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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 17, 1996
TriQuint Semiconductor, Inc.
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(Exact name of registrant as specified in its charter)
California 0-22660 95-3654013
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
3625A S.W. Murray Blvd., Beaverton, Oregon 97005
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 644-3535
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ITEM 5. OTHER EVENTS
TriQuint Semiconductor, Inc. (the "Company") entered into several
agreements each dated May 17, 1996 in connection with a lease facility for the
construction of a 187,000 square foot semiconductor manufacturing and office
complex in Hillsboro, Oregon. Pursuant to that certain Participation Agreement
among the Company, Wolverine Leasing Corp. ("Wolverine"), Matisse Holding
Company ("Matisse") and United States National Bank of Oregon ("Bank"),
Wolverine shall lease certain real property owned by Wolverine to the Company
under an operating lease with an option to purchase such property. In addition,
the Participation Agreement provides that Wolverine will make advances to the
Company to cover the costs of certain improvements to such real property and to
pay certain related financing costs, transaction costs, and other costs and
expenses; Wolverine will use the proceeds of loans from the Bank and Matisse, as
well as certain equity funds provided by Matisse, in order to provide the
Company with such advances and such other costs and expenses.
A copy of the press release, dated May 23, 1996, which publicly announces
the transaction is filed herewith as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
a. Financial Statements: not applicable.
b. Pro Forma Financial Information: not applicable.
c. Exhibits:
10.16 Participation Agreement dated May 17, 1996 among the
Registrant, Wolverine Leasing Corp., Matisse Holding Company
and United States National Bank of Oregon.
10.17 Lease dated May 17, 1996 between the Registrant and
Wolverine Leasing Corp.
99.1 Press Release dated May 23, 1996.
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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 hereunto duly authorized.
TRI QUINT SEMICONDUCTOR, INC.
Dated: June 14, 1996 By: /s/ JOSEPH J. MARTIN
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Joseph J. Martin
Vice President, Finance and
Administration, Chief Financial
Officer and Secretary
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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10.16 Participation Agreement dated May 17, 1996 among the Registrant,
Wolverine Leasing Corp., Matisse Holding Company and United States
National Bank of Oregon.
10.17 Lease dated May 17, 1996 between the Registrant and Wolverine
Leasing Corp.
99.1 Press Release dated May 23, 1996
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PARTICIPATION AGREEMENT
among
TRIQUINT SEMICONDUCTOR, INC.,
WOLVERINE LEASING CORP.,
MATISSE HOLDING COMPANY
and
UNITED STATES NATIONAL BANK OF OREGON
May 17, 1996
Headquarters and Manufacturing Facility
Dawson Creek Park
Hillsboro, Oregon
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS; INTERPRETATION........................................2
SECTION 2. CLOSING DATE.......................................................2
SECTION 3. FUNDING COMMITMENTS; DISBURSEMENT OF ADVANCES......................2
SECTION 3.1. WOLVERINE COMMITMENT............................................2
SECTION 3.2. Matisse COMMITMENT..............................................2
SECTION 3.3. BANK'S COMMITMENT...............................................3
SECTION 3.4. PROCEDURES FOR ADVANCES, LOAN ADVANCES, AND DESIGNATION OF
INTEREST RATES................................................................4
SECTION 3.5. ALLOCATION OF ADVANCES AMONG THE COMMITMENTS....................8
SECTION 3.6. INTEREST RATES AND PAYMENT DATES................................8
SECTION 3.7. COMPUTATION OF INTEREST........................................10
SECTION 3.8. PAYMENTS.......................................................11
SECTION 3.9. [Reserved......................................................11
SECTION 3.10. BASIC RENT....................................................11
SECTION 3.11. PURCHASE-PAYMENTS BY LESSEE...................................12
SECTION 3.12. RESIDUAL VALUE GUARANTEE AMOUNT PAYMENT BY LESSEE.............13
SECTION 3.13. Proceeds of Pledged Collateral................................13
