to Agent, on demand, an amount equal to such
Proportionate Share together with interest thereon, for each day
from the date such amount was made available to Lessee until the
date such amount is repaid to Agent, at a per annum rate equal to
the Base Rate.
(c) Participants' Obligations Several. The failure of any
Participant to fund its Proportionate Share of any Advance shall
not relieve any other Participant of its obligation hereunder to
fund its Proportionate Share of such Advance, and no Participant
shall be responsible for the failure of any other Participant to
fund its Proportionate Share of any Advance on the date of such
Advance.
2.06. Sharing of Payments.
(a) Outstanding Lease Amount. Lessor shall share payments
applied to reduce the Outstanding Lease Amount as follows:
(i) Each payment of the Outstanding Lease Amount
derived from the purchase price paid by Lessee (or an
Assignee Purchaser) to purchase the Property pursuant to the
Purchase Agreement shall be shared by the Participants pro
rata according to their respective Outstanding Participation
Amounts at the time of such payment.
(ii) Each payment of the Outstanding Lease Amount
derived from the Residual Value Guaranty Amount paid by
Lessee pursuant to the Purchase Agreement shall be shared
first by the Tranche A Participants pro rata according to
their respective Outstanding Tranche A Participation Amounts
at the time of such payment; second, if any amounts remain
after all Outstanding Tranche A Participation Amounts are
paid in full, by the Tranche B Participants pro rata
according to their respective Outstanding Tranche B
Participation Amounts at the time of such payment; and
third, if any amounts remain after all Outstanding Tranche A
Participation Amounts and all Outstanding Tranche B
Participation Amounts are paid in full, by the Tranche C
Participants pro rata according to their respective
Outstanding Tranche C Participation Amounts at the time of
such payment.
(iii) Each payment of the Outstanding Lease Amount
derived from:
(A) the purchase price paid by a Designated
Purchaser to purchase the Property pursuant to the
Purchase Agreement;
(B) the Indemnity Amount paid by Lessee
pursuant to the Purchase Agreement; or
(C) Casualty Proceeds or Condemnation Proceeds
related to any of the Property;
Shall be shared first by the Tranche B Participants pro rata
according to their respective Outstanding Tranche B
Participation Amounts at the time of such payment; second,
if any amounts remain after all Outstanding Tranche B
Participation Amounts are paid in full, by the Tranche A
Participants pro rata according to their respective
Outstanding Tranche A Participation Amounts at the time of
such payment; and third, if any amounts remain after all
Outstanding Tranche B Participation Amounts and all
Outstanding Tranche A Participation Amounts are paid in
full, by the Tranche C Participants pro rata according to
their respective Outstanding Tranche C Participation Amounts
at the time of such payment.
(iv) Each payment of the Outstanding Lease Amount
derived from the purchase price paid by any other Person to
purchase the Property (whether after the retention of such
Property by Lessor following the Expiration Date of the
Lease Agreement, upon foreclosure or otherwise) shall be
shared first by the Tranche B Participants pro rata
according to their respective Outstanding Tranche B
Participation Amounts at the time of such payment; second,
if any amounts remain after all Outstanding Tranche B
Participation Amounts are paid in full, by the Tranche A
Participants pro rata according to their respective
Outstanding Tranche A Participation Amounts at the time of
such payment; and third, if any amounts remain after all
Outstanding Tranche B Participation Amounts and all
Outstanding Tranche A Participation Amounts are paid in
full, by the Tranche C Participants pro rata according to
their respective Outstanding Tranche C Participation Amounts
at the time of such payment.
(v) Each payment of the Outstanding Lease Amount
derived from Cash Collateral shall be shared (i) by the
Tranche A Participants alone pro rata according to their
respective Outstanding Tranche A Participation Amounts at
the time of such payment if such payment is made after the
purchase of the Property by a Designated Purchaser pursuant
to the Marketing Option in the Purchase Agreement or (ii) by
all Participants pro rata according to their respective
Outstanding Participation Amounts at the time of such
payment if such payment is made in any other circumstance.
(b) Base Rent. Lessor shall share each payment applied to
Base Rent among the Participants which funded the Outstanding
Lease Amount pro rata according to (i) the respective Outstanding
Participation Amounts so funded by such Participants and (ii) the
dates on which such Participants so funded such amounts.
(c) Supplemental Rent. Lessor shall share each payment
applied to Supplemental Rent among the Lessor Parties as follows:
(i) Each payment applied to Agent's Fees shall be
solely for the account of Agent.
(ii) Each payment applied to Commitment Fees shall be
shared by the Participants pro rata according to (A) their
respective Proportionate Shares and (B) in the case of each
Participant which becomes a Participant hereunder after the
date hereof, the date upon which such Participant so became
a Participant.
(iii) Each payment applied to the 364-Day Commitment
Extension Fee shall be shared by the Participants pro rata
according to their respective Proportionate Shares on the
date of such payment.
(iv) Each payment applied to reimburse any Lessor
Party for any fees, costs and expenses incurred by such
Lessor Party shall be solely for the account of such Lessor
Party.
(v) Each payment of interest (other than Base Rent)
shall be shared among the Lessor Parties owed the amount
upon which such interest accrues pro rata according to (A)
the respective amounts so owed such Lessor Parties and (B)
the dates on which such amounts became owing to such Lessor
Parties.
(vi) All other payments under this Agreement and the
other Operative Documents shall be for the benefit of the
Person or Persons specified.
(d) Disproportionate Payments, Etc. If any Participant
shall obtain any payment (whether voluntary, involuntary, through
the exercise of any right of setoff, or otherwise) on account of
amounts owed to it in excess of its ratable share of payments on
account of such amounts obtained by all Participants entitled to
such payments, such Participant shall forthwith purchase from the
other Participants such participations in the payments to be made
under the Operative Documents as shall be necessary to cause such
purchasing Participant to share the excess payment ratably with
each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from such purchasing
Participant, such purchase shall be rescinded and each other
Participant shall repay to the purchasing Participant the purchase
price to the extent of such recovery together with an amount equal
to such other Participant's ratable share (according to the
proportion of (i) the amount of such other Participant's required
repayment to (ii) the total amount so recovered from the
purchasing Participant) of any interest or other amount paid or
payable by the purchasing Participant in respect of the total
amount so recovered. Lessee agrees that any Participant so
purchasing a participation from another Participant pursuant to
this Subparagraph 2.06(d) may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of
setoff) with respect to such participation as fully as if such
Participant were the direct creditor of Lessee in the amount of
such participation.
2.07. Other Payment Terms.
(a) Place and Manner of Payments by Lessee. Lessee shall
make all payments due to any Lessor Party under this Agreement and
the other Operative Documents by payments to Agent, for the
account of such Person, at Agent's office, located at the address
specified in Paragraph 7.01, with each payment due to a
Participant to be for the account of such Participant's Applicable
Participating Office. Lessee shall make all payments in lawful
money of the United States and in same day or immediately
available funds not later than 12:00 noon on the date due. Agent
shall promptly disburse to the appropriate Person each such
payment received by Agent for such Person.
(b) Date. Whenever any payment due under this Agreement
or any other Operative Document shall fall due on a day other than
a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the
computation of Rent, interest or fees, as the case may be.
Whenever this Agreement or any other Operative Document requires a
payment to be made by Lessee but fails to specify a time for such
payment to be made, such payment shall be due and payable thirty
(30) days after demand for such payment is made upon Lessee by the
applicable party.
(c) Late Payments. If any amounts required to be paid by
Lessee under this Agreement or any other Operative Document
(including Rent, interest, fees or other amounts) remain unpaid
after such amounts are due, Lessee shall pay a late payment charge
on the aggregate, outstanding balance of such amounts from the
date due until those amounts are paid in full at a per annum rate
equal to the Base Rate plus two percent (2.0%), such rate to
change from time to time as the Base Rate shall change.
(d) Application of Payments. All payments under this
Agreement and the other Operative Documents shall be applied first
to unpaid fees, costs and expenses then due and payable under this
Agreement or any other Operative Document, second to the accrued
Base Rent then due and payable under this Agreement or any other
Operative Document and finally to reduce the Outstanding Lease
Amount.
(e) Failure to Pay Agent. Unless Agent shall have
received notice from Lessee at least one (1) Business Day prior to
the date on which any payment is due to Lessor or the Participants
under this Agreement or the other Operative Documents that Lessee
will not make such payment in full, Agent may assume that Lessee
has made such payment in full to Agent on such date and Agent may,
in reliance upon such assumption, cause to be distributed to the
appropriate Persons on such due date an amount equal to the amount
then due such Persons. If and to the extent Lessee shall not have
so made such payment in full to Agent, each such Person shall
repay to Agent forthwith on demand such amount distributed to such
Person together with interest thereon, for each day from the date
such amount is distributed to such Person until the date such
Person repays such amount to Agent, at (i) the Federal Funds Rate
for the first three (3) days and (ii) the Base Rate plus two
percent (2.0%) thereafter, such rate to change from time to time
as the Base Rate shall change. A certificate of Agent submitted
to any Person with respect to any amounts owing by such Person
under this Subparagraph 2.07(e) shall be conclusive absent
manifest error.
2.08. Commitment Reductions.
(a) Reduction or Cancellation of Commitments. Lessee may,
at any time prior to the 364-Day Commitment Termination Date in
the case of the 364-Day Commitment or the Commitment Termination
Date in the case of the Two-Year-Day Commitment, upon five (5)
Business Days written notice to Lessor, permanently reduce the
364-Day Commitment or the Two-Year Commitment by the amount of One
Million Dollars ($1,000,000) or an integral multiple of One
Hundred Thousand Dollars ($100,000) in excess thereof or cancel
the 364-Day Commitment or the Two-Year Commitment in its entirety.
Any reduction of the 364-Day Commitment or the Two-Year Commitment
shall result in a corresponding reduction of the Total Commitment.
(b) Effect of Commitment Reductions. From the effective
date of any reduction of the 364-Day Commitment or the Two-Year
Commitment, the Commitment Fees shall be computed on the basis of
the 364-Day Commitment or the Two-Year Commitment as so reduced.
Once reduced or cancelled, the 364-Day Commitment, the Two-Year
Commitment and the Total Commitment may not be increased or
reinstated without the prior written consent of Lessor and all
Participants. Any reduction of the 364-Day Commitment, the Two-
Year Commitment or the Total Commitment pursuant to this Paragraph
2.08 shall be applied ratably to reduce each Participant's
Commitment pro rata in accordance with its Proportionate Share.
2.09. Extensions.
(a) 364-Day Commitment Extension. Lessee may request
Lessor to extend the 364-Day Commitment Termination Date for an
additional period of six (6) months by appropriately completing,
executing and delivering to Agent a written request in the form of
Exhibit G(1) (a " 364-Day Commitment Extension Request"). Lessee
shall deliver the 364-Day Commitment Extension Request to Agent
not more than three (3) months and not less than two (2) months
before the original 364-Day Commitment Termination Date. Agent
shall promptly deliver to Lessor and each Participant three (3)
copies of each 364-Day Commitment Extension Request received by
Agent. If Lessor or a Participant, in its sole and absolute
discretion, consents to the 364-Day Commitment Extension Request,
such Person shall evidence such consent by executing and returning
two (2) copies of the 364-Day Commitment Extension Request to
Agent not later than the last Business Day which is not less than
fifteen (15) Business Days prior to the original 364-Day
Commitment Termination Date. Any failure by Lessor or any
Participant so to execute and return a 364-Day Commitment
Extension Request shall be deemed a denial thereof. If Lessee
shall deliver a 364-Day Commitment Extension Request to Lessor
pursuant to the first sentence of this Subparagraph 2.09(a), then
not later than ten (10) Business Days prior to the original 364-
Day Commitment Termination Date, Agent shall notify Lessee, Lessor
and the Participants in writing whether (i) Agent has received a
copy of the 364-Day Commitment Extension Request executed by
Lessor and each Participant, in which case the definition of "
364-Day Commitment Termination Date" set forth in Subparagraph
2.01(a) shall be deemed extended to the date which is six (6)
months after the original 364-Day Commitment Termination Date
(subject to receipt by Agent of the 364-Day Commitment Extension
Fee), or (ii) Agent has not received a copy of the 364-Day
Commitment Extension Request executed by Lessor and each
Participant, in which case such 364-Day Commitment Extension
Request shall be deemed denied. Lessee acknowledges that neither
Lessor nor any Participant has promised (either expressly or
implicitly), or has any obligation or commitment, to extend or
consent to the extension of the 364-Day Commitment Termination
Date at any time.
(b) Lease Extension. Lessee may, as provided herein but
not more than three (3) times, request Lessor to extend the
Scheduled Expiration Date of the Lease Agreement for an additional
period of one (1) year by appropriately completing, executing and
delivering to Agent a written request in the form of Exhibit G(2),
together with an attachment thereto setting forth the terms upon
which Lessee would propose for the requested extension (a "Lease
Extension Request"). Lessee shall deliver each Lease Extension
Request to Agent not more than nine (9) months and not less than
six (6) months before the then current Scheduled Expiration Date.
Agent shall promptly deliver to Lessor and each Participant three
(3) copies of each Lease Extension Request received by Agent. If
Lessor or a Participant, in its sole and absolute discretion,
consents to a Lease Extension Request, such Person shall evidence
such consent by executing and returning two (2) copies of such
Lease Extension Request to Agent not later than the last Business
Day which is not less than five (5) months prior to the then
current Scheduled Expiration Date. Any failure by Lessor or any
Participant so to execute and return a Lease Extension Request
shall be deemed a denial thereof. If Lessee shall deliver a Lease
Extension Request to Lessor pursuant to the first sentence of this
Subparagraph 2.09(b), then not later than the last Business Day
which is not less than four (4) months prior to the then current
Scheduled Expiration Date, Agent shall notify Lessee, Lessor and
the Participants in writing whether (i) Agent has received a copy
of the Lease Extension Request executed by Lessor and each
Participant, in which case the definition of "Scheduled Expiration
Date" set forth in Subparagraph 2.02(a) of the Lease Agreement
shall be deemed extended to the date which is one (1) year after
the then current Scheduled Expiration Date (subject to the receipt
by Agent of any amounts payable by Lessee in connection with such
extension), or (ii) Agent has not received a copy of the Lease
Extension Request executed by Lessor and each Participant, in
which case such Lease Extension Request shall be deemed denied.
Lessee acknowledges that neither Lessor nor any Participant has
promised (either expressly or implicitly), or has any obligation
or commitment, to extend or consent to the extension of the
Scheduled Expiration Date at any time.
2.10. Nature of the Transactions. Lessee and the Lessor Parties
intend that the transactions evidenced by this Agreement and the other
Operative Documents constitute operating leases pursuant to FASB 13 for
accounting purposes and loans secured by the Property for other
purposes, including federal, state and local income tax purposes and
commercial, real estate and bankruptcy law purposes. To the extent that
this Agreement and the other Operative Documents reflect the lease form
alone, they do so for convenience only. Lessee and the Lessor Parties
intend that the Operative Documents have the dual form referred to in
the first sentence of this paragraph, notwithstanding the use of the
lease form alone.
(a) Tax Treatment. For purposes of all income, franchise
and other taxes imposed upon or measured by income, Lessee and
Lessor Parties intend that the transactions evidenced by the
Operative Documents shall be treated as loans by the Participants
(through Lessor) to Lessee secured by the Property, with Lessee as
owner of the Property. Lessee and the Lessor Parties may only
take deductions, credits, allowances and other reporting positions
on their respective returns, reports and statements which are
consistent with such treatment, unless required to do otherwise by
an appropriate taxing authority or after a clearly applicable
change in applicable Governmental Rules; provided, however, that
if an appropriate taxing authority or a clearly applicable change
in applicable Governmental Rules requires any Lessor Party to take
such an inconsistent position, such Lessor Party shall promptly
notify Lessee.
(b) Other Legal Treatment. For purposes of commercial
law, real property law, bankruptcy law and other applicable laws,
Lessee and Lessor Parties also intend that the transactions
evidenced by the Operative Documents shall be treated as loans by
the Participants (through Lessor) to Lessee secured by the
Property, with Lessee as owner of the Property. Consistent with
such treatment, Lessee and the Lessor Parties intend that, among
other things for such purposes, (i) the Advances be treated as
loans to Lessee by the Participants (through Lessor); (ii) the
Advances be secured by the Property and the Lessor Parties have
the rights and remedies of secured lenders; (iii) Base Rent be
treated as interest on the Advances; (iv) Lessee be required to
pay on the Expiration Date only the Residual Value Guaranty
Amount, the Indemnity Amount and the other amounts required by
Subparagraph 4.06(b) of the Purchase Agreement (or Subparagraph
4.06(c) if Lessor is retaining the Property) if Lessee exercises
the Marketing Option in accordance with the Purchase Agreement;
and (v) Lessee be required to pay on the Expiration Date the
Outstanding Lease Amount and all other amounts outstanding under
this Agreement and the other Operative Documents (including
amounts required by Subparagraph 4.06(a) of the Purchase
Agreement) if the Lease Agreement is terminated prior to its
Scheduled Expiration Date after an Event of Default occurs under
the Lease Agreement or if Lessee fails to or is otherwise not
entitled to exercise the Marketing Option in accordance with the
Purchase Agreement.
(c) No Reliance by Lessee. Lessee acknowledges and agrees
that no Lessor Party has made any representations or warranties to
Lessee concerning the tax, accounting or legal characteristics of
the Operative Documents and that Lessee has obtained and relied
upon such tax, accounting and legal advice concerning the
Operative Documents as it deems appropriate.
(d) Modification of Operative Documents. Lessee and the
Lessor Parties shall amend or modify this Agreement and the other
Operative Documents to the extent necessary for the transaction
evidenced by this Agreement and the other Operative Documents to
qualify as an operating lease pursuant to FASB 13 for accounting
purposes if, and only if, such amendments and modifications do not
adversely affect either Lessee or any Lessor Party.
2.11. Security.
(a) Lessee Obligations.
(i) To the extent that the transaction evidenced by
the Lease Agreement, Purchase Agreement and other Operative
Documents is treated as a loan by the Participants (through
Lessor) to Lessee secured by the Property, with Lessee as
owner of the Property pursuant to Paragraph 2.10, the Lessee
Obligations shall be secured by the Real Property Collateral
and the Personal Property Collateral (collectively, the
"Property Collateral") as provided in Subparagraphs 2.07(a)
and 2.07(b) of the Lease Agreement and in an Assignment of
Construction Agreements in the form of Exhibit H, duly
executed by Lessee (the "Assignment of Construction
Agreements").
(ii) In addition to the Property Collateral, the
Lessee Obligations shall be secured by a Cash Collateral
Agreement in the form of Exhibit I, duly executed by Lessee
(the "Cash Collateral Agreement") and Cash Collateral
delivered to Agent or Participants pursuant to the Cash
Collateral Agreement as provided below:
(A) To the extent such Cash Collateral is not
then held by Agent or Participants pursuant to the
Cash Collateral Agreement, Lessee shall deliver to
Agent or Participants pursuant to the Cash Collateral
Agreement:
(1) Cash Collateral in an amount not
less than 100% of the total Tranche A
Proportionate Share of the Outstanding Lease
Amount at any time Lessee elects, pursuant to
Subparagraph 3.02(l) of the Purchase Agreement,
to exercise the Marketing Option after Lessor
notifies Lessee that Lessor is terminating the
Lease Agreement on a Termination Date that is
prior to the Scheduled Expiration Date and the
only basis for such early termination is the
occurrence of a Non-Marketing Option Event of
Default; and
(2) Cash Collateral in an amount not
less than 100% of the total Outstanding Lease
Amount on or prior to August 31, 2002.
(B) Lessee may, at Lessee's election at any
other time, deliver to Agent or Participants pursuant
to the Cash Collateral Agreement Cash Collateral to
decrease the Applicable Margin for the LIBOR Rental
Rate under the Lease Agreement. If Lessee elects to
deliver any Cash Collateral pursuant to the Cash
Collateral Agreement to decrease the Applicable Margin
for the LIBOR Rental Rate, Lessee shall deliver to
Agent, five (5) Business Days' prior to the delivery
of such Cash Collateral, notice of such election and
shall deliver such Cash Collateral only on a Scheduled
Rent Payment Date under the Lease Agreement.
At the time Lessee delivers any Cash Collateral to Agent or
Participants pursuant to this clause (ii), Lessee also shall
deliver to Lessor a favorable written opinion of its
counsel, in form and substance reasonably satisfactory to
Lessor and Agent but subject to customary qualifications and
assumptions, to the effect that the Cash Collateral
Agreement is a legal, valid and binding agreement of Lessee,
enforceable in accordance with its terms, and that Lessor
has a perfected security interest in the Cash Collateral.
Lessee may not withdraw any Cash Collateral required to be
delivered pursuant to clause (A) above until the Expiration
Date of the Lease Agreement and the satisfaction in full of
all Lessee Obligations. Lessee may withdraw Cash Collateral
delivered and held pursuant to clause (B) above only as
provided in the Cash Collateral Agreement.
(iii) Lessee shall deliver to Lessor and Agent such
additional mortgages, deeds of trust, security agreements,
pledge agreements, lessor consents and estoppels (containing
appropriate mortgagee and lender protection language) and
other instruments, agreements, certificates, opinions and
documents (including Uniform Commercial Code financing
statements and fixture filings and landlord waivers) as
Lessor or Agent may reasonably request to (A) grant,
perfect, maintain, protect and evidence security interests
in favor of Lessor or Agent in the Property Collateral and
Cash Collateral prior to the Liens or other interests of any
Person, except in the case of the Property Collateral for
Permitted Property Liens; and (B) otherwise establish,
maintain, protect and evidence the rights provided to Lessor
and Agent in the Property Collateral and Cash Collateral.
Lessee shall fully cooperate with Lessor and Agent and
perform all additional acts reasonably requested by Lessor
or Agent to effect the purposes of this Subparagraph
2.11(a).
(b) Lessor Obligations.
(i) The Lessor Obligations shall be secured by the
following:
(A) An Assignment of Lease Agreement and
Purchase Agreement in the form of Exhibit J, duly
executed by Lessor (the "Assignment of Lease");
(B) A Construction Deed of Trust with
Assignment of Rents, Security Agreement and Fixture
Filing in the form of Exhibit K, duly executed by
Lessor (the "Lessor Deed of Trust"); and
(C) A Security Agreement in the form of
Exhibit L, duly executed by Lessor (the "Lessor
Security Agreement").
(ii) Lessor shall deliver to Agent such additional
mortgages, deeds of trust, security agreements, pledge
agreements, lessor consents and estoppels (containing
appropriate mortgagee and lender protection language) and
other instruments, agreements, certificates, opinions and
documents (including Uniform Commercial Code financing
statements and fixture filings and landlord waivers) as
Agent may reasonably request to (A) grant, perfect,
maintain, protect and evidence security interests in favor
of Agent in Lessor's rights in the Property Collateral and
Cash Collateral; and (B) otherwise establish, maintain,
protect and evidence the rights provided to Agent in the
Property Collateral and Cash Collateral. Lessor shall fully
cooperate with Agent and perform all additional acts
reasonably requested by Agent to effect the purposes of this
Subparagraph 2.11(b).
(iii) Lessee hereby consents to the Assignment of
Lease, the Lessor Deed of Trust and the Lessor Security
Agreement; the Liens granted to Agent therein; and all other
Liens granted to Agent in any of the Operative Documents and
the Property to secure the Lessor Obligations.
2.12. Change of Circumstances.
(a) Inability to Determine Rates. If, on or before the
first day of any Rental Period, (i) any Participant shall advise
Agent that the LIBOR Rental Rate for such Rental Period cannot be
adequately and reasonably determined due to the unavailability of
funds in or other circumstances affecting the London interbank
market or (ii) Majority Participants shall advise Agent that the
LIBOR Rental Rate for such Rental Period does not adequately and
fairly reflect the cost to such Participants of funding their
shares of the Outstanding Lease Amount, Agent shall immediately
give notice of such condition to Lessee, Lessor and the other
Participants. After the giving of any such notice (and until
Agent shall otherwise notify Lessee and Lessor that the
circumstances giving rise to such condition no longer exist), the
LIBOR Rental Rate shall be unavailable and the Rental Rate for
each new Rental Period shall be the Alternate Rental Rate.
(b) Illegality. If, after the date of this Agreement, the
adoption of any Governmental Rule, any change in any Governmental
Rule or the application or requirements thereof (whether such
change occurs in accordance with the terms of such Governmental
Rule as enacted, as a result of amendment or otherwise), any
change in the interpretation or administration of any Governmental
Rule by any Governmental Authority, or compliance by Lessor or any
Participant with any request or directive (whether or not having
the force of law) of any Governmental Authority (a "Change of
Law") shall make it unlawful or impossible for any Participant to
fund or maintain its portion of the Outstanding Lease Amount at
the LIBOR Rental Rate, such Participant shall immediately notify
Agent and Agent shall immediately notify Lessee, Lessor and the
other Participants of such Change of Law. After the giving of any
such notice (and until Agent shall otherwise notify Lessee and
Lessor that such Change of Law is no longer in effect), the LIBOR
Rental Rate shall be unavailable and the Rental Rate for each
Rental Period shall be the Alternate Rental Rate.
(c) Increased Costs. If, after the date of this
Agreement, any Change of Law:
(i) Shall subject Lessor or any Participant to any
tax, duty or other charge with respect to the Outstanding
Lease Amount, or shall change the basis of taxation of Base
Rent payments by Lessee to Lessor or any Participant under
this Agreement or any other Operative Document (except for
changes in the rate of taxation on the overall net income of
Lessor or any Participant imposed by its jurisdiction of
incorporation or any jurisdiction in which it maintains an
office); or
(ii) Shall impose, modify or hold applicable any
reserve (excluding any Reserve Requirement or other reserve
to the extent included in the calculation of the LIBOR
Rental Rate), special deposit or similar requirement against
assets held by, deposits or other liabilities in or for the
account of, advances or loans by, or any other acquisition
of funds by Lessor or any Participant for its portion of the
Outstanding Lease Amount; or
(iii) Shall impose on Lessor or any Participant any
other condition related to the Outstanding Lease Amount,
Base Rent or Lessor's or such Participant's commitments
hereunder;
And the effect of any of the foregoing is to increase the cost to
Lessor or such Participant of funding or maintaining its portion
of the Outstanding Lease Amount or commitments or to reduce any
amount receivable by Lessor or such Participant hereunder; then
Lessee shall from time to time within thirty (30) days after
demand by Lessor or such Participant, pay to Lessor or such
Participant additional amounts sufficient to reimburse Lessor or
such Participant for such increased costs or to compensate Lessor
or such Participant for such reduced amounts; provided, however,
that Lessee shall have no obligation to make any payment to any
demanding party under this Subparagraph 2.12(c) on account of any
such increased costs or reduced amounts relating to any Rental
Period that ended more than six (6) months prior to such demanding
party's first demand for payment (or, if any increased costs or
reduced amounts do not relate to a particular Rental Period, on
account of any such increased costs or reduced amounts realized by
the demanding party more than six (6) months prior to its first
demand for payment). A certificate setting forth in reasonable
detail the amount of such increased costs or reduced amounts,
submitted by Lessor or such Participant to Lessee shall constitute
prima facie evidence of such costs or amounts. The obligations of
Lessee under this Subparagraph 2.12(c) shall survive the payment
and performance of the Lessee Obligations and the termination of
this Agreement.
(d) Capital Requirements. If, after the date of this
Agreement, Lessor or any Participant determines that (i) any
Change of Law affects the amount of capital required to be
maintained by such Person or any other Person controlling such
Person (a "Capital Adequacy Requirement") and (ii) the amount of
capital maintained by such Person or such other Person which is
attributable to or based upon the Advances, the commitments or
this Agreement must be increased as a result of such Capital
Adequacy Requirement (taking into account such Person's or such
other Person's policies with respect to capital adequacy), Lessee
shall pay to such Person or such other Person, within thirty (30)
Business Days after demand of such Person, such amounts as such
Person or such other Person reasonably shall determine are
necessary to compensate such Person or such other Person for the
increased costs to such Person or such other Person of such
increased capital; provided, however, that Lessee shall have no
obligation to make any payment to any demanding party under this
Subparagraph 2.12(d) on account of any such increased costs
relating to any Rental Period that ended more than six (6) months
prior to such demanding party's first demand for payment (or, if
any increased costs or reduced amounts do not relate to a
particular Rental Period, on account of any such increased costs
or reduced amounts realized by the demanding party more than six
(6) months prior to its first demand for payment). A certificate
of Lessor or any Participant setting forth in reasonable detail
the computation of any such increased costs, delivered by such
Person to Lessee shall constitute prima facie evidence of such
costs. The obligations of Lessee under this Subparagraph 2.12(d)
shall survive the payment and performance of the Lessee
Obligations and the termination of this Agreement.
(e) Mitigation. If Lessor or any Participant becomes
aware of (i) any Change of Law which will make it unlawful or
impossible for such Person to fund or maintain its portion of the
Outstanding Lease Amount at the LIBOR Rental Rate or (ii) any
Change of Law or other event or condition which will obligate
Lessee to pay any amount pursuant to Subparagraph 2.12(c) or
Subparagraph 2.12(d), such Person shall notify Lessee and Agent
thereof as promptly as practical. If any Person has given notice
of any such Change of Law or other event or condition and
thereafter becomes aware that such Change of Law or other event or
condition has ceased to exist, such Person shall notify Lessee and
Agent thereof as promptly as practical. Each Person affected by
any Change of Law which makes it unlawful or impossible for such
Person to fund or maintain its portion of the Outstanding Lease
Amount at the LIBOR Rental Rate or to which Lessee is obligated to
pay any amount pursuant to Subparagraph 2.12(c) or Subparagraph
2.12(d) shall use reasonable commercial efforts (including
changing the jurisdiction of its Applicable Participating Office)
to avoid the effect of such Change of Law or to avoid or
materially reduce any amounts which Lessee is obligated to pay
pursuant to Subparagraph 2.12(c) or Subparagraph 2.12(d) if, in
the reasonable opinion of such Person, such efforts would not be
disadvantageous to such Person.
2.13. Taxes on Payments.
(a) Payments Free of Taxes. All payments made by Lessee
under this Agreement and the other Operative Documents shall be
made free and clear of, and without deduction or withholding for
or on account of, any present or future Indemnified Taxes, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority. If any Indemnified Taxes are required to
be withheld from any amounts payable to any Lessor Party hereunder
or under the other Operative Documents, the amounts so payable to
such Lessor Party shall be increased to the extent necessary to
yield to such Lessor Party (after payment of all Indemnified
Taxes) the Base Rent or any such other amounts payable hereunder
at the rates or in the amounts specified in this Agreement and the
other Operative Documents. Whenever any Indemnified Taxes are
payable by Lessee, as promptly as possible thereafter, Lessee
shall send to Agent for its own account or for the account of
Lessor or such Participant, as the case may be, a certified copy
of an original official receipt received by Lessee showing payment
thereof. If Lessee fails to pay any Indemnified Taxes when due to
the appropriate taxing authority or fails to remit to Agent the
required receipts or other required documentary evidence, Lessee
shall indemnify the Lessor Parties for any incremental taxes,
interest or penalties that may become payable by the Lessor
Parties as a result of any such failure. The obligations of
Lessee under this Subparagraph 2.13(a) shall survive the payment
and performance of the Lessee Obligations and the termination of
this Agreement.
(b) Withholding Exemption Certificates. On or prior to
the Closing Date or, if such date does not occur within thirty
(30) days after the date of this Agreement, by the end of such 30-
day period, Lessor, if it is not incorporated under the laws of
the United States of America or a state thereof, and each
Participant which is not incorporated under the laws of the United
States of America or a state thereof shall deliver to Lessee and
Agent two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 (or successor applicable form), as the
case may be, certifying in each case that Lessor or such
Participant, as the case may be, is entitled to receive payments
under this Agreement and the other Operative Documents without
deduction or withholding of any United States federal income
taxes. Each Person which delivers to Lessee and Agent a Form 1001
or 4224 pursuant to the immediately preceding sentence further
undertakes to deliver to Lessee and Agent two further copies of
Form 1001 or 4224 (or successor applicable forms), or other manner
of certification or procedure, as the case may be, on or before
the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent
form previously delivered by it to Lessee and Agent, and such
extensions or renewals thereof as may reasonably be requested by
Lessee or Agent, certifying in the case of a Form 1001 or 4224
that such Person is entitled to receive payments under this
Agreement and the other Operative Documents without deduction or
withholding of any United States federal income taxes, unless in
any such cases an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent Lessor or a
Participant from duly completing and delivering any such form with
respect to it and Lessor or such Participant advises Lessee and
Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
(c) Mitigation. If any Lessor Party claims any additional
amounts to be payable to it pursuant to this Paragraph 2.13, such
Lessor Party shall use reasonable commercial efforts to file any
certificate or document requested in writing by Lessee (including
copies of Internal Revenue Service Form 1001 (or successor forms)
reflecting a reduced rate of withholding) or to change the
jurisdiction of its Applicable Participating Office if the making
of such a filing or such change in the jurisdiction of its
Applicable Participating Office would avoid the need for or
materially reduce the amount of any such additional amounts which
may thereafter accrue and if, in the reasonable opinion of a
Participant, in the case of a change in the jurisdiction of its
Applicable Participating Office, such change would not be
disadvantageous to such Person.
(d) Tax Returns. Nothing contained in this Paragraph 2.13
shall require any Lessor Party to make available any of its tax
returns (or any other information relating to its taxes which it
deems to be confidential).
2.14. Funding Loss Indemnification. If Lessee shall (a) pay all
or any portion of the Outstanding Lease Amount on any day other than the
last day of a Rental Period therefor (whether an optional payment, a
mandatory payment or otherwise) or (b) cancel or otherwise fail to
consummate any Advance Request which has been delivered to Agent
(whether as a result of the failure to satisfy any applicable conditions
or otherwise), Lessee shall, upon demand by Lessor or any Participant,
reimburse such Person for and hold such Person harmless from all costs
and losses incurred by such Person as a result of such payment,
cancellation or failure. Lessee understands that such costs and losses
may include, without limitation, losses incurred by Lessor or a
Participant as a result of funding and other contracts entered into by
such Person to fund its portion of the Outstanding Lease Amount. Each
Person demanding payment under this Paragraph 2.14 shall deliver to
Lessee, with a copy to Agent, a certificate setting forth the amount of
costs and losses for which demand is made, which certificate shall set
forth in reasonable detail the calculation of the amount demanded. Such
a certificate so delivered to Lessee shall constitute prima facie
evidence of such costs and losses. The obligations of Lessee under this
Paragraph 2.14 shall survive the payment and performance of the Lessee
Obligations and the termination of this Agreement.
2.15. Replacement of Participants. If any Participant shall (a)
become a Defaulting Participant more than once, (b) continue as a
Defaulting Participant for more than five (5) Business Days at any time,
(c) deliver, pursuant to Subparagraph 2.12(b), a notice of a Change of
Law which does not affect Majority Participants, or (d) demand any
payment under Subparagraph 2.12(c), 2.12(d) or 2.13(a) for a reason
which is not applicable to Majority Participants, then Agent may (or
upon the written request of Lessee if no Event of Default has occurred
and is continuing, shall) replace such Participant (the "affected
Participant"), or cause such affected Participant to be replaced, with
another financial institution (the "replacement Participant") satisfying
the requirements of an Eligible Assignee under Subparagraph 7.05(b), by
having the affected Participant sell and assign all of its rights and
obligations under this Agreement and the other Operative Documents to
the replacement Participant pursuant to Subparagraph 7.05(b); provided,
however, that if Lessee seeks to exercise such right, it must do so
within sixty (60) days after it first receives notice of the event,
condition or demand giving rise to such right, and no Lessor Party shall
have any obligation to identify or locate a replacement Participant for
Lessee. Upon receipt by any affected Participant of a written notice
from Agent stating that Agent is exercising the replacement right set
forth in this Paragraph 2.15, such affected Participant shall sell and
assign all of its rights and obligations under this Agreement and the
other Operative Documents to the replacement Participant pursuant to an
Assignment Agreement and Subparagraph 7.05(b) for a purchase price equal
to the sum of its portion of the Outstanding Lease Amount, the accrued
and unpaid portion of the Base Rent relating to such portion and its
ratable share of all fees to which it is entitled.
SECTION 3. CONDITIONS PRECEDENT.
3.01. Acquisition Advance. The obligation of Lessor to enter into
the Ground Lease and to make the Acquisition Advance (and the
obligations of the Participants to fund their respective Proportionate
Shares of the Acquisition Advance) is (are) subject to receipt by Agent,
on or prior to the Closing Date, of each item listed in Schedule 3.01,
each in form and substance satisfactory to Lessor, Agent and each
Participant, and with sufficient copies for, Lessor, Agent and each
Participant.
3.02. Improvement/Expense Advances. The obligation of Lessor to
make each Improvement/Expense Advance (and the obligations of the
Participants to fund their respective Proportionate Shares of such
Advance) is (are) subject to (i) satisfaction of the conditions set
forth in Paragraph 3.01, (ii) receipt by Agent pursuant to Paragraph
2.03 of the Advance Request for such Advance, appropriately completed
and duly executed by Lessee, and (iii) receipt by Agent of date-down
endorsements to Agent's and Lessor's title insurance policies or binders
acceptable to Agent and Lessor.
3.03. Other Conditions Precedent. The occurrence of each Credit
Event (including the making of each Advance by Lessor and the funding of
each Advance by the Participants) is subject to the further conditions
that, on the date such Credit Event is to occur and after giving effect
to such Credit Event, the following shall be true and correct:
(a) The representations and warranties of Lessee set forth
in Paragraph 4.01 and in the other Operative Documents are true
and correct in all material respects as if made on such date
(except for representations and warranties expressly made as of a
specified date, which shall be true as of such date);
(b) No Default has occurred and is continuing or will
result from such Credit Event; and
(c) All of the Operative Documents are in full force and
effect.
The submission by Lessee to Lessor and Agent of each Advance Request,
each Notice of Rental Period Selection and a Notice of Marketing Option
Exercise shall be deemed to be a representation and warranty by Lessee
that each of the statements set forth above in this Paragraph 3.03 is
true and correct as of the date of such request and notice.
3.04. Covenant to Deliver. Lessee agrees (not as a condition but
as a covenant) to deliver to Lessor and Agent each item required to be
delivered to Lessor and Agent as a condition to each Advance if such
Advance is made. Lessee expressly agrees that the making of any Advance
prior to the receipt by Lessor and Agent of any such item shall not
constitute a waiver by Lessor, Agent or any Participant of Lessee's
obligation to deliver such item, unless expressly waived in writing.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
4.01. Lessee's Representations and Warranties. In order to induce
the Lessor Parties to enter into this Agreement and the other Operative
Documents to which they are parties, Lessee hereby represents and
warrants to the Lessor Parties as follows:
(a) Due Incorporation, Qualification, etc. Each of Lessee
and Lessee's Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of its state
of incorporation; (ii) has the power and authority to own, lease
and operate its properties and carry on its business as now
conducted; and (iii) is duly qualified, licensed to do business
and in good standing as a foreign corporation in each jurisdiction
where the failure to be so qualified or licensed is reasonably
likely to have a Material Adverse Effect.
(b) Authority. The execution, delivery and performance by
Lessee of each Operative Document executed, or to be executed, by
Lessee and the consummation of the transactions contemplated
thereby (i) are within the power of Lessee and (ii) have been duly
authorized by all necessary actions on the part of Lessee.
(c) Enforceability. Each Operative Document executed, or
to be executed, by Lessee has been, or will be, duly executed and
delivered by Lessee and constitutes, or will constitute, a legal,
valid and binding obligation of Lessee, enforceable against Lessee
in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and
general principles of equity.
(d) Non-Contravention. The execution and delivery by
Lessee of the Operative Documents executed by Lessee and the
performance and consummation of the transactions contemplated
thereby do not (i) violate any Requirement of Law applicable to
Lessee; (ii) violate any provision of, or result in the breach or
the acceleration of, or entitle any other Person to accelerate
(whether after the giving of notice or lapse of time or both), any
Contractual Obligation of Lessee; or (iii) result in the creation
or imposition of any Lien (or the obligation to create or impose
any Lien) upon any property, asset or revenue of Lessee (except
such Liens as may be created in favor of the Lessor Parties
pursuant to this Agreement or the other Operative Documents).
(e) Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Authority or other Person (including, without
limitation, the shareholders of any Person) is required in
connection with the execution and delivery of the Operative
Documents executed by Lessee and the performance and consummation
by Lessee of the transactions contemplated thereby, except such as
have been made or obtained and are in full force and effect.
(f) No Violation or Default. Neither Lessee nor any of
its Subsidiaries is in violation of or in default with respect to
(i) any Requirement of Law applicable to such Person; (ii) any
Contractual Obligation of such Person (nor is there any waiver in
effect which, if not in effect, would result in such a violation
or default), where, in each case, such violation or default is
reasonably likely to have a Material Adverse Effect. Without
limiting the generality of the foregoing, neither Lessee nor any
of its Subsidiaries (A) has violated any Environmental Laws,
(B) has any liability under any Environmental Laws or (C) has
received notice or other communication of an investigation or is
under investigation by any Governmental Authority having authority
to enforce Environmental Laws, where such violation, liability or
investigation is reasonably likely to have a Material Adverse
Effect. No Default has occurred and is continuing.
(g) Litigation. No actions (including, without
limitation, derivative actions), suits, proceedings or
investigations are pending or, to the knowledge of Lessee,
threatened against Lessee or any of its Subsidiaries at law or in
equity in any court or before any other Governmental Authority
which (i) is reasonably likely (alone or in the aggregate) to have
a Material Adverse Effect or (ii) seeks to enjoin, either directly
or indirectly, the execution, delivery or performance by Lessee of
the Operative Documents or the transactions contemplated thereby.
(h) Title; Possession Under Leases. Lessee and its
Subsidiaries own and have good and marketable title, or a valid
leasehold interest in, all their respective properties and assets
as reflected in the most recent Financial Statements delivered to
Agent (except those assets and properties disposed of in the
ordinary course of business or otherwise in compliance with this
Agreement since the date of such Financial Statements) and all
respective assets and properties acquired by Lessee and its
Subsidiaries since such date (except those disposed of in the
ordinary course of business or otherwise in compliance with this
Agreement). Such assets and properties are subject to no Lien,
except for Permitted Liens. Each of Lessee and its Subsidiaries
has complied with all material obligations under all material
leases to which it is a party and all such leases are in full
force and effect. Each of Lessee and its Subsidiaries enjoys
peaceful and undisturbed possession under such leases.