SECTION 3.14 SUPPLEMENTAL RENT.............................................13
SECTION 3.15. EXCEPTED PAYMENTS.............................................14
SECTION 3.16. DISTRIBUTION OF PAYMENTS AFTER LEASE EVENT OF DEFAULT.........14
SECTION 3.17. OTHER PAYMENTS................................................15
SECTION 3.18. CASUALTY AND CONDEMNATION PROCEEDS............................15
SECTION 3.19. ORDER OF APPLICATION..........................................16
SECTION 4. FEES..............................................................16
SECTION 4.1. UPFRONT FEE....................................................16
SECTION 4.2. Administrative Fee.............................................16
SECTION 5. CERTAIN INTENTIONS OF THE PARTIES.................................17
SECTION 5.1. Nature OF TRANSACTION..........................................17
SECTION 5.2. AMOUNTS DUE UNDER LEASE........................................18
SECTION 6. CONDITIONS PRECEDENT TO LOAN AND LEASE ADVANCES...................19
SECTION 6.1. CONDITIONS PRECEDENT -- INITIAL ADVANCE........................19
SECTION 6.2. CONDITIONS PRECEDENT -- SUBSEQUENT ADVANCES....................23
SECTION 6.3. Further Conditions Precedent...................................25
SECTION 7. COMPLETION DATE CONDITIONS........................................26
SECTION 7.1. CONDITIONS......................................................26
SECTION 8. REPRESENTATIONS...................................................27
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SECTION 8.1. Representations of Wolverine...................................27
SECTION 8.2. Representations of Matisse.....................................29
SECTION 8.3. Representations of the Lessee..................................32
SECTION 8.4. Representations of the Lessee With Respect to the Property on
each Funding Date............................................................36
SECTION 9. PAYMENT OF CERTAIN EXPENSES.......................................39
SECTION 9.1. Transaction Expenses...........................................39
SECTION 9.2. Brokers' Fees and Stamp Taxes..................................40
SECTION 9.3. Obligations....................................................40
SECTION 10. OTHER COVENANTS AND AGREEMENTS...................................41
SECTION 10.1. Covenants of the Lessee.......................................41
SECTION 10.2. Cooperation with the Lessee...................................45
SECTION 10.3. Covenants of Wolverine........................................46
SECTION 10.4. COVENANTS OF MATISSE..........................................49
SECTION 10.5 BANK'S COVENANTS...............................................52
SECTION 11. LOAN EVENTS OF DEFAULT AND REMEDIES..............................52
SECTION 11.1. LOAN EVENTS OF DEFAULT........................................52
SECTION 11.2 Remedies.......................................................54
SECTION 12. ARBITRATION......................................................55
[SECTION 12.1. Arbitration].................................................55
SECTION 13. INDEMNIFICATION..................................................56
SECTION 13.1. General Indemnification.......................................56
SECTION 13.2. End of Term Indemnity.........................................60
SECTION 13.3. Environmental Indemnity.......................................61
SECTION 13.4. Proceedings in Respect of Claims..............................62
SECTION 13.5. General Impositions Indemnity.................................64
SECTION 13.6. FUNDING LOSSES................................................70
SECTION 13.7. [RESERVED]....................................................71
SECTION 13.8. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR....71
SECTION 13.9. ILLEGALITY....................................................71
SECTION 13.10. INCREASED COST AND REDUCED RETURN............................72
SECTION 13.11. INDEMNITY PAYMENTS IN ADDITION TO RESIDUAL VALUE GUARANTEE
AMOUNT; SURVIVAL.............................................................73
SECTION 14 MISCELLANEOUS.....................................................74
SECTION 14.1. SURVIVAL OF AGREEMENTS........................................74
SECTION 14.2. NO BROKER, ETC................................................74
SECTION 14.3. NOTICES.......................................................74
SECTION 14.4. COUNTERPARTS..................................................75
SECTION 14.5. AMENDMENTS....................................................75
SECTION 14.6. HEADINGS, ETC.................................................75
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SECTION 14.7. PARTIES IN INTEREST...........................................75
SECTION 14.8. GOVERNING LAW.................................................75
SECTION 14.9. SEVERABILITY..................................................75
SECTION 14.10. LIMITATIONS OF WOLVERINE AND MATISSE'S LIABILITY.............76
SECTION 14.11. FURTHER ASSURANCES...........................................76
SECTION 14.12. SUBMISSION TO JURISDICTION...................................77
SECTION 14.13. WAIVER OF JURY TRIAL.........................................77
SECTION 14.14. USURY SAVINGS CLAUSE.........................................77
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of May 17, 1996 (this "PARTICIPATION
AGREEMENT"), is entered into by and among TRIQUINT SEMICONDUCTOR, INC., a
California corporation, as Lessee (together with its permitted successors and
assigns, the "LESSEE"); WOLVERINE LEASING CORP., a Texas corporation (together
with its permitted successors and assigns, "WOLVERINE"), MATISSE HOLDING
COMPANY, a Texas corporation (together with its permitted successors and
assigns, "Matisse") and UNITED STATES NATIONAL BANK OF OREGON (together with its
successors and assigns, the "BANK").
PRELIMINARY STATEMENTS
A. The Lessee has requested Wolverine, Matisse and the Bank to provide to
the Lessee a lease facility pursuant to which Wolverine would (a) lease certain
real property owned by Wolverine and more particularly described in EXHIBIT A
attached hereto (the "Land") to the Lessee, and (b) using proceeds of loans from
Bank and Matisse and certain equity funds provided by Matisse, make advances to
cover the costs of certain improvements to such real property and to pay certain
related financing costs, transaction expenses and other costs and expenses.
B. Wolverine and Matisse have requested the Bank to provide them certain
credit facilities pursuant to which the amounts to be advanced to the Lessee
could be funded.
C. Wolverine has requested Matisse to lend to Wolverine and make an
equity investment in Wolverine using certain of the funds advanced to Matisse by
Bank.
D. The Lessee, Wolverine, Matisse and the Bank are willing to enter into
such, lease and credit facilities upon the terms and subject to the conditions
set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
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SECTION 1.
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in APPENDIX 1 hereto for
all purposes hereof; and the rules of interpretation set forth in APPENDIX 1
hereto shall apply to this Participation Agreement.
SECTION 2.
CLOSING DATE
The Closing Date shall occur on the earliest date (on or before June 20,
1996) on which all the conditions precedent thereto set forth in SECTIONS 6.1
and 6.3 hereof shall have been satisfied or waived by the applicable parties as
set forth therein.
SECTION 3.
FUNDING COMMITMENTS; DISBURSEMENT OF ADVANCES
SECTION 3.1. WOLVERINE COMMITMENT. Subject to the conditions and terms
hereof, Wolverine shall take the following actions at the written request of the
Lessee from time to time during the Commitment Period:
(a) at the request of the Lessee from time to time during the
Commitment Period, make or cause to be made Lease Advances (out of funds
provided by the Bank and Matisse in an amount not to exceed the sum of the
Wolverine/Bank Commitment, the Wolverine/Matisse Commitment and the Matisse
Equity Commitment) for the purpose of financing Property Costs; and
(b) lease the Property as lessor to the Lessee under the Lease.
SECTION 3.2. MATISSE COMMITMENT. Subject to the terms and conditions
hereof, Matisse agrees to make or cause to be made for the account of Wolverine
during the Commitment Period, from Loan Advances made for the account of Matisse
out of the proceeds of the Matisse/Bank Loan, advances of the Wolverine/Matisse
Loan in an amount not to exceed the Wolverine/Matisse Commitment and equity
contributions in an amount not to exceed the Matisse Equity Commitment for the
purpose of funding Lease Advances to be made by Wolverine pursuant to SECTION
3.1 above, by making or causing to be made available for the account of
Wolverine on each Funding Date an amount in immediately available funds equal to
the amount of the Loan Advance under the Matisse/Bank Loan being funded on such
Funding Date.