(i) Financial Statements. The Financial Statements of
Lessee and its Subsidiaries which have been delivered to Agent,
(i) are in accordance with the books and records of Lessee and its
Subsidiaries, which have been maintained in accordance with good
business practice; (ii) have been prepared in conformity with
GAAP; and (iii) fairly present the financial conditions and
results of operations of Lessee and its Subsidiaries as of the
date thereof and for the period covered thereby. Neither Lessee
nor any of its Subsidiaries has any contingent obligations,
liability for taxes or other outstanding obligations which are
material in the aggregate, except as disclosed in the audited
Financial Statements dated July 31, 1997, furnished by Lessee to
Agent prior to the date hereof, or in the Financial Statements
delivered to Agent pursuant to clause (i) or (ii) of
Subparagraph 5.01.
(j) Equity Securities. All outstanding Equity Securities
of Lessee are duly authorized, validly issued, fully paid and non-
assessable. All Equity Securities of Lessee have been offered and
sold in compliance with all federal and state securities laws and
all other Requirements of Law.
(k) No Agreements to Sell Assets; Etc. Except as
otherwise permitted by Subparagraph 5.02(c) or Subparagraph
5.02(d), neither Lessee nor any of its Subsidiaries has any legal
obligation, absolute or contingent, to any Person to sell the
assets of Lessee or any of its Subsidiaries (other than sales in
the ordinary course of business), or to effect any merger,
consolidation or other reorganization of Lessee or any of its
Subsidiaries or to enter into any agreement with respect thereto.
(l) Employee Benefit Plans.
(i) Based upon the latest valuation of each Employee
Benefit Plan that either Lessee or any ERISA Affiliate
maintains or contributes to, or has any obligation under
(which occurred within twelve months of the date of this
representation), the aggregate benefit liabilities of such
plan within the meaning of 4001 of ERISA did not exceed
the aggregate value of the assets of such plan. Neither
Lessee nor any ERISA Affiliate has any liability with
respect to any post-retirement benefit under any Employee
Benefit Plan which is a welfare plan (as defined in
section 3(1) of ERISA), other than liability for health plan
continuation coverage described in Part 6 of Title I(B) of
ERISA, which liability for health plan contribution coverage
is not reasonably likely to have a Material Adverse Effect.
(ii) Each Employee Benefit Plan complies, in both
form and operation, in all material respects, with its
terms, ERISA and the IRC, and no condition exists or event
has occurred with respect to any such plan which would
result in the incurrence by either Lessee or any ERISA
Affiliate of any liability, fine or penalty that is
reasonably likely to have a Material Adverse Effect. Each
Employee Benefit Plan, related trust agreement, arrangement
and commitment of Lessee or any ERISA Affiliate is legally
valid and binding and in full force and effect. No Employee
Benefit Plan is being audited or investigated by any
government agency or is subject to any pending or threatened
claim or suit that is reasonably likely to have a Material
Adverse Effect. Neither Lessee nor any ERISA Affiliate nor
any fiduciary of any Employee Benefit Plan has engaged in a
prohibited transaction under section 406 of ERISA or section
4975 of the IRC.
(iii) Neither Lessee nor any ERISA Affiliate
contributes to or has any material contingent obligations to
any Multiemployer Plan. Neither Lessee nor any ERISA
Affiliate has incurred any liability (including secondary
liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan
under Section 4201 of ERISA or as a result of a sale of
assets described in Section 4204 of ERISA that is reasonably
likely to have a Material Adverse Effect. Neither Lessee
nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or insolvent under
and within the meaning of Section 4241 or Section 4245 of
ERISA or that any Multiemployer Plan intends to terminate or
has been terminated under Section 4041A of ERISA.
(m) Other Regulations. Lessee is not subject to
regulation under the Investment Company Act of 1940, the Public
Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or to any
other Governmental Rule limiting its ability to incur
indebtedness.
(n) Patent and Other Rights. Lessee and its Subsidiaries
own or license under validly existing agreements all patents,
licenses, trademarks, trade names, trade secrets, service marks,
copyrights and all rights with respect thereto, which are required
to conduct their businesses as now conducted.
(o) Governmental Charges and Other Indebtedness. Lessee
and its Subsidiaries have filed or caused to be filed all tax
returns which are required to be filed by them. Lessee and its
Subsidiaries have paid, or made provision for the payment of, all
taxes and other Governmental Charges which have or may have become
due pursuant to said returns or otherwise and all other
indebtedness, except such Governmental Charges or indebtedness, if
any, which are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been
provided or which are not reasonably likely to have a Material
Adverse Effect if unpaid.
(p) Margin Stock. Lessee owns no Margin Stock which, in
the aggregate, would constitute a substantial part of the assets
of Lessee, and no proceeds of any Loan will be used to purchase or
carry, directly or indirectly, any Margin Stock or to extend
credit, directly or indirectly, to any Person for the purpose of
purchasing or carrying any Margin Stock.
(q) Subsidiaries, etc. Set forth in Schedule 4.01(q) (as
supplemented by Lessee from time to time in a written notice to
Agent) is a complete list of all of Lessee's Subsidiaries, the
jurisdiction of incorporation of each, the classes of Equity
Securities of each and the number of shares and percentages of
shares of each such class owned directly or indirectly by Lessee.
(r) Catastrophic Events. Neither Lessee nor any of its
Subsidiaries and none of their properties is or has been affected
by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or
other casualty that is reasonably likely to have a Material
Adverse Effect. There are no disputes presently subject to
grievance procedure, arbitration or litigation under any of the
collective bargaining agreements, employment contracts or employee
welfare or incentive plans to which Lessee or any of its
Subsidiaries is a party, and there are no strikes, lockouts, work
stoppages or slowdowns, or, to the best knowledge of Lessee,
jurisdictional disputes or organizing activities occurring or
threatened which alone or in the aggregate are reasonably likely
to have a Material Adverse Effect.
(s) Burdensome Contractual Obligations, Etc. Neither
Lessee nor any of its Subsidiaries and none of their properties is
subject to any Contractual Obligation or Requirement of Law which
is reasonably likely to have a Material Adverse Effect.
(t) No Material Adverse Effect. No event has occurred and
no condition exists which is reasonably likely to have a Material
Adverse Effect.
(u) The Property.
(i) The Land consists of 15.12 acres located in the
City of Hillsboro, Washington County, Oregon, more
particularly described in Exhibit A.
(ii) On the date of this Agreement, there are no
Improvements on the Land. Upon the completion of the New
Improvements on the Land, the Improvements on the Land will
consist of a facility for the manufacture of advance laser
beam generation equipment and associated processes
containing approximately 15.12 acres (including parking,
landscaping, recreational and related facilities, amenities
and improvements).
(iii) No property, other than the leasehold interest
in the Land will be acquired for the Acquisition Price
therefor.
(iv) Access to the Land for pedestrians and motor
vehicles from publicly dedicated streets and public highways
is available.
(v) No portion of the Property is located in an area
identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable Governmental
Authority, or if any portion of the Property is located in
such an area, flood insurance has been obtained for the
Property or such portion thereof in accordance with
Paragraph 3.03 of the Lease Agreement and the National Flood
Insurance Act of 1968.
(vi) All of the Property complies and will comply at
all times (whether before commencement of any construction,
during any construction or after completion of construction
of any New Improvements) with all applicable Governmental
Rules (including Title III of the Americans with
Disabilities Act; Environmental Laws; and zoning, land use,
building, planning and fire laws, rules, regulations and
codes) and Insurance Requirements, except for violations
which are not reasonably likely to have a Material Adverse
Effect. No Hazardous Materials have been used, generated,
manufactured, stored, treated, disposed of, transported or
present on or released or discharged from the Property in
any manner that is reasonably likely to have a Material
Adverse Effect. There are no claims or actions which are
reasonably likely to have a Material Adverse Effect pending
or, to Lessee's knowledge, threatened against any of the
Property by any Governmental Authority or any other Person
relating to Hazardous Materials or pursuant to any
Environmental Laws.
(vii) None of the Improvements (whether before
commencement of any construction, during any construction or
after completion of construction of any New Improvements)
encroach or will at any time encroach in any manner onto any
adjoining land, except as permitted by express written and
recorded encroachment agreements approved by Agent or as
affirmatively insured against by appropriate title
insurance.
(viii) All licenses, approvals, authorizations,
consents, permits, easements and rights-of-way required for
the use of any of the Property have been obtained or, if not
yet required, will be obtained before required.
(ix) After the execution by Lessor and Lessee of the
Ground Lease on the Closing Date, Lessor will have good and
valid leasehold interest in the Property, subject to no
Liens except for Permitted Property Liens.
(v) Chief Executive Office. Lessee's chief executive
office is located at 26460 Corporate Ave., Hayward, California.
(w) Accuracy of Information Furnished. None of the
Operative Documents and none of the other certificates, statements
or information furnished to any Lessor Party by or on behalf of
Lessee or any of its Subsidiaries in connection with the Operative
Documents or the transactions contemplated thereby contains or
will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
Lessee shall be deemed to have reaffirmed, for the benefit of the Lessor
Parties, each representation and warranty contained in this Paragraph
4.01 on and as of the date of each Credit Event (except for
representations and warranties expressly made as of a specified date,
which shall be true as of such date).
4.02. Lessor's Representations and Warranties. In order to induce
Lessee, Agent and the Participants to enter into this Agreement and the
other Operative Documents to which they are parties, Lessor hereby
represents and warranties to Lessee, Agent and the Participants as
follows:
(a) Due Incorporation, Qualification, etc. Lessor (i) is
a corporation duly organized, validly existing and in good
standing under the laws of Illinois and (ii) has the power and
authority to own, lease and operate its properties and carry on
its business as now conducted.
(b) Authority. The execution, delivery and performance by
Lessor of each Operative Document executed, or to be executed, by
Lessor and the consummation of the transactions contemplated
thereby (i) are within the power of Lessor and (ii) have been duly
authorized by all necessary actions on the part of Lessor.
(c) Enforceability. Each Operative Document executed, or
to be executed, by Lessor has been, or will be, duly executed and
delivered by Lessor and constitutes, or will constitute, a legal,
valid and binding obligation of Lessor, enforceable against Lessor
in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and
general principles of equity.
(d) Non-Contravention. The execution and delivery by
Lessor of the Operative Documents executed by Lessor and the
performance and consummation of the transactions contemplated
thereby do not (i) violate any Requirement of Law applicable to
Lessor; (ii) violate any provision of, or result in the breach or
the acceleration of, or entitle any other Person to accelerate
(whether after the giving of notice or lapse of time or both), any
Contractual Obligation of Lessor; or (iii) result in the creation
or imposition of any Lien (or the obligation to create or impose
any Lien) upon any property, asset or revenue of Lessor (except
such Liens as may be created in favor of Agent pursuant to this
Agreement or the other Operative Documents).
(e) Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Authority or other Person (including, without
limitation, the shareholders of any Person) is required in
connection with the execution and delivery of the Operative
Documents executed by Lessor and the performance and consummation
of the transactions contemplated thereby, except such as have been
made or obtained and are in full force and effect.
(f) Litigation. No actions (including, without
limitation, derivative actions), suits, proceedings or
investigations are pending or, to the knowledge of Lessor,
threatened against Lessor at law or in equity in any court or
before any other Governmental Authority which (i) is reasonably
likely (alone or in the aggregate) to materially and adversely
affect the ability of Lessor to perform its obligations under the
Operative Documents to which it is a party or (ii) seeks to
enjoin, either directly or indirectly, the execution, delivery or
performance by Lessor of the Operative Documents or the
transactions contemplated thereby.
(g) Other Regulations. Lessor is not subject to
regulation under the Investment Company Act of 1940, the Public
Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or to any
other Governmental Rule limiting its ability to incur
indebtedness.
(h) Chief Executive Office. Lessor's chief executive
office is located at 135 S. LaSalle Street, Suite 711, Chicago,
Illinois, 60603.
4.03. Participants' Representations and Warranties. In order to
induce Lessee, Lessor and Agent to enter into this Agreement and the
other Operative Documents to which they are parties, each Participant
hereby represents and warranties to Lessee, Lessor and Agent as follows:
(a) Due Incorporation, Qualification, etc. Such
Participant (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
organization and (ii) has the power and authority to own, lease
and operate its properties and carry on its business as now
conducted.
(b) Authority. The execution, delivery and performance by
such Participant of each Operative Document executed, or to be
executed, by such Participant and the consummation of the
transactions contemplated thereby (i) are within the power of such
Participant and (ii) have been duly authorized by all necessary
actions on the part of such Participant.
(c) Enforceability. Each Operative Document executed, or
to be executed, by such Participant has been, or will be, duly
executed and delivered by such Participant and constitutes, or
will constitute, a legal, valid and binding obligation of such
Participant, enforceable against such Participant in accordance
with its terms, except as limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the
enforcement of creditors' rights generally and general principles
of equity.
(d) Non-Contravention. The execution and delivery by such
Participant of the Operative Documents executed by such
Participant and the performance and consummation of the
transactions contemplated thereby do not (i) violate any
Requirement of Law applicable to such Participant; (ii) violate
any provision of, or result in the breach or the acceleration of,
or entitle any other Person to accelerate (whether after the
giving of notice or lapse of time or both), any Contractual
Obligation of such Participant; or (iii) result in the creation or
imposition of any Lien (or the obligation to create or impose any
Lien) upon any property, asset or revenue of such Participant
(except such Liens as may be created in favor of Lessor or Agent
pursuant to this Agreement or the other Operative Documents).
(e) Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Authority or other Person (including, without
limitation, the shareholders of any Person) is required in
connection with the execution and delivery of the Operative
Documents executed by such Participant and the performance and
consummation of the transactions contemplated thereby, except such
as have been made or obtained and are in full force and effect.
(f) Litigation. No actions (including, without
limitation, derivative actions), suits, proceedings or
investigations are pending or, to the knowledge of such
Participant, threatened against such Participant at law or in
equity in any court or before any other Governmental Authority
which (i) is reasonably likely (alone or in the aggregate) to
materially and adversely affect the ability of such Participant to
perform its obligations under the Operative Documents to which it
is a party or (ii) seeks to enjoin, either directly or indirectly,
the execution, delivery or performance by such Participant of the
Operative Documents or the transactions contemplated thereby.
(g) Own Account. Such Participant is acquiring its
participation interest hereunder for its own account for
investment and not with a view to any distribution (as such term
is used in Section 2(11) of the Securities Act of 1933) thereof,
and, if in the future it should decide to dispose of its
participation interest, it understands that it may do so only in
compliance with the Securities Act of 1933 and the rules and
regulations of the Securities and Exchange Commission thereunder
and any applicable state securities laws.
SECTION 5. COVENANTS.
5.01. Lessee's Affirmative Covenants. Until the termination of
this Agreement and the satisfaction in full by Lessee of all Lessee
Obligations, Lessee will comply, and will cause compliance, with the
following affirmative covenants, unless Lessor and Required Participants
shall otherwise consent in writing:
(a) Financial Statements, Reports, etc. Lessee shall
furnish to Agent, with sufficient copies for Lessor and each
Participant, the following, each in such form and such detail as
Agent, Lessor or the Required Participants shall reasonably
request:
(i) As soon as available and in no event later than
sixty (60) days after the last day of each fiscal quarter of
Lessee (other than the last quarter of each fiscal year), a
copy of the Financial Statements of Lessee and its
Subsidiaries (prepared on a consolidated basis) for such
quarter and for the fiscal year to date, certified by the
president or chief financial officer of Lessee to present
fairly the financial condition, results of operations and
other information reflected therein and to have been
prepared in accordance with GAAP (subject to normal year-end
audit adjustments);
(ii) As soon as available and in no event later than
one hundred, twenty (120) days after the close of each
fiscal year of Lessee, (A) copies of the audited Financial
Statements of Lessee and its Subsidiaries (prepared on a
consolidated basis) for such year, audited by independent
certified public accountants of recognized national standing
acceptable to Agent and Required Participants, (B) copies of
the unqualified opinions (or qualified opinions reasonably
acceptable to Agent and Required Participants) delivered by
such accountants in connection with all such Financial
Statements and (C) certificates of such accountants to Agent
stating that in making the examination necessary for their
opinion they have reviewed Paragraph 5.03 and have obtained
no knowledge of any violation by Lessee and its Subsidiaries
of the covenants set forth therein, or if, in the opinion of
such accountants, any such violation has occurred, a
statement as to the nature thereof;
(iii) Contemporaneously with the quarterly and year-
end Financial Statements required by the foregoing clauses
(i) and (ii), a compliance certificate of the president or
chief financial officer of Lessee (a "Compliance
Certificate") which (A) states that no Default has occurred
and is continuing, or, if any such Default has occurred and
is continuing, a statement as to the nature thereof and what
action Lessee proposes to take with respect thereto and (B)
sets forth, for the quarter or year covered by such
Financial Statements or as of the last day of such quarter
or year (as the case may be), the calculation of the
financial ratios and tests provided in Paragraph 5.03;
(iv) As soon as possible and in no event later than
five (5) Business Days after any officer of Lessee knows of
the occurrence or existence of (A) any Reportable Event
under any Employee Benefit Plan or Multiemployer Plan; (B)
any actual or threatened litigation, suits, claims or
disputes against Lessee or any of its Subsidiaries involving
potential monetary damages payable by Lessee or its
Subsidiaries of $10,000,000 or more (alone or in the
aggregate); (C) any other event or condition which is
reasonably likely to have a Material Adverse Effect; or
(D) any Default; the statement of the president or chief
financial officer of Lessee setting forth details of such
event, condition or Default and the action which Lessee
proposes to take with respect thereto;
(v) As soon as available and in no event later than
five (5) Business Days after they are sent, made available
or filed, copies of (A) all registration statements and
reports filed by Lessee or any of its Subsidiaries with any
securities exchange or the Securities and Exchange
Commission (including, without limitation, all 10-Q, 10-K
and 8-Q reports); (B) all reports, proxy statements and
financial statements sent or made available by Lessee or any
of its Subsidiaries to its security holders; and (C) all
press releases and other similar public concerning any
material developments in the business of Lessee or any of
its Subsidiaries made available by Lessee or any of its
Subsidiaries to the public generally;
(vi) As soon as available and in no event later than
thirty (30) days after the first day of each fiscal year of
Lessee, the consolidated plan and forecast of Lessee and its
Subsidiaries for such fiscal year, including quarterly cash
flow projections; and
(vii) Such other instruments, agreements,
certificates, opinions, statements, documents and
information relating to the operations or condition
(financial or otherwise) of Lessee or its Subsidiaries, and
compliance by Lessee with the terms of this Agreement and
the other Operative Documents as Agent may from time to time
reasonably request.
(b) Books and Records. Lessee and its Subsidiaries shall
at all times keep proper books of record and account in which
full, true and correct entries will be made of their transactions
in accordance with GAAP.
(c) Inspections. Lessee and its Subsidiaries shall permit
any Person designated by any Participant, upon reasonable notice
and during normal business hours, to visit and inspect any of the
properties and offices of Lessee and its Subsidiaries, to examine
the books and records of Lessee and its Subsidiaries and make
copies thereof and to discuss the affairs, finances and business
of Lessee and its Subsidiaries with, and to be advised as to the
same by, their officers, auditors and accountants, all at such
times and intervals as any Participant may reasonably request;
provided, however, that, if no Default has occurred and is
continuing, Lessee shall not be required to permit more than four
(4) such visits for inspection and examination in any fiscal year.
(d) Insurance. In addition to the insurance requirements
set forth in the Lease Agreement with respect to the Property,
Lessee and its Subsidiaries shall:
(i) Carry and maintain insurance of the types and in
the amounts customarily carried from time to time during the
term of this Agreement by others engaged in substantially
the same business as such Person and operating in the same
geographic area as such Person, including, but not limited
to, fire, public liability, property damage and worker's
compensation;
(ii) Carry and maintain each policy for such
insurance with (A) a company which is rated A or better by
A.M. Best and Company at the time such policy is placed and
at the time of each annual renewal thereof or (B) any other
insurer which is reasonably satisfactory to Agent; and
(iii) Deliver to Agent from time to time, as Agent may
request, schedules setting forth all insurance then in
effect.
(e) Governmental Charges and Other Indebtedness. Lessee
and its Subsidiaries shall promptly pay and discharge when due
(i) all taxes and other Governmental Charges prior to the date
upon which penalties accrue thereon, (ii) all indebtedness which,
if unpaid, could become a Lien upon the property of Lessee or its
Subsidiaries and (iii) all other indebtedness which, if unpaid, is
reasonably likely to have a Material Adverse Effect, except such
Indebtedness as may in good faith be contested or disputed, or for
which arrangements for deferred payment have been made, provided
that in each such case appropriate reserves are maintained to the
reasonable satisfaction of Agent.
(f) Use of Proceeds. Lessee shall not use any part of the
proceeds of any Advance, directly or indirectly, for the purpose
of purchasing or carrying any Margin Stock or for the purpose of
purchasing or carrying or trading in any securities under such
circumstances as to involve Lessee or any Lessor Party in a
violation of Regulations G, T, U or X issued by the Federal
Reserve Board.
(g) General Business Operations. Each of Lessee and its
Subsidiaries shall (i) preserve and maintain its corporate
existence and all of its rights, privileges and franchises
reasonably necessary to the conduct of its business, (ii) conduct
its business activities in compliance with all Requirements of Law
and Contractual Obligations applicable to such Person, the
violation of which is reasonably likely to have a Material Adverse
Effect and (iii) keep all property useful and necessary in its
business in good working order and condition, ordinary wear and
tear excepted. Lessee shall maintain its chief executive office
and principal place of business in the United States and shall not
relocate its chief executive office or principal place of business
outside of California except upon not less than ninety (90) days
prior written notice to Agent.
5.02. Lessee's Negative Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee
Obligations, Lessee will comply, and will cause compliance, with the
following negative covenants, unless Lessor and Required Participants
shall otherwise consent in writing:
(a) Indebtedness. Neither Lessee nor any of its
Subsidiaries shall create, incur, assume or permit to exist any
Indebtedness or any Guaranty Obligations except for the following
("Permitted Indebtedness"):
(i) The Lessee Obligations under the Operative
Documents;
(ii) Indebtedness of Lessee and its Subsidiaries
listed in Schedule 5.02(a) and existing on the date of this
Agreement;
(iii) Indebtedness of Lessee and its Subsidiaries
arising from the endorsement of instruments for collection
in the ordinary course of Lessee's or a Subsidiary's
business;
(iv) Indebtedness of Lessee and its Subsidiaries for
trade accounts payable, provided that (A) such accounts
arise in the ordinary course of business and (B) no material
part of such account is more than ninety (90) days past due
(unless subject to a bona fide dispute and for which
adequate reserves have been established);
(v) Indebtedness of Lessee and its Subsidiaries
under Rate Contracts, provided that all such arrangements
are entered into in connection with bona fide hedging
operations and not for speculation;
(vi) Indebtedness of Lessee and its Subsidiaries
under purchase money loans and Capital Leases incurred by
Lessee or any of its Subsidiaries to finance the acquisition
by such Person of real property, fixtures or equipment
provided that in each case, (A) such Indebtedness is
incurred by such Person at the time of, or not later than
ninety (90) days after, the first functional use by such
Person of the property so financed and (B) such Indebtedness
does not exceed the purchase price of the property so
financed;
(vii) Subordinated Indebtedness of Lessee and its
Subsidiaries;
(viii) Indebtedness of Lessee and its
Subsidiaries under initial or successive refinancings of any
Indebtedness permitted by clause (ii) above or under
replacements of lines of credit or other credit commitments
permitted by clause (ii) above, provided that (A) the
principal amount of any such refinancing or replacement does
not exceed the principal amount of the Indebtedness being
refinanced or commitment being replaced and (B) the material
terms and provisions of any such refinancing or replacement
(including redemption, prepayment, default and subordination
provisions) are not substantially less favorable than the
comparable terms of the Indebtedness being refinanced or
commitment being replaced, except that the maturity of the
new Indebtedness or commitment may be longer;
(ix) Indebtedness of Lessee and its Subsidiaries with
respect to Surety Instruments incurred in the ordinary
course of business (including surety bonds issued to secure
obligations of Lessee and its Subsidiaries in respect of
equipment ordered from Lessee and its Subsidiaries);
(x) Guaranty Obligations of Lessee in respect of
Permitted Indebtedness of its Subsidiaries;
(xi) Indebtedness of Lessee to any of its
Subsidiaries, Indebtedness of any of Lessee's Subsidiaries
to Lessee or Indebtedness of any of Lessee's Subsidiaries to
any of Lessee's other Subsidiaries, provided that (A) any
Indebtedness of Lessee to any of its Subsidiaries and any
Indebtedness of any of Lessee's Subsidiaries to Lessee shall
be subject to Subparagraph 5.02(j) and (B) any Indebtedness
of Lessee to any of its Subsidiaries is Subordinated
Indebtedness;
(xii) Indebtedness of Lessee's Japanese Subsidiary
with respect to the sale, transfer or assignment of accounts
receivable of such Subsidiary and certain rights and
property related to the collection of or constituting
proceeds of such accounts receivable, provided that:
(A) Such sale, assignment or transfer is (1)
in the ordinary course of business, (2) for cash, (3)
with recourse to such Subsidiary in an amount not to
exceed the aggregate face amount of the accounts
receivable sold and certain additional interest
charges with respect to such Indebtedness and (4)
otherwise permitted under Subparagraph 5.02(c)(vii);
and
(B) Both immediately before and after giving
effect to such sale, assignment or transfer, no
Default shall have occurred and be continuing; and
(xiii) Other Indebtedness of Lessee and its
Subsidiaries, provided that the aggregate amount of such
other Indebtedness outstanding at any time does not exceed
ten percent (10%) of Lessee's Tangible Net Worth on the last
day of the immediately preceding fiscal year.
(b) Liens. Neither Lessee nor any of its Subsidiaries
shall create, incur, assume or permit to exist any Lien on or with
respect to any of its assets or property of any character, whether
now owned or hereafter acquired, except for the following
("Permitted Liens"):
(i) Liens in favor of any Lessor Party securing the
Lessee Obligations;
(ii) Liens listed in Schedule 5.02(b) and existing on
the date of this Agreement;
(iii) Liens for taxes or other Governmental Charges
not at the time delinquent or thereafter payable without
penalty or being contested in good faith, provided that
adequate reserves for the payment thereof have been
established in accordance with GAAP;
(iv) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords and other similar Liens
imposed by law incurred in the ordinary course of business
for sums not overdue or being contested in good faith,
provided that adequate reserves for the payment thereof have
been established in accordance with GAAP;
(v) Deposits under workers' compensation,
unemployment insurance and social security laws or to secure
the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, or to secure
statutory obligations of surety or appeal bonds or to secure
indemnity, performance or other similar bonds in the
ordinary course of business;
(vi) Zoning restrictions, easements, rights-of-way,
title irregularities and other similar encumbrances, which
alone or in the aggregate are not substantial in amount and
do not materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of
the business of Lessee or any of its Subsidiaries;
(vii) Banker's Liens and similar Liens (including set-
off rights) in respect of bank deposits;
(viii) Liens on any property or assets acquired,
or on the property or assets of any Persons acquired, by
Lessee or any of its Subsidiaries after the date of this
Agreement pursuant to Subparagraph 5.02(d), provided that
(A) such Liens exist at the time such property or assets or
such Persons are so acquired and (B) such Liens were not
created in contemplation of such acquisitions;
(ix) Judgement Liens, provided that such Liens do not
have a value in excess of $10,000,000 or such Liens are
released, stayed, vacated or otherwise dismissed within
thirty (30) days after issue or levy and, if so stayed, such
stay is not thereafter removed;
(x) Rights of (A) vendors or lessors under
conditional sale agreements, Capital Leases or other title
retention agreements, provided that, in each case, (1) such
rights secure or otherwise relate to Permitted Indebtedness,
(2) such rights do not extend to any property other than
property acquired with the proceeds of such Permitted
Indebtedness and (3) such rights do not secure any
Indebtedness other than such Permitted Indebtedness and (B)
lessors under operating leases;
(xi) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties and in connection with the importation of
goods in the ordinary course of Lessee's and its
Subsidiaries' businesses;
(xii) Liens securing Indebtedness which constitutes
Permitted Indebtedness under clause (vi) of Subparagraph
5.02(a) provided that, in each case, such Lien (A) covers
only those assets, the acquisition of which was financed by
such Permitted Indebtedness, and (B) secures only such
Permitted Indebtedness;
(xiii) Liens securing Indebtedness which
constitutes Permitted Indebtedness under clause (xii) of
Subparagraph 5.02(a) provided that, in each case, such Lien
(A) secures only such Permitted Indebtedness, and (B) such
Liens do not extend to any assets or property other than the
assets or property sold (other than cash pledged under
certain circumstances to secure such Permitted Indebtedness
in an amount not to exceed $15,000,000 in the aggregate
during the term of this Agreement, provided that both
immediately before and after giving effect to any such cash
collateralization, Lessee shall be in compliance with the
financial covenants set forth in Paragraph 5.03 and no other
Default or Event of Default shall have occurred and be
continuing);
(xiv) Liens on the property or assets of any
Subsidiary of Lessee in favor of Lessee or any other
Subsidiary of Lessee;
(xv) Liens incurred in connection with the extension,
renewal or refinancing of the Indebtedness secured by the
Liens described in clause (ii) or (xii) above, provided that
any extension, renewal or replacement Lien (A) is limited to
the property covered by the existing Lien and (B) secures
Indebtedness which is no greater in amount and has material
terms no less favorable to the Participants than the
Indebtedness secured by the existing Lien;
(xvi) Liens on insurance proceeds in favor of
insurance companies with respect to the financing of
insurance premiums;
(xvii) Liens in inventory of Lessee and its
Subsidiaries in favor of (A) customers of Lessee and its
Subsidiaries to secure the obligations of Lessee and its
Subsidiaries in respect of equipment ordered from Lessee and
its Subsidiaries by such customers or (B) sureties that have
issued surety bonds to such customers to secure such
obligations, provided that each such Lien (1) covers only
(y) the equipment ordered by a customer pursuant to a
purchase order which has been delivered to Lessee or one of
its Subsidiaries and (z) the parts and other inventory of
Lessee and its Subsidiaries which will be used to build such
equipment, (2) secures only the obligations of Lessee and
its Subsidiaries in respect of such equipment and (3)
terminates upon the delivery of such equipment to such
customer or the ultimate purchaser thereof or the return to
such customer of such deposit;
(xviii) Permitted Property Liens in the Property;
and
(xix) Other Liens, provided that the aggregate amount
of the Indebtedness outstanding at any time and secured by
such other Liens does not exceed five percent (5%) of
Lessee's Tangible Net Worth on the last day of the
immediately preceding fiscal year;
Provided, however, that the foregoing exceptions shall not be
construed to permit any Liens, except for Permitted Property
Liens, in any of the Property
(c) Asset Dispositions. Neither Lessee nor any of its
Subsidiaries shall sell, lease, transfer or otherwise dispose of
all or any part of its assets or property, whether now owned or
hereafter acquired, except for the following:
(i) Sales of inventory by Lessee and its
Subsidiaries in the ordinary course of their businesses;
(ii) Sales or other dispositions of surplus, damaged,
worn or obsolete equipment or inventory;
(iii) Sales or other dispositions of Investments
permitted by clause (i) of Subparagraph 5.02(e) for not less
than fair market value;
(iv) Sales or assignments of defaulted receivables to
a collection agency in the ordinary course of business;
(v) Licenses by Lessee or its Subsidiaries of its
patents, copyrights, trademarks, trade names and service
marks in the ordinary course of its business provided that,
in each case, the terms of the transaction are terms which
then would prevail in the market for similar transactions
between unaffiliated parties dealing at arm's length;
(vi) Sales or other dispositions of assets and
property by Lessee to any of Lessee's Subsidiaries or by any
of Lessee's Subsidiaries to Lessee or any of its other
Subsidiaries, provided that the terms of any such sales or
other dispositions by or to Lessee are terms which are no
less favorable to Lessee then would prevail in the market
for similar transactions between unaffiliated parties
dealing at arm's length;
(vii) Sales, for cash, in the ordinary course of
business of accounts receivable of Lessee's Japanese
Subsidiary and certain rights and property of such
Subsidiary related to the collection of or constituting
proceeds of such accounts receivable, with or without
recourse, at a discount rate not to exceed ten percent
(10%);
(viii) Sales, for cash, in the ordinary course of
business of accounts receivable of Lessee and certain rights
and property of Lessee related to the collection of or
constituting proceeds of such accounts receivable, with or
without recourse, at a discount rate not to exceed ten
percent (10%), provided that the aggregate amount of
accounts receivable so sold by Lessee in any fiscal quarter
does not exceed twelve million Dollars $12,000,000);
(ix) The sale by Lessee to the Hayward Lessor of the
improvements that have been made by Lessee to the property
located at 26460 Corporate Avenue, Hayward, California and
that will be leased back to Lessee pursuant to the Hayward
Lease, provided that (A) the book value of such improvements
at the time of such sale does not exceed $11,000,000 and (B)
the purchase price paid by the Hayward Lessor for such
improvements is not less than $12,000,000; and
(x) Other sales, leases, transfers and disposals of
assets and property, provided that the aggregate value of
all such assets and property (based upon the greater of the
fair market or book value of such assets and property) so
sold, leased, transferred or otherwise disposed of in any
fiscal year does not exceed five percent (5%) of Lessee's
Tangible Net Worth on the last day of the immediately
preceding fiscal year;
Provided, however, that the foregoing exceptions shall not be
construed to permit any sales, leases, transfers or other
disposals of any of the Property, except as expressly permitted by
the Lease Agreement.
(d) Mergers, Acquisitions, Etc. Neither Lessee nor any of
its Subsidiaries shall acquire any other Person (whether through
merger with such Person, acquisition of such Person as a
Subsidiary or otherwise) or all or substantially all of the assets
of any other Person, except that Lessee and its Subsidiaries may
make any such acquisitions if (i) the aggregate consideration paid
by Lessee and its Subsidiaries in cash for all such acquisitions
after the date of this Agreement does not exceed $25,000,000; (ii)
the aggregate consideration paid by Lessee and its Subsidiaries in
stock for all such acquisitions after the date of this Agreement
does not exceed $50,000,000 (such stock to be valued at the market
value thereof at the time paid as consideration); (iii) in any
merger involving Lessee, Lessee is the surviving corporation; and
(iv) both immediately before and after giving effect to any such
acquisition, no Default shall have occurred and be continuing.
(e) Investments. Neither Lessee nor any of its
Subsidiaries shall make any Investment except for Investments in
the following:
(i) Investments in Cash Equivalents;
(ii) Investments permitted by the investment policy
of Lessee set forth in Schedule 5.02(e) or, if any changes
to the investment policy of Lessee are hereafter duly
approved by the Board of Directors of Lessee, in any
subsequent investment policy which is the most recent
investment policy delivered by Lessee to Agent with a
certificate of Lessee's chief financial officer to the
effect that such investment policy has been duly approved by
Lessee's Board of Directors and is then in effect;
(iii) Loans and other extensions of credit by Lessee
and its Subsidiaries to each other to the extent permitted
by clause (xi) of Subparagraph 5.02(a) and other types of
Investments by Lessee and its Subsidiaries to each other;
(iv) Investments consisting of loans to employees,
officers and directors, provided that the aggregate
principal amount of such loans does not exceed $5,000,000 at
any time;
(v) Investments of Lessee and its Subsidiaries in
Rate Contracts, provided that all such arrangements are
entered into in connection with bona fide hedging operations
and not for speculation;
(vi) Investments permitted by Subparagraph 5.02(d);
and
(vii) Other Investments, provided that the amount of
any such Investment, when added to the aggregate amount of
all other Investments made pursuant to this clause (vii)
since the date of this Agreement (net of any returns
previously received on account of such Investments), does
not exceed ten percent (10%) of Lessee's Tangible Net Worth
on the last day of the immediately preceding fiscal year.
(f) Dividends, Redemptions, Etc. Neither Lessee nor any
of its Subsidiaries shall pay any dividends or make any
distributions on its Equity Securities; purchase, redeem, retire,
defease or otherwise acquire for value any of its Equity
Securities; return any capital to any holder of its Equity
Securities as such; make any distribution of assets, Equity
Securities, obligations or securities to any holder of its Equity
Securities as such; or set apart any sum for any such purpose;
except as follows:
(i) Either Lessee or any of its Subsidiaries may pay
dividends on its capital stock payable solely in such
Person's own capital stock;
(ii) Any Subsidiary of Lessee may pay dividends to
Lessee; and
(iii) Lessee may repurchase its Equity Securities,
provided that the cost of any such repurchase, when added to
the aggregate cost of all other repurchases made pursuant to
this clause (iii) since the date of this Agreement, does not
exceed ten percent (10%) of Lessee's Tangible Net Worth on
the last day of the immediately preceding fiscal year.
(g) Change in Business. Neither Lessee nor any of its
Subsidiaries shall engage, either directly or indirectly through
Affiliates, in any business that is substantially different from
the semi-conductor market (including semi-conductor capital
equipment, test and inspection equipment, flat panel displays and
laser direct imaging equipment), the pattern generation market and
any strategic component parts in relation thereto.
(h) Indebtedness Payments, Etc. Neither Lessee nor any of
its Subsidiaries shall (i) prepay, redeem, purchase, defease or
otherwise satisfy in any manner prior to the scheduled payment
thereof any Subordinated Indebtedness or (ii) amend, modify or
otherwise change any of the subordination or other provisions of
any document, instrument or agreement evidencing Subordinated
Indebtedness in a manner which adversely affects the material
rights of the Lessor Parties.
(i) ERISA. Neither Lessee nor any ERISA Affiliate shall
(i) adopt or institute any Employee Benefit Plan that is an
employee pension benefit plan within the meaning of Section 3(2)
of ERISA, (ii) take any action which will result in the partial or
complete withdrawal, within the meanings of sections 4203 and 4205
of ERISA, from a Multiemployer Plan, (iii) engage or permit any
Person to engage in any transaction prohibited by section 406 of
ERISA or section 4975 of the IRC involving any Employee Benefit
Plan or Multiemployer Plan which would subject either Lessee or
any ERISA Affiliate to any tax, penalty or other liability
including a liability to indemnify, (iv) incur or allow to exist
any accumulated funding deficiency (within the meaning of
section 412 of the IRC or section 302 of ERISA), (v) fail to make
full payment when due of all amounts due as contributions to any
Employee Benefit Plan or Multiemployer Plan, (vi) fail to comply
with the requirements of section 4980B of the IRC or Part 6 of
Title I(B) of ERISA, or (vii) adopt any amendment to any Employee
Benefit Plan which would require the posting of security pursuant
to section 401(a)(29) of the IRC, where singly or cumulatively,
the above would have a Material Adverse Effect.
(j) Transactions With Affiliates. Neither Lessee nor any
of its Subsidiaries shall enter into any Contractual Obligation
with any Affiliate or engage in any other transaction with any
Affiliate except upon terms at least as favorable to Lessee or
such Subsidiary as an arms-length transaction with unaffiliated
Persons.
(k) Accounting Changes. Neither Lessee nor any of its
Subsidiaries shall (i) change its fiscal year (currently August 1
through July 31) or (ii) except as required by GAAP, change its
accounting practices in any manner which would affect Lessee's
compliance with Paragraph 5.03.
5.03. Lessee's Financial Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee
Obligations, Lessee will comply, and will cause compliance, with the
following financial covenants, unless Lessor and Required Participants
shall otherwise consent in writing:
(a) Leverage Ratio. Lessee shall not permit the Leverage
Ratio of Lessee on the last day of any fiscal quarter set forth
below to be greater than the ratio set forth opposite such quarter
below:
Quarters ending on January 31, 1998
April 30, 1998 and July 31, 1998 0.250
to 1.000;
Quarters ending on, October 31, 1998,
January 31, 1999, April 30, 1999
and July 31, 1999 0.275 to
1.000;
Each quarter thereafter 0.250 to
1.000.
(b) Quick Ratio. Lessee shall not permit the Quick Ratio
of Lessee on the last day of any fiscal quarter set forth below to
be less than the ratio set forth opposite such quarter below:
Quarter ending on January 31, 1998 1.00
to 1.00;
Each quarter thereafter 1.10 to
1.00.
(c) Net Worth. Lessee shall not permit the net worth of
Lessee and its Subsidiaries on the last day of any fiscal quarter
(such day to be referred to herein as a "determination date")
which commences after April 30, 1996 (such date to be referred to
herein as the "base date") to be less than the sum on such
determination date of the following:
(i) $50,000,000;
(ii) Seventy-five percent (75%) of the sum of the
consolidated quarterly Adjusted Net Income (ignoring any
quarterly losses) of Lessee and its Subsidiaries for each
quarter after the base date through and including the
quarter ending on the determination date; and
(iii) Fifty percent (50%) of the Net Proceeds realized
by Lessee and its Subsidiaries from the issuance of Equity
Securities during the period commencing on the base date and
ending on the determination date.
(d) Cash Balances. Lessee shall not permit the Cash
Balances of Lessee and its Subsidiaries to be less than
$25,000,000 on the last day of any fiscal quarter.
(e) Debt Service Coverage Ratio. Lessee shall not permit
the Debt Service Coverage Ratio of Lessee and its Subsidiaries for
any consecutive four-quarter period to be less than the ratio set
forth opposite such quarter below:
Quarters ending on January 31, 1998
and April 30, 1998 5.00
to 1.00;
Quarters ending on, July 31, 1998
and October 31, 1998 3.00
to 1.00;
Quarters ending on, January 31, 1999
and April 30, 1999 4.00
to 1.00;
Each quarter thereafter 5.00 to 1.00
(f) Profitability. Lessee shall not permit:
(i) The Adjusted Net Income of Lessee and its
Subsidiaries to be a loss in more than two quarters in any
consecutive four-quarter period or the aggregate amount of
any such two quarterly losses to exceed $10,000,000 in total
for the two quarters combined;
(ii) The Operating Income of Lessee and its
Subsidiaries to be a loss in more than two quarters in any
consecutive four-quarter period or the aggregate amount of
any such two quarterly losses to exceed $10,000,000 in total
for the two quarters combined; or
(iii) The cumulative Adjusted Net Income of Lessee and
its Subsidiaries for any consecutive four-quarter period to
be less than $1.00.
5.04. Lessor's Covenants. Until the termination of this Agreement
and the satisfaction in full by Lessor of all Lessor Obligations, Lessor
will comply, and will cause compliance, with the following covenants,
unless Lessee and Required Participants shall otherwise consent in
writing:
(a) Use of Proceeds. Lessor shall use the proceeds of all
amounts delivered to Lessor by Participants pursuant to
Subparagraph 2.05(a) solely to fund Advances.
(b) Lessor Liens. Lessor shall not create, incur, assume
or permit to exist any Lessor Lien (other than any Lien granted to
Agent or any Participant pursuant to the Operative Documents to
secure the Lessor Obligations) and shall promptly discharge, at
its sole cost and expense, any Lessor Lien on the Property (other
than any Liens granted to Agent or any Participant pursuant to the
Operative Documents to secure the Lessor Obligations); provided,
however, that Lessor shall not be required so to discharge any
such Lessor Lien if the same is being (or promptly will be)
contested in good faith by appropriate proceedings diligently
prosecuted, provided that any such contest is completed and all
Lessor Liens are discharged on or prior to the Expiration Date.
(c) Property Disposition. Lessor shall not sell, lease,
transfer or otherwise dispose of its right, title and interest in
the Property and the Operative Documents except as provided in
Subparagraph 2.11(b) or Subparagraph 7.05(d) hereof or in the
Purchase Agreement or after retaining the Property following the
Expiration Date.
(d) Chief Executive Office. Lessor shall not change its
chief executive office without giving Agent prompt written notice.
5.05. Participants' Covenants. Each Participant covenants that it
will not fund its portion of any Advance with the assets of any
"employee benefit plan" (as defined in Section 3(3) of ERISA) which is
subject to Title I of ERISA or any "plan" (as defined in Section
4975(e)(1) of the IRC.
SECTION 6. LESSOR, AGENT AND THEIR RELATIONS WITH PARTICIPANTS.
6.01. Appointment of Agent. Each Participant hereby appoints and
authorizes Agent to act as its agent hereunder and under the other
Operative Documents with such powers as are expressly delegated to Agent
by the terms of this Agreement and the other Operative Documents,
together with such other powers as are reasonably incidental thereto.
Lessor is not an agent for the Participants or Agent, and neither this
Agreement nor any other Operative Document shall be construed to
constitute or evidence a partnership among the Lessor Parties or
otherwise to impose upon Lessor or Agent any fiduciary duty.
6.02. Powers and Immunities. Neither Lessor nor Agent shall have
any duties or responsibilities except those expressly set forth in this
Agreement or in any other Operative Document, be a trustee for any
Participant or have any fiduciary duty to any Participant.
Notwithstanding anything to the contrary contained herein, neither
Lessor nor Agent shall be required to take any action which is contrary
to this Agreement or any other Operative Document or any applicable
Governmental Rule. Neither Lessor nor Agent nor any Participant shall
be responsible to any Participant for any recitals, statements,
representations or warranties made by Lessee or any of its Subsidiaries
contained in this Agreement or in any other Operative Document, for the
value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Operative Document or for any
failure by Lessee or any of its Subsidiaries to perform their respective
obligations hereunder or thereunder. Lessor and Agent may employ agents
and attorneys-in-fact and shall not be responsible to any Participant
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither Lessor nor Agent nor any
of their respective directors, officers, employees, agents or advisors
shall be responsible to any Participant for any action taken or omitted
to be taken by it or them hereunder or under any other Operative
Document or in connection herewith or therewith, except for its or their
own gross negligence or willful misconduct. Except as otherwise
provided under this Agreement, Lessor and Agent shall take such action
with respect to the Operative Documents as shall be directed by the
Required Participants.
6.03. Reliance. Lessor or Agent shall be entitled to rely upon
any certificate, notice or other document (including any cable,
telegram, facsimile or telex) believed by it in good faith to be genuine
and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by Lessor or
Agent with reasonable care. As to any other matters not expressly
provided for by this Agreement, neither Lessor nor Agent shall be
required to take any action or exercise any discretion, but shall be
required to act or to refrain from acting upon instructions of the
Required Participants and shall in all cases be fully protected by the
Participants in acting, or in refraining from acting, hereunder or under
any other Operative Document in accordance with the instructions of the
Required Participants, and such instructions of the Required
Participants and any action taken or failure to act pursuant thereto
shall be binding on all of the Participants.
6.04. Defaults. Neither Lessor nor Agent shall be deemed to have
knowledge or notice of the occurrence of any Default unless Lessor and
Agent have received a written notice from a Participant or Lessee,
referring to this Agreement, describing such Default and stating that
such notice is a "Notice of Default". If Lessor and Agent receive such
a notice of the occurrence of a Default, Agent shall give prompt notice
thereof to the Participants. Lessor and Agent shall take such action
with respect to such Default as shall be reasonably directed by the
Required Participants; provided, however, that until Lessor and Agent
shall have received such directions, Lessor or Agent may (but shall not
be obligated to) take such action, or refrain from taking such action,
with respect to such Default as it shall deem advisable in the best
interest of the Participants.
6.05. Indemnification. Without limiting the Obligations of Lessee
hereunder, each Participant agrees to indemnify Lessor and Agent,
ratably in accordance with such Participant's Proportionate Share, for
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against Lessor or Agent in any way relating to or arising out
of this Agreement or any documents contemplated by or referred to herein
or therein or the transactions contemplated hereby or thereby or the
enforcement of any of the terms hereof or thereof; provided, however,
that no Participant shall be liable for any of the foregoing to the
extent they arise from Lessor's or Agent's gross negligence or willful
misconduct. Lessor or Agent shall be fully justified in refusing to
take or in continuing to take any action hereunder unless it shall first
be indemnified to its satisfaction by the Participants against any and
all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The obligations of each
Participant under this Paragraph 6.05 shall survive the payment and
performance of the Lessee Obligations, the termination of this Agreement
and any Participant ceasing to be a party to this Agreement (with
respect to events which occurred prior to the time such Participant
ceased to be a Participant hereunder).
6.06. Non-Reliance. Each Participant represents that it has,
independently and without reliance on Lessor, Agent, or any other
Participant, and based on such documents and information as it has
deemed appropriate, made its own appraisal of the business, prospects,
management, financial condition and affairs of Lessee and the
Subsidiaries and its own decision to enter into this Agreement and
agrees that it will, independently and without reliance upon Lessor,
Agent or any other Participant, and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own appraisals and decisions in taking or not taking action under
this Agreement or any other Operative Document. Neither Lessor nor
Agent nor any of their respective affiliates nor any of their respective
directors, officers, employees, agents or advisors shall (a) be required
to keep any Participant informed as to the performance or observance by
Lessee or any of its Subsidiaries of the obligations under this
Agreement or any other document referred to or provided for herein or to
make inquiry of, or to inspect the properties or books of Lessee or any
of its Subsidiaries; (b) have any duty or responsibility to provide any
Participant with any credit or other information concerning Lessee or
any of its Subsidiaries which may come into the possession of Lessor or
Agent, except for notices, reports and other documents and information
expressly required to be furnished to the Participants by Lessor or
Agent hereunder; or (c) be responsible to any Participant for (i) any
recital, statement, representation or warranty made by Lessee or any
officer, employee or agent of Lessee in this Agreement or in any of the
other Operative Documents, (ii) the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any
Operative Document, (iii) the value or sufficiency of the Property or
the validity or perfection of any of the liens or security interests
intended to be created by the Operative Documents, or (iv) any failure
by Lessee to perform its obligations under this Agreement or any other
Operative Document.
6.07. Resignation or Removal of Agent. Agent may resign at any
time by giving thirty (30) days prior written notice thereof to Lessee
and the Participants, and Agent may be removed at any time with or
without cause by the Required Participants. Upon any such resignation
or removal, the Required Participants shall have the right to appoint a
successor Agent, which Agent, if not a Participant, shall be reasonably
acceptable to Lessee; provided, however, that Lessee shall have no right
to approve a successor Agent if a Default has occurred and is
continuing. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from the
duties and obligations thereafter arising hereunder. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of
this Section VI and any other provision of this Agreement or any other
Operative Document which by its terms survives the termination of this
Agreement shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
6.08. Authorization. Agent is hereby authorized by the
Participants to execute, deliver and perform, each of the Operative
Documents to which Agent is or is intended to be a party and each
Participant agrees to be bound by all of the agreements of Agent
contained in the Operative Documents.
6.09. Lessor and Agent in their Individual Capacities. Lessor,
Agent and their respective affiliates may make loans to, accept deposits
from and generally engage in any kind of banking or other business with
Lessee and its Subsidiaries and affiliates as though Lessor were not
Lessor hereunder and Agent were not Agent hereunder. With respect to
Advances, if any, made by Agent in its capacity as a Participant, Agent
in its capacity as a Participant shall have the same rights and powers
under this Agreement and the other Operative Documents as any other
Participant and may exercise the same as though it were not Agent, and
the terms "Participant" or "Participants" shall include Agent in its
capacity as a Participant.
SECTION 7. MISCELLANEOUS
7.01. Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Lessor, Lessee, any Participant or Agent under this Agreement or
the other Operative Documents shall be in writing and faxed, mailed or
delivered, if to Lessor, Lessee or Agent, at its respective facsimile
number or address set forth below or, if to any Participant, at the
address or facsimile number specified beneath the heading "Address for
Notices" under the name of such Participant in Part B of Schedule I (or
to such other facsimile number or address for any party as indicated in
any notice given by that party to the other parties). All such notices
and communications shall be effective (a) when sent by Federal Express
or other overnight service of recognized standing, on the Business Day
following the deposit with such service; (b) when mailed, first class
postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (c) when delivered by hand, upon delivery;
and (d) when faxed, upon confirmation of receipt; provided, however,
that any Advance Request, Notice of Rental Period Selection, Extension
Request, Notice of Term Purchase Option Exercise, Notice of Marketing
Option Exercise or Notice of Expiration Date Purchase Option Exercise
delivered to Lessor or Agent shall not be effective until received by
Lessor or Agent.
Lessee: Etec Systems, Inc.
26460 Corporate Ave.
Hayward, CA 94545
Attn: Treasurer
Tel. No: (510) 887-3649
Fax. No: (510) 780-3845
Attn: Saul Arnold
Tel. No: (510) 887-3550
Fax. No: (510) 780-3845
Lessor: Lease Plan North America, Inc.
c/o ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 711
Chicago, IL 60603
Attn: David M. Shipley
Tel. No: (312) 904-2183
Fax. No: (312) 904-6217
Agent: ABN AMRO Bank N.V.
Capital Markets-Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY 10019
Attn: Linda Boardman
Tel. No: (212) 314-1724
Fax. No: (212) 314-1709
With a copy to:
ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attn: Robin Yim
Tel. No: (415) 984-3712
Fax. No: (415) 362-3524
Each Advance Request, Notice of Rental Period Selection, Extension
Request, Notice of Term Purchase Option Exercise, Notice of Marketing
Option Exercise and Notice of Expiration Date Purchase Option Exercise
shall be given by Lessee to Agent's office located at its address
referred to above during its normal business hours; provided, however,
that any such notice received by Agent after 10:00 a.m. on any Business
Day shall be deemed received by Agent on the next Business Day. In any
case where this Agreement authorizes notices, requests, demands or other
communications by Lessee to any Lessor Party to be made by telephone or
facsimile, any Lessor Party may conclusively presume that anyone
purporting to be a person designated in any incumbency certificate or
other similar document received by such Lessor Party is such a person.
7.02. Expenses. Lessee shall pay on demand, whether or not any
Advance is made hereunder, (a) all reasonable fees and expenses,
including reasonable attorneys' fees and expenses, incurred by Lessor
and Agent in connection with the preparation, negotiation, execution and
delivery of, the consummation of the transactions contemplated by and
the exercise of their duties under, this Agreement and the other
Operative Documents, and the preparation, negotiation, execution and
delivery of amendments and waivers hereunder and thereunder and (b) all
reasonable fees and expenses, including reasonable attorneys' fees and
expenses, incurred by the Lessor Parties in the enforcement or attempted
enforcement of any of the Lessee Obligations or in preserving any of the
Lessor Parties' rights and remedies (including all such fees and
expenses incurred in connection with any "workout" or restructuring
affecting the Operative Documents or the Lessee Obligations or any
bankruptcy or similar proceeding involving Lessee or any of its
Subsidiaries). As used herein, the term "reasonable attorneys' fees and
expenses" shall include, without limitation, allocable costs and
expenses of Agent's and Participants' in-house legal counsel and staff.
The obligations of Lessee under this Paragraph 7.02 shall survive the
payment and performance of the Lessee Obligations and the termination of
this Agreement.
7.03. Indemnification. To the fullest extent permitted by law,
Lessee agrees to protect, indemnify, defend and hold harmless, on an
after-tax basis, the Lessor Parties and the other Indemnitees from and
against any and all liabilities, losses, damages or expenses of any kind
or nature (including Indemnified Taxes) and from any suits, claims or
demands (including in respect of or for reasonable attorney's fees and
other expenses) arising on account of or in connection with any matter
or thing or action or failure to act by Indemnitees, or any of them,
arising out of or relating to the Operative Documents, any transaction
contemplated thereby or the Property, including any use by Lessee of the
Property or the Advances, except to the extent such liability arises
from the willful misconduct or gross negligence of such Indemnitee.
Upon receiving knowledge of any suit, claim or demand asserted by a
third party that any Lessor Party believes is covered by this indemnity,
such Lessor Party shall give Lessee notice of the matter and an
opportunity to defend it, at Lessee's sole cost and expense, with legal
counsel reasonably satisfactory to such Lessor Party. Such Lessor
Parties may also require Lessee to defend the matter. Any failure or
delay of any Lessor Party to notify Lessee of any such suit, claim or
demand shall not relieve Lessee of its obligations under this Paragraph
7.03 but shall reduce such obligations to the extent of any increase in
those obligations caused solely by any such failure or delay that is
unreasonable. The obligations of Lessee under this Paragraph 7.03 shall
survive the payment and performance of the Lessee Obligations and the
termination of this Agreement.
7.04. Waivers; Amendments. Any term, covenant, agreement or
condition of this Agreement or any other Operative Document may be
amended or waived if such amendment or waiver is in writing and is
signed by Lessor, Lessee and the Required Participants; provided,
however that:
(a) Any amendment, waiver or consent which (i) increases
the 364-Day Commitment, Two-Year Commitment or Total Commitment,
(ii) extends the Scheduled Expiration Date, (iii) reduces the
Rental Rate or any fees or other amounts payable for the account
of the Participants hereunder, (iv) postpones any date scheduled
for any payment of Base Rent or any fees or other amounts payable
for the account of the Participants hereunder or thereunder, (v)
amends Paragraph 2.06 or this Paragraph 7.04, (vi) amends the
definition of Required Participants or (vii) releases Lessor's
interest in any substantial part of the Property, must be in
writing and signed or approved in writing by all Participants;
(b) Any amendment, waiver or consent which increases or
decreases the Proportionate Share of any Participant must be in
writing and signed by such Participant; and
(c) Any amendment, waiver or consent which affects the
rights or obligations of Agent must be in writing and signed by
Agent.
No failure or delay by any Lessor Party in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor
shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right. Unless otherwise
specified in such waiver or consent, a waiver or consent given hereunder
shall be effective only in the specific instance and for the specific
purpose for which given.
7.05. Successors and Assigns.
(a) Binding Effect. This Agreement and the other
Operative Documents shall be binding upon and inure to the benefit
of Lessee, Lessor, the Participants, Agent and their respective
permitted successors and assigns. All references in this
Agreement to any Person shall be deemed to include all successors
and assigns of such Person.
(b) Participant Assignments.
(i) Any Participant may, at any time, sell and
assign to any other Participant or any Eligible Assignee
(individually, an "Assignee Participant") all or a portion
of its rights and obligations under this Agreement and the
other Operative Documents (such a sale and assignment to be
referred to herein as an "Assignment") pursuant to an
assignment agreement in the form of Exhibit M (an
"Assignment Agreement"), executed by each Assignee
Participant and such assignor Participant (an "Assignor
Participant") and delivered to Agent for its acceptance and
recording in the Register; provided, however, that:
(A) Without the written consent of Lessor,
Agent and, if no Default has occurred and is
continuing, Lessee (which consent of Lessor, Agent and
Lessee shall not be unreasonably withheld), no
Participant may make any Assignment to any Assignee
Participant which is not, immediately prior to such
Assignment, a Participant hereunder or an Affiliate
thereof; or
(B) Without the written consent of Lessor,
Agent and, if no Default has occurred and is
continuing, Lessee (which consent of Lessor, Agent and
Lessee shall not be unreasonably withheld), no
Participant may make any Assignment to any Assignee
Participant if, after giving effect to such
Assignment, the Commitment of such Participant or such
Assignee Participant would be less than Five Million
Dollars ($5,000,000) (except that a Participant may
make an Assignment which reduces its Commitment to
zero without the written consent of Lessor, Agent or
Lessee); or
(C) Without the written consent of Lessor,
Agent and, if no Default has occurred and is
continuing, Lessee (which consent of Lessor, Agent and
Lessee shall not be unreasonably withheld), no
Participant may make any Assignment of its Outstanding
Tranche A Participation Amount or its Outstanding
Tranche B Participation Amount which does not assign
and delegate an equal pro rata interest in (1) such
Participant's Outstanding Tranche A Participation
Amount and its Outstanding Tranche B Participation
Amount, (2) such Participant's Tranche A Percentage
and its Tranche B Percentage, and (3) such
Participant's other rights, duties and obligations
relating to the Tranche A Portion and the Tranche B
Portion under this Agreement and the other Operative
Documents.
(D) Without the written consent of Lessor,
Agent and, if no Default has occurred and is
continuing, Lessee (which consent of Lessor, Agent and
Lessee shall not be unreasonably withheld), no Tranche
C Participant may make any Assignment of its
Outstanding Tranche C Participation Amount which does
not assign and delegate an equal pro rata interest in
(1) such Participant's Outstanding Tranche C
Participation Amount, (2) such Participant's Tranche C
Percentage, and (3) such Participant's other rights,
duties and obligations relating to the Tranche C
Portion under this Agreement and the other Operative
Documents.
Upon such execution, delivery, acceptance and recording of
each Assignment Agreement, from and after the Assignment
Effective Date determined pursuant to such Assignment
Agreement, (y) each Assignee Participant thereunder shall be
a Participant hereunder with a Tranche A Percentage, Tranche
B Percentage, Tranche C Percentage and Proportionate Share
as set forth on Attachment 1 to such Assignment Agreement
(under the caption "Tranche Percentages and Proportionate
Shares After Assignment") and shall have the rights, duties
and obligations of such a Participant under this Agreement
and the other Operative Documents, and (z) the Assignor
Participant thereunder shall be a Participant with a Tranche
A Percentage, Tranche B Percentage, Tranche C Percentage and
Proportionate Share as set forth on Attachment 1 to such
Assignment Agreement (under the caption "Tranche Percentages
and Proportionate Shares After Assignment") , or, if the
Proportionate Share of the Assignor Participant has been
reduced to 0%, the Assignor Participant shall cease to be a
Participant and to have any obligation to fund any portion
of any Advance; provided, however, that any such Assignor
Participant which ceases to be a Participant shall continue
to be entitled to the benefits of any provision of this
Agreement which by its terms survives the termination of
this Agreement. Each Assignment Agreement shall be deemed
to amend Schedule I to the extent, and only to the extent,
necessary to reflect the addition of each Assignee
Participant, the deletion of each Assignor Participant which
reduces its Proportionate Share to 0% and the resulting
adjustment of Tranche A Percentages, Tranche B Percentages,
Tranche C Percentages and Proportionate Shares arising from
the purchase by each Assignee Participant of all or a
portion of the rights and obligations of an Assignor
Participant under this Agreement and the other Operative
Documents. Each Assignee Participant which was not
previously a Participant hereunder and which is not
incorporated under the laws of the United States of America
or a state thereof shall, within three (3) Business Days of
becoming a Participant, deliver to Lessee and Agent two duly
completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or successor applicable form), as the
case may be, certifying in each case that such Participant
is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income
taxes.
(ii) Agent shall maintain at its address referred to
in Paragraph 7.01 a copy of each Assignment Agreement
delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Participants
and the Tranche A Percentage, Tranche B Percentage, Tranche
C Percentage and Proportionate Share of each Participant
from time to time. The entries in the Register shall be
conclusive in the absence of manifest error, and Lessee,
Agent and the Participants may treat each Person whose name
is recorded in the Register as the owner of the interests
recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Lessee or any
Participant at any reasonable time and from time to time
upon reasonable prior notice.
(iii) Upon its receipt of an Assignment Agreement
executed by an Assignor Participant and an Assignee
Participant (and, to the extent required by clause (i) of
this Subparagraph 7.05(b), by Lessor, Agent and Lessee),
together with payment to Agent by Assignor Participant of a
registration and processing fee of $2,500, Agent shall (A)
promptly accept such Assignment Agreement and (B) on the
Assignment Effective Date determined pursuant thereto record
the information contained therein in the Register and give
notice of such acceptance and recordation to Lessor, the
Participants and Lessee. Agent may, from time to time at
its election, prepare and deliver to Lessor, the
Participants and Lessee a revised Schedule I reflecting the
names, addresses and respective Proportionate Shares of all
Participants then parties hereto.
(iv) Subject to Subparagraph 7.13(g), the Lessor
Parties may disclose the Operative Documents and any
financial or other information relating to Lessee or any
Subsidiary to each other or to any potential Assignee
Participant.
(c) Participant Subparticipations. Any Participant may at
any time sell to one or more banks or other financial institutions
("Subparticipants") subparticipation interests in the rights and
interests of such Participant under this Agreement and the other
Operative Documents. In the event of any such sale by a
Participant of subparticipation interests, such Participant's
obligations under this Agreement and the other Operative Documents
shall remain unchanged, such Participant shall remain solely
responsible for the performance thereof and Lessee and the other
Lessor Parties shall continue to deal solely and directly with
such Participant in connection with such Participant's rights and
obligations under this Agreement. Any agreement pursuant to which
any such sale is effected may require the selling Participant to
obtain the consent of the Subparticipant in order for such
Participant to agree in writing to any amendment, waiver or
consent of a type specified in clause (i), (ii), (iii) or (iv) of
Subparagraph 7.04(a) but may not otherwise require the selling
Participant to obtain the consent of such Subparticipant to any
other amendment, waiver or consent hereunder. Lessee agrees that
any Participant which has transferred any subparticipation
interest shall, notwithstanding any such transfer, be entitled to
the full benefits accorded such Participant under Paragraph 2.12,
Paragraph 2.13, and Paragraph 2.14, as if such Participant had not
made such transfer.
(d) Lessor Assignments. Lessor may, upon one (1) month's
prior written notice to Lessee and Agent, sell and assign all of
its right, title and interest in the Property and its rights,
powers, privileges, duties and obligations under this Agreement
and the other Operative Documents, provided that:
(i) If such sale and assignment is effected after
either (A) the occurrence of a Change of Law which makes it
unlawful or unreasonably burdensome for Lessor to hold legal
or beneficial title to the Property or to perform its
obligations and duties under this Agreement and the other
Operative Documents or (B) the resignation or removal of the
Agent which was the Agent at the time Lessor became the
Lessor, the purchaser/assignee (the "successor Lessor")
shall be either (1) a Participant or an Eligible Assignee
that will not cause the transaction evidenced by this
Agreement and the other Operative Documents to lose its
treatment as an operating lease under FASB 13 or (2) a
Person approved as provided in clause (ii) below; or
(ii) If such sale and assignment is effected in any
other circumstance, the successor Lessor shall be a Person
that is (A) a financial institution or a Person controlled
by a financial institution and (B) approved in writing by
Agent, Required Participants and, if no Default has occurred
and is continuing, Lessee (which consents of Agent, Required
Participants and Lessee shall not be unreasonably withheld);
and
(iii) The successor Lessor executes such documents,
instruments and agreements as may reasonably be necessary to
evidence its agreement to assume all of the obligations and
duties of the Lessor under this Agreement and the other
Operative Documents.
Upon the consummation of any such sale and assignment, (A) the
successor Lessor shall become the "Lessor" and shall succeed to
and become vested with all the rights, powers, privileges, duties
and obligations of the Lessor under this Agreement and the other
Operative Documents and (B) the retiring Lessor shall be
discharged from the duties and obligations of the Lessor
thereafter arising under this Agreement and the other Operative
Documents. After any retiring Lessor's discharge as the Lessor,
the provisions of Section VI and any other provision of this
Agreement or any other Operative Document which by its terms
survives the termination of this Agreement shall continue in
effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as the Lessor.
7.06. Setoff. In addition to any rights and remedies of the
Participants provided by law, each Participant shall have the right,
with the prior written consent of Agent, but without prior notice to or
consent of Lessee, any such notice and consent being expressly waived by
Lessee to the extent permitted by applicable law, upon the occurrence
and during the continuance of an Event of Default, to set-off and apply
against the Lessee Obligations, whether matured or unmatured, any amount
owing from such Participant to Lessee, at or at any time after, the
occurrence of such Event of Default. The aforesaid right of set-off may
be exercised by such Participant against Lessee or against any trustee
in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor of
Lessee or against anyone else claiming through or against Lessee or such
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Participant prior to the occurrence of an Event of
Default. Each Participant agrees promptly to notify Lessee after any
such set-off and application made by such Participant, provided that the
failure to give such notice shall not affect the validity of such set-
off and application.
7.07. No Third Party Rights. Nothing expressed in or to be
implied from this Agreement is intended to give, or shall be construed
to give, any Person, other than the parties hereto and their permitted
successors and assigns hereunder, any benefit or legal or equitable
right, remedy or claim under or by virtue of this Agreement or under or
by virtue of any provision herein.
7.08. Partial Invalidity. If at any time any provision of this
Agreement or any other Operative Document is or becomes illegal, invalid
or unenforceable in any respect under the law or any jurisdiction,
neither the legality, validity or enforceability of the remaining
provisions of this Agreement or the other Operative Documents nor the
legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
7.09. JURY TRIAL. EACH OF LESSEE AND THE LESSOR PARTIES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING TO THE OPERATIVE
DOCUMENTS IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY OPERATIVE DOCUMENT.
7.10. Counterparts. This Agreement may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
7.11. No Joint Venture, Etc. Neither this Agreement nor any other
Operative Document nor any transaction contemplated hereby or thereby
shall be construed to (a) constitute a partnership or joint venture
between Lessee and any Lessor Party or (b) impose upon any Lessor Party
any agency relationship with or fiduciary duty to Lessee.
7.12. Usury Savings Clause. Nothing contained in this Agreement
or any other Operative Documents shall be deemed to require the payment
of interest or other charges by Lessee in excess of the amount the
applicable Lessor Parties may lawfully charge under applicable usury
laws. In the event any Lessor Party shall collect monies which are
deemed to constitute interest which would increase the effective
interest rate to a rate in excess of that permitted to be charged by
applicable law, all such sums deemed to constitute excess interest
shall, upon such determination, at the option of Lessor, be returned to
Lessee or credited against other Lessee Obligations.
7.13. Confidentiality. No Lessor Party shall disclose to any
Person any information with respect to Lessee or any of its Subsidiaries
which is furnished pursuant to this Agreement or under the other
Operative Documents, except that any Lessor Party may disclose any such
information (a) to its own directors, officers, employees, auditors,
counsel and other advisors and to its Affiliates to the extent
reasonably determined by such Lessor Party to be necessary for the
administration or enforcement of the Operative Documents; (b) to any
other Lessor Party; (c) which is otherwise available to the public; (d)
if required or appropriate in any report, statement or testimony
submitted to any Governmental Authority having or claiming to have
jurisdiction over such Lessor Party; (e) if required in response to any
summons or subpoena; (f) in connection with any litigation among the
parties relating to the Operative Documents or the transactions
contemplated thereby; (g) to comply with any Requirement of Law
applicable to such Lessor Party; (h) to any Assignee Participant or
Subparticipant or any prospective Assignee Participant or
Subparticipant, provided that such Assignee Participant or
Subparticipant or prospective Assignee Participant or Subparticipant
agrees to be bound by this Paragraph 7.13; or (i) otherwise with the
prior consent of Lessee; provided, however, that (i) any Lessor Party
served with any summons or subpoena demanding the disclosure of any such
information shall use reasonable efforts to notify Lessee promptly of
such summons or subpoena and, if requested by Lessee and not materially
disadvantageous to such Lessor Party, to cooperate with Lessee in
obtaining a protective order restricting such disclosure, and (ii) any
disclosure made in violation of this Agreement shall not affect the
obligations of Lessee and its Subsidiaries under this Agreement and the
other Operative Documents.
7.14. Governing Law. This Agreement and the other Operative
Documents were accepted by the Lessor Parties in the state of
California, which state the parties agree has a substantial relationship
to the parties and to the underlying transaction embodied hereby.
Accordingly, in all respects, including, without limiting the generality
of the foregoing, matters of construction, validity, enforceability and
performance, this Agreement and the other Operative Documents and the
obligations arising hereunder and thereunder shall be governed by, and
construed in accordance with, the laws of the state of California
applicable to contracts made and performed in such state and any
applicable law of the United States of America, except that at all times
the provisions for enforcement of Lessor's STATUTORY POWER OF SALE
granted under the Lease Agreement and the creation, perfection and
enforcement of the security interests created pursuant thereto and
pursuant to the other Operative Documents shall be governed by and
construed according to the law of the state where the Property is
located. Except as provided in the immediately preceding sentence,
Lessee hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any
jurisdiction other than California governs this Agreement and the other
Operative Documents.
7.15. Consent to Jurisdiction. Lessee irrevocably submits to the
jurisdiction of: (a) any state or federal court sitting in the state of
California over any suit, action, or proceeding, brought by Lessee
against Lessor Parties, arising out of or relating to this Agreement or
the other Operative Documents; (b) any state or federal court sitting in
the state where the Property is located or the state in which Lessee's
principal place of business is located over any suit, action or
proceeding, brought by Lessor Parties against Lessee, arising out of or
relating to this Agreement or the other Operative Documents; and (c) any
state court sitting in the county of the state where the Property is
located over any suit, action, or proceeding, brought by Lessor Parties
to exercise their STATUTORY POWER OF SALE under this Agreement or any
action brought by Lessor Parties to enforce their rights with respect to
the Collateral. Lessee irrevocably waives, to the fullest extent
permitted by law, any objection that Lessee may now or hereafter have to
the laying of venue of any such suit, action, or proceeding brought in
any such court and any claim that any such suit, action, or proceeding
brought in any such court has been brought in an inconvenient forum.
[The first signature page follows.]
IN WITNESS WHEREOF, Lessee, Lessor, the Participants and Agent
have caused this Agreement to be executed as of the day and year first
above written.
LESSEE: ETEC SYSTEMS, INC.
By:______________________________________
Name:_________________________________
Title:__________________________________
LESSOR: LEASE PLAN NORTH AMERICA, INC.
By:______________________________________
Name:_________________________________
Title:__________________________________
AGENT: ABN AMRO BANK N.V.
By:______________________________________
Name:_________________________________
Title:__________________________________
By:______________________________________
Name:_________________________________
Title:__________________________________
PARTICIPANTS: ABN AMRO BANK N.V.
By:______________________________________
Name:_________________________________
Title:__________________________________
By:______________________________________
Name:_________________________________
Title:__________________________________
SCHEDULE I
PARTICIPANTS
PART A(1)
TRANCHE PERCENTAGES AND PROPORTIONATE SHARES
PRIOR TO COMMITMENT TERMINATION DATE
Tranche A Tranche B Tranche C Proportionate
Participant Percentage Percentage Percentage
Share___
ABN AMRO
Bank N.V. 89.90000000% 7.00000000% 0.00000000%
96.90000000%
Lease Plan
North America 0.00000000% 0.00000000% 3.10000000%
3.10000000%
TOTAL 89.90000000% 7.00000000% 3.10000000%
100.00000000%
PART A(2)
TRANCHE PERCENTAGES AND PROPORTIONATE SHARES
ON AND AFTER COMMITMENT TERMINATION DATE
Tranche A Tranche B Tranche C Proportionate
Participant Percentage Percentage Percentage
Share___
ABN AMRO
Bank N.V. 83.00000000% 13.90000000% 0.00000000%
96.90000000%
Lease Plan
North America 0.00000000% 0.00000000% 3.10000000%
3.10000000%
TOTAL 83.00000000% 13.90000000% 3.10000000%
100.00000000%
PART B - ADDRESSES, ETC.
ABN AMRO BANK N.V.
Applicable Participating Office:
ABN AMRO Bank N.V.
San Francisco International Branch
101 California Street, Suite 4550
San Francisco, CA 94111
Address for Notices:
ABN AMRO Bank N.V.
San Francisco International Branch
101 California Street, Suite 4550
San Francisco, CA 94111
Attention: Robin Yim
Telephone: (415) 984-3712
Fax: (415) 362-3524
ABN AMRO North America, Inc.
Capital Markets-Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY 10019
Attention: Linda Boardman
Telephone: (212) 314-1724
Fax: (212) 314-1709
Wiring Instructions:
ABN AMRO Bank N.V.
New York, New York
RT/ABA No.: 026009580
Account Name: ABN AMRO San Francisco
Account No.: 6510010545-41
Reference: Etec Systems, Inc. Synthetic Lease
SCHEDULE 1.01
DEFINITIONS
"364-Day Commitment" shall have the meaning given to that term in
Subparagraph 2.03(b) of the Participation Agreement.
"364-Day Commitment Extension Fee" shall have the meaning given to
that term in Subparagraph 2.04(c) of the Participation Agreement.
"364-Day Commitment Period" shall have the meaning given to that
term in Subparagraph 2.03(b) of the Participation Agreement.
"364-Day Commitment Termination Date" shall have the meaning given
to that term in Subparagraph 2.03(b) of the Participation Agreement.
"ABN AMRO" shall mean ABN AMRO Bank N.V.
"Acquisition Advance" shall have the meaning given to that term in
Subparagraph 2.01(b) of the Participation Agreement.
"Acquisition Date" shall mean the date on which Lessor acquires a
leasehold interest in the Land by entering into the Ground Lease with
Lessee.
"Acquisition Price" shall mean the total price payable by Lessor
to acquire its leasehold interest in the Land and to acquire the other
initial Property, if any, on the Closing Date.
"Acquisition Request" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Participation Agreement.
"Adjusted Net Income" shall mean, with respect to Lessee and its
Subsidiaries for any period, the sum, determined on a consolidated basis
in accordance with GAAP where applicable, of:
(a) The net income or net loss of Lessee and its
Subsidiaries for such period after provision for income taxes;
plus
(b) To the extent deducted in calculating such net income
or net loss for such period, all non-recurring charges incurred by
Lessee and its Subsidiaries during such period for the acquisition
of in-process technology; provided, however, that the sum of all
such charges so added to net income or net loss in calculating the
Adjusted Net Income of Lessee and its Subsidiaries during the
period from the date of this Agreement through the Scheduled
Expiration Date shall not exceed $15,000,000.
"Advances" shall have the meaning given to that term in
Subparagraph 2.01(b) of the Participation Agreement.
"Advance Requests" shall have the meaning given to that term in
Subparagraph 2.03(c) of the Participation Agreement.
"Affiliate" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether
beneficially or as a trustee, guardian or other fiduciary, twenty (20%)
or more of any class of Equity Securities of such Person, (b) each
Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person or (c) each of such Person's
officers, directors, joint venturers and partners; provided, however,
that in no case shall any Lessor Party be deemed to be an Affiliate of
Lessee or any of its Subsidiaries for purposes of the Operative
Documents. For the purpose of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean ABN AMRO, acting in its capacity as Agent for
the Participants under the Operative Documents.
"Agent's Fee Letter" shall mean the letter agreement dated as of
November 26, 1997 between Lessee and Agent regarding certain fees
payable by Lessee to Agent.
"Agent's Syndication Letter" shall mean the letter agreement dated
as of November 26, 1997 between Lessee and Agent regarding post-closing
syndication.
"Agent's Fees" shall have the meaning given to that term in
Subparagraph 2.04(a) of the Participation Agreement.
"Alternate Rental Rate" shall mean, for any Rental Period (or
portion thereof), the per annum rate equal to the Base Rate in effect
from time to time during such period plus the Applicable Margin, such
rate to change from time during such period as the Base Rate or
Applicable Margin shall change.
"Applicable Margin" shall mean:
(a) Tranche A and Tranche B. With respect to the
Outstanding Tranche A Amount and Outstanding Tranche B Amount:
(i) No Cash Collateral. During any period when
Agent does not have, in accordance with the Cash Collateral
Agreement, a first priority perfected security interest in
any Cash Collateral securing the Lessee Obligations:
(A) Ninety-five hundredths of one percent
(0.95%) per annum with respect to the LIBOR Rental
Rate; or
(B) Zero percent (0%) per annum with respect
to the Alternate Rental Rate;
(ii) Full Cash Collateral. During any period when
Agent has, in accordance with the Cash Collateral Agreement,
a first priority perfected security interest in Cash
Collateral that secures the Lessee Obligations and has a
value equal to or greater than the full Outstanding Lease
Amount:
(A) Twenty-five hundredths of one percent
(0.25%) per annum with respect to the LIBOR Rental
Rate; or
(B) Zero percent (0%) per annum with respect
to the Alternate Rental Rate; or
(iii) Partial Cash Collateral. During any period when
Agent has, in accordance with the Cash Collateral Agreement,
a first priority perfected security interest in Cash
Collateral that secures the Lessee Obligations but has a
value less than the full Outstanding Lease Amount:
(A) The per annum margin equal to the sum of
the following with respect to the LIBOR Rental Rate:
(1) The product of (y) ninety-five
hundredths of one percent (0.95%) per annum
times (z) a fraction, the numerator of which is
the remainder of the Outstanding Lease Amount
minus the value of the Cash Collateral and the
denominator of which is the Outstanding Lease
Amount; plus
(2) The product of (y) twenty-five
hundredths of one percent (0.25%) per annum
above times (z) a fraction, the numerator of
which is the value of the Cash Collateral and
the denominator of which is the Outstanding
Lease Amount; or
(B) Zero percent (0%) per annum with respect
to the Alternate Rental Rate; and
(b) Tranche C. With respect to the Outstanding Tranche C
Amount:
(i) Two percent (2.0%) per annum with respect to the
LIBOR Rental Rate; or
(ii) Two percent (2.0%) per annum with respect to the
Alternate Rental Rate;
provided, however, that each Applicable Margin set forth in
subparagraphs (a) and (b) of this definition shall be increased by two
percent (2.0%) per annum on the date an Event of Default occurs and
shall continue at such increased rate unless and until such Event of
Default is waived in accordance with the Operative Documents.
"Applicable Participating Office" shall mean, with respect to any
Participant, (a) initially, its office designated as such in Part B of
Schedule I (or, in the case of any Participant which becomes a
Participant by an assignment pursuant to Subparagraph 7.05(b) of the
Participation Agreement, its office designated as such in the applicable
Assignment Agreement) and (b) subsequently, such other office or offices
as such Participant may designate to Agent as the office at which such
Participant's interest in the Lease Agreement will thereafter be
maintained and for the account of which all payments of Rent and other
amounts payable to such Participant under the Operative Documents will
thereafter be made.
"Appraisal" shall mean an appraisal of the Property or a portion
thereof in a form satisfactory to Lessee, Lessor, Agent and the Required
Participants, prepared by an independent MAI appraiser that (a) complies
with the Financial Institutions Reform, Recovery and Enforcement Act of
1989 and all other applicable Governmental Rules and (b) is approved by
Lessor, Agent and the Required Participants (at the time such appraiser
is selected).
"Appurtenant Rights" shall mean all easements and rights-of-way,
strips and gores of land, streets, ways, alleys, passages, sewer rights,
water, water courses, water rights and powers, air rights and
development rights, liberties, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way belonging, relating
or pertaining to any Land or the Improvements thereto and the
reversions, remainders, and all the estates, rights, titles, interests,
property, possession, claim and demand whatsoever, both in law and in
equity, of, in and to such Land and Improvements and every part and
parcel thereof, with the appurtenances thereto.
"Assignee Participant" shall have the meaning given to that term
in Subparagraph 7.05(b) of the Participation Agreement.
"Assignee Purchaser" shall have the meaning given to that term in
Subparagraph 5.03(b)of the Purchase Agreement.
"Assignment" shall have the meaning given to that term in
Subparagraph 7.05(b) of the Participation Agreement.
"Assignment Agreement" shall have the meaning given to that term
in Subparagraph 7.05(b) of the Participation Agreement.
"Assignment Effective Date" shall have, with respect to each
Assignment Agreement, the meaning set forth therein.
"Assignment of Construction Agreements" shall have the meaning
given to that term in Subparagraph 2.11(a) of the Participation
Agreement.
"Assignment of Lease" shall have the meaning given to that term in
Subparagraph 2.11(b).
"Assignor Participant" shall have the meaning given to that term
in Subparagraph 7.05(b) of the Participation Agreement.
"Assumed Appraisal" shall have the meaning given to that term in
Subparagraph 3.02(h) of the Purchase Agreement.
"Base Rate" shall mean, on any day, the greater of (a) the Prime
Rate in effect on such date and (b) the Federal Funds Rate for such day
plus one-half percent (0.50%).
"Base Rent" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Lease Agreement.
"Business Day" shall mean any day on which (a) commercial banks
are not authorized or required to close in San Francisco, California or
New York, New York and (b) if such Business Day is related to a LIBOR
Rental Rate, dealings in Dollar deposits are carried out in the London
interbank market.
"Capital Adequacy Requirement" shall have the meaning given to
that term in Subparagraph 2.12(d) of the Participation Agreement.
"Capital Asset" shall mean, with respect to any Person, any
tangible fixed or capital asset owned or leased (in the case of a
Capital Lease) by such Person, or any expense incurred by such Person
that is required by GAAP to be reported as a non-current asset on such
Person's balance sheet.
"Capital Expenditures" shall mean, with respect to Lessee and its
Subsidiaries for any period, the sum, determined on a consolidated basis
in accordance with GAAP, of all amounts expended and indebtedness
incurred or assumed by Lessee and its Subsidiaries during such period
for the acquisition of Capital Assets (including all amounts expended
and indebtedness incurred or assumed in connection with Capital Leases),
other than amounts expended by Lessee and its Subsidiaries to repurchase
used Lessee systems previously sold to customers by Lessee and its
Subsidiaries. (For clarification and without limiting the generality of
this definition, amounts paid by Lessee under the Hayward Lease shall
not constitute "Capital Expenditures" if the Hayward Lease is an
operating lease under GAAP.)
"Capital Leases" shall mean any and all lease obligations that, in
accordance with GAAP, are required to be capitalized on the books of a
lessee.
"Cash Balances" shall mean, with respect to Lessee and its
Subsidiaries at any time, the remainder, determined on a consolidated
basis in accordance with GAAP, of:
(a) The sum of (i) the cash of Lessee and its Subsidiaries
at such time and (ii) the market value of the Cash Equivalents of
Lessee and its Subsidiaries at such time;
minus
(b) If the Outstanding Revolver Credit at such time
exceeds $5,000,000, the amount of such excess.
"Cash Collateral" shall mean United States Treasury Securities and
deposit accounts held or maintained by Agent and Participants to the
extent such securities and accounts are held and maintained in
accordance with the Cash Collateral Agreement and Lessor has a first
priority perfected security interest therein securing the Lessee
Obligations.
"Cash Collateral Agreement" shall have the meaning given to that
term in Subparagraph 2.11(a) of the Participation Agreement.
"Cash Equivalents" shall mean, on any date:
(a) Any debt investments that mature within one year from
such date if such investments are permitted by the investment
policy of Lessee set forth in Schedule 5.02(e) to the
Participation Agreement; or
(b) If the investment policy of Lessee is changed after
the date of the Participation Agreement, any debt investments that
mature within one year from such date if (i) such investments are
permitted by the most recent investment policy of Lessee and (ii)
such investment policy has been approved by Lessee's Board of
Directors and by Lessor and Required Participants.
"Casualty" shall mean any damage to, destruction of or decrease in
the value of all or any portion of any of the Property as a result of
fire, flood, earthquake or other natural cause; the actions or inactions
of any Person or Persons (whether willful or unintentional and whether
or not constituting negligence); or any other cause.
"Casualty and Condemnation Proceeds" shall mean all awards,
damages, compensation, reimbursement and other payments made or to be
made to Lessee, Lessor or Agent from any insurer, Governmental Authority
or other Person (other than Lessee or any Lessor Party) on account of
any Casualty or Condemnation.
"Change of Control" shall mean (a) with respect to Lessee, the
occurrence of any of the following events: (i) any person or group of
persons (within the meaning of Section 13 or 14 of the Securities
Exchange Act of 1934, as amended) shall (A) acquire beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
amended) of twenty-five percent (25%) or more of the outstanding Equity
Securities of Lessee entitled to vote for members of the board of
directors, or (B) acquire all or substantially all of the assets of
Lessee and its Subsidiaries taken as a whole, or (ii) during any period
of twelve (12) consecutive calendar months, individuals who are
directors of Lessee on the first day of such period ("Initial
Directors") and any directors of Lessee who are specifically approved by
two-thirds of the Initial Directors and previously-approved Directors
("Approved Directors") shall cease to constitute a majority of the Board
of Directors of Lessee before the end of such period; and (b) with
respect to Lessee's Japanese Subsidiary, Lessee shall cease to own at
least fifty-one percent (51%) of the Equity Securities of such
Subsidiary except for nominal amounts of director stock necessary to do
business in Japan.
"Change of Law" shall have the meaning given to that term in
Subparagraph 2.12(b) of the Participation Agreement.
"Closing Date" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.
"Closing Date Appraisal" shall mean, with respect to the Property
on or as of a recent date prior to the Closing Date, an Appraisal that
assesses at such time the Fair Market Value of Lessor's leasehold
interest in the Property on such date.
"Collateral" shall mean the Property Collateral, the Cash
Collateral and all other property in which any Lessor Party has a Lien
to secure any of the Lessee Obligations.
"Commencement Date" shall have the meaning given to that term in
Subparagraph 2.02(a) of the Lease Agreement.
"Commitment" shall mean, with respect to any Participant at any
time, such Participant's Proportionate Share of the Total Commitment at
such time.
"Commitment Fees" shall have the meaning given to that term in
Subparagraph 2.04(b) of the Participation Agreement.
"Commitment Period" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.
"Commitment Termination Date" shall have the meaning given to that
term in Subparagraph 2.01(a) of the Participation Agreement.
"Completion" shall have the meaning given to that term in
Subparagraph 3.05(c) of the Construction Agency Agreement. "Complete",
"Completed" and "Completion" shall have comparable meanings.
"Completion Date" shall mean the first date on which all of the
conditions set forth in Subparagraph 3.05(c) of the Construction Agency
Agreement are satisfied.
"Compliance Certificate" shall have the meaning given to that term
in Subparagraph 5.01(a) of the Participation Agreement.
"Condemnation" shall mean any condemnation, requisition,
confiscation, seizure or other taking or sale of the use, access,
occupancy or other right in or to all or any portion of any of the
Property (whether wholly or partially, temporarily or permanently), by
or on account of any actual or threatened eminent domain proceeding or
other taking of action by any Governmental Authority or other Person
having the power of eminent domain, including an action by any such
Governmental Authority or Person to change the grade of, or widen the
streets adjacent to, such Property or alter the pedestrian or vehicular
traffic flow to such Property so as to result in change in access to
such Property, or by or on account of an eviction by paramount title or
any transfer made in lieu of any such proceeding or action. A
"Condemnation" shall be deemed to have occurred on the earliest of the
dates that use, access, occupancy or other right is taken.
"Conforming Bid" shall have the meaning given to that term in
Subparagraph 3.02(c) of the Purchase Agreement.
"Construction Agency Agreement" shall have the meaning given to
that term in Subparagraph 2.01(a) of the Participation Agreement.
"Construction Agreements" shall have the meaning given to that
term in Paragraph 3.02 of the Construction Agency Agreement.
"Contingent Obligation" shall mean, with respect to any Person,
(a) any Guaranty Obligation of that Person; and (b) any direct or
indirect obligation or liability, contingent or otherwise, of that
Person (i) in respect of any Surety Instrument issued for the account of
that Person or as to which that Person is otherwise liable for
reimbursement of drawings or payments, (ii) as a partner or joint
venturer in any partnership or joint venture, (iii) to purchase any
materials, supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (iv) in
respect to any Rate Contract that is not entered into in connection with
a bona fide hedging operation that provides offsetting benefits to such
Person. The amount of any Contingent Obligation shall (subject, in the
case of Guaranty Obligations, to the last sentence of the definition of
"Guaranty Obligation") be deemed equal to the maximum reasonably
anticipated liability in respect thereof, and shall, with respect to
item (b)(iv) of this definition be marked to market on a current basis.
"Contractual Obligation" of any Person shall mean, any indenture,
note, lease, loan agreement, security, deed of trust, mortgage, security
agreement, guaranty, instrument; contract, agreement or other form of
contractual obligation or undertaking to which such Person is a party or
by which such Person or any of its property is bound.
"Credit Event" shall mean the making of each Advance, the
selection of a new Rental Period or the exercise of the Marketing Option
under the Purchase Agreement.
"Current Appraisal" shall have the meaning given to that term in
Subparagraph 3.02(h) of the Purchase Agreement.
"Debt Service Coverage Ratio" shall mean, with respect to Lessee
and its Subsidiaries for any period, the ratio, determined on a
consolidated basis in accordance with GAAP where applicable, of;
(a) The remainder of (i) EBITDA of Lessee and its
Subsidiaries for such period minus (ii) all Capital Expenditures
of Lessee and its Subsidiaries for such period;
to
(b) The sum of (i) all Interest Expenses of Lessee and its
Subsidiaries for such period and (ii) all principal payments on
long-term Indebtedness for borrowed money of Lessee and its
Subsidiaries scheduled for payment during the immediately
succeeding comparable period (excluding any payments of the
Outstanding Lease Amount payable on the Expiration Date of the
Lease Agreement).
"Default" shall mean any Event of Default under the Lease
Agreement or any event or circumstance not yet constituting an Event of
Default under the Lease Agreement which, with the giving of any notice
or the lapse of any period of time or both, would become an Event of
Default under the Lease Agreement.
"Defaulting Participant" shall mean a Participant which has failed
to fund its portion of any Advance which it is required to fund under
the Participation Agreement and has continued in such failure for three
(3) Business Days after written notice from Agent.
"Deposit Accounts" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Cash Collateral Agreement.
"Depositary Bank" shall have the meaning given to that term in
Paragraph 2.02 of the Cash Collateral Agreement.
"Designated Purchaser" shall have the meaning given to that term
in Subparagraph 3.02(e) of the Purchase Agreement.
"Dollars" and "$" shall mean the lawful currency of the United
States of America and, in relation to any payment under the Operative
Documents, same day or immediately available funds.
"EBITDA" shall mean, with respect to Lessee and its Subsidiaries
for any period, the sum of the following, determined on a consolidated
basis in accordance with GAAP:
(a) The Adjusted Net Income of Lessee and its Subsidiaries
for such period;
plus
(b) The sum (to the extent deducted in calculating such
Adjusted Net Income) of (i) all Interest Expenses of Lessee and
its Subsidiaries accrued during such period, (ii) all income taxes
of Lessee and its Subsidiaries accrued during such period and (ii)
all depreciation and amortization expenses of Lessee and its
Subsidiaries accrued during such period.
"Eligible Assignee" shall mean (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of
the Organization for Economic Cooperation and Development (the "OECD"),
or a political subdivision of any such country, and having a combined
capital and surplus of at least $100,000,000, provided that such bank is
acting through a branch or agency located in the United States; or (c) a
Person that is (i) a Subsidiary of a Participant, (ii) a Subsidiary of a
Person of which a Participant is a Subsidiary, or (iii) a Person of
which a Participant is a Subsidiary.
"Employee Benefit Plan" shall mean any employee benefit plan
within the meaning of section 3(3) of ERISA maintained or contributed to
by Lessee or any ERISA Affiliate, other than a Multiemployer Plan.
"Environmental Laws" shall mean the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environment
Response, Compensation and Liability Act of 1980 (including the
Superfund Amendments and Reauthorization Act of 1986, "CERCLA"), 42
U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
Section 651; the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of
1977, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq.; and all other Governmental Rules relating
to the protection of human health and the environment, including all
Governmental Rules pertaining to reporting, licensing, permitting,
transportation, storage, disposal, investigation, and remediation of
emissions, discharges, releases, or threatened releases of Hazardous
Materials into the air, surface water, groundwater, or land, or relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials.
"Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other
equity interests in and of such Person (regardless of how designated and
whether or not voting or non-voting) and (b) all warrants, options and
other rights to acquire any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may from time to time be amended or supplemented,
including any rules or regulations issued in connection therewith.
"ERISA Affiliate" shall mean any Person which is treated as a
single employer with Lessee under Section 414 of the IRC.
"Event of Default" shall have the meaning given to that term in
Paragraph 5.01 of the Lease Agreement.
"Exhibit B Supplement" shall have the meaning given to that term
in Subparagraph 2.03(b) of the Participation Agreement.
"Existing Improvements" shall mean, with respect to the Land, all
Improvements existing on the Land on the Closing Date.
"Expiration Date" shall mean the earlier of (a) the Scheduled
Expiration Date under the Lease Agreement, as such date may be extended
pursuant to this Agreement, and (b) the Termination Date for the Lease
Agreement, if the Lease Agreement is terminated prior to its Scheduled
Expiration Date in accordance with its terms.
"Expiration Date Appraisal" shall mean, with respect to the
Property at any time, an Appraisal that assesses at such time the Fair
Market Value of Lessor's leasehold and other interests in the Property
on the Scheduled Expiration Date and as improved in accordance with the
Plans and Specifications for the New Improvements.
"Expiration Date Purchase Option" shall have the meaning given to
that term in Subparagraph 3.01(b) of the Purchase Agreement.
"Fair Market Value" shall mean, with respect to any of the
Property or any portion thereof, the maximum reasonable amount (not less
than zero) that would be paid in cash in an arm's-length transaction
between an informed and willing purchaser and an informed and willing
seller, neither of whom is under any compulsion to purchase or sell, for
the ownership of the Property or such portion.
"FASB 13" shall mean Financial Accounting Standards Board
Statement No. 13.
"Federal Funds Rate" shall mean, for any day, the rate per annum
set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board
(including any such successor publication, "H.15 (519)") for such day
opposite the caption "Federal Funds (Effective)". If on any relevant
day, such rate is not yet published in H.15 (519), the rate for such day
shall be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or
any successor publication, published by the Federal Reserve Bank of New
York (including any such successor publication, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective
Rate". If on any relevant day, such rate is not yet published in either
H.15 (519) or the Composite 3:30 p.m. Quotations, the rate for such day
shall be the arithmetic means, as determined by Agent, of the rates
quoted to Agent for such day by three (3) Federal funds brokers of
recognized standing selected by Agent.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
"Financial Statements" shall mean, with respect to any accounting
period for any Person, statements of income, shareholders' equity and
cash flows of such Person for such period, and a balance sheet of such
Person as of the end of such period, setting forth in each case in
comparative form figures for the corresponding period in the preceding
fiscal year if such period is less than a full fiscal year or, if such
period is a full fiscal year, corresponding figures from the preceding
annual audit, all prepared in reasonable detail and in accordance with
GAAP.
"Force Majeure Events" shall mean any Acts of God, riots, civil
commotions, insurrections, wars, strikes, lockouts or other events
beyond the control of Lessee, except for (a) any such events that are
known to or should be known to Lessee on the Closing Date; (b) any such
events that are caused by the financial condition of Lessee or the
failure of Lessee to make any payments under any Construction
Agreements, any Operative Documents or any related agreements or (c) any
events that could be remedied through the payment of money or the
exercise of other commercially reasonable efforts.
"GAAP" shall mean generally accepted accounting principles and
practices as in effect in the United States of America from time to
time, consistently applied.
"Governmental Authority" shall mean any domestic or foreign
national, state or local government, any political subdivision thereof,
any department, agency, authority or bureau of any of the foregoing, or
any other entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, including,
without limitation, the Federal Deposit Insurance Corporation, the
Federal Reserve Board, the Comptroller of the Currency, any central bank
or any comparable authority.
"Governmental Charges" shall mean taxes, levies, assessments,
fees, imposts, duties, licenses, recording charges, claims or other
charges imposed by any Governmental Authority.
"Governmental Rule" shall mean any law, rule, regulation,
ordinance, order, code, interpretation, judgment, decree, directive,
guidelines, policy or similar form of decision of any Governmental
Authority.
"Ground Lease" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.
"Ground Lease Commencement Date" shall have the meaning given to
that term in Paragraph 2.02 of the Ground Lease
"Ground Lease Event of Default" shall have the meaning given to
that term in Paragraph 5.01 of the Ground Lease.
"Ground Lease Expiration Date" shall have the meaning given to
that term in Paragraph 4.02
"Ground Lease Option Price" shall have the meaning given to that
term in Paragraph 6.02 of the Ground Lease.
"Ground Lease Property" shall have the meaning given to that term
in Paragraph 2.01 of the Ground Lease.
"Ground Lease Purchase Option" shall have the meaning given to
that term in Paragraph 6.01 of the Ground Lease.
"Ground Lease Purchase Option Date" shall have the meaning given
to that term in Paragraph 6.01 of the Ground Lease.
"Ground Lease Scheduled Expiration Date" shall have the meaning
given to that term in Paragraph 2.02 of the Ground Lease.
"Ground Lessee" shall have the meaning given to that term in the
introductory paragraph of the Ground Lease.
"Ground Lessor" shall have the meaning given to that term in the
introductory paragraph of the Ground Lease.
"Guaranty Obligation" shall mean, with respect to any Person, any
direct or indirect liability of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"),
including any obligation of that Person, whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary
obligations or any property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation, or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (d) otherwise to
assure or hold harmless the holder of any such primary obligation
against loss in respect thereof. The amount of any Guaranty Obligation
shall be deemed equal to the stated or determinable amount of the
primary obligation in respect of which such Guaranty Obligation is made
or, if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof.
"Hayward Lease" shall mean the Second Amended and Restated Lease
Agreement to be entered into between the Hayward Lessor, as landlord,
and Lessee, as tenant.
"Hayward Lease Property" shall mean the property leased by Lessee
from the Hayward Lessor pursuant to the Hayward Lease.
"Hayward Lessor" shall mean ESI (CA) QRS 12-6, Inc., a California
corporation.
"Hazardous Materials" shall mean all materials, substances and
wastes which are classified or regulated as "hazardous," "toxic" or
similar descriptions under any Environmental Law.
"Improvement/Expense Advance Request" shall have the meaning given
to that term in Subparagraph 2.03(b) of the Participation Agreement.
"Improvement/Expense Advances" shall have the meaning given to
that term in Subparagraph 2.01(a) of the Participation Agreement.
"Improvements" shall mean all buildings, structures, facilities,
fixtures and other improvements of every kind and description now or
hereafter located on any of the Land, including (a) all parking areas,
roads, driveways, walks, fences, walls, drainage facilities and other
site improvements; (b) all water, sanitary and storm sewer, drainage,
electricity, steam, gas, telephone and other utility equipment and
facilities, all plumbing, lighting, heating, ventilating, air-
conditioning, refrigerating, incinerating, compacting, fire protection
and sprinkler, surveillance and security, public address and
communications equipment and systems, partitions, elevators, escalators,
motors, machinery, pipes, fittings and other items of equipment of every
kind and description now or hereafter located on such Land or attached
to the Improvements thereto which by the nature of their location
thereon or attachment thereto are real property under applicable law;
and (c) all Modifications to such Land or its Improvements, except for
any Modifications removed by Lessee from the Property pursuant to
Subparagraph 3.10 of the applicable Lease Agreement.
"Indebtedness" of any Person shall mean, without duplication:
(a) All obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments and all other
obligations of such Person for borrowed money (including recourse
obligations of such Person in connection with receivables and
other assets sold by such Person);
(b) All obligations of such Person for the deferred
purchase price of property or services (including obligations
under letters of credit and other credit facilities which secure
or finance such purchase price and obligations under "synthetic"
leases but excluding trade payables incurred in the ordinary
course of business on ordinary terms which are not overdue);
(c) All obligations of such Person under conditional sale
or other title retention agreements with respect to property
acquired by such Person (to the extent of the value of such
property if the rights and remedies of the seller or lender under
such agreement in the event of default are limited solely to
repossession or sale of such property);
(d) All obligations of such Person as lessee under or with
respect to Capital Leases;
(e) All net obligations of such Person, contingent or
otherwise, under or with respect to Rate Contracts;
(f) All Guaranty Obligations of such Person with respect
to the obligations of other Persons of the types described in
clauses (a) - (e) above; and
(h) All obligations of other Persons of the types
described in clauses (a) - (e) above to the extent secured by (or
for which any holder of such obligations has an existing right,
contingent or otherwise, to be secured by) any Lien in any
property (including accounts and contract rights) of such Person,
even though such Person has not assumed or become liable for the
payment of such obligations.
(For clarification and without limiting the generality of this
definition, the obligations of Lessee under the Hayward Lease shall not
constitute "Indebtedness" if the Hayward Lease is an operating lease
under GAAP.)
"Indemnified Taxes" shall mean all income taxes, stamp taxes,
sales taxes, use taxes, rental taxes, gross receipts taxes, property
(tangible and intangible) taxes, franchise taxes, excise taxes, value
added taxes, turnover taxes, withholding taxes and other taxes and
Governmental Charges, together with any and all assessments, penalties,
fines, additions and interest thereon, except:
(a) Net income taxes and franchise taxes in lieu of net
income taxes imposed on any Lessor Party by its jurisdiction of
incorporation or a jurisdiction in which it maintains an office
(provided, however, that this definition shall not be construed to
prevent a payment from being made on an after-tax basis);
(b) Any tax or other Governmental Charge that has not
become a Lien on any of the Property and that Lessee is contesting
pursuant to Paragraph 3.12 of the Lease Agreement (but only while
Lessee is so contesting such tax or Governmental Charge); or
(c) Any tax or other Governmental Charge that is imposed
upon an Indemnitee primarily as a result of the gross negligence
or willful misconduct of such Indemnitee itself (as opposed to
gross negligence or willful misconduct imputed to such
Indemnitee), but not taxes or other Governmental Charges imposed
as a result of ordinary negligence of such Indemnitee.
"Indemnitees" shall mean the Lessor Parties and their Affiliates
and their respective directors, officers, employees, agents, attorneys
and advisors.
"Indemnity Amount" shall have the meaning given to that term in
Subparagraph 3.02(g) of the Purchase Agreement.
"Initial Bid" shall have the meaning given to that term in
Subparagraph 3.02(b) of the Purchase Agreement.
"Initial Marketing Period" shall have the meaning given to that
term in Subparagraph 3.02(b) of the Purchase Agreement.
"Insurance Requirements" shall mean all terms, conditions and
requirements imposed by the policies of insurance which Lessee is
required to maintain by the Operative Documents.
"Interest Expenses" shall mean, with respect to Lessee and its
Subsidiaries for any period, the sum, determined on a consolidated basis
in accordance with GAAP, of (a) all interest accrued on the Indebtedness
of Lessee and its Subsidiaries during such period (including interest
attributable to Capital Leases) and (b) all letter of credit fees
payable by Lessee and its Subsidiaries accrued during such period.
"Investment" of any Person shall mean any loan or advance of funds
by such Person to any other Person (other than advances to employees of
such Person for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business), any purchase or other
acquisition of any Equity Securities or Indebtedness of any other
Person, any capital contribution by such Person to or any other
investment by such Person in any other Person (including any Guaranty
Obligations of such Person and any indebtedness of such Person of the
type described in clause (h) of the definition of "Indebtedness" on
behalf of any other Person); provided, however, that Investments shall
not include (a) accounts receivable or other indebtedness owed by
customers of such Person which are current assets and arose from sales
of inventory in the ordinary course of such Person's business or (b)
prepaid expenses of such Person incurred and prepaid in the ordinary
course of business.
"IRC" shall mean the Internal Revenue Code of 1986.
"Issues and Profits" shall mean all present and future rents,
royalties, issues, profits, receipts, revenues, income, earnings and
other benefits accruing from any of the Land, Improvements or
Appurtenant Rights (whether in the form of accounts, chattel paper,
instruments, documents, investment property, general intangibles or
otherwise) including all rents and other amounts payable pursuant to any
Subleases.
"Land" shall mean all lots, pieces, tracts or parcels of land
described in Exhibit A to the Lease Agreement and leased by Lessee
pursuant to the Lease Agreement.
"Lease Agreement" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.
"Lease Extension Request" shall have the meaning given to that
term in Subparagraph 2.09(b) of the Participation Agreement.
"Lease Reduction Payments" shall mean each of the following to the
extent applied to reduce the Outstanding Lease Amount pursuant to the
Operative Documents:
(a) Casualty and Condemnation Proceeds;
(b) The purchase price paid for the Property (or any
portion thereof) by Lessee, an Assignee Purchaser or a Designated
Purchaser pursuant to the Purchase Agreement;
(c) The Residual Value Guaranty and Indemnity Amount paid
by Lessee pursuant to the Purchase Agreement;
(d) Any proceeds received by Lessee from any sale of the
Property after the Expiration Date if such Property is retained by
Lessor after such Expiration Date pursuant to the applicable
Purchase Agreement; and
(e) Any proceeds received by any Lessor Party from the
exercise of any of its remedies under the Operative Documents
after the occurrence of an Event of Default under the Lease
Agreement.
"Leasehold Mortgagee" shall have the meaning given to that term in
Paragraph 3.07 of the Ground Lease.
"Leasehold Mortgages" shall have the meaning given to that term in
Paragraph 3.07 of the Ground Lease.
"Lessee" shall mean Etec Systems, Inc., acting in its capacity as
Lessee under the Operative Documents.
"Lessee Obligations" shall mean and include all liabilities and
obligations owed by Lessee to any Lessor Party under any of the
Operative Documents of every kind and description and however arising
(whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising), including the obligation of
Lessee to pay Rent, to pay the Residual Value Guaranty Amount, Indemnity
Amount and/or Outstanding Lease Amount and to pay all interest, fees,
charges, expenses, attorneys' fees and accountants' fees chargeable to
Lessee or payable by Lessee under the Operative Documents.
"Lessee Security Documents" shall mean and include the Lease
Agreement, the Cash Collateral Agreement, the Assignment of Construction
Agreements, the Ground Lease and all other instruments, agreements,
certificates, opinions and documents (including Uniform Commercial Code
financing statements and fixture filings and landlord waivers) delivered
to any Lessor Party in connection with any Collateral or to secure the
Lessee Obligations.
"Lessor" shall mean Lease Plan North America, Inc. , acting in its
capacity as Lessor under the Operative Documents.
"Lessor Deed of Trust" shall have the meaning given to that term
in Subparagraph 2.11(b) of the Participation Agreement.
"Lessor Liens" shall mean any Liens or other interests in any of
the Property of any Person other than Lessee or a Lessor Party arising
as a result of (a) any transfer or assignment by Lessor to such Person
of any of Lessor's interests in such Property in violation of any of the
Operative Documents or (b) any claim against Lessor by any such Person
unrelated to any of the Operative Documents or the transactions
contemplated thereby. (Lessor Liens shall include Liens granted by
Lessor to Agent or any Participant to secure the Lessor Obligations.)
"Lessor Obligations" shall mean and include all liabilities and
obligations owed by Lessor to Agent or any Participant under any of the
Operative Documents of every kind and description and however arising
(whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising), including the obligation of
Lessor to share payments made by Lessee to Lessor under the Operative
Documents as provided in Paragraph 2.06 of the Participation Agreement.
"Lessor Parties" shall mean Lessor, the Participants and Agent.
"Lessor Security Agreement" shall have the meaning given to that
term in Subparagraph 2.11(b) of the Participation Agreement.
"Leverage Ratio" shall mean, with respect to Lessee and its
Subsidiaries at any time, the ratio, determined on a consolidated basis
in accordance with GAAP, of (a) the Senior Indebtedness of Lessee and
its Subsidiaries at such time to (b) the Total Capital of Lessee and its
Subsidiaries at such time.
"LIBO Rate" shall mean, with respect to any Rental Period, a rate
per annum equal to the quotient (rounded upward if necessary to the
nearest 1/100 of one percent) of (a) the arithmetic mean (rounded upward
if necessary to the nearest 1/16 of one percent) of the rates per annum
appearing on the Telerate Page 3750 (or any successor publication) on
the second Business Day prior to the first day of such Rental Period at
or about 11:00 A.M. (London time) (for delivery on the first day of such
Rental Period) for a term comparable to such Rental Period (or for a
term of one (1) month for any Rental Period that is less than one (1)
month but is at least seven (7) days), divided by (b) one minus the
Reserve Requirement in effect from time to time. If for any reason
rates are not available as provided in clause (a) of the preceding
sentence, the rate to be used in clause (a) shall be, the rate per annum
at which Dollar deposits are offered to ABN AMRO by prime banks in the
London interbank market on the second Business Day prior to the first
day of such Rental Period at or about 11:00 A.M. (London time) (for
delivery on the first day of such Rental Period) in an amount
substantially equal to ABN AMRO's Proportionate Share of the Outstanding
Lease Amount and for a term comparable to such Rental Period (or for a
term of one (1) month for any Rental Period that is less than one (1)
month but is at least seven (7) days). The LIBO Rate shall be adjusted
automatically as of the effective date of any change in the Reserve
Requirement.
"LIBOR Rental Rate" shall mean, for any Rental Period, the per
annum rate equal to the LIBO Rate for such Rental Period, plus the
Applicable Margin, such rate to change from time to time during such
period as the Applicable Margin shall change.
"Lien" shall mean, with respect to any property, any security
interest, mortgage, pledge, lien, charge or other encumbrance in, of, or
on such property or the income therefrom, including the interest of a
vendor or lessor under a conditional sale agreement, Capital Lease,
"synthetic" lease or other title retention agreement, or any agreement
to provide any of the foregoing, and the filing of any financing
statement or similar instrument under the Uniform Commercial Code or
comparable law of any jurisdiction.
"Major Casualty" shall mean, with respect to the Property, any
Casualty affecting such Property where (a) the damage to such Property
is treated by any insurer of such Property as a total loss; (b) such
Property cannot reasonably be repaired and restored to the condition in
which it existed immediately prior to such Casualty; or (c) the
reasonably anticipated cost to repair and restore such Property to the
condition in which it existed immediately prior to such Casualty would
exceed twenty-five percent (25%) of the Outstanding Lease Amount.
"Major Condemnation" shall mean, with respect to the Property, any
Condemnation affecting such Property where (a) all or substantially all
of such Property is taken by such Condemnation; (b) such Property cannot
reasonably be repaired and restored to the condition in which it existed
immediately prior to such Condemnation; or (c) the reasonably
anticipated cost to repair and restore such Property to the condition in
which it existed immediately prior to such Condemnation would exceed
twenty-five percent (25%) of the Outstanding Lease Amount.
"Majority Participants" shall mean (a) at any time the aggregate
Outstanding Lease Amount is greater than $0, Participants whose
aggregate Outstanding Participation Amounts equal or exceed fifty
percent (50%) of the aggregate Outstanding Lease Amount at such time and
(b) at any time the aggregate Outstanding Lease Amount is $0,
Participants whose Proportionate Shares equal or exceed fifty percent
(50%).
"Margin Stock" shall have the meaning given to that term in
Regulation U issued by the Federal Reserve Board, as amended from time
to time, and any successor regulation thereto.
"Marketing Option" shall have the meaning given to that term in
Subparagraph 3.01(a) of the Purchase Agreement.
"Marketing Option Event of Default" shall mean any Event of
Default other than a Non-Marketing Option Event of Default.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, assets, operations or financial or other condition of
Lessee and its Subsidiaries, taken as a whole; (b) the ability of Lessee
to pay or perform the Lessee Obligations when due in accordance with the
terms of the Operative Documents; (c) the rights and remedies of any
Lessor Party under the Operative Documents or any related document,
instrument or agreement; or (d) the value of the Property and the
Collateral, any Lessor Party's security interests, Liens or other rights
in the Property and the Collateral or the perfection or priority of such
security interests, Liens or rights.
"Material Casualty" shall mean any Casualty to the Property that
alone, or in combination with any prior Casualties to the Property for
which repairs to restore the Property to its prior condition have not
been completed, will require repairs costing $1,000,000 or more to
restore the Property to its prior condition.
"maturity" shall mean, with respect to any Rent, interest, fee or
other amount payable by Lessee under the Operative Documents, the date
such Rent, interest, fee or other amount becomes due, whether upon the
stated maturity or due date, upon acceleration or otherwise.
"Modifications" shall have the meaning given to that term in
Subparagraph 3.01(c) of the Lease Agreement.
"Multiemployer Plan" shall mean any multiemployer plan within the
meaning of section 3(37) of ERISA maintained or contributed to by Lessee
or any ERISA Affiliate.
"Net Proceeds" shall mean, with respect to any issuance of Equity
Securities by Lessee or any of its Subsidiaries, the aggregate
consideration received by Lessee or such Subsidiary from such issuance
less the sum of the actual amount of the reasonable fees and commissions
payable to Persons other than Lessee or any Affiliate of Lessee and the
other reasonable costs and expenses (including reasonable legal
expenses) directly related to such issuance that are to be paid by
Lessee or any of its Subsidiaries.
"New Improvements" shall mean, with respect to the Land, all new
Improvements to the Land contemplated by the Plans and Specifications.
"Non-Marketing Option Event of Default" shall mean:
(a) An Event of Default under Subparagraph 5.01(m) of the
Lease Agreement; or
(b) An Event of Default under Subparagraph 5.01(c) of the
Lease Agreement resulting from Lessee's failure to start and
complete the construction of the New Improvements in accordance
with the Construction Agency Agreement where such failure is
caused solely by a Force Majeure Event.
"Notice of Expiration Date Purchase Option Exercise" shall have
the meaning given to that term in Paragraph 3.01 of the Purchase
Agreement.
"Notice of Ground Lease Purchase Option Exercise" shall have the
meaning given to that term in Paragraph 6.01 of the Ground Lease.
"Notice of Ground Lease Rent Increase" shall have the meaning
given to that term in Paragraph 2.03 of the Ground Lease.
"Notice of Marketing Option Exercise" shall have the meaning given
to that term in Paragraph 3.01 of the Purchase Agreement.
"Notice of Rental Period Selection" shall have the meaning given
to that term in Subparagraph 2.03(a) of the Lease Agreement.
"Notice of Term Purchase Option Exercise" shall have the meaning
given to that term in Subparagraph 2.01(a) of the Purchase Agreement.
"Operating Income" shall mean, with respect to Lessee and its
Subsidiaries for any period, the sum of the following, determined on a
consolidated basis in accordance with GAAP where applicable:
(a) The Adjusted Net Income of Lessee and its Subsidiaries
for such period;
plus
(b) The remainder of (i) to the extent deducted in
calculating such Adjusted Net Income, all Interest Expenses of
Lessee and its Subsidiaries accrued during such period minus (ii)
to the extent included in calculating such Adjusted Net Income,
all interest income of Lessee and its Subsidiaries accrued during
such period;
plus
(c) The remainder of (i) to the extent deducted in
calculating such Adjusted Net Income, all extraordinary losses of
Lessee and its Subsidiaries accrued during such period minus (ii)
to the extent included in calculating such Adjusted Net Income,
all extraordinary gains of Lessee and its Subsidiaries accrued
during such period;
plus
(d) To the extent deducted in calculating such Adjusted
Net Income, all depreciation and amortization expenses of Lessee
and its Subsidiaries accrued during such period.
"Operative Documents" shall mean and include the Participation
Agreement, the Lease Agreement, the Construction Agency Agreement, the
Purchase Agreement, the Lessee Security Documents, the Lessor Deed of
Trust, the Lessor Security Agreement, the Assignment of Lease, the
Agent's Fee Letter and the Agent's Syndication Letter; all other
notices, requests, certificates, documents, instruments and agreements
delivered to any Lessor Party pursuant to Paragraph 3.01 or 3.02 of the
Participation Agreement; and all notices, requests, certificates,
documents, instruments and agreements delivered to any Lessor Party in
connection with any of the foregoing on or after the date of the
Participation Agreement. (Without limiting the generality of the
preceding definition, the term "Operative Documents" shall include all
written waivers, amendments and modifications to any of the notices,
requests, certificates, documents, instruments and agreements referred
to therein.)
"Option Exercise Notification Date" shall have the meaning given
to that term in Paragraph 6.01 of the Ground Lease.
"Outside Completion Date" shall have the meaning given to that
term in Subparagraph 2.01(a) of the Participation Agreement.
"Outstanding Lease Amount" shall mean, on any date, the remainder
of (a) the sum of all Advances made by Lessor on or prior to such date,
minus (b) the sum of all Lease Reduction Payments applied by Lessor on
or prior to such date.
"Outstanding Participation Amount" shall mean, with respect to any
Participant on any date, the remainder of (a) the sum of the portions of
all Advances funded by such Participant on or prior to such date, minus
(b) the sum of such Participant's share of all Lease Reduction Payments
applied to the Outstanding Lease Amount on or prior to such date.
"Outstanding Revolver Credit" shall mean, with respect to Lessee
and its Subsidiaries at any time, the sum of the aggregate principal
amount of all loans of Lessee and its Subsidiaries outstanding at such
time under revolving lines of credit.
"Outstanding Tranche A Participation Amount" shall mean, with
respect to any Tranche A Participant on any date, the remainder of (a)
such Participant's Tranche A Portion of all Advances made by Lessor on
or prior to such date, minus (b) such Participant's share of all Lease
Reduction Payments applied to the Tranche A Portion of the Advances on
or prior to such date.
"Outstanding Tranche B Participation Amount" shall mean, with
respect to any Tranche B Participant on any date, the remainder of (a)
such Participant's Tranche B Portion of all Advances made by Lessor on
or prior to such date, minus (b) such Participant's share of all Lease
Reduction Payments applied to the Tranche B Portion of the Advances on
or prior to such date.
"Outstanding Tranche C Participation Amount" shall mean, with
respect to any Tranche C Participant on any date, the remainder of (a)
such Participant's Tranche C Portion of all Advances made by Lessor on
or prior to such date, minus (b) such Participant's share of all Lease
Reduction Payments applied to the Tranche C Portion of the Advances on
or prior to such date.
"Participants" shall mean the financial institutions from time to
time listed in Schedule I to the Participation Agreement (as amended
from time to time pursuant to Subparagraph 7.05(b) of the Participation
Agreement or otherwise), acting in their capacities as Participants
under the Operative Documents.
"Participation Agreement" shall mean the Participation Agreement,
dated as of December 5,1997 among Lessee and the Lessor Parties.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Improvement Costs" shall mean all reasonable costs and
expenses necessary for the construction of the New Improvements to the
Land (not including the costs of the Land, the Existing Improvements and
the other Property to be acquired for the Acquisition Price paid by
Lessor for the Land and the other initial Property on the Closing Date),
including:
(a) All reasonable costs and expenses of building supplies
and materials necessary for the construction of the New
Improvements;
(b) All reasonable costs and expenses of architects,
engineers, contractors and other Persons providing labor and
services necessary for the construction of the New Improvements;
(c) All reasonable costs and expenses of performance and
other bonds and other insurance necessary for the construction of
the New Improvements; and
(d) All Base Rent accruing during the Commitment Period.
"Permitted Indebtedness" shall have the meaning given to that term
in Subparagraph 5.02(a) of the Participation Agreement.
"Permitted Liens" shall have the meaning given to that term in
Subparagraph 5.02(b) of the Participation Agreement.
"Permitted Property Liens" shall have the meaning given to that
term in Subparagraph 3.07(a) of the Lease Agreement.
"Permitted Transaction Expenses" shall mean the following costs
and expenses to the extent payable by Lessee in connection with and
directly related to the preparation, execution and delivery of the
Operative Documents and the transactions contemplated thereby:
(a) The reasonable fees and expenses of counsel for Lessee
incurred in connection with the preparation, negotiation,
execution and delivery of the Operative Documents;
(b) The reasonable fees and expenses of counsel for each
of Lessor and Agent incurred in connection with the preparation,
negotiation, execution and delivery of the Operative Documents;
(c) The reasonable fees and expenses incurred in
recording, registering or filing any of the Operative Documents;
(d) The title fees, premiums and escrow costs and other
expenses relating to title insurance and the closing of the
transactions contemplated by the Operative Documents;
(e) The reasonable fees and expenses of required
environmental audits and appraisals;
(f) The reasonable fees and expenses of consultants and
accountants for Lessee;
(g) The reasonable fees and expenses for surveys; and
(h) Other related reasonable fees and expenses.
"Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a joint
venture, a trust or other entity or a Governmental Authority.
"Personal Property Collateral" shall have the meaning given to
that term in Subparagraph 2.07(b) of the Lease Agreement.
"Plans and Specifications" shall mean the architectural,
engineering and construction plans, specifications and drawings for the
new Improvements to be constructed on the Land delivered to Lessor on or
prior to the Closing Date pursuant to Subparagraph 3.01 and Schedule
3.01 of the Participation Agreement, as such plans, specifications and
drawings may thereafter be revised, amended, supplemented or modified
pursuant to Paragraph 3.01 of the Construction Agency Agreement.
"Prime Rate" shall mean the per annum rate publicly announced by
ABN AMRO from time to time at its Chicago Office. The Prime Rate is
determined by ABN AMRO from time to time as a means of pricing credit
extensions to some customers and is neither directly tied to any
external rate of interest or index nor necessarily the lowest rate of
interest charged by ABN AMRO at any given time for any particular class
of customers or credit extensions. Any change in the Base Rate
resulting from a change in the Prime Rate shall become effective on the
Business Day on which each change in the Prime Rate occurs.
"Property" shall have the meaning given to that term in Paragraph
2.01 of the Lease Agreement.
"Property Collateral" shall have the meaning given to that term in
Subparagraph 2.11(a) of the Participation Agreement.
"Proportionate Share" shall mean, with respect to each
Participant, the percentage set forth under the caption "Proportionate
Share" opposite such Participant's name on Part A of Schedule I, or, if
changed, such percentage as may be set forth for such Participant in the
Register. The Proportionate Share of each Participant shall equal the
sum of such Participant's Tranche A Proportionate Share, Tranche B
Proportionate Share and Tranche C Proportionate Share.
"Purchase Agreement" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.
"Purchase Documents" shall have the meaning given to that term in
Subparagraph 4.01(a) of the Purchase Agreement.
"Purchaser" shall have the meaning given to that term in
Subparagraph 4.01(a) of the Purchase Agreement.
"Quick Ratio" shall mean, with respect to Lessee and its
Subsidiaries at any time, the ratio, determined on a consolidated basis
in accordance with GAAP, of:
(a) The sum at such time of (i) all cash of Lessee and its
Subsidiaries; (ii) the market value of all Cash Equivalents of
Lessee and its Subsidiaries; and (iii) all accounts receivable of
Lessee and its Subsidiaries, less all reserves therefor; provided,
however, that in computing the foregoing sum, there shall be
excluded therefrom any cash, Cash Equivalent or accounts
receivable subject to a security interest in favor of any Person
other than any Participant;
to
(b) The sum at such time of (i) the current liabilities of
Lessee and its Subsidiaries; and (ii) to the extent not included
in such current liabilities, the Outstanding Revolver Credit at
such time.
"Rate Contracts" shall mean swap agreements (as that term is
defined in Section 101 of the Federal Bankruptcy Reform Act of 1978, as
amended) and any other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Real Property Collateral" shall have the meaning given to that
term in Subparagraph 2.07(a) of the Lease Agreement.
"Register" shall have the meaning given to that term in
Subparagraph 7.05(b) of the Participation Agreement.
"Related Agreements" shall mean all chattel paper, accounts,
instruments, documents, investment property and general intangibles
relating to any of the Land, Improvements or Appurtenant Rights or to
the present or future development, construction, operation or use of any
of the Land, Improvements or Appurtenant Rights, including (a) all
plans, specifications, construction agreements, maps, surveys, studies,
books of account, records, files, insurance policies, guarantees and
warranties relating to such Land or Improvements or to the present or
future development, construction, operation or use of such Land,
Improvements or Appurtenant Rights (including the Construction
Agreements and the Plans and Specifications); (b) all architectural,
engineering, construction and management contracts, all supply and
service contracts for water, sanitary and storm sewer, drainage,
electricity, steam, gas, telephone and other utilities relating to such
Land, Improvements or Appurtenant Rights or to the present or future
development, construction, operation or use of such Land, Improvements
or Appurtenant Rights; and (c) all computer software and intellectual
property, guaranties and warranties, letters of credit, and documents
relating to such Land, Improvements or Appurtenant Rights or to the
present or future development, construction, operation or use of such
Land, Improvements or Appurtenant Rights.
"Related Goods" shall mean:
(a) All machinery, furniture, equipment, fixtures and
other goods and tangible personal property (including construction
materials and supplies) financed by any Advance, including all
such property described in Exhibit B to the Lease Agreement and in
each Exhibit B Supplement delivered by Lessee; and
(b) All machinery, equipment, fixtures and other goods and
tangible personal property (including construction materials and
supplies) now or hereafter intended for the construction,
reconstruction, repair, replacement, alteration, addition or
improvement of or to any of the Improvements or any other Related
Goods.
"Related Permits" shall mean all licenses, authorizations,
certificates, variances, consents, approvals and other permits, now or
hereafter pertaining to any of the Land, Improvements or Appurtenant
Rights and all tradenames or business names relating to any of the Land,
Improvements or Appurtenant Rights or the present or future development,
construction, operation or use of any of the Land, Improvements or
Appurtenant Rights.
"Rent" shall mean collectively Base Rent and Supplemental Rent.
"Rent Increase Notification Date" shall have the meaning given to
that term in Paragraph 2.03 of the Ground Lease.
"Rental Period" shall have the meaning given to that term in
Subparagraph 2.03(a ) of the Lease Agreement.
"Rental Rate" shall have the meaning given to that term in
Subparagraph 2.03(a) of each Lease Agreement.
"Repair and Restoration Account" shall have the meaning given to
that term in Subparagraph 3.04(c) of the Lease Agreement.
"Reportable Event" shall have the meaning given to that term in
ERISA and applicable regulations thereunder.
"Required Participants" shall mean (a) at any time the aggregate
Outstanding Lease Amount is greater than $0, Participants whose
aggregate Outstanding Participation Amounts equal or exceed sixty-six
and two-thirds percent (66-2/3%) or more of the aggregate Outstanding
Lease Amount at such time and (b) at any time the aggregate Outstanding
Lease Amount is $0, Participants whose Proportionate Shares equal or
exceed sixty-six and two-thirds percent (66-2/3%).
"Requirement of Law" applicable to any Person shall mean (a) the
Articles or Certificate of Incorporation and By-laws, Partnership
Agreement or other organizational or governing documents of such Person,
(b) any Governmental Rule applicable to such Person, (c) any license,
permit, approval or other authorization granted by any Governmental
Authority to or for the benefit of such Person or (d) any judgment,
decision or determination of any Governmental Authority or arbitrator,
in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Reserve Requirement" shall mean, with respect to any day in any
Rental Period, the aggregate of the reserve requirement rates (expressed
as a decimal) in effect on such day for eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of the Federal
Reserve Board) maintained by a member bank of the Federal Reserve
System. As used herein, the term "reserve requirement" shall include,
without limitation, any basic, supplemental or emergency reserve
requirements imposed on any Participant by any Governmental Authority.
"Residual Value Guaranty Amount" shall have the meaning given to
that term in Subparagraph 3.02(g) of the Purchase Agreement.
"Scheduled Expiration Date" shall have the meaning given to that
term in Subparagraph 2.02(a) of the Lease Agreement.
"Scheduled Rent Payment Date" shall have the meaning given to that
term in Subparagraph 2.03(a) of the Lease Agreement.
"Secondary Marketing Period" shall have the meaning given to that
term in Subparagraph 3.02(b) of the Purchase Agreement.
"Senior Indebtedness" shall mean, with respect to Lessee and its
Subsidiaries at any time, the remainder, determined on a consolidated
basis in accordance with GAAP, of (a) the total Indebtedness of Lessee
and its Subsidiaries at such time minus (b) the total Subordinated
Indebtedness of Lessee and its Subsidiaries at such time.
"Solvent" shall mean, with respect to any Person on any date, that
on such date (a) the fair value of the property of such Person is
greater than the fair value of the liabilities (including, without
limitation, contingent liabilities) of such Person, (b) the present fair
saleable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not
intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature
and (d) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such
Person's property would constitute an unreasonably small capital.
"Subleases" shall mean all leases and subleases of any of the
Land, Improvements and/or Appurtenant Rights by Lessee as lessor or
sublessor, now or hereafter in effect, whether or not of record,
including all guaranties and security therefor and the right to bring
actions and proceedings thereunder or for the enforcement thereof and to
do anything which Lessee is or may become entitled to do thereunder.
"Subordinated Indebtedness" shall mean Indebtedness which is
unsecured and subordinated to the Lessee Obligations on terms acceptable
to Lessor and the Required Participants.
"Subparticipants" shall have the meaning given to that term in
Subparagraph 7.05(c) of the Participation Agreement.
"Subsidiary" of any Person shall mean (a) any corporation of which
more than 50% of the issued and outstanding Equity Securities having
ordinary voting power to elect a majority of the Board of Directors of
such corporation (irrespective of whether at the time capital stock of
any other class or classes of such corporation shall or might have
voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned or controlled by such Person, by such
Person and one or more of its other Subsidiaries or by one or more of
such Person's other Subsidiaries, (b) any partnership, joint venture, or
other Person of which more than 50% of the equity interest having the
power to vote, direct or control the management of such partnership,
joint venture, business trust or other Person is at the time owned and
controlled by such Person, by such Person and one or more of the other
Subsidiaries or by one or more of such Person's other Subsidiaries or
(c) any other Person included in the Financial Statements of such Person
on a consolidated basis.
"Supplemental Rent" shall have the meaning given to such term in
Subparagraph 2.03(b) of the Lease Agreement.
"Surety Instruments" shall mean all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside
bonds, surety bonds and similar instruments.
"Tangible Net Worth" shall mean, with respect to Lessee and its
Subsidiaries at any time, the remainder at such time, determined on a
consolidated basis in accordance with GAAP, of (a) the total assets of
Lessee and its Subsidiaries minus (b) the sum (without limitation and
without duplication of deductions) of (i) the total liabilities of
Lessee and its Subsidiaries, (ii) all reserves established by Lessee and
its Subsidiaries for anticipated losses and expenses (to the extent not
deducted in calculating total assets in clause (a) above), and (iii) all
intangible assets of Lessee and its Subsidiaries (to the extent included
in calculating total assets in clause (a) above), including, without
limitation, goodwill (including any amounts, however designated on the
balance sheet, representing the cost of acquisition of businesses and
investments in excess of underlying tangible assets), trademarks,
trademark rights, trade name rights, copyrights, patents, patent rights,
licenses, unamortized debt discount, marketing expenses, organizational
expenses, non-compete agreements and deferred research and development.
"Term" shall mean the period beginning on the Commencement Date of
the Lease Agreement and ending on the Expiration Date of the Lease
Agreement.
"Termination Date" shall mean (a) the date set forth in a Notice
of Term Purchase Option as the Scheduled Rent Payment Date on which the
Lease Agreement will be terminated by Lessee pursuant to Paragraph 4.01
of the Lease Agreement and the Property will be purchased by Lessee
pursuant to Section II of the Purchase Agreement or (b) the date set
forth in a written notice delivered by Lessor to Lessee pursuant to
Subparagraph 5.03(a) or 5.04(a) of the Lease Agreement after the
occurrence of an Event of Default thereunder as the date on which the
Lease Agreement will be terminated.
"Term Purchase Option" shall have the meaning given to that term
in Paragraph 2.01 of the Purchase Agreement.
"Total Capital" shall mean, with respect to Lessee and its
Subsidiaries at any time, the sum, determined on a consolidated basis in
accordance with GAAP, of (a) the total Indebtedness of Lessee and its
Subsidiaries at such time plus (b) the net worth of Lessee and its
Subsidiaries at such time.
"Total Commitment" shall mean the amount set forth as such in
Subparagraph 2.01(b) of the Participation Agreement or, if such amount
is reduced pursuant to Subparagraph 2.08(a) of the Participation
Agreement, the amount to which so reduced.
"Tranche A Participant" shall mean, at any time, any Participant
having an Outstanding Tranche A Participation Amount at such time.
"Tranche A Percentage" shall mean (a) with respect to each
Participant at any time prior to the Commitment Termination Date, the
percentage set forth under the caption "Tranche A Percentage" opposite
such Participant's name in Part A(1) of Schedule I and (b) with respect
to each Participant at any time on or after the Commitment Termination
Date, the percentage set forth under the caption "Tranche A Percentage"
opposite such Participant's name in Part A(2) of Schedule I; or in the
case of either such percentage, if changed, such percentage as may be
set forth for such Participant in the Register.
"Tranche A Portion" shall mean, (a) with respect to any Advance
without reference to any Participant, the portion of such Advance equal
to the Tranche A Proportionate Share of such Advance and (b) with
respect to any Advance with reference to any Participant, the portion of
such Advance equal to such Participant's Tranche A Percentage of such
Advance.
"Tranche A Proportionate Share" shall mean (a) at any time prior
to the Commitment Termination Date, eighty-nine and nine-tenths percent
(89.9%) and (b) at any time on or after the Commitment Termination Date,
eighty-three percent (83.0%).
"Tranche B Participant" shall mean, at any time, any Participant
having an Outstanding Tranche B Participation Amount at such time.
"Tranche B Percentage" shall mean (a) with respect to each
Participant at any time prior to the Commitment Termination Date, the
percentage set forth under the caption "Tranche B Percentage" opposite
such Participant's name in Part A(1) of Schedule I and (b) with respect
to each Participant at any time on or after the Commitment Termination
Date, the percentage set forth under the caption "Tranche B Percentage"
opposite such Participant's name in Part A(2) of Schedule I; or in the
case of either such percentage, if changed, such percentage as may be
set forth for such Participant in the Register..
"Tranche B Portion" shall mean, (a) with respect to any Advance
without reference to any Participant, the portion of such Advance equal
to the Tranche B Proportionate Share of such Advance and (b) with
respect to any Advance with reference to any Participant, the portion of
such Advance equal to such Participant's Tranche B Percentage of such
Advance.
"Tranche B Proportionate Share" shall mean (a) at any time prior
to the Commitment Termination Date, seven percent (7.0%) and (b) at any
time on or after the Commitment Termination Date, thirteen and nine-
tenths percent (13.9%).
"Tranche C Participant" shall mean, at any time, any Participant
having an Outstanding Tranche C Participation Amount at such time.
"Tranche C Percentage" shall mean (a) with respect to each
Participant at any time prior to the Commitment Termination Date, the
percentage set forth under the caption "Tranche C Percentage" opposite
such Participant's name in Part A(1) of Schedule I and (b) with respect
to each Participant at any time on or after the Commitment Termination
Date, the percentage set forth under the caption "Tranche C Percentage"
opposite such Participant's name in Part A(2) of Schedule I; or in the
case of either such percentage, if changed, such percentage as may be
set forth for such Participant in the Register.
"Tranche C Portion" shall mean, (a) with respect to any Advance
without reference to any Participant, the portion of such Advance equal
to the Tranche C Proportionate Share of such Advance and (b) with
respect to any Advance with reference to any Participant, the portion of
such Advance equal to such Participant's Tranche C Percentage of such
Advance.
"Tranche C Proportionate Share" shall mean, at all times (whether
before, on or after the Commitment Termination Date), three and one-
tenth percent (3.1%).
"Trustee" shall have the meaning given to that term in the
introductory paragraph of the Lease Agreement.
"Two-Year Commitment" shall have the meaning given to that term in
Subparagraph 2.01(b) of the Participation Agreement.
"Unused" shall mean (a) with respect to the 364-Day Commitment at
any time, the remainder of (i) the 364-Day Commitment at such time minus
(ii) the aggregate amount of all Advances made prior to such time and
allocated to the 364-Day Commitment; (b) with respect to the Two-Year
Commitment at any time, the remainder of (i) the Two-Year Commitment at
such time minus (ii) the aggregate amount of all Advances made prior to
such time and allocated to the Two-Year Commitment; and (b) with respect
to the Total Commitment at any time, the remainder of (i) the Total
Commitment at such time minus (b) the aggregate amount of all Advances
made prior to such time.
SCHEDULE 1.02
RULES OF CONSTRUCTION
(a) GAAP. Unless otherwise indicated in any Operative Document,
all accounting terms used in the Operative Documents shall be construed,
and all accounting and financial computations thereunder shall be
computed, in accordance with GAAP. If GAAP changes after the date of
the Participation Agreement such that any covenants contained in the
Operative Documents would then be calculated in a different manner or
with different components, Lessee and the Lessor Parties agree to
negotiate in good faith to amend the applicable Operative Documents in
such respects as are necessary to conform those covenants as criteria
for evaluating Lessee's financial condition to substantially the same
criteria as were effective prior to such change in GAAP; provided,
however, that, until Lessee and the Lessor Parities so amend the
Operative Documents, all such covenants shall be calculated in
accordance with GAAP as in effect immediately prior to such change.
(b) Headings. Headings in each of the Operative Documents are
for convenience of reference only and are not part of the substance
thereof.
(c) Plural Terms. All terms defined in any Operative Document
in the singular form shall have comparable meanings when used in the
plural form and vice versa.
(d) Time. All references in each of the Operative Documents to
a time of day shall mean San Francisco, California time, unless
otherwise indicated. All references in each of the Operative Documents
to a date (the "action date") which is one month prior to or after
another date (the "reference date") shall mean the date in the
immediately preceding or succeeding calendar month (as the case may be)
which numerically corresponds to the reference date; provided, however,
that (i) if such corresponding date in the immediately preceding or
succeeding calendar month (as the case may be) is not a Business Day,
the action date shall be the next succeeding Business Day after such
corresponding date (unless, in the case of a Rental Period, such next
Business Day falls in another calendar month, in which case the action
date shall be the immediately preceding Business Day) and (ii) if the
reference date is the last Business Day of a calendar month (or a day
for which there is no numerically corresponding day in the immediately
preceding calendar month) the action date shall be the last Business Day
of the immediately preceding or succeeding calendar month (as the case
may be). All references in each of the Operative Documents to an
earlier date which is two or more months prior to a reference date or to
a later date which is two or more months after a reference date shall be
determined in a comparable manner.
(e) Construction. The Operative Documents are the result of
negotiations among, and have been reviewed by Lessee and each Lessor
Party and their respective counsel. Accordingly, the Operative
Documents shall be deemed to be the product of all parties hereto, and
no ambiguity shall be construed in favor of or against Lessee or any
Lessor Party.
(f) Entire Agreement. The Operative Documents, taken together,
constitute and contain the entire agreement of Lessee and the Lessor
Parties and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties,
whether written or oral, respecting the subject matter thereof
(including the commitment letter dated as of November 26, 1997] between
Lessee and Agent.)
(g) Calculation of Base Rent, Interest and Fees. All
calculations of Base Rent, interest and fees under the Operative
Documents for any period (i) shall include the first day of such period
and exclude the last day of such period and (ii) shall be calculated on
the basis of a year of 360 days for actual days elapsed, except that
during any period that Base Rent or any interest is to be calculated
based upon the Base Rate, such Base Rent or interest shall be calculated
on the basis of a year of 365 or 366 days, as appropriate, for actual
days elapsed.
(h) References.
(i) References in any Operative Document to "Recitals,"
"Sections," "Paragraphs," "Subparagraphs," "Articles," "Exhibits"
and "Schedules" are to recitals, sections, paragraphs,
subparagraphs, articles, exhibits and schedules therein and
thereto unless otherwise indicated.
(ii) References in any Operative Document to any document,
instrument or agreement (A) shall include all exhibits, schedules
and other attachments thereto, (B) shall include all documents,
instruments or agreements issued or executed in replacement
thereof, and (C) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended,
modified and supplemented from time to time and in effect at any
given time.
(iii) References in any Operative Document to any
Governmental Rule (A) shall include any successor Governmental
Rule, (B) shall include all rules and regulations promulgated
under such Governmental Rule (or any successor Governmental Rule),
and (C) shall mean such Governmental Rule (or successor
Governmental Rule) and such rules and regulations, as amended,
modified, codified or reenacted from time to time and in effect at
any given time.
(iv) References in any Operative Document to any Person in
a particular capacity (A) shall include any permitted successors
to and assigns of such Person in that capacity and (B) shall
exclude such Person individually or in any other capacity.
(i) Other Interpretive Provisions. The words "hereof," "herein"
and "hereunder" and words of similar import when used in any Operative
Document shall refer to such Operative Document as a whole and not to
any particular provision of such Operative Document. The words
"include" and "including" and words of similar import when used in any
Operative Document shall not be construed to be limiting or exclusive.
In the event of any inconsistency between the terms of the Participation
Agreement and the terms of any other Operative Document, the terms of
the Participation Agreement shall govern.
SCHEDULE 3.01
CONDITIONS PRECEDENT TO ACQUISITION ADVANCE
A. Principal Operative Documents.
(1) The Participation Agreement, duly executed by Lessee,
Lessor, each Participant and Agent;
(2) The Lease Agreement, duly executed by Lessee and
Lessor and appropriately notarized for recording;
(3) The Purchase Agreement, duly executed by Lessee and
Lessor;
(4) The Construction Agency Agreement, duly executed by
Lessee and Lessor;
(5) The Assignment of Construction Agreements, duly
executed by Lessee;
(6) The Cash Collateral Agreement, duly executed by
Lessee;
(7) The Assignment of Lease, duly executed by Lessor and
appropriately notarized for recording;
(8) The Lessor Deed of Trust, duly executed by Lessor and
appropriately notarized for recording; and
(9) The Lessor Security Agreement, duly executed by
Lessor.
B. Lessee Corporate Documents.
(1) The Certificate or Articles of Incorporation of
Lessee, certified as of a recent date prior to the Closing Date by
the Secretary of State (or comparable official) of its
jurisdiction of incorporation;
(2) A Certificate of Good Standing (or comparable
certificate) for Lessee, certified as of a recent date prior to
the Closing Date by the Secretary of State (or comparable
official) of its jurisdiction of incorporation;
(3) A certificate of the Secretary or an Assistant
Secretary of Lessee, dated the Closing Date, certifying (a) that
attached thereto is a true and correct copy of the Bylaws of
Lessee as in effect on the Closing Date; (b) that attached thereto
are true and correct copies of resolutions duly adopted by the
Board of Directors of Lessee and continuing in effect, which
authorize the execution, delivery and performance by Lessee of the
Operative Documents executed or to be executed by Lessee and the
consummation of the transactions contemplated thereby; and
(c) that there are no proceedings for the dissolution or
liquidation of Lessee;
(4) A certificate of the Secretary or an Assistant
Secretary of Lessee, dated the Closing Date, certifying the
incumbency, signatures and authority of the officers of Lessee
authorized to execute, deliver and perform the Operative Documents
and all other documents, instruments or agreements related thereto
executed or to be executed by Lessee; and
(5) A Certificates of Good Standing (or comparable
certificates) for Lessee, certified as of a recent date prior to
the Closing Date by the Secretary of State of California and
Oregon.
C. Financial Statements, Financial Condition, Etc.
(1) A copy of the 10-K report filed by Lessee with the
Securities and Exchange Commission for the fiscal year ended July
31, 1997;
(2) The consolidated plan and forecast of Lessee and its
Subsidiaries for the fiscal year to end July 31, 1998, including
quarterly cash flow projections; and
(3) Such other financial, business and other information
regarding Lessee, or any of its Subsidiaries as Agent or any
Participant may reasonably request, including information as to
possible contingent liabilities, tax matters, environmental
matters and obligations for employee benefits and compensation.
D. Collateral Documents.
(1) The Ground Lease, duly executed by Lessor and Lessee;
(2) A Memorandum of Ground Lease, appropriately completed
and duly executed by Lessor and Lessee and appropriately notarized
for recording;
(3) A Memorandum of Purchase Agreement, appropriately
completed and duly executed by Lessee and Lessor and appropriately
notarized for recording;
(4) Evidence that the Lease Agreement, the Assignment of
Lease, the Lessor Deed of Trust, the Memorandum of Ground Lease
and the Memorandum of Purchase Agreement delivered pursuant to
items A(2), A(7), A(8), D(2) and D(3) have been properly recorded
in the Official Records of the County of Washington County,
Oregon;
(5) An extended coverage owner's policy or binder of title
insurance (or a commitment therefor) for the Property insuring
Lessor's leasehold estate to the Property (subject to such
exceptions as Agent may approve), in such amounts and with such
endorsements as Agent may reasonably require, issued by a title
insurer acceptable to Agent, together with such policies of co-
insurance or re-insurance (or commitments therefor) as Agent may
require;
(6) An extended coverage lender's policy of title
insurance (or a commitment therefor) for the Property insuring the
validity and priority of the Lease Agreement (subject to such
exceptions as Agent may approve), in such amounts and with such
endorsements as Agent may reasonably require, issued by a title
insurer acceptable to Agent, together with such policies of co-
insurance or re-insurance (or commitments therefor) as Agent may
require;
(7) An extended coverage lender's policy of title
insurance (or a commitment therefor) for the Property insuring the
validity and priority of the Lessor Deed of Trust (subject to such
exceptions as Agent may approve), in such amounts and with such
endorsements as Agent may reasonably require, issued by a title
insurer acceptable to Agent, together with such policies of co-
insurance or re-insurance (or commitments therefor) as Agent may
require;
(8) Copies of all leases for the Property and all other
documents, instruments and agreements recorded against or
otherwise affecting the Property, including all amendments,
extensions and other modifications thereof;
(9) Subordination, non-disturbance and attornment
agreements from the lessee under each of the leases for the
Property;
(10) Such consents and estoppels, with appropriate
mortgagee protection language, as are requested by Agent, each
duly executed by the appropriate Person;
(11) Such Uniform Commercial Code financing statements and
fixture filings (appropriately completed and executed) for filing
in such jurisdictions as Agent may request to perfect the Liens
granted to Lessor and Agent in the Lessee Security Documents, the
Lessor Security Agreement and the other Operative Documents;
(12) Such Uniform Commercial Code termination statements
(appropriately completed and executed) for filing in such
jurisdictions as Agent may request to terminate any financing
statement evidencing Liens of other Persons in the Collateral
which are prior to the Liens granted to Lessor and Agent in the
Lessee Security Documents, the Lessor Security Agreement and the
other Operative Documents, except for any such prior Liens which
are expressly permitted by the Operative Documents to be prior;
(13) Uniform Commercial Code search certificates from the
jurisdictions in which Uniform Commercial Code financing
statements are to be filed pursuant to item B(10) above reflecting
no other financing statements or filings which evidence Liens of
other Persons in the Collateral which are prior to the Liens
granted to Lessor and Agent in the Lessee Security Documents, the
Lessor Security Agreement and the other Operative Documents,
except for any such prior Liens (a) which are expressly permitted
by the Operative Documents to be prior or (b) for which Agent has
received a termination statement pursuant to item B(12) above;
(14) Such other documents, instruments and agreements as
Agents may reasonably request to establish and perfect the Liens
granted to any Lessor Party in the Lessee Security Documents, the
Lessor Deed of Trust, the Lessor Security Agreement and the other
Operative Documents;
(15) Such other evidence as Agent may request to establish
that the Liens granted to Agent or any Participant in the Lessee
Security Documents, the Lessor Deed of Trust, the Lessor Security
Agreement and the other Operative Documents are perfected and
prior to the Liens of other Persons in the Collateral, except for
any such Liens which are expressly permitted by the Operative
Documents to be prior; and
(16) Oregon Statutory Notice Letter.
E. Opinions.
(1) A favorable written opinion of Pillsbury, Madison &
Sutro, counsel to Lessee, dated the Closing Date, addressed to
Lessor and Agent, for the benefit of Lessor, Agent and the
Participants, and covering such legal matters as Agent may
reasonably request and otherwise in form and substance
satisfactory to Agent.
F. Other Items.
(1) A duly completed and timely delivered Acquisition
Request, duly executed by Lessee;
(2) A Closing Date Appraisal for the Property, dated as of
a recent date prior to the Closing Date;
(3) Bills of sale for all Related Goods to be acquired
with the Acquisition Advances to be made on the Closing Date, each
reflecting Lessor as the purchaser of such Related Goods;
(4) An as-built survey of the Property (a) prepared and
dated not more than two (2) months prior to the Closing Date by a
registered surveyor reasonably satisfactory to Agent,
(b) certified as correct and as (i) having been made in accordance
with the most recent standards for "Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys," jointly
established and adopted by ALTA and ACSM, and (ii) meeting the
accuracy requirements of a Class A survey (as defined therein) and
including items 1-5, 7-13 and 15 of Table 3 thereof, and
(c) disclosing, among other things, (i) the location of the
perimeter of the Property by courses and distances, (ii) all
easements and rights-of-way, whether above or underground, (iii)
the lines of the street abutting the Property and the width
thereof, (iv) encroachments, if any, and the extent thereof in
feet and inches upon the Property, and (v) all boundary and lot
lines, and all other matters that would be disclosed by inspection
of the Property and the public records;
(5) If requested by Lessor, Agent or any Participant, a
list of and copies of all Construction Agreements;
(6) Environmental reports and assessments satisfactory to
Agent issued by environmental consultants acceptable to Agent with
respect to the Property;
(7) Certificates of insurance evidencing the insurance
Lessee is required to maintain pursuant to Paragraph 3.03 of the
Lease Agreements;
(8) A certificate of the Chief Financial Officer of
Lessee, addressed to Lessor and Agent and dated the Closing Date,
certifying that:
(a) The representations and warranties set forth in
Paragraph 4.01 of the Participation Agreement and in the
other Operative Documents are true and correct in all
material respects as of such date (except for such
representations and warranties made as of a specified date,
which shall be true as of such date);
(b) No Default has occurred and is continuing as of
such date;
(c) All of the Operative Documents are in full force
and effect on such date.
(9) All fees and expenses payable to the Lessor Parties on
or prior to the Closing Date (including all Agent's Fees);
(10) All fees and expenses of Lessor's and Agent's counsels
through the Closing Date; and
(11) Such other evidence as Agent may reasonably request to
establish the accuracy and completeness of the representations and
warranties and the compliance with the terms and conditions
contained in the Operative Documents.
EXHIBIT 10.3
SECOND
AMENDED AND RESTATED
LEASE AGREEMENT
by and between
ET LLC,
a Delaware limited liability company
d/b/a
ET QRS LLC
as LANDLORD
and
ETEC SYSTEMS, INC.,
a Nevada corporation,
as TENANT
Premises: Hayward, California
Dated as of: February 2, 1998
TABLE OF CONTENTS
Page
1. Demise of Premises 1
2. Certain Definitions 2
3. Title and Condition 13
4. Use of Leased Premises; Quiet Enjoyment 16
5. Term 16
6. Basic Rent 17
7. Additional Rent 18
8. Net Lease; Non-Terminability 19
9. Payment of Impositions 20
10. Compliance with Laws and Easement Agreements; Environmental
Matters 22
11. Liens; Recording 24
12. Maintenance and Repair 25
13. Alterations and Improvements 26
14. Permitted Contests 27
15. Indemnification 28
16. Insurance 29
17. Casualty and Condemnation 34
18. Termination Events 35
19. Restoration; Reduction of Rent 37
20. Procedures Upon Purchase 39
21. Assignment and Subletting; Prohibition against Leasehold
Financing 40
22. Events of Default 45
23. Remedies and Damages Upon Default 48
24. Notices 52
25. Estoppel Certificate 52
26. Surrender 53
27. No Merger of Title 53
28. Books and Records 53
29. Determination of Value 55
30. Non-Recourse as to Landlord 59
31. Financing 59
32. Subordination 60
33. Financial Covenants; Covenant Breach Offer 60
34. Tax Treatment; Reporting 61
35. Right of First Refusal 62
36. Financing Major Alterations 64
37. Security Deposit 65
38. Right to Vacate; Rejectable Offer Upon Vacation 66
39. Miscellaneous 67
Exhibit A - Premises
Exhibit B - Machinery and Equipment
Exhibit C - Permitted Encumbrances
Exhibit D - Basic Rent Payments
Exhibit E - Financial Covenants
Schedule 1 - Termination Values
Schedule 2 - Approved Alterations to Building 2 and Building 3
Schedule 3 - Project I Improvements
SECOND AMENDED AND RESTATED LEASE AGREEMENT, made as of this 2nd
day of February, 1998, between ET LLC, a Delaware limited liability
company d/b/a ET QRS LLC ("Landlord"), with an address c/o W.P. Carey &
Co., Inc., 50 Rockefeller Plaza, Second Floor, New York, New York 10020,
and ETEC SYSTEMS, INC., a Nevada corporation ("Tenant"), with an address
at 26460 Corporate Avenue, Hayward, California 94545.
BACKGROUND
A. ESI (CA) QRS 12-6, Inc., as landlord ("Original Landlord")
and Tenant entered into a Lease Agreement dated as of February 1, 1995,
as amended by the terms of Exhibit 1 to that certain letter agreement
dated August 7, 1996 and amended and restated by an Amended and Restated
Lease Agreement, dated as of January 31, 1997 (said Lease Agreement, as
amended and amended and restated, the "Original Lease").
B. By Articles of Merger filed with the Secretary of State of
Delaware on January 29, 1998 Original Landlord merged with ET-ESI, INC.
and by Articles of Merger filed with the Secretary of State of Delaware
on January 29, 1998 ET-ESI, Inc. merged with ET LLC and by Limited
Liability Company Application for Registration filed with the Secretary
of State of the State said ET LLC qualified to do business in the State
in the name of ET QRS LLC.
C. Landlord desires to demise to Tenant and Tenant desires to
lease from Landlord the Project I Improvements and the Project II
Improvements (as such terms are hereinafter defined) and in connection
therewith to amend and restate the Original Lease in its entirety.
In consideration of the rents and provisions herein stipulated to
be paid and performed, Landlord and Tenant hereby covenant and agree as
follows:
1. Demise of Premises. Landlord hereby demises and lets to
Tenant, and Tenant hereby takes and leases from Landlord, for the term
and upon the provisions hereinafter specified, the following described
property (collectively, the "Leased Premises"): (a) the premises
described in Exhibit "A" hereto, together with the Appurtenances
(collectively, the "Land"); (b) the three office/manufacturing
facilities constructed on the Land, known as "Building 1," "Building 2"
and "Building 3" and containing approximately 60,000 square feet, 47,000
square feet and 106,000 square feet, respectively; (c) the Project I
Improvements described in Schedule 3 hereto; (d) the Project II
Improvements, and all other buildings, structures and other improvements
now or hereafter constructed on the Land (collectively, together with
the Project I Improvements, the "Improvements"); and (e) the fixtures,
machinery, equipment and other property described in Exhibit "B" hereto
(collectively, the "Equipment").
2. Certain Definitions.
"Acquisition Cost" shall mean the sum of (a) $14,321,137, (b)
Project I Costs and (c) Project II Costs.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 7(a).
"Adjoining Property" shall mean all sidewalks, driveways, curbs,
gores and vault spaces adjoining any of the Leased Premises.
"Alterations" shall mean all changes, additions, modifications,
improvements or repairs to, all alterations, reconstructions,
remodeling, renovations, renewals, replacements or removals of and all
substitutions or replacements for any of the Improvements or Equipment,
both interior and exterior, structural and non-structural, and ordinary
and extraordinary.
"Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land,
including (a) easements over other lands granted by any Easement
Agreement and (b) any streets, ways, alleys, vaults, gores or strips of
land adjoining the Land.
"Assignment" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and
(b) secures Landlord's obligation to repay a Loan, as the same may be
amended, supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates
as defined in Paragraph 6.
"Building 4" shall mean the building to contain not less than
129,000 square feet, to be constructed on the easterly portion of the
Land, in accordance with the Project II Plans and the Project II Budget
and to be known as "Building 4".
"Buildings 2 and 3 Renovations" shall mean Buildings 2 and 3
Renovations as defined in the Construction Agency Agreement.
"Casualty" shall mean any injury to or death of any person or any
loss of or damage to any property (including the Leased Premises)
included within or related to the Leased Premises or arising from the
Adjoining Property.
"Commencement Date" shall mean Commencement Date as defined in
Paragraph 5(a).
"Completion Agreement" shall mean the Completion Agreement of even
date between Landlord and Tenant pursuant to which Tenant has agreed to
complete the Project I Improvements.
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for
Condemnation.
"Construction Agency Agreement" shall mean the Construction Agency
Agreement of even date between Landlord, as owner, and Tenant, as agent
for Landlord pursuant to which Tenant, as such agent will cause the
Project II Improvements to be constructed.
"Costs" of a Person or associated with a specified transaction
shall mean all costs and expenses incurred by such Person or associated
with such transaction, including without limitation, reasonable
attorneys' fees and expenses, court costs, escrow fees, title insurance
premiums, mortgage points, recording fees and transfer taxes, as the
circumstances require.
"Covenant Breach" shall mean Covenant Breach as defined in
Paragraph 33(b).
"Covenants" shall mean Covenants as defined in Paragraph 33(a).
"CPI" shall mean CPI as defined in Paragraph 2 of Exhibit "D".
"Default Termination Amount" shall mean the Default Termination
Amount as defined in Paragraph 23(a)(iii).
"Default Rate" shall mean the Default Rate as defined in Paragraph
7(a)(iv).
"Deposit Amount" shall mean Deposit Amount as defined in
Paragraph 21(d).
"Easement Agreement" shall mean any conditions, covenants,
reservations, restrictions, easements, declarations, licenses and other
agreements listed as Permitted Encumbrances, including the Parking
Easement of even date from Tenant to Landlord or as may hereafter affect
the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, foreign and local law,
statute, ordinance, rule, regulation, license, permit, authorization,
approval, consent, court order, judgment, decree, injunction, code,
requirement or agreement with any governmental entity, (x) relating to
pollution (or the cleanup thereof), or the protection of air, water
vapor, surface water, groundwater, drinking water supply, land
(including land surface or subsurface), plant, aquatic and animal life
from injury caused by a Hazardous Substance or (y) concerning exposure
to, or the use, containment, storage, recycling, reclamation, reuse,
treatment, generation, discharge, transportation, processing, handling,
labeling, production, disposal or remediation of Hazardous Substances,
Hazardous Conditions or Hazardous Activities, in each case as amended
and as now or hereafter in effect, and (ii) any common law or equitable
doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability)
that may impose liability or obligations or injuries or damages due to
or threatened as a result of the presence of, exposure to, or ingestion
of, any Hazardous Substance. The term Environmental Law includes,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Resources Conservation
and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the Solid Waste Disposal Act, the Toxic Substance
Control Act, the Insecticide, Fungicide and Rodenticide Act, the
Occupational Safety and Health Act of 1970, the National Environmental
Policy Act and the Hazardous Materials Transportation Act, each as
amended and as now or hereafter in effect and any similar foreign, state
or local Law.
"Environmental Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration, migration or
transporting of any Hazardous Substance at, upon, under, onto or within
the Leased Premises, or from the Leased Premises to the environment, in
violation of any Environmental Law or which could be reasonably expected
to result in any liability to Landlord, Tenant or Lender, any Federal,
state or local government or any other Person for the costs of any
removal or remedial action or natural resources damage or for bodily
injury or property damage, (b) any deposit, storage, dumping, placement
or use of any Hazardous Substance at, upon, under or within the Leased
Premises or which extends to any other property in violation of any
Environmental Law or which could reasonably be expected to result in any
liability to any Federal, state or local government or to any other
Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (c) the
abandonment or discarding of any barrels, containers or other
receptacles containing any Hazardous Substances in violation of any
Environmental Laws, (d) any activity, occurrence or condition which
could be reasonably expected to result in any liability, cost or expense
to Landlord or Lender or any other owner or occupier of the Leased
Premises, or which could be reasonably expected to result in a creation
of a lien on the Leased Premises under any Environmental Law, or (e) any
violation of or noncompliance with any Environmental Law.
"Equipment" shall mean the Equipment as defined in Paragraph 1.
"Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).
"Existing Improvements" shall mean Building 1, Building 2 and
Building 3 as described in Paragraph 1 hereof together with the existing
Equipment installed therein.
"Expiration Date" shall mean Expiration Date as defined in
Paragraph 5(a).
"Fair Market Rental Value" shall mean the fair market rental value
of the Leased Premises for the relevant Renewal Term determined in
accordance with the procedure specified in Paragraph 29.
"Fair Market Rental Value Date" shall mean any date on which Fair
Market Rental Value is finally determined in accordance with
Paragraph 29.
"Fair Market Value" shall mean the fair market value of the Leased
Premises as of the Relevant Date. For all purposes of this Lease, Fair
Market Value shall be determined in accordance with the procedure
specified in Paragraph 29.
"Fair Market Value Date" shall mean the date when the Fair Market
Value is finally determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately available
funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.
"Federal Funds Effective Rate" shall mean for any day, the rate
set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such day opposite the
caption "Federal Funds (Effective)". If on any relevant day such rate
is not yet published in H.15(519), the rate for such day will be the
rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotations") for
such day under the caption "Federal Funds Effective Rate." If on any
relevant day the appropriate rate for such day is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for
such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds arranged prior to 9:00 a.m., New
York time, on that day by each of three leading brokers of federal funds
transactions in New York City, selected by the Landlord.
"Final Completion Date" shall mean, individually, the Project I
Final Completion Date or the Project II Final Completion Date, as the
context may require, and collectively, the Project I Final Completion
Date and the Project II Final Completion Date.
"Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or
creates any Hazardous Substance; (ii) causes or results in (or threatens
to cause or result in) the release, seepage, spill, leak, flow,
discharge or emission of any Hazardous Substance into the environment
(including, without limitation, the air, surface water, groundwater,
watercourses or water systems), (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would cause the Leased
Premises or any portion thereof to become a hazardous waste treatment,
recycling, reclamation, processing, storage or disposal facility within
the meaning of any Environmental Law.
"Hazardous Condition" means any condition which would support or
be reasonably likely to result in any claim or liability under any
Environmental Law, including the presence of underground storage tanks.
"Hazardous Substance" means (i) any substance, material, product,
(including, without limitation, petroleum products), derivative
(including, without limitation, petroleum products), compound, mixture,
mineral (including, without limitation, asbestos), chemical, gas, waste,
contaminant or pollutant, in each case whether naturally occurring,
man-made or the by-product of any process, that is toxic, harmful or
hazardous or acutely hazardous to public health or safety or the
environment or (ii) any substance supporting a claim under any
Environmental Law, whether or not such substance is defined as hazardous
or toxic as such under any Environmental Law. By way of example, and
not of limitation, Hazardous Substances include, but are not limited to,
any toxic substance, hazardous substance, hazardous waste, hazardous
constituent, pollutant, contaminant, industrial waste, medical waste,
petroleum product, petroleum derivative, petroleum waste, radon,
radioactive material, asbestos, asbestos containing materials, urea
formaldehyde, foam insulation, lead or polychlorinated biphenyl.
"Impositions" shall mean the Impositions as defined in
Paragraph 9(a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.
"Initial Lender" shall mean Creditanstalt-Bankverein, its
successors and assigns.
"Initial Loan" shall mean the $8,221,345 loan from Initial Lender
evidenced by a Note dated January 31, 1997.
"Initial Term" shall mean Initial Term as defined in
Paragraph 5(a).
"Insurance Requirements" shall mean the requirements of all
insurance policies required to be maintained in accordance with this
Lease.
"Intended Assignment Offer" shall mean Intended Assignment Offer
as defined in Paragraph 21(d).
"Intended Assignment Purchase Date" shall mean Intended Assignment
Purchase Date as defined in Paragraph 21(d).
"Intended Transaction" shall mean Intended Transaction as defined
in Paragraph 33(b).
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation,
policy, requirement or administrative or judicial determination, even if
unforeseen or extraordinary, of every duly constituted governmental
authority, court or agency, now or hereafter enacted or in effect.
"Lease" shall mean this Second Amended and Restated Lease
Agreement.
"Lease Year" shall mean any twelve (12) consecutive month period
during the Term except that the first Lease Year commenced on
February 16, 1995 and terminated on February 29, 1996 and the last Lease
Year shall end on the last day of the Term.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean all present and future Laws
(including but not limited to Environmental Laws and Laws relating to
accessibility to, usability by, and discrimination against, disabled
individuals) and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Tenant or to any of the
Leased Premises, or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or restoration of any of the
Leased Premises, even if compliance therewith necessitates structural
changes or improvements or results in interference with the use or
enjoyment of any of the Leased Premises.
"Lender" shall mean (a) Initial Lender, and (b) any person or
entity (and their respective successors and assigns) which may, after
the date hereof, make a Loan to Landlord or is the holder of any Note.
"LIBOR" means the rate of interest designated by Tenant
corresponding to the rate for one-month, two-month, three-month,
six-month or one-year periods for LIBOR as published in The Wall Street
Journal on the business day (the "Rate Determination Date") prior to the
first day of the applicable period (the first such designation to be
made as of the date hereof) which rate (a) shall remain fixed during the
period to which the rate corresponds, (b) shall, as to each such period,
be designated by notice to Landlord and (c) shall, as to such period,
not extend beyond May 31, 1999 as to the Project II Improvements and (d)
shall be the one-month rate if Tenant fails to make any required
designation.
If no such LIBOR rate appears in The Wall Street Journal as
described in the foregoing paragraph, LIBOR shall be the Federal Funds
Effective Rate on the Rate Determination Date.
All percentages resulting from any calculations referred to in
this definition will be rounded upwards, if necessary, to the nearest
multiple of 1/100 of 1% and all U.S. dollar amounts used in or resulting
from such calculations will be rounded to the nearest dollar (with fifty
cents or more being rounded upward).
"Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and
evidenced by a Note.
"Major Alterations" shall mean Major Alterations as defined in
Paragraph 36(a).
"Monetary Obligations" shall mean Rent and all other sums payable
by Tenant under this Lease to Landlord, to any third party on behalf of
Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust from Landlord
to a Lender which (a) encumbers any of the Leased Premises and
(b) secures Landlord's obligation to repay a Loan, as the same may be
amended, supplemented or modified.
"Net Award" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance
required under clauses (i), (ii) (to the extent payable to Landlord or
Lender), (iv), (v) or (vi) of Paragraph 16(a), as the case may be, less
any expenses incurred by Landlord and Lender in collecting such award or
proceeds.
"Non-Preapproved Assignee" shall mean Non-Preapproved Assignee as
defined in Paragraph 21(b).
"Non-Preapproved Assignment" shall mean Non-Preapproved Assignment
as defined in Paragraph 21(b).
"Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
"Offer Amount" shall mean (i) prior to the expiration of the
Initial Term, the greater of (a) the Fair Market Value of the Leased
Premises as of the Relevant Date and (b) the sum of the Acquisition Cost
and the applicable Prepayment Premium which Landlord will be required to
pay in prepaying any Loan with the proceeds of the Offer Amount and
(ii) after the expiration of the Initial Term, the Fair Market Value of
the Leased Premises as of the Relevant Date.
"Original Landlord" shall mean Original Landlord as described in
the BACKGROUND.
"Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation which does not
constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants, restrictions,
reservations, liens, conditions, easements, declarations, licenses and
other encumbrances, other than any Mortgage or Assignment, listed on
Exhibit "C" hereto (but such listing shall not be deemed to revive any
such encumbrances that have expired or terminated or are otherwise
invalid or unenforceable).
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Preapproved Assignee" shall mean Preapproved Assignee as defined
in Paragraph 21(a).
"Preapproved Assignment" shall mean Preapproved Assignment as
defined in Paragraph 21(a).
"Preapproved Sublet" shall mean Preapproved Sublet as defined in
Paragraph 21(h).
"Prepayment Premium" shall mean any payment (other than a payment
of principal and/or interest which Landlord is required to make under a
Note or a Mortgage) by reason of any prepayment by Landlord of any
principal due under a Note or Mortgage, and which may be (in lieu of
such prepayment premium or prepayment penalty) a "make whole" clause
requiring a prepayment premium in an amount sufficient to compensate the
Lender for the loss of the benefit of the Loan due to a prepayment or a
"breakage fee" or "funding losses" as a result of any prepayment;
provided, however, that the Prepayment Premium shall not exceed the
prepayment premium amount that would be payable if the outstanding
principal amount of the Loan being prepaid were the original principal
amount of the Replacement Loan (calculated on the basis of the full
funding of the Replacement Loan).
"Prime Rate" shall mean the annual interest rate as published,
from time to time, in the Wall Street Journal as the "Prime Rate" in its
column entitled "Money Rate". The Prime Rate may not be the lowest rate
of interest charged by any "large U.S. money center commercial banks"
and Landlord makes no representations or warranties to that effect. In
the event the Wall Street Journal ceases publication or ceases to
publish the "Prime Rate" as described above, the Prime Rate shall be the
average per annum discount rate (the "Discount Rate") on ninety-one (91)
day bills ("Treasury Bills") issued from time to time by the United
States Treasury at its most recent auction, plus three hundred (300)
basis points. If no such 91-day Treasury Bills are then being issued,
the Discount Rate shall be the discount rate on Treasury Bills then
being issued for the period of time closest to ninety-one (91) days.
"Project I Acquisition Fee" shall mean $518,324.
"Project I Costs" shall mean with respect to the Project I
Improvements, the sum of $11,000,000 and the Project I Acquisition Fee.
"Project I Final Completion Date" shall mean March 31, 1998.
"Project I Improvements" shall mean the Improvements to Buildings
2 and 3 as generally described in Schedule 3 to this Lease and more
particularly described in the Project I Plans.
"Project I Plans" shall mean Project I Plans delivered to Landlord
on the date hereof.
"Project II Acquisition Fee" shall mean an amount equal to the
difference between (x) Project II Costs (exclusive of the Project II
Acquisition Fee), divided by .955, minus (y) Project II Costs (exclusive
of the Project II Acquisition Fee).
"Project II Budget" shall mean the Project II Budget attached as
Exhibit "B" to the Construction Agency Agreement as the same may be
amended from time to time in accordance with the applicable provisions
of the Construction Agency Agreement.
"Project II Costs" shall mean (i) with respect to the Project II
Improvements the lesser of (A) the sum of $50,000,000 and the Project II
Acquisition Fee and (B) the sum of Project II Direct Costs, Project II
Indirect Costs and the Project II Acquisition Fee.
"Project II Direct Costs" shall mean Direct Costs as defined in
Section 1.1 of the Construction Agency Agreement.
"Project II Final Completion Date" shall mean the date on which
all "punch list" items are completed with respect to the Project II
Improvements which shall occur not later than July 31, 1999 with respect
to Building 4 and October 31, 1999 with respect to the Building 2 and 3
Renovations.
"Project II Substantial Completion Date" shall mean the date on
which a permanent certificate of occupancy is issued for Building 4, but
in no event later than May 31, 1999.
"Project II Improvements" shall mean, collectively, Building 4 and
the Buildings 2 and 3 Renovations.
"Project II Indirect Costs" shall mean Indirect Costs as defined
in Section 1.01 of the Construction Agency Agreement.
"Project II Plans" shall mean Plans as defined in Section 1.01 of
the Construction Agency Agreement.
"Project" shall mean, the Project I Improvements or Project II
Improvements, as applicable.
"Relevant Amount" shall mean the Termination Amount, Offer Amount
or the Default Termination Amount, as the case may be.
"Relevant Date" shall mean (a) the date immediately prior to the
date on which the applicable Condemnation Notice is received, in the
event of a Termination Notice under Paragraph 18 which is occasioned by
a Taking, (b) the date immediately prior to the date on which the
applicable Casualty occurs, in the event of a Termination Notice under
Paragraph 18 which is occasioned by a Casualty, (c) the date when Fair
Market Value is redetermined, in the event of a redetermination of Fair
Market Value pursuant to Paragraph 20(c), (d) the date immediately prior
to the date on which Landlord makes an Intended Assignment Offer,
(e) the date immediately prior to the Event of Default giving rise to
the need to determine Fair Market Value in the event Landlord provides
Tenant with notice of its intention to require Tenant to make a
termination offer under Paragraph 23(a)(iii), (f) the Fair Market Value
Date, in the event Landlord receives an offer to purchase the Leased
Premises pursuant to Paragraph 35(c), (g) with respect to a Covenant
Breach or an Intended Transaction, the date that is the earlier of
(i) the date immediately prior to the date on which Tenant notifies
Landlord that an Intended Transaction or Covenant Breach will occur or
makes a public announcement to such effect, or (ii) the date immediately
prior to the date on which the Covenant Breach or the Intended
Transaction occurs or, but for the acceptance by Landlord of the
rejectable offer under Paragraph 33, would occur, and (h) the date
immediately prior to the date on which Tenant vacates the Leased
Premises in the event Tenant makes a Vacation Offer pursuant to
Paragraph 38 or, with respect to any determination of Fair Market Rental
Value, the first day of the Renewal Term for which a determination of
Fair Market Rental Value is being made.
"Remaining Sum" shall mean Remaining Sum as defined in
Paragraph 19(c).
"Renewal Term" shall mean Renewal Term as defined in
Paragraph 5(b).
"Rent" shall mean, collectively, Basic Rent and Additional Rent.
"Replacement Loan" shall mean the Loan that refinances the Initial
Loan.
"Requisition" shall mean any temporary requisition or confiscation
of the use or occupancy of any of the Leased Premises by any
governmental authority, civil or military, whether pursuant to an
agreement with such governmental authority in settlement of or under
threat of any such requisition or confiscation, or otherwise.
"Retention Date" shall mean the later of the date on which the
amount of the Remaining Sum is finally determined or the date on which
Landlord's right to the Remaining Sum is finally determined.
"Security Deposit" shall mean Security Deposit as defined in
Paragraph 37(a).
"Significant Subsidiary" shall mean at any time any Subsidiary
that would at such time constitute a "significant subsidiary" (as such
term is defined in Regulation S-X of the Securities and Exchange
Commission as in effect on the date hereof) of the Tenant.
"Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).
"State" shall mean the State of California.
"Subsidiary" shall mean any corporation, partnership, limited
liability company, joint venture, association or other business entity
of which the Tenant now or hereafter owns directly or indirectly,
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other governing body
thereof.
"Surviving Obligations" shall mean any obligations of Tenant under
this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such
expiration or termination by their own terms.
"Taking" shall mean (a) any taking or damaging of all or a portion
of any of the Leased Premises (i) in or by condemnation or other eminent
domain proceedings pursuant to any Law, general or special, or (ii) by
reason of any agreement with any condemnor in settlement of or under
threat of any such condemnation or other eminent domain proceeding, or
(iii) by any other means, or (b) any de facto condemnation. The Taking
shall be considered to have taken place as of the later of the date
actual physical possession is taken by the condemnor, or the date on
which the right to compensation and damages accrues under the Law
applicable to the Leased Premises.
"Term" shall mean the Term as defined in Paragraph 5(a).
"Termination Amount" shall mean (i) prior to the expiration of the
Initial Term, the greater of (a) the sum of the applicable Termination
Value specified on Schedule 1 hereto and any Prepayment Premium which
Landlord will be required to pay in prepaying any Loan with proceeds of
the Termination Amount or (b) the Fair Market Value of the Leased
Premises as of the Relevant Date and (ii) after the expiration of the
Initial Term, the Fair Market Value of the Leased Premises as of the
Relevant Date.
"Termination Date" shall mean Termination Date as defined in
Paragraph 18(b).
"Termination Event" shall mean a Termination Event as defined in
Paragraph 18(a).
"Termination Notice" shall mean Termination Notice as defined in
Paragraph 18(a).
"Third Party Purchaser" shall mean Third Party Purchaser as
defined in Paragraph 21(o).
"Vacation Offer" shall mean Vacation Offer as defined in
Paragraph 38.
3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the
Mortgage and Assignment presently in effect, (ii) the rights of any
Persons in possession of the Leased Premises, (iii) the existing state
of title of the Leased Premises, including any Permitted Encumbrances,
(iv) any state of facts which an accurate survey or physical inspection
of the Leased Premises might show, (v) all Legal Requirements, including
any existing violation of any thereof, and (vi) the condition of the
Leased Premises as of the commencement of the Term, without
representation or warranty by Landlord.
(b) Tenant acknowledges that the Existing Improvements are in
acceptable condition and repair at the inception of this Lease.
LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED
PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS
LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT
MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF
ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE,
(vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE,
(ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION,
(xiii) DURABILITY, (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS
SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi) COMPLIANCE
OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL RISKS
INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND
THAT THE EXISTING IMPROVEMENTS HAVE BEEN INSPECTED BY TENANT AND IS
SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF
THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD
SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY
IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED,
AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE
LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY
OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this
Lease and has found the same to be satisfactory for the purposes
contemplated hereby. Tenant represents and warrants that (i) Tenant has
conveyed fee simple title (both legal and equitable) in the Leased
Premises to Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises as provided herein, (ii) the
Existing Improvements conform and on the applicable Final Completion
Date the applicable Project shall conform to all material Legal
Requirements and all Insurance Requirements, (iii) to Tenant's knowledge
all permits, licenses, approvals, consents and easements necessary or
appropriate for the use or operation of the Leased Premises have been
obtained, (iv) all contractors engaged by Tenant and to Tenant's
knowledge, all subcontractors who have performed work on or supplied
materials to the Existing Improvements have been fully paid or Tenant is
holding retainage sufficient to pay such contractors in full, and all
materials and supplies have been fully paid for or Tenant is holding
retainage sufficient to pay for such materials and supplies in full,
(v) the Existing Improvements have been fully completed, and on the
applicable Final Completion Date the applicable Project shall be
completed in all material respects in a workmanlike manner of first
class quality, and (vi) all Equipment necessary or appropriate for the
use or operation of the Leased Premises has been installed and is
presently fully operative in all material respects, and on the Project I
Final Completion Date and Project II Final Completion Date, as
applicable, all Equipment necessary or appropriate for the use and
operation of the applicable Project shall have been installed and shall
be fully operative in all material respects.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties, indemnities and similar
rights which Landlord may have against any manufacturer, seller,
engineer, contractor or builder in respect of any of the Leased
Premises. Such assignment shall remain in effect until an Event of
Default occurs or until the expiration or earlier termination of this
Lease, whereupon such assignment shall cease and all of said warranties,
guaranties, indemnities and other rights shall automatically revert to
Landlord.
(e) As of the date hereof, Landlord has acquired a portion of
the Project I Improvements. Tenant covenants and agrees to cause the
Project I Improvements to be completed in a good and workmanlike manner
no later than the Project I Final Completion Date in accordance with the
terms of the Completion Agreement and shall pay in full all Project I
Costs no later than April 1, 1998, subject, however, to Tenant's right
to contest under Paragraph 14 hereof. All acknowledgments of Tenant
regarding the Leased Premises contained in Paragraph 3(b) shall be
deemed to have been made with respect to Project I as of the Project I
Final Completion Date.
(f) Pursuant to the Construction Agency Agreement, Tenant will
cause the Project II Improvements to be constructed with funds more
particularly described in the Construction Agency Agreement. The
Project II Improvements will be owned by Landlord and included within
the Leased Premises. Tenant acknowledges that the Project II
Improvements have not yet been constructed and that, pursuant to the
Construction Agency Agreement entered into by Landlord and Tenant,
Tenant has the responsibility for causing the Project II Improvements to
be completed in accordance with the terms of the Construction Agency
Agreement. Landlord will not make any representations or warranties
with respect to the Project II Improvements. Tenant further
acknowledges that, upon occurrence of an Event of Default, Landlord may
terminate the Construction Agency Agreement, and in addition to all
other remedies of Landlord under this Lease, Landlord shall have the
right but not the obligation to complete construction of the Project II
Improvements in accordance with the Project II Plans. If Landlord so
completes construction of the Project II Improvements, Tenant will not
be excused from paying all Rent due pursuant to the terms of this Lease,
and Landlord shall have the right to exercise any or all of its remedies
hereunder following an Event of Default. All acknowledgments of Tenant
regarding the Leased Premises contained in Paragraph 3(b) shall be
deemed to have been made with respect to the Project II Improvements as
of the Project II Final Completion Date.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for offices,
manufacturing, warehouse, distribution and research and development and
uses ancillary thereto and for no other purpose without Landlord's prior
written consent, which shall not be unreasonably withheld, delayed or
conditioned. Tenant shall not use or occupy or permit any of the Leased
Premises to be used or occupied, nor do or permit anything to be done in
or on any of the Leased Premises, in a manner which would or might
(i) violate any Law, Legal Requirement or Easement Agreement, (ii) make
void or voidable or cause any insurer to cancel any insurance required
by this Lease, or make it difficult or impossible to obtain any such
insurance at commercially reasonable rates, (iii) make void or voidable,
or cancel or cause to be cancelled or released any warranty, guaranty or
indemnity, (iv) cause structural injury to any of the Improvements or
(v) constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold,
occupy and enjoy the Leased Premises throughout the Term, without any
hindrance, ejection or molestation by Landlord with respect to matters
that arise after the date hereof, provided that Landlord may, upon not
less than 48 hours' notice to Tenant, enter upon and examine any of the
Leased Premises at such reasonable times as Landlord may elect (except
that no notice shall be required if an Event of Default exists and
remains uncured), for the purpose of inspecting the Leased Premises,
verifying compliance or non-compliance by Tenant with its obligations
hereunder and the existence or non-existence of an Event of Default or
event which with the passage of time and/or notice would constitute an
Event of Default, showing the Leased Premises to prospective Lenders and
purchasers and taking such other action with respect to the Leased
Premises as is permitted by any provision hereof.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have and hold
the Leased Premises for an initial term (herein, the "Initial Term", and
the Initial Term, as extended or renewed in accordance with the
provisions hereof, being called the "Term") that commenced on
February 16, 1995 (the "Commencement Date") and that expires on May 31,
2014 (the "Expiration Date"). If all Rent and all other sums due
hereunder shall not have been fully paid by the end of the Term,
Landlord may, at its option, extend the Term until all said sums shall
have been fully paid.
(b) Provided that if, on or prior to the Expiration Date or any
other Renewal Date (as hereinafter defined) (i) no Event of Default
exists and remains uncured, and (ii) this Lease shall not have been
terminated pursuant to any provision hereof, then on the Expiration Date
and on the fifth (5th) and tenth (10th) anniversaries of the Expiration
Date, each such anniversary being a "Renewal Date", the Term shall be
deemed to have been automatically extended for an additional period of
five (5) years, and on the fifteenth (15th) anniversary of the
Expiration Date for eight (8) months, such anniversary also being a
"Renewal Date", the Term shall be deemed to have been automatically
extended (each such extension period, a "Renewal Term"), unless in any
case Tenant shall notify Landlord in writing at least one (1) year prior
to the next Renewal Date that Tenant is terminating this Lease as of the
next Renewal Date. If Tenant elects not to extend the Term of this
Lease then, prior to the expiration date, Tenant shall, at the request
of Landlord, provide to Landlord a Termination of Lease in recordable
form. Any such extension of the Term shall be subject to all of the
provisions of this Lease, as the same may be amended, supplemented or
modified.
(c) If Tenant exercises its option not to extend or further
extend the Term, or if an Event of Default exists, then Landlord shall
have the right during the remainder of the Term then in effect and, in
any event, Landlord shall have the right during the last year of the
Term, to (i) advertise the availability of the Leased Premises for sale
or reletting and to erect upon the Leased Premises signs indicating such
availability and (ii) upon reasonable prior notice to Tenant show the
Leased Premises to prospective purchasers or tenants or their agents at
such reasonable times as Landlord may select and as may be approved by
Tenant, such approval not to be unreasonably withheld or delayed (except
that no approval shall be required if an Event of Default exists and
remains uncured).
6. Basic Rent. Landlord acknowledges that all Basic Rent has
been paid through January 31, 1998. Tenant shall pay to Landlord, as
annual rent for the Leased Premises during the portion of the Term
remaining from and after February 1, 1998, the amounts determined in
accordance with Exhibit "D" hereto ("Basic Rent"). Payments shall be
made on March 1, 1998 and on the first day of each month during the
remainder of the Term (each such day being a "Basic Rent Payment Date").
Each such rental payment shall be made, (a) at Landlord's sole
discretion, to Landlord at its address set forth above and/or to such
one or more other Persons, at such addresses and in such proportions as
Landlord may direct by fifteen (15) days' prior written notice to Tenant
(in which event Tenant shall give Landlord notice of each such payment
concurrent with the making thereof), and (b) in funds available to
Landlord on the applicable Basic Rent Payment Date.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all costs and expenses of Tenant and all reasonable costs
and expenses of, Landlord and any other Persons specifically
referenced herein which are incurred in connection or
associated with (A) the use, non-use, occupancy, possession,
operation, condition, design, construction, maintenance,
alteration, repair or restoration of any of the Leased
Premises, (B) the performance of any of Tenant's obligations
under this Lease, (C) any sale or other transfer of any of
the Leased Premises to Tenant under this Lease, (D) any
Condemnation proceedings, (E) the adjustment, settlement or
compromise of any insurance claims involving or arising from
any of the Leased Premises, (F) the prosecution, defense or
settlement of any litigation involving or arising from any
of the Leased Premises, this Lease, or the sale of the
Leased Premises to Landlord, (G) the enforcement by
Landlord, its successors and assigns, of any of its rights
under this Lease, (H) any amendment to or modification or
termination of this Lease made at the request of Tenant,
(I) Costs of Landlord's and Lender's counsel incurred in
connection with the preparation, negotiation and execution
of this Lease, Costs of Landlord's and Lender's counsel
incurred in connection with the review and/or negotiation of
documents requested by Tenant and Costs of third party
consultants retained by Landlord in connection with any act
undertaken by Landlord at the request of Tenant, or
incurred in connection with any act of Landlord performed on
behalf of Tenant that Landlord has the right to perform
under the terms of this Lease, (J) the reasonable cost of a
consultant retained by Lender to review plans,
specifications, and contracts in connection with any
Alteration for which the approval of Lender is required or
permitted under the terms of the Mortgage and the reasonable
costs of Lender in connection with any inspection of the
Leased Premises, (K) out-of-pocket costs incurred by Lender
in connection with an Event of Default, (L) costs and
expenses of any trustee under any Mortgage and (M) any other
items specifically required to be paid by Tenant under this
Lease, which costs and expenses shall include, without
limitation, all Costs, judgments, settlement amounts,
Impositions, insurance premiums, appraisal fees, the cost of
performing and reporting any Site Assessment if an
Environmental Violation is found, the cost of monitoring
compliance with the provisions of Paragraph 10(f) hereof,
including the reasonable cost of consultants retained by
Landlord and Lender, the cost of curing any Environmental
Violation, and the cost of complying with all Legal
Requirements, fines, penalties and interest;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount
("Late Charge") equal to three percent (3%) of the amount of
such unpaid installment or portion thereof; provided,
however, that with respect to the first two late payments of
all or any portion of any installment of Basic Rent in any
consecutive twelve (12) month period the Late Charge shall
not be due and payable unless the Basic Rent has not been
paid within three (3) business days following receipt by
Tenant of written notice that such installment has not been
received;
(iii) a sum equal to any additional sums (including
any late charge, default penalties, interest and fees of
Lender's counsel) which are payable by Landlord to any
Lender under any Note by reason of Tenant's late payment or
non-payment of Basic Rent or by reason of an Event of
Default; and
(iv) interest at the rate per annum (the "Default
Rate") equal to the default interest rate per annum in the
Note on the following sums until paid in full: (A) all
overdue installments of Basic Rent from the respective due
dates thereof, (B) all overdue amounts of Additional Rent
relating to obligations which Landlord shall have paid on
behalf of Tenant, from the date Tenant receives notice of
payment thereof by Landlord, and (C) all other overdue
amounts of Additional Rent, from the date that Tenant
receives notice any such amount has become overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent
referred to in Paragraph 7(a)(i) when the same shall become due,
provided that amounts which are billed to Landlord or any third party,
but not to Tenant, shall be paid within five (5) days after Landlord's
demand for payment thereof, and (ii) any other Additional Rent,
immediately upon Landlord's demand for payment thereof.
(c) In no event shall amounts payable under Paragraph 7(a)(ii),
(iii) and (iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary Obligations shall be
paid without notice or demand and without set-off, counterclaim,
recoupment, abatement, suspension, deferment, diminution, deduction,
reduction or defense, except as specifically provided herein to the
contrary (collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein, this Lease
and the rights of Landlord and the obligations of Tenant hereunder shall
not be affected by any event or for any reason, including the following:
(i) any damage to or theft, loss or destruction of any of the Leased
Premises, (ii) any Condemnation, (iii) the prohibition, limitation or
restriction of Tenant's use of any of the Leased Premises, (iv) any
eviction by paramount title or otherwise, (v) Tenant's acquisition of
ownership of any of the Leased Premises other than pursuant to an
express provision of this Lease, (vi) any default on the part of
Landlord hereunder or under any Note, Mortgage, Assignment or any other
agreement, (vii) any latent or other defect in any of the Leased
Premises, (viii) the breach of any warranty of any seller or
manufacturer of any of the Equipment, (ix) any violation of
Paragraph 4(b) or any other provision of this Lease by Landlord, (x) the
bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution or winding-up of, or other proceeding affecting
Landlord or Tenant, (xi) the exercise of any remedy, including
foreclosure, under any Mortgage or Assignment, (xii) any action with
respect to this Lease (including the disaffirmance hereof) which may be
taken by Landlord, any trustee, receiver or liquidator of Landlord or
any court under the Federal Bankruptcy Code or otherwise, (xiii) any
interference with Tenant's use of the Leased Premises, (xiv) market or
economic changes or (xv) any other cause, whether similar or dissimilar
to the foregoing, any present or future Law to the contrary
notwithstanding.
(c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall
continue to be payable in all events (or, in lieu thereof, Tenant shall
pay amounts equal thereto), and the obligations of Tenant hereunder
shall continue unaffected unless the requirement to pay or perform the
same shall have been terminated pursuant to an express provision of this
Lease. All Rent payable by Tenant hereunder shall constitute "rent" for
all purposes (including Section 502(b)(6) of the Federal Bankruptcy
Code).
(d) Except as otherwise expressly provided herein, Tenant shall
have no right and hereby waives all rights which it may have under any
Law (i) to quit, terminate or surrender this Lease or any of the Leased
Premises, or (ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, not later than the due date thereof, or at
least five (5) days prior to the day before any fine, interest, penalty
or cost may be added thereto or imposed, or at least five (5) days prior
to the day any lien may be filed for the non-payment thereof (if such
day is used to determine the due date of the respective item), pay and
discharge all taxes (including real and personal property, franchise,
sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all
assessments and levies, all permit, inspection and license fees, all
rents and charges for water, sewer, utility and communication services
relating to any of the Leased Premises, all ground rents and all other
public charges whether of a like or different nature, even if unforeseen
or extraordinary, imposed upon or assessed against (i) Tenant, (ii) any
of the Leased Premises, including any increases in real estate taxes
from a reassessment of the Leased Premises by the applicable taxing
authority as a result of any transfer of the Leased Premises (A) to any
affiliate of Landlord or Landlord's parent of which Landlord's parent
directly or indirectly owns beneficially more than fifty percent (50%)
or (B) to Landlord's parent so long as in any such case Tenant has an
opportunity to review and comment upon the structure of such transfer
prior to the occurrence thereof, (iii) Landlord as a result of or
arising in respect of the acquisition, ownership, occupancy, leasing,
use, possession or sale of any of the Leased Premises, any activity
conducted on any of the Leased Premises, or the Rent, or (iv) any Lender
by reason of any Note, Mortgage, Assignment or other document evidencing
or securing a Loan and which (as to this clause (iv)) Landlord has
agreed to pay (collectively, the "Impositions"); provided, that nothing
herein shall obligate Tenant to pay (A) income, excess profits or other
taxes of Landlord (or Lender) which are determined on the basis of
Landlord's (or Lender's) net income or net worth (unless such taxes are
a substitute for any then existing tax, assessment or other charge upon
or with respect to the Leased Premises which, if it were in effect,
would be payable by Tenant under the provisions hereof or by the terms
of such tax, assessment or other charge), (B) any estate, inheritance,
succession, gift or similar tax imposed on Landlord or Lender, (C) any
capital gains tax imposed on Landlord in connection with the sale of the
Leased Premises to any Person or (D) any increases in real estate taxes
from a reassessment of the Leased Premises by the applicable taxing
authority as a result of (x) any sale or transfer of the Leased Premises
or, (y) any sale or transfer of ownership interests by any member of
Landlord, except as provided in (ii) above. If any Imposition may be
paid in installments without interest or penalty, Tenant shall have the
option to pay such Imposition in installments; in such event, Tenant
shall be liable only for those installments which accrue or become due
and payable during the Term. Tenant shall prepare and file all tax
reports required by governmental authorities which relate to the
Impositions. Tenant shall deliver to Landlord (1) copies of all
settlements and notices pertaining to the Impositions which may be
issued by any governmental authority within ten (10) days after Tenant's
receipt thereof, (2) receipts for payment of all taxes required to be
paid by Tenant hereunder within thirty (30) days after the due date
thereof and (3) receipts for payment of all other Impositions within ten
(10) days after Landlord's request therefor. Any refunds of Impositions
attributable to any period during the Term shall be payable to, and
shall be the property of, Tenant.
(b) Landlord shall have the right at any time following the
occurrence and during the continuation of an Event of Default to require
Tenant to pay to Landlord (or Lender if Landlord is so required pursuant
to the terms of the Mortgage) an additional monthly sum (the "Escrow
Payments") sufficient to pay the Escrow Charges (as hereinafter defined)
as they become due. As used herein, "Escrow Charges" shall mean real
estate taxes on the Leased Premises or payments in lieu thereof and
premiums on any insurance required by this Lease. Landlord shall
determine the amount of the Escrow Charges and of each Escrow Payment.
As long as the Escrow Payments are being held by Landlord and not
Lender, or if Lender shall hold the Escrow Payments and shall so agree,
the Escrow Payments shall not be commingled with other funds of
Landlord or other Persons and interest shall accrue thereon for the
benefit of Tenant, from the date such monies are received by or on
behalf of Landlord to the date such monies are disbursed to pay Escrow
Charges. Landlord or Lender, as the case may be, shall apply the Escrow
Payments to the payment of the Escrow Charges in such order or priority
as Landlord shall determine or as required by law. If at any time the
Escrow Payments theretofore paid to Landlord or Lender, as the case may
be, shall be insufficient for the payment of the Escrow Charges, Tenant,
within ten (10) days after Landlord's demand therefor, which shall
include written verification of such deficiency, shall pay the amount of
the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its sole expense, be in material compliance
with and conform to, and cause any other Person occupying any part of
the Leased Premises to be in material compliance with and conform to,
all Insurance Requirements and Legal Requirements (except that Tenant
and the Leased Premises shall be in absolute compliance with all
applicable Environmental Laws). Tenant shall not at any time (i) cause,
permit or suffer to occur any material Environmental Violation or
(ii) permit any sublessee, assignee or other Person occupying the Leased
Premises under or through Tenant to cause, permit or suffer to occur any
material Environmental Violation and, at the request of Landlord or
Lender, Tenant shall promptly remediate or undertake any other
appropriate response action to correct any existing Environmental
Violation, however immaterial.
(b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the
covenants, conditions and agreements contained in any Easement Agreement
on the part of Landlord or other occupier of the Leased Premises, to be
kept and performed thereunder. Tenant will not alter, modify, amend or
terminate any Easement Agreement, give any consent or approval
thereunder, or enter into any new Easement Agreement without, in each
case, the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Any such new Easement Agreement shall
automatically be a Permitted Encumbrance.
(c) In connection with the refinancing of the Initial Loan or as
reasonably requested by a Lender and in any other case not more
frequently than once every three (3) years or at any other time that, in
the opinion of Landlord or Lender, a reasonable basis exists to believe
that an Environmental Violation exists or a condition that could be
reasonably expected to result in an Environmental Violation exists, upon
prior written notice from Landlord or Lender, Tenant shall permit such
persons as Landlord or Lender may designate ("Site Reviewers") to visit
the Leased Premises at reasonable times agreed to by Tenant and perform,
as agents of Tenant, environmental site investigations and assessments
("Site Assessments") on the Leased Premises for the purpose of
investigating the Leased Premises. In addition to the permitted Site
Assessments, the Site Reviewers shall have the right to obtain from
Tenant information reasonably necessary to update any Site Assessment.
Such Site Assessments may include both above and below the ground
testing for Environmental Violations and such other tests as may be
reasonably necessary, in the opinion of the Site Reviewers, to conduct
the Site Assessments. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Leased Premises as
may be reasonably requested by the Site Reviewers to facilitate the Site
Assessments, and shall make available for meetings with the Site
Reviewers appropriate personnel having knowledge of such matters.
Landlord shall pay the cost of any such Site Assessment unless an
Environmental Violation is found, in which event the cost shall be paid
by Tenant.
(d) If an Environmental Violation occurs or is found to exist
and, in Landlord's reasonable judgment, the cost of remediation of, or
other response action with respect to, the same is likely to exceed
$250,000, or, if an Event of Default under Paragraph 22(a)(i) hereof has
occurred during the immediately preceding twelve (12) month period,
$50,000, Tenant shall provide to Landlord and Lender within ten (10)
days after Landlord's or Lender's request therefor, adequate financial
assurances that Tenant will effect such remediation or other response
action in accordance with applicable Environmental Laws.
(e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist that would render
the Leased Premises untenantable or unmarketable and the Term would
otherwise terminate or expire, then, at the option of Landlord, the Term
shall be automatically extended beyond the date of termination or
expiration and this Lease shall remain in full force and effect beyond
such date until the earlier to occur of (i) the completion of all
remedial or other response action in accordance with applicable
Environmental Laws or (ii) the date specified in a written notice from
Landlord to Tenant terminating this Lease.
(f) If Tenant fails to comply with (or promptly commence to
comply with and diligently pursue to completion) any requirement of any
Environmental Law in connection with any Environmental Violation which
occurs or is found to exist, then after ten (10) days prior notice to
Tenant (except that no notice shall be required if any emergency exists)
Landlord and/or Lender shall have the right (but no obligation) to take
any and all actions as Landlord and/or Lender shall deem necessary or
advisable in order to cure such Environmental Violation.
(g) Tenant shall notify Landlord and Lender immediately after
becoming aware of any Environmental Violation (or alleged Environmental
Violation) or noncompliance with any of the covenants contained in this
Paragraph 10 and shall forward to Landlord and Lender immediately upon
receipt thereof copies of all orders, claims, reports, notices, permits,
applications or other communications relating to any such violation or
noncompliance.
(h) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain
covenants of the other party thereto which are comparable to the
covenants contained in this Paragraph 10.
(i) Tenant shall not release The Perkin-Elmer Corporation ("PE")
from any of its obligations under the Asset Purchase Agreement, dated
March 16, 1990, between Tenant and PE that relate to clause (f) of
Section 6.2 thereof or otherwise amend said clause (f) or any other
applicable provision without having obtained the prior written approval
of Landlord and Lender. Tenant represents and warrants to Landlord that
the indemnity under clause (f) of Section 6.2 includes 1,
1-dichloroethene on the Leased Premises.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit
to be created or to remain and shall promptly discharge or remove any
lien, levy or encumbrance on any of the Leased Premises or on any Rent
or any other sums payable by Tenant under this Lease, other than any
Mortgage or Assignment, the Permitted Encumbrances and any mortgage,
lien, encumbrance or other charge created by or resulting solely from
any act or omission of Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD
SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO
BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE
LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER
LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD May AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL
PROMPTLY, POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH
NON-LIABILITY OF LANDLORD.
(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or
permitted by any present or future Law in order to evidence the
respective interests of Landlord and Tenant in the Leased Premises, and
shall cause a memorandum of this Lease (or, if such a memorandum cannot
be recorded, this Lease), and any supplement hereto or thereto, to be
recorded in such manner and in such places as may be required or
permitted by any present or future Law in order to protect the validity
and priority of this Lease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain, at Tenant's sole cost
and expense, the Existing Premises and the Adjoining Property in
substantially as good repair and appearance as they are in on the date
hereof and shall at all times maintain the Project I Improvements and
Project II Improvements in substantially as good repair and appearance
as they are on the Project I Final Completion Date and Project II Final
Completion Date, ordinary wear and tear excepted, and fit to be used for
their intended use in accordance with the practices generally recognized
as then acceptable by other companies in its industry, and, in the case
of the Equipment, in as good mechanical condition as it was on the later
of the date hereof or the date of its installation, except for ordinary
wear and tear. Tenant shall take every other reasonable action
necessary or appropriate for the preservation and safety of the Leased
Premises. Tenant shall promptly make all Alterations of every kind and
nature, whether foreseen or unforeseen, which may be required to comply
with the foregoing requirements of this Paragraph 12(a). Landlord shall
not be required to make any Alteration, whether foreseen or unforeseen,
or to maintain any of the Leased Premises or Adjoining Property in any
way, and Tenant hereby expressly waives any right which may be provided
for in any Law now or hereafter in effect to make Alterations at the
expense of Landlord or to require Landlord to make Alterations. Any
Alteration made by Tenant pursuant to this Paragraph 12 shall be made in
conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed, shall
(i) encroach upon any setback or any property, street or right-of-way
adjoining the Leased Premises, (ii) violate the provisions of any
restrictive covenant affecting the Leased Premises, (iii) hinder or
obstruct any easement or right-of-way to which any of the Leased
Premises is subject or (iv) impair the rights of others in, to or under
any of the foregoing, Tenant shall, at Tenant's sole cost and expense,
promptly after receiving a notice thereof, correct such condition from
the party entitled to make such demand, and either (A) obtain from all
necessary parties waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, hindrance,
obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be necessary to remove
all such encroachments, hindrances or obstructions and to end all such
violations or impairments, including, if necessary, making Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained the
prior written consent of Landlord and Lender, to make (i) non-structural
Alterations to the Leased Premises, (ii) structural Alterations or a
series of related structural Alterations that, as to any such
Alterations or series of related Alterations, do not cost in excess of
$1,000,000 or, with respect to Alterations to any "clean room" test area
in Buildings 2, 3 or 4 and any "process laboratory" in Buildings 2, 3
and 4, $2,500,000, (iii) to install Equipment in the Improvements or
accessions to the Equipment that, as to such Equipment or accessions, do
not cost in excess of $1,000,000 or, with respect to Alterations to any
"clean room" test area in Buildings 2, 3 and 4 and any "process
laboratory" in Buildings 2, 3 and 4 $2,500,000, and (iv) the Alterations
identified in Schedule 2 attached hereto, so long as at the time of
construction or installation of any such Equipment or Alterations
pursuant to clauses (i) through (iv) no Event of Default exists and the
value and utility of the Leased Premises is not diminished thereby and
no such Alterations shall be permitted under this Paragraph 13 with
respect to the Project II Improvements until the Project II Final
Completion Date. If the cost of any structural Alterations, series of
related structural Alterations, Equipment or accessions thereto is in
excess of $1,000,000 or, with respect to Alterations to any "clean room"
test area in Buildings 2, 3 or 4 and any "process laboratory" in
Buildings 2, 3 or 4, $2,500,000, the prior written approval of Lender
shall be required, such approval not to be unreasonably withheld,
delayed or conditioned, but may be withheld if an Event of Default
exists and remains uncured. Tenant shall not construct upon the Land
any additional buildings without having first obtained the prior written
consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this
Paragraph 13 or Paragraph 36 or as required by Paragraph 12 or 17 (such
Alterations and actions being hereinafter collectively referred to as
"Work"), whether or not Landlord's or Lender's consent is required, then
(i) the market value of the Leased Premises shall not be lessened by any
such Work or its usefulness impaired, (ii) all such Work shall be
performed by Tenant in a good and workmanlike manner, (iii) all such
Work shall be expeditiously completed in compliance with all Legal
Requirements, (iv) all such Work shall comply with the Insurance
Requirements, (v) if any such Work involves the replacement of Equipment
or parts thereto, all replacement Equipment or parts shall have a value
and useful life so as not to diminish the value of the Improvements,
(vi) Tenant shall promptly discharge or remove all liens filed against
any of the Leased Premises arising out of such Work, (vii) Tenant shall
procure and pay for all permits and licenses required in connection with
any such Work, (viii) all such Work that constitutes part of the Leased
Premises shall be the property of Landlord and shall be subject to this
Lease, and Tenant shall execute and deliver to Landlord any document
requested by Landlord evidencing the assignment to Landlord of all
estate, right, title and interest (other than the leasehold estate
created hereby) of Tenant or any other Person thereto or therein, and
(ix) Tenant shall comply, to the extent requested by Landlord or
required by this Lease, with the provisions of Paragraph 19(a), whether
or not such Work involves restoration of the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of
this Lease, Tenant shall not be required to (a) pay any Imposition,
(b) comply with any Legal Requirement, (c) discharge or remove any lien
referred to in Paragraph 11 or 13 or (d) take any action with respect to
any encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b) (such non-compliance with the terms
hereof being hereinafter referred to collectively as "Permitted
Violations"), so long as at the time of such contest no Event of Default
exists and so long as Tenant shall contest, in good faith, the
existence, amount or validity thereof, the amount of the damages caused
thereby, or the extent of its or Landlord's liability therefor by
appropriate proceedings which shall operate during the pendency thereof
to prevent or stay (i) the collection of, or other realization upon, the
Permitted Violation so contested, (ii) the sale, forfeiture or loss of
any of the Leased Premises or any Rent to satisfy or to pay any damages
caused by any Permitted Violation, (iii) any material interference with
the use or occupancy of any of the Leased Premises, (iv) any
interference with the payment of any Rent, (v) the cancellation or
increase in the rate of any insurance policy or a statement by the
carrier that coverage will be denied or (vi) the enforcement or
execution of any injunction, order or Legal Requirement with respect to
the Permitted Violation. Tenant shall provide Landlord security which
is satisfactory, in Landlord's reasonable judgment, to assure that such
Permitted Violation is corrected, including all Costs, interest and
penalties that may be incurred or become due in connection therewith.
While any proceedings which comply with the requirements of this
Paragraph 14 are pending and the required security (if any) is held by
Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by Law to
correct such Permitted Violation and Tenant's contest does not prevent
or stay such requirement as to Landlord. Each such contest shall be
promptly and diligently prosecuted by Tenant to a final conclusion,
except that Tenant, so long as the conditions of this Paragraph 14 are
at all times complied with, has the right to attempt to settle or
compromise such contest through negotiations. Tenant shall pay any and
all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such
contest, fully pay and discharge the amounts which shall be levied,
assessed, charged or imposed or be determined to be payable therein or
in connection therewith, together with all penalties, fines, interest
and Costs thereof or in connection therewith, and perform all acts the
performance of which shall be ordered or decreed as a result thereof.
No such contest shall subject Landlord or Lender to the risk of any
civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, save and hold harmless
Landlord, Lender, its officers, directors, shareholders, employees and
trustees and all other Persons described in Paragraph 30 (each an
"Indemnitee") from and against any and all liabilities, obligations,
fines, losses, damages (including punitive damages), penalties, Costs,
causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused, without regard to the form of action and
whether based on strict liability, gross negligence, negligence or any
other theory of recovery at law or in equity, arising from (i) any
matter pertaining to the acquisition (or the negotiations leading
thereto), ownership, use, non-use, occupancy, operation, condition,
design, construction, maintenance, repair or restoration of the Leased
Premises or Adjoining Property, (ii) any casualty in any manner arising
from the Leased Premises or Adjoining Property, whether or not Landlord
has or should have knowledge or notice of any defect or condition
causing or contributing to said casualty, (iii) any violation by Tenant
of any provision of this Lease, any contract or agreement to which
Tenant is a party, any Legal Requirement or any Permitted Encumbrance or
(iv) any alleged, threatened or actual Environmental Violation, however
immaterial, including (A) liability for response costs and for costs of
removal and remedial action incurred by the United States Government,
any state or local governmental unit or any other Person, or damages
from injury to or destruction or loss of natural resources, including
the reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to Section 107 of CERCLA, or any successor section or
act or provision of any similar state or local Law, (B) liability for
costs and expenses of abatement, correction or clean-up, fines, damages,
response costs or penalties which arise from the provisions of any of
the other Environmental Laws and (C) liability for personal injury or
property damage arising under any statutory or common-law tort theory,
including damages assessed for the maintenance of a public or private
nuisance or for carrying on of a dangerous activity, but excluding in
all cases any and all liabilities, losses, damages (including punitive
damages), penalties, costs, causes of action, suits, claims, demands or
judgments caused by the gross negligence or willful misconduct of any
Indemnitee.
(b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, such Indemnitee may either (i)
retain its own counsel and defend such action (it being understood that
Tenant may employ counsel of its choice to monitor the defense of any
such action) or (ii) notify Tenant to resist or defend such action or
proceeding by retaining counsel reasonably satisfactory to such
Indemnitee, and such Indemnitee will cooperate and assist in the defense
of such action or proceeding if reasonably requested so to do by Tenant.
(c) The obligations of Tenant under this Paragraph 15 shall
survive any termination or expiration of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:
(i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All
Risk" property policy including but not limited to flood (if
the Leased Premises is in a flood zone) in amounts not less
than the actual replacement cost of the Improvements and
Equipment. Such policies shall contain replacement cost and
agreed amount endorsements and shall contain deductibles not
more than $50,000.00 per occurrence. Tenant shall maintain
earthquake insurance for the Improvements and Equipment in
an amount equal to the product of full replacement cost of
the Improvements multiplied by the Probable Maximum Loss of
the Improvements determined every four (4) years by a
seismic engineer mutually acceptable to Landlord and Tenant
with a deductible of not more than 25% of the product of the
full replacement cost of the Improvements multiplied by the
Probable Maximum Loss, provided, however, that in the event
of a substantial change in the availability or cost of
earthquake coverage Landlord and Tenant shall in good faith
negotiate a different amount or a different deductible or
other different terms of such insurance (subject to the
consent of Lender), taking into account the cost and
availability of such insurance and the objective of
reasonably protecting the interests of Landlord and Lender.
(ii) Commercial General Liability Insurance against
claims for personal and bodily injury, death or property
damage occurring on, in or as a result of the use of the
Leased Premises, in an amount not less than $15,000,000 per
occurrence/annual aggregate including but not limited to
Incidental Medical Malpractice, Garagekeepers Liability,
Host Liquor Liability, Non-Owned and Hired Automobile
Liability and all other coverage extensions that are usual
and customary for properties of this size and type provided,
however, that the Landlord shall have the right to require
such higher limits as may be reasonable and customary for
properties of this size and type.
(iii) Workers' Compensation Insurance covering all
persons employed by Tenant in connection with any work done
on or about any of the Leased Premises for which claims for
death, disease or bodily injury may be asserted against
Landlord, Tenant or any of the Leased Premises or, in lieu
of such Workers' Compensation Insurance, a program of
self-insurance complying with the rules, regulations and
requirements of the appropriate agency of the State.
(iv) Comprehensive Boiler and Machinery Insurance on
any of the Equipment or any other equipment on or in the
Leased Premises including but not limited to Service
Interruption, Expediting Expenses, Ammonia Contamination,
Hazardous Clean-Up and Comprehensive Object Definition, in
an amount not less than $1,000,000 for damage to property,
bodily injury or death resulting from such covered perils as
found in a standard Comprehensive Boiler and Machinery
Policy. Such policies may contain a deductible not in
excess of $50,000.
(v) Business Income/Interruption Insurance to include
Loss of Rents on an Actual Loss Sustained basis with a
period of indemnity not less than one year from the time of
loss. Such insurance shall name Landlord and Lender as
"loss payee" solely with respect to Rent payable to or for
the benefit of Landlord under this Lease.
(vi) During construction of the Project I
Improvements and the Project II Improvements and during any
period in which substantial Alterations at the Leased
Premises are being undertaken, Builder's Risk insurance
covering the total completed value including any "soft
costs" with respect to the Improvements being altered or
repaired (on a completed value, non-reporting basis),
replacement cost of work performed and equipment, supplies
and materials furnished in connection with such construction
or repair of Improvements or Equipment, together with such
"soft cost" endorsements and such other endorsements as
Landlord may reasonably require and General Liability,
Workers' Compensation and Automobile Liability Insurance
with respect to the Improvements being constructed, altered
or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this
Paragraph 16, including without limitation amounts of
coverage, deductibles, form of mortgagee clause) on or in
connection with any of the Leased Premises as Landlord or
Lender may reasonably require, which at the time is usual
and commonly obtained in connection with properties similar
in type of building size and use to the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be written
by companies which have a Best's rating of A:X or above and are admitted
in, and approved to write insurance policies by the State Insurance
Department for, the State. The insurance policies (i) shall be for such
terms as Landlord may reasonably approve, (ii) shall be in amounts
sufficient at all times to satisfy any coinsurance requirements thereof
and (iii) shall (except for the worker's compensation insurance referred
to in Paragraph 16(a)(iii) hereof) name Landlord, Tenant and Lender as
additional insureds or loss payees, as their respective interests may
appear. If said insurance or any part thereof shall expire, be
withdrawn, become void, voidable, unreliable or unsafe for any reason,
including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason
whatsoever said insurance shall become reasonably unsatisfactory to
Landlord of Lender, Tenant shall immediately obtain new or additional
insurance reasonably satisfactory to Landlord and Lender.
(c) Each policy required by any provision of Paragraph 16(a),
except clause (iii) thereof, shall provide that it may not be canceled,
substantially modified or allowed to lapse on any renewal date except
after sixty (60) days' prior notice to Landlord and Lender. Each such
policy shall also provide that any loss otherwise payable thereunder
shall be payable notwithstanding (i) any act or omission of Landlord or
Tenant which might, absent such provision, result in a forfeiture of all
or a part of such insurance payment, (ii) the occupation or use of any
of the Leased Premises for purposes more hazardous than those permitted
by the provisions of such policy, (iii) any foreclosure or other action
or proceeding taken by Lender pursuant to any provision of the Mortgage,
Note, Assignment or other document evidencing or securing the Loan upon
the happening of an event of default therein or (iv) any change in title
to or ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each
policy and deliver to Landlord evidence of the payment of the full
premium therefor or installment then due prior to the expiration date of
such policy, and shall promptly deliver to Landlord each original policy
or a duplicate thereof.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain
pursuant to Paragraph 16(a) may be carried under a "blanket" or umbrella
policy or policies covering other properties or liabilities of Tenant,
provided that such "blanket" or umbrella policy or policies otherwise
comply with the provisions of this Paragraph 16 and provided further
that such policies shall provide for a reserved amount thereunder with
respect to the Leased Premises sufficient to assure that the amount of
insurance required by this Paragraph 16 will be available
notwithstanding any losses with respect to other property covered by
such blanket policies. The amount of the total insurance allocated to
the Leased Premises, which amount shall be not less than the amounts
required pursuant to this Paragraph 16, shall be specified either (i) in
each such "blanket" or umbrella policy or (ii) in a written statement,
which Tenant shall deliver to Landlord and Lender, from the insurer
thereunder. The original or a certified copy of each such "blanket" or
umbrella policy shall promptly be delivered to Landlord and Lender.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and
(ii) all requirements of the insurers thereunder applicable to Landlord,
Tenant or any of the Leased Premises or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration or repair of
any of the Leased Premises, even if such compliance necessitates
Alterations or results in interference with the use or enjoyment of any
of the Leased Premises.
(g) Tenant shall not carry separate insurance concurrent in form
or contributing in the event of a Casualty with that required in this
Paragraph 16 unless (i) Landlord and Lender are included therein as loss
payee or additional insureds, with loss payable as provided herein, and
(ii) such separate insurance complies with the other provisions of this
Paragraph 16. Tenant shall immediately notify Landlord and Lender of
such separate insurance and shall deliver to Landlord and Lender copies
of the policies therefor.
(h) All policies shall contain effective waivers by the carrier
against all claims for insurance premiums against Landlord and Lender
and shall contain full waivers of subrogation against the Landlord and
Lender.
(i) All proceeds of any insurance required under Paragraph 16(a)
shall be payable as follows:
(i) Except for proceeds payable to a Person other
than Landlord, Tenant or Lender and, so long as no Event of
Default exists and remains uncured, proceeds of less than
$1,000,000, all proceeds of insurance required under clauses
(ii), (iv) and (vii) of Paragraph 16(a) and proceeds
attributable to the general liability coverage provisions of
Builder's Risk insurance under clause (vi) of
Paragraph 16(a) shall be payable to Landlord or, if required
by the Mortgage or requested by Lender pursuant to the
Mortgage, to Lender. All proceeds of insurance required
under clause (v) of Paragraph 16(a) shall be payable to
Landlord or, if required by the Mortgage, to Lender.
(ii) Proceeds of insurance required under clause (i)
of Paragraph 16(a) and proceeds attributable to Builder's
Risk insurance (other than its general liability coverage
provisions) under clause (vi) of Paragraph 16(a) shall be
payable as follows:
(A) In the event of a Casualty that is a
Termination Event for which a Termination Notice has
been given under Paragraph 18(a), the proceeds shall
be payable to Landlord or, if required by the Mortgage
or requested by Lender pursuant to the Mortgage, to
Lender. Landlord shall retain or apply the Net Award
in accordance with the provisions of Paragraphs 18 and
20.
(B) In the event of a Casualty that is not a
Termination Event where the proceeds exceed
$1,000,000, the proceeds shall be payable to Landlord
or, if required by the Mortgage or requested by Lender
pursuant to the Mortgage, to Lender. Landlord shall
apply the Net Award in accordance with the provisions
of Paragraph 19.
(C) In the event of a Casualty that is not a
Termination Event where the proceeds are equal to or
less than $1,000,000 and provided no Event of Default
exists and is continuing, and no fact or condition
exists which with the lapse of time or giving of
notice, or both, would in Landlord's or Lender's
judgment constitute an Event of Default, at the time
such proceeds are paid, the Net Award shall be payable
to Tenant. Tenant shall apply the Net Award to
restoration of the Leased Premises in accordance with
the applicable provisions of this Lease. If an Event
of Default exists and is continuing or a fact or
condition exists which with the lapse of time or
giving of notice, or both, would in Landlord's or
Lender's judgment constitute an Event of Default, all
proceeds shall be payable to Landlord or Lender.
(iii) In the event that Tenant is listed as a payee
on a check from an insurance carrier for insurance proceeds
which subparagraphs (i) and (ii) provide are to be payable
to Landlord, Lender or another party or parties, Tenant
shall cooperate by promptly endorsing said check over to the
party to whom the proceeds are to be payable under
subparagraphs (i) or (ii). Tenant hereby appoints each of
Landlord or Lender as Tenant's attorneys-in-fact to endorse
any such check.
17. Casualty and Condemnation.
(a) If any Casualty occurs the insurance proceeds for which is
reasonably estimated by Tenant to be equal to or in excess of One
Hundred Thousand Dollars ($100,000), Tenant shall give Landlord and
Lender immediate notice thereof. So long as no Event of Default exists,
and subject to the provisions of Paragraph 16(i)(ii), Tenant is hereby
authorized to adjust, collect and compromise all claims under any of the
insurance policies required by Paragraph 16(a) (except public liability
insurance claims payable to a Person other than Tenant, Landlord or
Lender) and to execute and deliver on behalf of Landlord and Lender all
necessary proofs of loss, receipts, vouchers and releases required by
the insurers and Landlord and Lender shall have the right to join with
Tenant therein. Any adjustment, settlement or compromise of any such
claim in excess of $1,000,000 shall be subject to the prior written
approval of Landlord and Lender, which shall not be unreasonably
withheld, conditioned or delayed and Landlord and Lender shall have the
right to prosecute or contest, or to require Tenant to prosecute or
contest, any such claim, adjustment, settlement or compromise. If an
Event of Default exists, Tenant shall not be entitled to adjust, collect
or compromise any claim or to participate with Landlord or Lender in any
adjustment, collection and compromise of the Net Award payable in
connection with a Casualty. Tenant agrees to sign, upon the request of
Landlord or Lender, all proofs of loss, receipts, vouchers and releases.
Each insurer is hereby authorized and directed to make payment under
said policies in excess of $1,000,000 and return of unearned premiums,
directly to Landlord or, if required by the Mortgage or requested by
Lender pursuant to the Mortgage, to Lender instead of to Landlord or
Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord
and Lender as Tenant's attorneys-in-fact to endorse any draft therefor.
(b) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord and Lender thereof. So long as no Event of
Default exists, Tenant is authorized to collect, settle and compromise
the amount of any Net Award and Landlord and Lender shall have the right
to join with Tenant therein. No agreement with any condemnor in
settlement or under threat of any Condemnation shall be made by Tenant
without the written consent of Landlord and Lender which shall not be
unreasonably withheld, conditioned or delayed. If an Event of Default
exists, Landlord and Lender shall be authorized to collect, settle and
compromise the amount of any Net Award and Tenant shall not be entitled
to participate with Landlord and Lender in any Condemnation proceeding
or negotiations under threat thereof or to contest the Condemnation or
the amount of the Net Award therefor. Subject to the provisions of this
Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord and
Lender any award or payment to which Tenant is or may be entitled by
reason of any Condemnation, whether the same shall be paid or payable
for Tenant's leasehold interest hereunder or otherwise; but nothing in
this Lease shall impair Tenant's right to any award or payment on
account of Tenant's trade fixtures, equipment or other tangible property
which is not part of the Equipment, moving expenses or loss of business,
if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the
amount of the award otherwise payable to Landlord for the Condemnation
of Landlord's fee interest in the Leased Premises or the amount of the
award (if any) otherwise payable for the Condemnation of Tenant's
leasehold interest hereunder.
(c) If any Partial Casualty (whether or not insured against) or
Partial Condemnation shall occur, this Lease shall continue,
notwithstanding such event, and there shall be no abatement or reduction
of any Monetary Obligations, except as provided in Paragraph 17(d) and
19(c). Promptly after such Partial Casualty or Partial Condemnation,
Tenant, as required in Paragraph 12(a), shall commence and diligently
continue to restore the Leased Premises as nearly as practicable to
their value, condition and character immediately prior to such event.
Upon the receipt by Landlord of the entire Net Award of such Partial
Casualty or Partial Condemnation, Landlord shall make such Net Award
available to Tenant for restoration in accordance with and subject to
the provisions of Paragraph 19(a). If any Casualty or Condemnation
which is not a Partial Casualty or Partial Condemnation shall occur,
Tenant shall comply with the terms and conditions of Paragraph 18.
(d) In the event of a Requisition of any of the Leased Premises,
if any Net Award payable by reason of such Requisition is retained by
Landlord or Lender, each installment of Basic Rent payable on or after
the date on which the Net Award is paid to Landlord shall be reduced by
a fraction, the denominator of which shall be the total amount of all
Basic Rent due from such date to and including the last day of the Term
(calculated on the basis of the Basic Rent in effect as of the date of
the Requisition) and the numerator of which shall be the amount of such
Net Award retained by Landlord. Upon the expiration of the Term, any
portion of such Net Award which shall not have been previously credited
to Tenant shall be retained by Landlord.
18. Termination Events.
(a) If (i) the Leased Premises shall be taken by a Taking or
(ii) any substantial portion of the Leased Premises shall be taken by a
Taking or all or any substantial portion of the Leased Premises shall
be damaged or destroyed by a Casualty and, in such case, Tenant
certifies to Landlord that it will forever abandon operations at the
Leased Premises (each of the events described in the above clauses (i)
and (ii) shall hereinafter be referred to as a "Termination Event"),
then (x) in the case of (i) above, Tenant shall be obligated, within
thirty (30) days after Tenant receives a Condemnation Notice and (y) in
the case of (ii) above, Tenant shall have the option, within thirty (30)
days after Tenant receives a Condemnation Notice or thirty (30) days
after the Casualty, as the case may be, to give to Landlord and Lender
written notice of the Tenant's option to terminate this Lease (a
"Termination Notice") in the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease on the first Basic Rent Payment Date
which occurs at least ninety (90) days after the Fair Market Value Date
(the "Termination Date"), (ii) a binding and irrevocable offer of Tenant
to purchase the Leased Premises for an amount equal to the Termination
Amount and (iii) if the Termination Event is an event described in
Paragraph 18(a)(ii), the certification described therein and a certified
resolution of the Board of Directors of Tenant authorizing the same.
Promptly upon the delivery to Landlord of a Termination Notice, Landlord
and Tenant shall commence to determine the Fair Market Value of the
Leased Premises.
(c) If Landlord shall reject such offer to purchase the Leased
Premises by written notice to Tenant (a "Rejection"), which Rejection
shall contain the written consent of Lender, not later than thirty (30)
days following the Fair Market Value Date, then this Lease shall
terminate on the Termination Date; provided that, if Tenant has not
satisfied all Monetary Obligations and all other obligations and
liabilities under this Lease which have arisen on or prior to the
Termination Date (collectively, "Remaining Obligations") on the
Termination Date, then Landlord may, at its option, extend the date on
which this Lease may terminate to a date which is no later than the
first Basic Rent Payment Date after the Termination Date on which Tenant
has satisfied all Remaining Obligations. Upon such termination (i) all
obligations of Tenant hereunder shall terminate except for any Surviving
Obligations, (ii) Tenant shall promptly vacate and shall have no further
right, title or interest in or to any of the Leased Premises and
(iii) the Net Award shall be retained by Landlord. Notwithstanding
anything to the contrary hereinabove contained, if Tenant shall have
received a Rejection and, on the date when this Lease would otherwise
terminate as provided above, Landlord shall not have received the full
amount of the Net Award payable by reason of the applicable Termination
Event, then on the Termination Date Tenant shall assign to Landlord all
of its right, title and interest, if any, in and to the Net Award.
(d) Unless Tenant shall have received a Rejection not later than
the thirtieth (30th) day following the Fair Market Value Date, Landlord
shall be conclusively presumed to have accepted such offer. If such
offer is accepted by Landlord then, on the Termination Date, Tenant
shall pay to Landlord (or Lender if the Mortgage requires or permits
Lender to so require) the Termination Amount and all Remaining
Obligations and, if requested by Tenant, Landlord shall (i) convey to
Tenant the Leased Premises or the remaining portion thereof, if any, and
(ii) pay to or assign to Tenant its entire interest in and to the Net
Award, all in accordance with Paragraph 20.
19. Restoration; Reduction of Rent.
(a) So long as no Event of Default, or fact or condition which
with the lapse of time or giving of notice or both would, in the
judgment of Landlord or Lender, constitute an Event of Default, exists,
any Net Award up to and including $1,000,000 shall be paid directly to
Tenant and Tenant shall restore the Leased Premises in accordance with
the requirements of Paragraph 13(b) of this Lease. Any Net Award in
excess of $1,000,000 shall be made available by Landlord to Tenant for
the restoration of any of the Leased Premises, and Landlord (or Lender
if required by any Mortgage or if the Mortgage permits Lender to so
require) shall hold such Net Award in a fund (the "Restoration Fund")
and disburse amounts from the Restoration Fund only in accordance with
the following conditions:
(i) prior to commencement of restoration, (A) the
architects, contracts, contractors, plans and specifications
for the restoration shall have been approved by Landlord and
Lender, such approval not to be unreasonably withheld,
conditioned or delayed and (B) Landlord and Lender shall,
upon reasonable request and based upon a review of the
contractor's and prime subcontractors' credit, be provided
with acceptable performance bonds which insure satisfactory
completion of the restoration, are in an amount and form and
have a surety acceptable to Landlord, and name Landlord and
Lender as additional dual obligees;
(ii) at the time of any disbursement, no Event of
Default, or fact or condition which with the giving of
notice or lapse of time or both would, in the judgment of
Landlord or Lender, constitute an Event of Default shall
exist and any mechanics' or materialmen's liens filed
against any of the Leased Premises shall have been insured
over or covered by a bond;
(iii) disbursements shall be made from time to time
in an amount not exceeding the cost of the work completed
since the last disbursement, upon receipt of (A)
satisfactory evidence, including architects' certificates,
of the stage of completion, the estimated total cost of
completion and performance of the work to date in a good and
workmanlike manner in accordance with the contracts, plans
and specifications, (B) waivers of liens, (C) contractors'
and subcontractors' sworn statements as to completed work
and the cost thereof for which payment is requested, (D) a
satisfactory bringdown of title insurance and (E) other
evidence of cost and payment so that Landlord and Lender can
verify that the amounts disbursed from time to time are
represented by work that is completed, in place and free and
clear of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be
accompanied by a certificate of Tenant, signed by the
president or a vice president or the chief financial officer
of Tenant, describing the work for which payment is
requested, stating the cost incurred in connection
therewith, stating that Tenant has not previously received
payment for such work and, upon completion of the work, also
stating that the work has been fully completed and complies
with the applicable requirements of this Lease;
(v) Landlord or Lender may retain ten percent (10%)
of the Restoration Fund until the restoration is fully
completed;
(vi) if the Restoration Fund is held by Lender it may
be commingled with Lender's other funds and shall bear
interest unless otherwise required by Lender; if it is held
by Landlord it shall be commingled with Landlord's other
funds and shall bear interest at the best available interest
rate; and
(vii) such other reasonable conditions to insure
timely, lien free completion of the restoration as Landlord
or Lender may impose.
(b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Landlord or if required by
a Mortgage, by Lender, exceeds the amount of the Net Award available for
such restoration, the amount of such excess shall, upon demand by
Landlord, be paid by Tenant to Landlord or if required by a Mortgage or
by Lender pursuant to the terms of a Mortgage, to Lender to be added to
the Restoration Fund. Any sum so added by Tenant which remains in the
Restoration Fund upon completion of restoration shall be refunded to
Tenant. For purposes of determining the source of funds with respect to
the disposition of funds remaining after the completion of restoration,
the Net Award shall be deemed to be disbursed prior to any amount added
by Tenant.
(c) If any sum remains in the Restoration Fund after completion
of the restoration and any refund to Tenant pursuant to Paragraph 19(b),
such sum (the "Remaining Sum") shall be retained by Landlord or, if
required by a Note or Mortgage or by Lender pursuant to the terms of a
Note or Mortgage, paid by Landlord to a Lender. If the Remaining Sum is
(i) retained by Landlord, each installment of Basic Rent payable on or
after the Retention Date shall be reduced by a fraction, the denominator
of which shall be the total amount of all Basic Rent due from such date
to and including the last Basic Rent Payment Date for the then existing
Term calculated on the basis of the Basic Rent then in effect and taking
into account any applicable adjustments under Paragraphs 1(c)(i) and
1(c)(ii) of Exhibit "D" and the numerator of which shall be the
Remaining Sum, or (ii) paid to Lender, then each installment of Basic
Rent thereafter payable shall be reduced in the same amount as payments
are reduced under any Note as if the Loan were reamortized to reflect
such payment, in each case until such Remaining Sum has been applied in
full or until the Term has expired, whichever occurs first. Landlord
agrees that if the terms of a Note or Mortgage permit partial prepayment
of the principal balance of the Loan without premium or penalty and, in
such event, require the Lender to thereupon reamortize the Loan,
Landlord shall pay any Remaining Sum to Lender as a partial prepayment
of the Loan and clause (ii) of this Paragraph 19(c) shall apply. Upon
the expiration of the Term, any portion of the Remaining Sum which has
not been so applied shall be retained by Landlord.
20. Procedures Upon Purchase.
(a) If the Leased Premises is purchased by Tenant pursuant to
any provision of this Lease, Landlord need not convey any better title
thereto than that which was conveyed to Landlord, and Tenant shall
accept such title, subject, however, to the Permitted Encumbrances and
to all other liens, exceptions and restrictions on, against or relating
to any of the Leased Premises and to all applicable Laws, but free of
the lien of and security interest created by any Mortgage or Assignment
and liens, exceptions and restrictions on, against or relating to the
Leased Premises which have been created by or resulted solely from acts
of Landlord after the date of this Lease, unless the same are Permitted
Encumbrances or customary utility easements benefiting the Leased
Premises or were created with the concurrence of Tenant or as a result
of a default by Tenant under this Lease.
(b) Upon the date fixed for any such purchase of the Leased
Premises pursuant to any provision of this Lease (any such date the
"Purchase Date"), through an appropriate escrow, Tenant shall pay to
Landlord, or to any Person to whom Landlord directs payment, the
Relevant Amount therefor specified herein, in Federal Funds, less any
credit of the Net Award received and retained by Landlord or Lender
allowed against the Relevant Amount, and Landlord shall deliver to
Tenant (i) a special warranty deed which describes the premises being
conveyed and conveys the title thereto as provided in Paragraph 20(a),
(ii) such other instruments as shall be necessary to transfer to Tenant
or its designee any other property (or rights to any Net Award not yet
received by Landlord or a Lender) then required to be sold by Landlord
to Tenant pursuant to this Lease and (iii) any Net Award received by
Landlord, not credited to Tenant against the Relevant Amount and
required to be delivered by Landlord to Tenant pursuant to this Lease;
provided, that if any Monetary Obligations remain outstanding on such
date, then Landlord may deduct from the Net Award the amount of such
Monetary Obligations; and further provided, that if any event has
occurred which, in Landlord's reasonable judgment, is likely to subject
any Indemnitee to any liability which Tenant is required to indemnify
against pursuant to Paragraph 15, then an amount shall be deducted from
the Net Award which, in Landlord's reasonable judgment, is sufficient to
satisfy such liability, which amount shall be deposited in an escrow
account with a financial institution reasonably satisfactory to Landlord
and Tenant on terms reasonably satisfactory to Landlord and Tenant
pending resolution of such matter. If on the Purchase Date any Monetary
Obligations remain outstanding and no Net Award is payable to Tenant by
Landlord or the amount of such Net Award is less than the amount of the
Monetary Obligations, then Tenant shall pay to Landlord on the Purchase
Date the amount of such Monetary Obligations. Upon the completion of
such purchase, this Lease and all obligations and liabilities of Tenant
hereunder shall terminate, except any Surviving Obligations.
(c) If the Tenant shall cause completion of such purchase to be
delayed after (i) the Termination Date, in the event of a purchase
pursuant to Paragraph 18 or, (ii) the date scheduled for such purchase,
in the event of a purchase under any other provision of this Lease then
(x) Rent shall continue to be due and payable until completion of such
purchase and (y) at Landlord's sole option, Fair Market Value shall be
redetermined and the Relevant Amount payable by Tenant pursuant to the
applicable provision of this Lease shall be adjusted to reflect such
redetermination. Landlord shall not be deemed to have caused completion
of such purchase to be delayed if it in good faith disputes the process
or methodology for determining Fair Market Value.
(d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance
shall be deducted from the Relevant Amount due to Landlord.
21. Assignment and Subletting; Prohibition against
Leasehold Financing.
(a) Tenant shall have the right so long as no Event of Default
has occurred and is continuing, upon thirty (30) days prior written
notice to Landlord and Lender, with no consent of Landlord or Lender
being required or necessary ("Preapproved Assignment") to assign this
Lease to any Person ("Preapproved Assignee") that is a Subsidiary of
Tenant on the date hereof or that, after the date hereof, is a
wholly-owned Subsidiary of Tenant or which, whether or not in connection
with the transfer or sale of all or substantially all of Tenant's
business, immediately following such assignment satisfies all published
criteria necessary to obtain a publicly traded unsecured senior debt
rating of "A2" or better from Moody's Investors Services, Inc. or a
rating of "A" or better from Standard & Poor's Ratings Service, and in
the event all of such rating agencies cease to furnish such ratings,
then a comparable rating by any rating agency reasonably acceptable to
Landlord and Lender.
(b) During the Initial Term, if Tenant desires to assign this
Lease to a Person ("Non-Preapproved Assignee") who would not be a
Preapproved Assignee ("Non-Preapproved Assignment") then Tenant shall,
not less than ninety (90) days prior to the date on which it desires to
make a Non-Preapproved Assignment submit to Landlord and Lender
information regarding the following with respect to the Non-Preapproved
Assignee: (A) credit, (B) capital structure, (C) management,
(D) operating history, (E) proposed use of the Leased Premises and (F)
risk factors associated with the proposed use of the Leased Premises by
the Non-Preapproved Assignee, taking into account factors such as
environmental concerns, product liability and the like. Landlord and
Lender shall review such information and shall approve or disapprove the
Non-Preapproved Assignee no later than the thirtieth (30th) day
following receipt of all such information, and Landlord and Lender shall
be deemed to have acted reasonably in granting or withholding consent
for any or no reason if such grant or disapproval is based on any of the
above-described information. Notwithstanding anything to the contrary
contained herein, if the request for consent to a Non-Preapproved
Assignment is in connection with the sale by Tenant of all or
substantially all of its assets, Landlord and Lender shall be deemed to
have consented to the Non-Preapproved Assignment so long as no Event of
Default has occurred and is continuing and if, immediately after the
assignment, the Non-Preapproved Assignee has, on a pro forma basis, an
Adjusted Consolidated Net Worth (as defined in Exhibit "E") of not less
than the sum of (x) Fifty-three Million Dollars ($53,000,000) plus (y)
an amount equal to 60% of Tenant's Consolidated Net Income on a
cumulative basis for each fiscal quarter in which such Consolidated Net
Income is positive, but with no adjustment for each fiscal quarter in
which Consolidated Net Income is negative (calculated at the end of each
fiscal quarter), commencing with the fiscal quarter of Tenant that
commenced on August 1, 1996 and continuing for each quarter to and
including the end of the fiscal quarter prior to the fiscal quarter in
which the Non-Preapproved Assignment occurs.
(c) After the Initial Term, if Tenant desires to carry out a
Non-Preapproved Assignment, then Tenant shall, not less than fifteen
(15) days prior to the date on which it desires to make such
Non-Preapproved Assignment, submit to Landlord (and Lender, if Lender's
consent to the Non-Preapproved Assignment is required), reasonable
information regarding the identity and credit of the Non-Preapproved
Assignee. Landlord (and Lender, if applicable) shall review such
information and shall, no later than the fifteenth (15th) day following
receipt of such information, approve or disapprove the Non-Preapproved
Assignee. Such approval shall be deemed given if the net worth of the
Non-Preapproved Assignee is greater than or equal to the net worth of
the Tenant as shown on its then most recently prepared financial
statements, and otherwise such approval shall not be unreasonably
withheld, conditioned or delayed.
(d) If Landlord and Lender withhold consent to the
Non-Preapproved Assignment and Tenant desires to complete the
Non-Preapproved Assignment, Tenant shall make a rejectable offer (the
"Intended Assignment Offer") to purchase the Leased Premises for a
purchase price equal to the Offer Amount and to consummate the purchase
on the first Basic Rent Payment Date occurring thirty (30) days after
the determination of Fair Market Value (the "Intended Assignment
Purchase Date"). Notwithstanding the foregoing, if the Intended
Assignment Offer is accepted by Landlord and the Non-Preapproved
Assignment occurs on a date (the "Assignment Date") that is prior to the
Intended Assignment Purchase Date, then on the Assignment Date Tenant
shall deposit in escrow with Lender an amount (the "Deposit Amount")
equal to one hundred percent (100%) of the sum of the Acquisition Cost
and any estimated Prepayment Premium. On the Intended Assignment
Purchase Date, Tenant shall increase the Deposit Amount by the amount by
which the actual Prepayment Premium exceeds the estimated Prepayment
Premium. The Deposit Amount shall be held by and invested by Lender and
the Deposit Amount, together with any interest earned thereon, shall be
applied on the Intended Assignment Purchase Date to payment of the Offer
Amount.
(e) If Landlord shall reject the Intended Assignment Offer by
notice to Tenant, such notice to contain the written consent of Lender
to such rejection, no later than the thirtieth (30th) day following
receipt of the Intended Assignment Offer by Landlord, then this Lease
shall remain in full force and effect and Landlord and Lender shall be
deemed to have consented to the Non-Preapproved Assignment. Nothing
provided herein shall constitute a waiver by Landlord of the obligation
of Tenant to comply with the requirements of this Paragraph 21(e) if a
subsequent Non-Preapproved Assignment arises. No rejection of the
Intended Assignment Offer shall be effective for any purpose unless
consented to in writing by Lender.
(f) Unless Landlord shall have rejected the Intended Assignment
Offer by the foregoing notice to Tenant not later than the thirtieth
(30th) day following receipt of information described in the foregoing
Paragraph 21(b) or 21(c), Landlord shall be conclusively presumed to
have accepted the Intended Assignment Offer. If the Intended Assignment
Offer is accepted by Landlord, Tenant shall pay to Landlord the Offer
Amount (less the Deposit Amount and interest thereon paid to Landlord)
on the Intended Assignment Purchase Date and, provided that no Rent or
any other charge is due and unpaid under this Lease as of the Intended
Assignment Purchase Date and Tenant is otherwise in compliance with the
terms of this Lease, Landlord shall convey to Tenant the Leased Premises
in accordance with the provisions of Paragraph 20 of this Lease.
(g) Any assignment of Tenant's interest in this Lease by
operation of law as a result of any merger or consolidation by Tenant
shall be governed by the provisions of Paragraph 1(c) of Exhibit "E".
(h) Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, to enter into one or more
subleases that demise, in the aggregate, up to but not in excess of
thirty-one percent (31%) of the gross space in the Improvements with no
consent or approval of Landlord or Lender being required or necessary
("Preapproved Sublet"). Other than pursuant to a Preapproved Sublet,
during the Initial Term, no portion of the Leased Premises shall be
subleased during the Term to any other Person without the prior written
consent of Landlord and Lender, which consent shall not be unreasonably
withheld or delayed, and which consent shall be granted or withheld
based on a review of the following criteria as they relate to the
proposed sublessee: (1) credit, (2) capital structure, (3) management,
(4) operating history and (5) the proposed use of the sublet portion of
the Improvements, taking into account factors related to the proposed
subtenant's use of the Leased Premises such as environmental concerns.
Landlord and Lender shall be deemed to have acted reasonably in granting
or withholding consent if such grant or disapproval is based on their
reasonable review of the above-described criteria.
(i) After the Initial Term, if Tenant desires to sublet any
portion of the Leased Premises other than as permitted by the first
sentence of Paragraph 21(b) above, then Tenant shall, not less than
fifteen (15) days prior to the date on which it desires to enter into
such sublease, submit to Landlord and Lender such information as
Landlord and Lender reasonably request regarding the identity and credit
of the proposed subtenant. Landlord and Lender shall review such
information and shall, no later than the fifteenth (15th) day following
receipt of such information, approve or disapprove the proposed
sublease. Such approval shall be deemed given if the net worth of the
proposed subtenant is greater than or equal to the net worth of the
Tenant as shown on its then most recently prepared financial statements,
and otherwise such approval shall not be unreasonably withheld,
conditioned or delayed.
(j) If Tenant assigns all its rights and interest under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Tenant hereunder, actual or contingent, including
obligations of Tenant which may have arisen on or prior to the date of
such assignment, including the obligation to comply with Exhibit "E", by
a written instrument delivered to Landlord at the time of such
assignment. Each sublease of any of the Leased Premises shall be
subject and subordinate to the provisions of this Lease. No assignment
or sublease made as permitted by this Paragraph 21 shall affect or
reduce any of the obligations of Tenant hereunder or under any document
executed by Tenant in favor of or for the benefit of Lender, and all
such obligations shall continue in full force and effect as obligations
of a principal and not as obligations of a guarantor, as if no
assignment or sublease had been made. No assignment or sublease shall
impose any additional obligations on Landlord under this Lease.
(k) With respect to any Preapproved Assignment or Preapproved
Sublet, Tenant shall provide to Landlord and to Lender legal opinions
and other information reasonably required by Landlord and Lender to
establish that any proposed Preapproved Assignment or Preapproved Sublet
satisfies the criteria set forth above.
(l) Tenant shall, within ten (10) days after the execution and
delivery of any assignment or sublease consented to by Landlord and
Lender , deliver a duplicate original copy thereof to Landlord and
Lender which, in the event of an assignment, shall be in recordable
form.
(m) As security for performance of its obligations under this
Lease, Tenant hereby grants, conveys and assigns to Landlord all right,
title and interest of Tenant in and to all subleases hereinafter entered
into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits
therefrom. Landlord hereby grants to Tenant a license to collect and
enjoy all rents and other sums of money payable under any sublease of
any of the Leased Premises, provided, however, that Landlord shall have
the absolute right at any time during the existence of an Event of
Default, upon notice to Tenant and any subtenants, to revoke said
license and to collect such rents and sums of money and to retain the
same. Tenant shall not consent to, cause or allow any modification or
alteration of any of the terms, conditions or covenants of any of the
subleases or the termination thereof, without the prior written approval
of Landlord, which consent shall not be unreasonably withheld, nor shall
Tenant do nor permit anything to be done, the doing of which, nor omit
or refrain from doing anything, the omission of which, will or could be
a breach of or default in the terms of any of the subleases.
(n) Tenant shall have no right or power to grant a mortgage on,
or to pledge its leasehold interest in, or otherwise encumber its
interest under this Lease or any sublease of the Leased Premises, and
any such mortgage, pledge or encumbrance made in violation of this
Paragraph 21 shall be void. Tenant shall not permit any subtenant to
mortgage, pledge or otherwise encumber its subleasehold interest in the
Leased Premises.
(o) Subject to Tenant's rights under Paragraph 35, Landlord may
sell or transfer the Leased Premises at any time without Tenant's
consent to any third party (each a "Third Party Purchaser"), provided,
that so long as no Event of Default exists either at the time Landlord
enters into an agreement of sale for the purchase of the Leased Premises
or on the date of conveyance to a Third Party Purchaser, Landlord shall
not sell the Leased Premises to any Person whose primary business is the
manufacturing of equipment that makes masks for the semi-conductor
industry. In the event of any such transfer, Tenant shall attorn to any
Third Party Purchaser as Landlord so long as such Third Party Purchaser
and Landlord notify Tenant in writing of such transfer and such Third
Party Purchaser assumes in writing the obligations of Landlord under
this Lease. At the request of Landlord, Tenant will execute such
documents confirming the agreement referred to above and such other
agreements as Landlord may reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant
hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b))
shall, at the sole option of Landlord, constitute an "Event of Default"
under this Lease:
(i) a failure by Tenant to make any payment of any
Monetary Obligation, regardless of the reason for such
failure;
(ii) a failure by Tenant duly to perform and observe,
or a violation or breach of, any other provision hereof not
otherwise specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by Tenant
herein or in any certificate, demand or request made
pursuant hereto proves to be incorrect, now or hereafter, in
any material respect;
(iv) a default beyond any applicable cure period or
at maturity by Tenant or any Subsidiary of Tenant in any
payment of principal or interest on any obligations for
borrowed money having an outstanding principal balance of
$10,000,000 or more in the aggregate, or in the performance
of any other provision contained in any instrument under
which any such obligation is created or secured (including
the breach of any covenant thereunder), (x) if such payment
is a payment at maturity or a final payment, or (y) if a
result of such default is to cause such obligation to be
accelerated prior to its stated maturity;
(v) a default by Tenant or any Subsidiary of Tenant
beyond any applicable cure period in the payment of rent
under, or in the performance of any other material provision
of, any other lease or leases that have, in the aggregate,
rental obligations over the terms thereof of $10,000,000 or
more in the aggregate if the landlord under any such lease
or leases commences to terminate such lease or leases,
dispossess Tenant or any Subsidiary or accelerate the rent
payable thereunder;
(vi) a final, non-appealable judgment or judgments
for the payment of money in excess of $10,000,000 (less any
amounts payable from the proceeds of insurance) in the
aggregate shall be rendered against Tenant or any Subsidiary
and the same shall not be payable from the proceeds of
insurance and shall remain undischarged, unbonded or
unsatisfied for a period of sixty (60) consecutive days;
(vii) Tenant shall breach any Covenant or an Intended
Transaction or a Non-Preapproved Assignment shall occur and
Tenant shall have failed to comply with the provisions of
Paragraph 21(d) through (f) or Paragraph 33, as applicable;
(viii) Tenant or any Significant Subsidiary of Tenant
shall (A) voluntarily be adjudicated a bankrupt or
insolvent, (B) seek or consent to the appointment of a
receiver or trustee for itself or for the Leased Premises,
(C) file a petition seeking relief under the bankruptcy or
other similar laws of the United States, any state or any
jurisdiction, (D) make a general assignment for the benefit
of creditors, or (E) be unable to pay its debts as they
mature;
(ix) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant or any Significant
Subsidiary of Tenant, a receiver or trustee for it or for
any of the Leased Premises or approving a petition filed
against Tenant or any Significant Subsidiary which seeks
relief under the bankruptcy or other similar laws of the
United States, any state or any jurisdiction, and such
order, judgment or decree shall remain undischarged or
unstayed ninety (90) days after it is entered;
(x) the Leased Premises shall have been vacated
(i.e., ceased to be operated on a consistent basis) except
as permitted under, and subject to the terms and conditions
of, Paragraph 38 hereof or the Leased Premises shall have
been abandoned;
(xi) Tenant or any Significant Subsidiary of Tenant
shall be liquidated or dissolved or shall begin proceedings
towards its liquidation or dissolution;
(xii) the estate or interest of Tenant or any
Significant Subsidiary of Tenant in any of the Leased
Premises shall be levied upon or attached in any proceeding
and such estate or interest is about to be sold or
transferred or such process shall not be vacated or
discharged within sixty (60) days after it is made;
(xiii) a failure by Tenant, following any notice and
an opportunity to cure, to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant
under any provision of any Assignment or any other document
between Tenant and Lender that, as to such Assignment or
other document, (A) recites that a breach, violation or
misrepresentation by Tenant thereunder will cause a default
under the Loan and (B) provides that Lender will give to
Tenant any notice of such default that it is required to
give to Landlord, if such failure, violation, breach or
misrepresentation gives rise to a default beyond any
applicable cure period with respect to any Loan;
(xiv) a failure by Tenant to maintain in effect any
occupancy permit for the Leased Premises or permit required
under any Environmental Law;
(xv) an Event of Default shall have occurred and be
continuing under the Construction Agency Agreement or the
Completion Agreement; or
(xvi) Tenant shall have failed to occupy Building 4
by August 1, 1999.
(b) No notice or cure period shall be required in any one or
more of the following events: (A) except as otherwise set forth below,
the occurrence of an Event of Default under clause (i), (iv), (v), (vi),
(vii), (viii), (ix), (x), (xi), (xii), (xiii), (xv) or (xvi) of
Paragraph 22(a); (B) the default consists of a failure to provide any
insurance required by Paragraph 16 or an assignment or sublease entered
into in violation of Paragraph 21; or (C) the default is such that any
delay in the exercise of a remedy by Landlord could reasonably be
expected to cause irreparable non-monetary harm to Landlord. If the
default consists of the failure to pay any Monetary Obligation under
clause (i) of Paragraph 22(a), the applicable cure period shall be five
(5) days from the date on which notice is given except that if the
failure is the failure to pay Basic Rent no notice shall be required and
only the five (5) day cure period shall be applicable, but in any event
Landlord shall not be obligated to allow any cure period for or, if
required, give notice of, any such default more than twice within any
Lease Year. If the default consists of a default under clauses (iv),
(v) or (x) the applicable cure period shall be ten (10) days from the
date on which notice is given provided that (X) with respect to a
default under clause (iv) or (v) Tenant immediately gives to Landlord
notice of acceleration or failure to pay at maturity or the exercise of
remedies by a landlord or (Y) with respect to a default under clause (x)
Tenant immediately give to Landlord notice that it has vacated the
Leased Premises. If the default consists of a default under clauses
(ii), (iii) or (xiv) of Paragraph 22(a), other than the events specified
in clauses (B) and (C) of the first sentence of this Paragraph 22(b),
the applicable cure period shall be twenty (20) days from the date on
which notice is given or, if the default cannot be cured within such
twenty (20) day period, the cure period shall be extended for the period
required to cure the default (but such cure period, including any
extension, shall not in the aggregate exceed one hundred eighty (180)
days), provided that Tenant shall commence to cure the default within
the said twenty-day period and shall actively, diligently and in good
faith proceed with and continue the curing of the default until it shall
be fully cured.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or
at any time thereafter, to the extent permitted by applicable law, to
exercise its remedies and to collect damages from Tenant in accordance
with this Paragraph 23, without demand upon or notice to Tenant except
as otherwise provided in Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in
such notice. Upon such date, this Lease, the estate hereby
granted and all rights of Tenant hereunder shall expire and
terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to
Landlord in accordance with Paragraph 26. If Tenant does
not so surrender and deliver possession of the Leased
Premises, Landlord may re-enter and repossess the Leased
Premises, with or without legal process, by peaceably
entering the Leased Premises and changing locks or by
summary proceedings, ejectment or any other lawful means or
procedure. Upon or at any time after taking possession of
the Leased Premises, Landlord may, by peaceable means or
legal process, remove any Persons or property therefrom.
Landlord shall be under no liability for or by reason of any
such entry, repossession or removal. Notwithstanding such
entry or repossession, Landlord may (A) exercise the remedy
set forth in and collect the damages permitted by
Paragraph 23(a)(iii) or (B) collect the damages set forth in
Paragraph 23(c).
(ii) After repossession of the Leased Premises
pursuant to clause (i) above, Landlord shall have the right
to relet any of the Leased Premises to such tenant or
tenants, for such term or terms, for such rent, on such
conditions and for such uses as Landlord in its sole
discretion may determine, and collect and receive any rents
payable by reason of such reletting. Landlord may make such
Alterations in connection with such reletting as it may deem
advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in
Paragraph 23(c).
(iii) To the extent permitted by applicable law,
Landlord may, upon notice to Tenant, require Tenant to make
an irrevocable offer to terminate this Lease upon payment to
Landlord of an amount (the "Default Termination Amount")
specified in the next sentence. The "Default Termination
Amount" shall be the greater of (A) the Fair Market Value of
the Leased Premises, or (B) the Acquisition Cost and the
Prepayment Premium which Landlord will be required to pay in
prepaying any Loan with proceeds of the Default Termination
Amount. Upon such notice to Tenant, Tenant shall be deemed
to have made such offer and shall, if requested by Landlord,
within ten (10) days following such request deposit with
Landlord as payment against the Default Termination Amount
the amount described in (B) above, and Landlord and Tenant
shall promptly commence to determine Fair Market Value.
Within thirty (30) days after the Fair Market Value Date,
Landlord shall accept or reject such offer. If Landlord
accepts such offer then, on the tenth (10th) business day
after such acceptance, Tenant shall pay to Landlord the
Default Termination Amount and, at the request of Tenant,
Landlord will convey the Leased Premises to Tenant or its
designee in accordance with Paragraph 20. Any rejection by
Landlord of such offer (which rejection shall have been
consented to in writing by Lender) shall have no effect on
any other remedy Landlord may have under this Lease.
(b) In addition to its other rights under this Lease, Landlord
has the remedy described in California Civil Code Section 1951.4 which
provides substantially as follows: Landlord may continue the Lease in
effect after Tenant's breach and abandonment and recover the Rent as it
becomes due. In accordance with California Civil Code Section 1951.4
(or any successor statute), Tenant acknowledges that in the event Tenant
breaches this Lease and abandons the Leased Premises, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's
right to possession, and Landlord may enforce all of its rights and
remedies under this Lease, including the right to recover the Rent as it
becomes due under this Lease. Tenant acknowledges that the limitations
on subletting and assignment set forth in Paragraph 21 are reasonable.
Acts of maintenance or preservation or efforts to relet the Leased
Premises or the appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession.
(c) If Landlord elects to terminate this Lease upon the
occurrence of an Event of Default, Landlord may collect from Tenant
damages computed in accordance with the following provisions in
addition to Landlord's other remedies under this Lease:
(i) the worth at the time of award of any unpaid Rent
which has been earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by
which any unpaid Rent which would have been earned after
termination until the time of award exceeds the amount of
such rental loss that Tenant proves could have been
reasonably avoided; plus
(iii) the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the
time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided, plus
(iv) any other reasonable Cost necessary to
compensate Landlord for all the detriment proximately caused
by Tenant's failure to perform its obligations under this
Lease, including out of pocket costs incurred by Lender, or
which in the ordinary course of things would be likely to
result therefrom including, without limitation, brokerage
commissions, the cost of repairing and reletting the Leased
Premises and reasonable attorneys' fees; plus
(v) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted
from time to time by applicable state law. Damages shall be
due and payable from the date of termination.
(d) For purposes of clauses (i) and (ii) of Paragraph 23(c), the
"worth at the time of award" shall be computed by adding interest at the
Default Rate to the past due Rent. For the purposes of clause (iii) of
Paragraph 23(c), the "worth at the time of award" shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of the award, plus one percent (1%).
(e) Landlord shall be entitled to apply the Security Deposit to
any amounts due under Paragraph 23(c) if this Lease shall be terminated,
or, if this Lease shall remain in full force and effect, to any amounts
due under Paragraph 23(b) or in the following order: (i) to past due
Basic Rent, (ii) to other Monetary Obligations then due and owing and
(iii) to installments of Basic Rent in inverse order of maturity
commencing with the last installment of the Term.
(f) Notwithstanding anything to the contrary herein contained,
in lieu of or in addition to any of the foregoing remedies and damages,
Landlord may exercise any remedies and collect any damages available to
it at law or in equity. If Landlord is unable to obtain full
satisfaction pursuant to the exercise of any remedy, it may pursue any
other remedy which it has hereunder or at law or in equity.
(g) Landlord shall not be required to mitigate any of its
damages hereunder unless required to by applicable Law. If any Law
shall validly limit the amount of any damages provided for herein to an
amount which is less than the amount agreed to herein, Landlord shall be
entitled to the maximum amount available under such Law.
(h) No termination of this Lease, repossession or reletting of
the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving
Obligations.
(i) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY. Tenant agrees
that this Lease constitutes a written consent to waiver of trial by jury
pursuant to the provisions of California Code of Civil Procedure Section
631 and Tenant does hereby appoint Landlord its true and lawful
attorney-in-fact, which appointment is coupled with an interest, and
Tenant does hereby authorize and empower Landlord, in the name, place
and stead of Tenant, to file this Lease with the clerk or judge of any
court of competent jurisdiction as statutory written consent to waiver
of trial by jury.
(j) During the existence of any Event of Default, Landlord shall
have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter
the Leased Premises, Landlord may enter the Leased Premises for such
purpose.
(k) No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise
any option, right, power or remedy contained in this Lease shall be
construed as a waiver, modification or relinquishment thereof. A
receipt by Landlord of any sum in satisfaction of any Monetary
Obligation with knowledge of the breach of any provision hereof shall
not be deemed a waiver of such breach, and no waiver by Landlord of any
provision hereof shall be deemed to have been made unless expressed in a
writing signed by Landlord.
(l) Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right
and privilege which it or any of them may have under any present or
future Law to redeem any of the Leased Premises or to have a continuance
of this Lease after termination of this Lease or of Tenant's right of
occupancy or possession pursuant to any court order or any provision
hereof, and (ii) the benefits of any present or future Law which exempts
property from liability for debt or for distress for rent.
(m) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other
remedy. Each remedy may be exercised at any time an Event of Default
has occurred and is continuing and may be exercised from time to time.
No remedy shall be exhausted by any exercise thereof.
24. Notices. All notices, demands, requests, consents,
approvals, offers, statements and other instruments or communications
required or permitted to be given pursuant to the provisions of this
Lease shall be in writing and shall be deemed to have been given for all
purposes when delivered in person or by Federal Express or other
reliable 24-hour delivery service, addressed to the other party at its
address stated on page 1 of this Lease. A copy of any notice given by
Tenant to Landlord shall simultaneously be given by Tenant to Reed Smith
Shaw & McClay, 2500 One Liberty Place, Philadelphia, PA 19103,
Attention: Chairman, Real Estate Department. For the purposes of this
Paragraph, any party may substitute another address stated above (or
substituted by a previous notice) for its address by giving fifteen (15)
days' notice of the new address to the other party, in the manner
provided above.
25. Estoppel Certificate. At any time upon not less than ten
(10) days' prior written request by any of Landlord, Tenant or Lender
(the "Requesting Party") to Landlord or Tenant, as applicable, (the
"Responding Party"), the Responding Party shall deliver to the
Requesting Party a statement in writing, executed by an authorized
officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and
effect, (b) the dates to which Basic Rent, Additional Rent and all other
Monetary Obligations have been paid, (c) that, to the knowledge of the
signer of such certificate and except as otherwise specified, no default
by either Landlord or Tenant exists hereunder, (d) such other matters as
the Requesting Party may reasonably request, and (e) if Tenant is the
Responding Party that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signer, threatened,
against Tenant before or by any court or administrative agency which, if
adversely decided, would materially and adversely affect the financial
condition and operations of Tenant or Tenant's ability to perform its
obligations under this Lease. Any such statements by the Responding
Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate,
any Lender or their assignees and by any prospective purchaser or
mortgagee of any of the Leased Premises. Any certificate required under
this Paragraph 25 and delivered by Tenant shall state that, in the
opinion of each person signing the same, he or she has made such
examination or investigation as is necessary to enable him or her to
express an informed opinion as to the subject matter of such
certificate, and shall briefly state the nature of such examination or
investigation.
26. Surrender. Upon the expiration or earlier termination of
this Lease, Tenant shall peaceably leave and surrender the Leased
Premises to Landlord in the same condition in which the Leased Premises
was at the commencement of this Lease, except as repaired, rebuilt,
restored, altered, replaced or added to as permitted or required by any
provision of this Lease, and except for ordinary wear and tear. Upon
such surrender, Tenant shall (a) remove from the Leased Premises all
property which is owned by Tenant or third parties other than Landlord
and (b) repair any damage caused by such removal. Property not so
removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises.
The cost of removing and disposing of such property and repairing any
damage to any of the Leased Premises caused by such removal shall be
paid by Tenant to Landlord upon demand. Landlord shall not in any
manner or to any extent be obligated to reimburse Tenant for any such
property which becomes the property of Landlord pursuant to this
Paragraph 26.
27. No Merger of Title. There shall be no merger of the
leasehold estate created by this Lease with the fee estate in any of the
Leased Premises by reason of the fact that the same Person may acquire
or hold or own, directly or indirectly, (a) the leasehold estate created
hereby or any part thereof or interest therein and (b) the fee estate in
any of the Leased Premises or any part thereof or interest therein,
unless and until all Persons having any interest in the interests
described in (a) and (b) above which are sought to be merged shall join
in a written instrument effecting such merger and shall duly record the
same.
28. Books and Records.
(a) Tenant shall permit Landlord and Lender by their respective
agents, accountants and attorneys, upon not less than 48 hours notice to
Tenant (except that if an Event of Default exists no notice shall be
required), to visit and inspect the Leased Premises and examine (and
make copies of) the records and books of account and to discuss the
finances and business with the officers of Tenant and its independent
accountants, at such reasonable times as may be requested by Landlord.
Upon the request of Lender (either telephonically or in writing), Tenant
shall provide to Lender (with a copy to Landlord) such other information
as Lender shall reasonably request.
(b) Tenant shall deliver to Landlord and to Lender within ninety
(90) days of the close of each fiscal year, annual audited financial
statements of Tenant and its consolidated Subsidiaries prepared by
nationally recognized independent certified public accountants. Tenant
shall also furnish to Landlord and Lender within forty-five (45) days of
the close of each of the remaining three (3) fiscal quarters unaudited
financial statements of Tenant, certified by Tenant's chief financial
officer, and all other quarterly reports of Tenant, and all filings, if
any, of Form 10-K, Form 10-Q and other required filings with the
Securities and Exchange Commission pursuant to the provisions of the
Securities Exchange Act of 1934, as amended, or any other Law. All
financial statements of Tenant shall be prepared in accordance with GAAP
(as defined in Exhibit "E" hereto) consistently applied. All annual
financial statements shall be accompanied (x) by an opinion of said
accountants stating that (1) there are no qualifications as to the scope
of the audit and (2) the audit was performed in accordance with GAAP and
(y) by the affidavit of the president or a vice president of Tenant,
dated within five (5) days of the delivery of such statement, stating
that (i) the affiant knows of no Event of Default, or event which, upon
notice or the passage of time or both, would become an Event of Default
which has occurred and is continuing hereunder or, if any such event has
occurred and is continuing, specifying the nature and period of
existence thereof and what action Tenant has taken or proposes to take
with respect thereto and (ii) except as otherwise specified in such
affidavit, that Tenant has fulfilled all of its obligations under this
Lease which are required to be fulfilled on or prior to the date of such
affidavit.
(c) Landlord and its agents, accountants and attorneys, shall
consider and treat on a confidential basis (i) any information contained
in the books and records of Tenant, (ii) any copies of any books and
records of Tenant, and any financial statements of Tenant pursuant to
Paragraph 28(b) which are delivered to or received by them. Neither
Landlord nor its agents, accountants and attorneys, shall disclose any
information contained in Tenant's books and records nor distribute
copies of any of such books and records nor Tenant's financial
statements to any other Persons without the prior written consent of the
chief operating officer of Tenant.
(d) The restrictions contained in Paragraph 28(c) shall not
prevent disclosure by Landlord of any information in any of the
following circumstances:
(i) Upon the order of any court or administrative
agency to the extent required by such order and not
effectively stayed or by appeal or otherwise;
(ii) Upon the request, demand or requirement of any
regulatory agency or authority having jurisdiction over such
party, including the United States Securities and Exchange
Commission (whether or not such request or demand has the
force of law);
(iii) That has been publicly disclosed by Tenant in a
press release or other public announcement of general
circulation or filed with the United States Securities and
Exchange Commission or that has become public through no
breach by the recipient of these confidentiality
obligations;
(iv) To counsel or accountants or other agents for
Landlord or counsel or accountants or other agents for such
other Person who has agreed to abide by the provisions of
Paragraph 28(c);
(v) While an Event of Default exists, in connection
with the exercise of any right or remedy under this Lease or
any other related document;
(vi) Independently developed by Landlord to the
extent that confidential information provided by Tenant is
not used to develop such information;
(vii) With respect to financial information and
information that Landlord or its attorneys deem to be
material in any reporting to the shareholders of Landlord or
the shareholders or prospective shareholders (whether
through a registered public offering or otherwise) of
Landlord's parent company;
(viii) In connection with any sale or financing of
the Leased Premises, provided that any recipient of such
information who is a prospective purchaser of the Leased
Premises (except for a purchaser that purchases all or
substantially all of the assets of Landlord's parent
company) shall agree to be bound by the terms of
Paragraph 28(c);
(ix) From Landlord to Lender or to any prospective
purchaser of the Leased Premises or to the National
Association of Insurance Commissioners; or
(x) As otherwise required by Law.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value or Fair Market
Rental Value is required pursuant to any provision of this Lease, such
Fair Market Value or Fair Market Rental Value shall be determined in
accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon
such Fair Market Value within thirty (30) days after the
date (the "Applicable Initial Date") on which (A) Tenant
provides Landlord with notice of its intention to terminate
this Lease and purchase the Leased Premises pursuant to
Paragraph 18, (B) Landlord provides Tenant with notice of
its intention to redetermine Fair Market Value pursuant to
Paragraph 20(c), (C) Landlord provides Tenant with notice of
Landlord's intention to require Tenant to make an offer to
terminate this Lease pursuant to Paragraph 23(a)(iii), (D)
Tenant provides Landlord with an Intended Assignment Offer
under Paragraph 21(d), (E) the date on which Landlord
accepts Tenant's offer pursuant to Paragraph 33(c), (F) the
date on which Landlord accepts the Third Party Purchaser's
offer pursuant to Paragraph 35(c) and (G) the date on which
Landlord accepts Tenant's offer pursuant to Paragraph 38(d).
Landlord and Tenant shall endeavor to agree on Fair Market
Rental Value on the date (also, an "Applicable Initial
Date") which is six (6) calendar months prior to the
expiration of the then current Term unless Tenant has
previously exercised its option pursuant to Paragraph 5(b)
not to have the Term automatically extended. Upon reaching
such agreement, the parties shall execute an agreement
setting forth the amount of such Fair Market Value or Fair
Market Rental Value, as the case may be.
(ii) If the parties shall not have signed such
agreement within thirty (30) days after the Applicable
Initial Date, Tenant shall within fifty (50) days after the
Applicable Initial Date select an appraiser and notify
Landlord in writing of the name, address and qualifications
of such appraiser. Within twenty (20) days thereafter,
Landlord shall select an appraiser and notify Tenant of the
name, address and qualifications of such appraiser. Such
two appraisers shall endeavor to agree upon Fair Market
Value or Fair Market Rental Value, as the case may be, based
on an appraisal made by each of them as of the Relevant
Date. If such two appraisers shall agree upon a Fair Market
Value or Fair Market Rental Value, as the case may be, the
amount of such Fair Market Value or Fair Market Rental
Value, as the case may be, as so agreed shall be binding and
conclusive.
(iii) If such two appraisers shall be unable to agree
upon a Fair Market Value or Fair Market Rental Value, as the
case may be, within twenty (20) days after the selection of
an appraiser by Landlord, then such appraisers shall advise
Landlord and Tenant of their respective determination of
Fair Market Value or Fair Market Rental Value, as the case
may be, and shall select a third appraiser to make the
determination of Fair Market Value or Fair Market Rental
Value, as the case may be, which determination as to the
selection of the third appraiser shall be binding and
conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree
upon the designation of a third appraiser within ten (10)
days after the expiration of the twenty (20) day period
referred to in clause (iii) above, or if such third
appraiser does not make a determination of Fair Market Value
or Fair Market Rental Value, as the case may be, within
twenty (20) days after his selection, then such third
appraiser or a substituted third appraiser, as applicable,
shall, at the request of either party hereto (with notice to
the other party), be appointed by the President or Chairman
of the American Arbitration Association in San Francisco,
California. The determination of Fair Market Value or Fair
Market Rental Value, as the case may be, made by the third
appraiser appointed pursuant hereto shall be made within
twenty (20) days after such appointment.
(v) Fair Market Value or Fair Market Rental Value, as
the case may be, shall be the average of the determination
of Fair Market Value or Fair Market Rental Value, as the
case may be, made by the third appraiser and the
determination of Fair Market Value or Fair Market Rental
Value, as the case may be, made by the appraiser (pursuant
to Paragraph 29(a)(iii) hereof) whose determination of Fair
Market Value or Fair Market Rental Value, as the case may
be, is nearest to that of the third appraiser. Such average
shall be binding and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to
this Paragraph 29(a) shall (A) be independent qualified MAI
appraisers (B) have no right, power or authority to alter or
modify the provisions of this Lease, (C) utilize the
methodology for determining Fair Market Value set forth in
Paragraph 29(c) or the methodology for determining Fair
Market Rental Value as set forth in Paragraph 29(d), and (D)
be registered in the State if the State provides for or
requires such registration. The Cost of the procedure
described in this Paragraph 29(a) above shall be borne
equally by Landlord and Tenant, except that the Cost with
respect to the appraisals performed under Paragraphs 21, 23,
33 or 38 shall be paid by Tenant and the Cost with respect
to the appraisals performed under Paragraph 35 shall be paid
by the Third Party Purchaser.
(b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term,
then the date on which the Term would otherwise expire or terminate
shall be extended to the date specified for termination in the
particular provision of this Lease pursuant to which the determination
of Fair Market Value is being made. If, by virtue of any delay, Fair
Market Rental Value is not determined by the expiration or termination
of the then current Term, then until Fair Market Rental Value is
determined, Tenant shall continue to pay Basic Rent during the
succeeding Renewal Term in the same amount which it was obligated under
this Lease to pay prior to the commencement of the Renewal Term. When
Fair Market Rental Value is determined, the appropriate Basic Rent shall
be calculated retroactive to the commencement of the Renewal Term and
Tenant shall either receive a refund from Landlord (in the case of an
overpayment) or shall pay any deficiency to Landlord (in the case of an
underpayment).
(c) Fair Market Value shall be determined as follows: The
appraisers shall add (i) the present value of the Rent for the remaining
Term, (with assumed increases in the CPI to be determined by the
appraisers) using a discount rate (which may be determined by an
investment banker) based on the creditworthiness of Tenant and (ii) the
present value of the Fair Market Value of the Leased Premises as of the
end of the then current Term (without necessarily making any assumption
as to whether the Tenant will or will not exercise any remaining
options), using a yield rate required by investors for property having
similar characteristics, without consideration given to Tenant's credit
rating or creditworthiness. In determining the value under (ii), the
appraisers shall, insofar as possible, consider properties having
similar characteristics and in reasonable proximity to the Leased
Premises, but the appraisers shall not be precluded from considering
properties that do not have "clean" rooms, properties that are (or are
not) located in Hayward, California or properties having a different use
than the Leased Premises. The appraisers shall further assume that no
default then exists under the Lease, that Tenant has complied (and will
comply) with all provisions of the Lease, and that Tenant has not
violated (and will not violate) any of the Covenants.
(d) In determining Fair Market Rental Value, the appraisers
shall determine the amount that a willing tenant would pay, and a
willing landlord of a building having similar characteristics and in
reasonable proximity to the Leased Premises would accept, at arm's
length, taking into account: (a) the age, quality, and condition of the
Improvements; (b) that the Leased Premises may be leased as a whole or
substantially as a whole to a single user or leased to multiple users;
(c) a lease term of five (5) years; (d) an absolute triple net lease;
and (e) such other items that professional real estate appraisers
customarily consider. In determining Fair Market Rental Value, the
appraisers shall, insofar as possible, consider properties having
similar characteristics and in reasonable proximity to the Leased
Premises, but the appraisers shall not be precluded from considering
properties that do not have "clean" rooms, properties that are (or are
not) located in Hayward, California or properties having a different use
than the Leased Premises.
30. Non-Recourse as to Landlord. Anything contained herein to
the contrary notwithstanding, any claim based on or in respect of any
liability of Landlord under this Lease shall be enforced only against
the Leased Premises and not against any other assets, properties or
funds of (a) Landlord, (b) any director, officer, general partner,
shareholder, member, limited partner, advisor, employee or agent of
Landlord or any general partner of Landlord or any of its general
partners (or any legal representative, heir, estate, successor or assign
of any thereof), (c) any predecessor or successor partnership or
corporation (or other entity) of Landlord or any of its general
partners, shareholders, officers, directors, advisors, employees or
agents, either directly or through Landlord or its general partners,
shareholders, officers, directors, advisors, employees or agents or any
predecessor or successor partnership or corporation (or other entity),
or (d) any other Person (including W.P. Carey Incorporated) affiliated
with any of the foregoing, or any director, officer, advisor, employee
or agent of any thereof.
31. Financing.
(a) Tenant covenants and agrees that it shall pay all reasonable
costs and expenses incurred by Landlord in refinancing the Initial Loan,
including the cost of any mortgage broker's fees, "points" or commitment
fees payable to the Lender, survey, title and environmental costs and
costs of Landlord's and Lender's counsel. Payment of such costs shall
be made within ten (10) days following receipt of a written request from
Landlord accompanied by invoices for the amounts requested.
(b) If Landlord desires to obtain or refinance any Loan, Tenant
shall negotiate in good faith with Landlord concerning any request made
by any Lender or proposed Lender for changes or modifications in this
Lease. In particular, Tenant shall agree, upon request of Landlord, to
supply any such Lender with such notices and information as Tenant is
required to give to Landlord hereunder and to extend the rights of
Landlord hereunder to any such Lender and to consent to such financing
if such consent is requested by such Lender. Tenant shall provide any
other consent or statement and shall execute any and all other documents
that such Lender requires in connection with such financing, including
any environmental indemnity agreement and subordination, non-disturbance
and attornment agreement, so long as the same do not materially
adversely affect any right, benefit or privilege of Tenant under this
Lease or materially increase Tenant's obligations under this Lease.
(c) Except as provided in Paragraph 31(a) above, Tenant shall
not be responsible for any fees or expenses associated with any of the
transactions contemplated by this Paragraph 31. Landlord shall
reimburse Tenant for all reasonable costs and expenses incurred by
Tenant in carrying out its obligations under this Paragraph 31 other
than as provided in the foregoing Paragraph 31(a).
32. Subordination. This Lease and Tenant's interest hereunder
shall be subordinate to any Mortgage or other security instrument
hereafter placed upon the Leased Premises by Landlord, and to any and
all advances made or to be made thereunder, to the interest thereon, and
all renewals, replacements and extensions thereof, provided that any
such Mortgage or other security instrument (or a separate instrument in
recordable form duly executed by the holder of any such Mortgage or
other security instrument and delivered to Tenant) shall provide for the
recognition of this Lease and all Tenant's rights hereunder unless and
until an Event of Default exists or Landlord shall have the right to
terminate this Lease pursuant to any applicable provision hereof all as
set forth in a Subordination, Non-Disturbance and Attornment Agreement
in form and substance reasonably satisfactory to Tenant.
33. Financial Covenants; Covenant Breach Offer.
(a) Until the expiration of the Initial Term, Tenant hereby
covenants and agrees to comply with all the covenants and agreements
(the "Covenants") described in Paragraphs 1 through 3 in Exhibit "E"
hereto.
(b) If (i) Tenant intends to take any action or, with respect to
Paragraph 1(b) of Exhibit "E", has knowledge that such action is
intended to be taken by another Person, or such action occurs (such
action, an "Intended Transaction") that would result in a breach of any
Covenant set forth in Paragraph 1 or 2 of Exhibit "E" attached hereto or
(ii) Tenant becomes aware that the Covenant set forth in Paragraph 3 of
Exhibit "E" will be or has been breached (a "Covenant Breach"), then,
not later than ninety (90) days prior to the Intended Transaction or the
date on which Tenant obtains knowledge of any such action, in the case
of (i) above, or immediately upon becoming aware that a Covenant Breach
will occur or has occurred, in the case of (ii) above, Tenant shall
submit to Landlord and Lender a description thereof specifying the
Intended Transaction or the Covenant Breach, as the case may be,
together with a rejectable offer of Tenant to purchase the Leased
Premises (as required by, and in accordance with, the provisions of this
Paragraph 33) and, if such offer is accepted by Landlord, Tenant shall
purchase the Leased Premises within the time prescribed for such
purchase (as provided in this Paragraph 33) and otherwise in accordance
with the provisions of Paragraph 20 of this Lease.
(c) Tenant shall make an offer to purchase the Leased Premises
no later than the date (the "Intended Transaction Closing Date") on
which the Intended Transaction will occur (or, in the case of a Covenant
Breach, no later than the earlier of ninety (90) days from the date
Tenant becomes aware that a Covenant Breach has occurred or will occur)
for a purchase price equal to the Offer Amount.
(d) If Landlord shall reject such offer by notice to Tenant,
such notice to contain the written consent of Lender to such rejection,
not later than the thirtieth (30th) day following receipt of such offer
by Landlord, then the Lease shall remain in full force and effect and
the Intended Transaction or Covenant Breach, as the case may be, shall
be deemed waived or acceptable by Landlord and Lender, respectively, and
the waiver or acceptance shall remain in effect for the balance of the
Term with respect to the specific Intended Transaction or specific set
of facts giving rise to the Covenant Breach only. No rejection of an
offer under this Paragraph 33 shall be effective for any purpose unless
consented to in writing by Lender.
(e) Unless Landlord shall have rejected such offer by the
foregoing notice to Tenant not later than the thirtieth (30th) day
following receipt of Tenant's offer by Landlord, Landlord shall be
conclusively presumed to have accepted such offer. If such offer is
accepted by Landlord, Tenant shall pay to Landlord the Offer Amount on
the Intended Transaction Closing Date (except that if the Fair Market
Value of the Leased Premises shall not yet have been determined, Tenant
shall pay to Landlord an amount equal to the Deposit Amount on the
Intended Transaction Closing Date and any excess of the Fair Market
Value of the Leased Premises over such sum shall be paid by Tenant to
Landlord within ten (10) days of the determination of such Fair Market
Value) and, provided that no Rent or any other charge is due and unpaid
under this Lease as of the Intended Transaction Closing Date, and Tenant
is otherwise in compliance with the terms of this Lease, Landlord shall
convey to Tenant the Leased Premises in accordance with the provisions
of Paragraph 20.
(f) Notwithstanding the foregoing, and only with respect to
offers made solely in anticipation of an Intended Transaction or a
Covenant Breach which Tenant anticipates will occur, if Tenant
determines that the Intended Transaction or Covenant Breach will not
occur, Tenant shall have the right to revoke its offer to purchase the
Leased Premises by notice to Landlord received not later than fifteen
(15) days prior to the anticipated Intended Transaction Closing Date
(TIME BEING OF THE ESSENCE), provided that Tenant shall be obligated to
pay all Costs of Landlord and Lender reasonably incurred as a result of
the offer made by Tenant pursuant to this Paragraph 33. Nothing
provided herein shall constitute a waiver by Landlord of the obligation
of Tenant to comply with the requirements of this Paragraph 33 if a
subsequent Covenant Breach or subsequent Intended Transaction will occur
or occurs.
34. Tax Treatment; Reporting. Landlord and Tenant each
acknowledge that each shall treat this transaction as a true lease for
state law purposes and shall report this transaction as a lease for
Federal income tax purposes. For Federal income tax purposes each shall
treat this Lease as a true lease with Landlord as the owner of the
Leased Premises and Tenant as the lessee of such Leased Premises
including: (1) treating Landlord as the owner of the property eligible
to claim depreciation deductions under Section 167 or 168 of the
Internal Revenue Code of 1986 (the "Code") with respect to the Leased
Premises, (2) Tenant reporting its Rent payments as a business expense
under Section 162 of the Code, and (3) Landlord reporting the Rent
payments as rental income.
35. Right of First Refusal.
(a) Except as otherwise provided in clause (e) of this
Paragraph 35, and provided an Event of Default does not then exist,
prior to selling the Leased Premises to any Third Party Purchaser, if
Landlord shall enter into a contract for the sale of the Leased Premises
with a Third Party Purchaser, (i) such contract shall be conditioned
upon Tenant's failure to exercise its right under this Paragraph 35 and
(ii) Landlord shall give written notice to Tenant of the contract for
sale, together with a copy of the executed offer or contract and the
name and business address of the Third Party Purchaser.
(b) For a period of thirty (30) days following receipt of such
notice, Tenant shall have the right and option, exercisable by written
notice to Landlord given within said thirty (30) day period, to elect to
purchase the Leased Premises at the purchase price and upon all the
terms and conditions set forth in such contract for sale except that no
contingencies contained in such contract for sale as to environmental
assessments, engineering studies, inspection of the Leased Premises,
sale of other property, state of the title to or encumbrances on the
Leased Premises which pertains to any exception of title created by, or
suffered to exist by, Tenant, or any other condition or contingency to
the Third Party Purchaser's obligation to purchase the Leased Premises
which pertains to the condition of the Leased Premises, shall apply to
Tenant's obligation to purchase the Leased Premises under this
Paragraph 35, and Tenant shall be obligated to purchase the Leased
Premises without any such condition or contingency.
(c) If at the expiration of the aforesaid thirty (30) day period
Tenant shall have failed to exercise the aforesaid option, Landlord may
sell the Leased Premises to such Third Party Purchaser upon the terms
set forth in such contract. For the purposes of Paragraph 35(a), the
purchase price in any contract to purchase the Leased Premises which is
received by Landlord between June 1, 2007 and May 31, 2008 shall be
deemed to be "acceptable to Landlord" if such offer (i) is for an amount
equal to or greater than the greater of (A) the sum of (1) Fair Market
Value (which shall be determined in accordance with the procedure set
forth in Paragraph 29 of this Lease, except that references to Tenant in
Paragraphs 29(a) and (b) hereof shall mean Third Party Purchaser) and
(2) the Prepayment Premium or (B) the sum of (1) the Acquisition Cost
reduced by the principal payments made on the Note to the date of
purchase and (2) the Prepayment Premium, (ii) provides that the
purchaser pays all costs in connection with such purchase, (iii)
provides that such purchase price is payable in cash at the closing of
the sale of the Leased Premises and (iv) the closing date for such
purchase will occur not later than sixty (60) days following May 31,
2008.
(d) Except as otherwise specifically provided in the foregoing
Paragraph 35(a), the closing date for any purchase of the Leased
Premises by Tenant pursuant to this Paragraph 35 shall be on a date
designated by Tenant, but not later than (i) ninety (90) days after the
date of Tenant's notice to Landlord of its intention to purchase the
Leased Premises upon the terms of the contract for sale with a Third
Party Purchaser or (ii) the closing date provided in such contract for
sale. At such closing Landlord shall convey the Leased Premises to
Tenant in accordance with, and Tenant shall pay to Landlord the purchase
price and other consideration set forth in, the applicable offer or
contract.
(e) Tenant shall have the right during the Term to exercise the
foregoing right of first refusal upon each proposed sale of the Leased
Premises prior to May 31, 2008; provided, that if, following compliance
with the procedure described in this Paragraph 35, a Third Party
Purchaser does not purchase the Leased Premises, such event shall not
count as an exercise of Tenant's right of first refusal.
NOTWITHSTANDING ANYTHING TO THE CONTRARY, IF TENANT FAILS TO EXERCISE
THE RIGHT OF FIRST REFUSAL BY May 31, 2008, OR IF THIS LEASE TERMINATES
OR THE TERM EXPIRES, SUCH RIGHT SHALL TERMINATE AND BE NULL AND VOID AND
OF NO FURTHER FORCE AND EFFECT.
(f) If Tenant does not exercise its right of first refusal to
purchase the Leased Premises and the Leased Premises are transferred to
a Third Party Purchaser, Tenant will attorn to any Third Party Purchaser
as Landlord so long as such Third Party Purchaser and Landlord notify
Tenant in writing of such transfer. At the request of Landlord, Tenant
will execute such documents confirming the agreement referred to above
and such other agreements as Landlord may reasonably request, provided
that such agreements do not increase the liabilities and obligations of
Tenant hereunder.
(g) The provisions of Paragraph 35(a) shall not apply to or
prohibit (i) any mortgaging, subjection to deed of trust or other
hypothecation of Landlord's interest in the Leased Premises, (ii) any
sale of the Leased Premises pursuant to a private power of sale under or
judicial foreclosure of any Mortgage or other security instrument or
device to which Landlord's interest in the Leased Premises is now or
hereafter subject, (iii) any transfer of Landlord's interest in the
Leased Premises to a Lender, beneficiary under deed of trust or other
holder of a security interest therein by deed in lieu of foreclosure,
(iv) any transfer of the Leased Premises to any governmental or
quasi-governmental agency with power of condemnation, (v) any transfer
of the Leased Premises to any affiliate of Landlord, Corporate Property
Associates 12 Incorporated ("CPA 12") or Corporate Property Associates
14 Incorporated ("CPA 14") or to any entity for whom W.P. Carey & Co.,
Inc., W.P. Carey Incorporated or any of their affiliates provides
material management or investment advice, (vi) any Person to whom CPA 12
or CPA 14 sell all or substantially all of their assets, (vii) any
transfer of the Leased Premises to any of the successors or assigns of
any of the Persons referred to in the foregoing clauses (i) through (vi)
or (viii) any transfer, sale or conveyance of any part or all of the
interests in Landlord between its members or to any affiliates of
Landlord, CPA 12 or CPA 14.
36. Financing Major Alterations.
(a) Should Tenant, during the Term of this Lease, desire to make
Alterations to any of the Leased Premises which are not readily
removable without causing material damage to the Leased Premises which
cannot be repaired and which will cost in excess of Five Hundred
Thousand Dollars ($500,000) ("Major Alterations"), Tenant may, prior to
the commencement of construction of such Major Alterations, request
Landlord (with a copy of such request to Lender) to reimburse the costs
thereof to Landlord (the "Alteration Cost") to Tenant, to wit: cost of
labor and materials, financing fees, legal fees, survey, title insurance
and other normal and customary loan or construction costs.
(b) Should Landlord agree to reimburse such costs, Landlord and
Tenant shall enter into good faith negotiations regarding the execution
and delivery of a written agreement of modification of this Lease, which
agreement shall provide for the following:
(i) payment by Landlord to Tenant of the Alteration
Cost within one hundred twenty (120) days of the date of
Landlord's agreement to pay the Alteration Cost, or in
installment payments as agreed, or on the date of completion
of the Major Alterations, whichever shall be the later;
(ii) an increase in the annual Basic Rent payable
during the Amortization Period (as hereinafter defined) to
an amount sufficient to amortize the Alteration Cost ("Total
Financing") over a period (the "Amortization Period") which
shall be the remainder of the then current Term and, if
Tenant so elects, any additional extension periods provided
for herein (so long as Tenant shall confirm any such
extension periods included in the Amortization Period by a
written waiver of its right to give notice of its intention
not to renew this Lease prior to the expiration of such
extension periods), at such rate of interest and upon such
other terms as shall be agreed upon between Landlord and
Tenant, but which shall be no less favorable than the
prevailing interest rate and terms for unsecured loans in a
principal amount equal to the Total Financings for borrowers
with credit ratings equivalent to the lesser of Landlord's
or Tenant's credit rating at that time; and
(iii) such other changes and amendments to this Lease
as may be necessary and appropriate in view of such payment
of the Alteration Cost by Landlord to Tenant.
(c) Tenant shall pay all Costs incurred by Landlord in
connection with any such modification to this Lease and such financing,
including closing costs, brokerage fees, taxes, recording charges and
legal fees and expenses.
(d) If Landlord and Tenant do not reach agreement on Tenant's
request to have Landlord finance the Alteration Costs, Tenant shall,
subject to the provisions of Paragraph 13 of this Lease, have the right
to construct the Major Alterations at Tenant's sole cost and expense.
In any event, the construction of the Major Alterations shall be
performed in accordance with the provisions of Paragraph 13 hereof and
the Major Alterations shall be the property of Landlord and part of the
Leased Premises subject to this Lease.
(e) Nothing contained in this Paragraph 36 shall be construed to
modify Paragraph 13 hereof, and the provisions of Paragraph 12 and
subparagraphs (i) and (ii) of Paragraph 13(a) shall apply to all Major
Alterations made or constructed hereunder, including the requirement for
Landlord's consent to Alterations.
37. Security Deposit.
(a) Tenant has delivered to Landlord a security deposit (the
"Security Deposit") in the amount of Three Hundred Forty-two Thousand
Five Hundred Eighty-one and 25/100 ($342,581.25). If not sooner applied
as provided in Paragraph 23(e), the Security Deposit shall be applied
(i) to monthly payments of the Basic Rent in reverse order, commencing
with the last month of the Initial Term, commencing with the last
payment due or (ii) if Tenant purchases the Leased Premises, against
Tenant's obligation to pay the Default Termination Amount, Offer Amount
or Termination Amount, as the case may be. The Security Deposit shall
be security for the payment by Tenant of the Rent and all other charges
or payments to be paid hereunder and the performance of the covenants
and obligations contained herein. Landlord shall have the right to
commingle the Security Deposit with other funds of Landlord. Anything
herein contained to the contrary notwithstanding, the Security Deposit
shall be credited against Rent or other obligations of Tenant hereunder.
(b) Landlord shall have the right to assign to Lender or any
other holder of a Mortgage the Security Deposit during the term of the
applicable Loan, and the Lender or such other holder of a Mortgage shall
have all of the rights of, and shall be subject to the terms of, this
Paragraph 37. Tenant covenants and agrees to execute such agreements,
consents and acknowledgments as may be reasonably requested by Landlord
and Lender from time to time to acknowledge the assignment of the
Security Deposit.
38. Right to Vacate; Rejectable Offer Upon Vacation.
(a) Tenant shall have the right at any time after June 1, 2004
to vacate the Leased Premises; provided that (i) Tenant shall notify
Landlord and Lender within ten (10) days after vacation of the Leased
Premises by Tenant, (ii) Tenant shall make reasonable good faith efforts
to sublet the Leased Premises, which sublease or subleases which shall
be subject to the provisions of Paragraph 21(h) or (i) hereof, as the
case may be, and (iii) Tenant shall continue to perform all of its
obligations under this Lease, including its obligation to maintain the
Leased Premises and to pay all Rent as and when due hereunder.
(b) If, at any time during the Term, the Leased Premises shall
be vacant for twelve (12) consecutive months, Tenant shall, on the first
day of the thirteenth (13th) month that Leased Premises are vacant, make
an offer (the "Vacation Offer") to purchase the Leased Premises on the
first Basic Rent Payment Date occurring thirty (30) days after the
determination of Fair Market Value (the "Vacation Purchase Date") for a
purchase price equal to the Offer Amount. Promptly upon the delivery to
Landlord of the Vacation Offer, Landlord and Tenant shall commence to
determine the Fair Market Value of the Leased Premises.
(c) No rejection of the Vacation Offer shall be effective for
any purpose unless consented to in writing by Lender. If Landlord shall
reject the Vacation Offer by notice to Tenant, containing the written
consent of Lender to such rejection, no later than the thirtieth (30th)
day following receipt of the Vacation Offer by Landlord, then this Lease
shall remain in full force and effect and Landlord and Lender shall be
deemed to have waived the Event of Default described in
Paragraph 22(a)(x) with respect to a vacation of the Leased Premises.
(d) Unless Landlord shall have rejected the Vacation Offer by
the foregoing notice to Tenant not later than the thirtieth (30th) day
following receipt of the Vacation Offer by Landlord, Landlord shall be
conclusively presumed to have accepted the Vacation Offer. If the
Vacation Offer is accepted by Landlord, then, through an appropriate
escrow, (i) Tenant shall pay to Landlord the Offer Amount on the
Vacation Purchase Date and, (ii) provided that no Rent or any other
charge is due and unpaid under this Lease as of the Vacation Purchase
Date and Tenant is otherwise in compliance with the terms hereof,
Landlord shall convey to Tenant the Leased Premises in accordance with
the provisions of Paragraph 20.
39. Miscellaneous.
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this
Lease or to be used in determining the intent of the parties or
otherwise interpreting this Lease.
(b) As used in this Lease, the singular shall include the plural
and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings:
(i) "including" shall mean "including without limitation";
(ii) "provisions" shall mean "provisions, terms, agreements, covenants
and/or conditions"; (iii) "lien" shall mean "lien, charge, encumbrance,
title retention agreement, pledge, security interest, mortgage and/or
deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any
part thereof or interest therein"; (vii) "any of the Improvements" shall
mean "the Improvements or any part thereof or interest therein";
(viii) "any of the Equipment" shall mean "the Equipment or any part
thereof or interest therein"; and (ix) "any of the Adjoining Property"
shall mean "the Adjoining Property or any part thereof or interest
therein".
(c) Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or
any person or entity designated by Landlord. Each appointment of
Landlord as attorney-in-fact for Tenant hereunder is irrevocable and
coupled with an interest. Except as otherwise specifically provided
herein, Landlord shall have the right, at its sole option, to withhold
or delay its consent whenever such consent is required under this Lease
for any reason or no reason. Time is of the essence with respect to the
performance by Tenant of its obligations under this Lease.
(d) Landlord shall in no event be construed for any purpose to
be a partner, joint venturer or associate of Tenant or of any subtenant,
operator, concessionaire or licensee of Tenant with respect to any of
the Leased Premises or otherwise in the conduct of their respective
businesses.
(e) This Lease and any documents which were executed by Tenant
at the request of Landlord on or about the date of the Original Lease
and may be executed by Tenant on or about the effective date hereof at
Landlord's request constitute the entire agreement between the parties
and supersede all prior understandings and agreements, whether written
or oral, between the parties hereto relating to the Leased Premises and
the transactions provided for herein. Landlord and Tenant are business
entities having substantial experience with the subject matter of this
Lease and have each fully participated in the negotiation and drafting
of this Lease. Accordingly, this Lease shall be construed without
regard to the rule that ambiguities in a document are to be construed
against the drafter.
(f) This Lease may be modified, amended, discharged or waived
only by an agreement in writing signed by the party against whom
enforcement of any such modification, amendment, discharge or waiver is
sought.
(g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent
encumbrances and subtenants of any of the Leased Premises, and shall
inure to the benefit of Landlord, its successors and assigns. If there
is more than one Tenant, the obligations of each shall be joint and
several.
(h) If any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
(i) This Lease shall be governed by and construed and enforced
in accordance with the Laws of the State.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to
be duly executed under seal as of the day and year first above written.
LANDLORD:
ET LLC, a Delaware limited
liability company, d/b/a ET QRS LLC
By: Corporate Property Associates
12 Incorporated, Member
By:
Title: First Vice President
By: Corporate Property Associates
14 Incorporated, Member
By:
Title: First Vice President
TENANT:
ETEC SYSTEMS, INC.,
a Nevada corporation
By:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 44,501
<SECURITIES> 52,393
<RECEIVABLES> 70,647
<ALLOWANCES> 1,199
<INVENTORY> 79,134
<CURRENT-ASSETS> 282,663
<PP&E> 43,179
<DEPRECIATION> 0
<TOTAL-ASSETS> 329,713
<CURRENT-LIABILITIES> 106,309
<BONDS> 0
0
0
<COMMON> 220
<OTHER-SE> 218,838
<TOTAL-LIABILITY-AND-EQUITY> 329,713
<SALES> 112,132
<TOTAL-REVENUES> 130,533
<CGS> 49,605
<TOTAL-COSTS> 63,322
<OTHER-EXPENSES> 24,332 <F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 360
<INCOME-PRETAX> 27,295
<INCOME-TAX> 9,416
<INCOME-CONTINUING> 9,416
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,416
<EPS-PRIMARY> $0.82
<EPS-DILUTED> $0.78
<FN>
<F1> EXCLUDES SG&A AS SG&A IS PART OF 5-03(b)(4).
</FN>
</TABLE>