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SECTION 3.3. BANK'S COMMITMENTS.
(a) WOLVERINE/BANK COMMITMENT. Bank agrees to make during the Commitment
Period Loan Advances of the Wolverine/Bank Loan for the account of Wolverine in
an amount not to exceed the Wolverine/Bank Commitment, for the purpose of
funding Lease Advances to be made by Wolverine pursuant to SECTION 3.1 above by
making available for the account of Wolverine on each Funding Date an amount in
immediately available funds equal to the Wolverine/Bank Commitment Percentage of
the amount of the Lease Advance being funded on such Funding Date.
(b) MATISSE/BANK COMMITMENT. Subject to the terms and conditions hereof,
Bank further agrees to make during the Commitment Period Loan Advances of the
Matisse/Bank Loan for the account of Matisse in an amount not to exceed the
Matisse/Bank Commitment, for the purpose of funding Advances to be made by
Matisse to Wolverine under SECTION 3.2 above, by making available for the
account of Matisse on each Funding Date an amount in immediately available funds
equal to the Matisse/Bank Commitment Percentage of the amount of the Lease
Advance being funded on such Funding Date.
(c) APPLICATION AS LEASE ADVANCES; LEASE ADVANCES ALLOCABLE TO MATISSE.
The Loan Advances by the Bank under the Wolverine/Bank Loan and the Matisse/Bank
Loan shall be made by Bank directly to Lessee as Lease Advances for the account
of Wolverine and Matisse, respectively, and all Lease Advances made for the
account of Matisse from proceeds of Loan Advances under the Matisse/Bank Loan
shall, as between Wolverine and Matisse, be deemed, to the extent of a
percentage equal to the sum of the Wolverine/Matisse Commitment Percentage and
Matisse Equity Percentage thereof, to be made by Matisse for the account of
Wolverine.
(d) ADVANCES DIRECTLY TO LESSEE. All Loan Advances shall be funded
directly as Lease Advances to or at the direction of Lessee in accordance with
the terms set forth herein (except for Interest Payment Advances, which shall be
funded in accordance with SECTION 3.6(d) below), and neither Wolverine nor
Matisse shall be entitled to receive the proceeds of Loan Advances directly.
Wolverine and Matisse hereby consent to the disbursement of the Wolverine/Bank
Loan and the Matisse/Bank Loan directly to the Lessee and for their accounts and
further consent to and agree to be bound by all interest rate elections made by
the Lessee pursuant hereto. If under any circumstances whatsoever, either
Wolverine or Matisse shall ever come into possession of any proceeds of the
Wolverine/Bank Loan or the Matisse/Bank Loan, it shall immediately return those
funds to the Bank for disbursement to the Lessee in accordance herewith.
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SECTION 3.4. PROCEDURES FOR LEASE ADVANCES, LOAN ADVANCES, AND DESIGNATION
OF INTEREST RATES.
(a) FUNDING REQUESTS. With respect to each funding of a Lease
Advance, the Lessee shall deliver to Wolverine and the Bank a Funding
Request substantially in the form of EXHIBIT B (a "FUNDING REQUEST")
specifying the amount and purpose of the Lease Advance requested, the payee
of such Lease Advance and the information required in SECTION 3.4(b) below.
The Lessee shall not request more than two (2) Funding Dates during any
calendar month. Each Lease Advance shall be in a minimum amount equal to
$500,000. Subject to the satisfaction or waiver of the conditions
precedent to such Lease Advance set forth in SECTION 6, the Bank shall
credit the Lessee's demand deposit account with the Bank with an amount
equal to the amount of the Lease Advance so requested, not later than 12:00
noon, Portland, Oregon time, on the applicable Funding Date. Upon the
Lessee's receipt of the funds provided by the Bank with respect to a Lease
Advance, the Lessee shall use the Lease Advance provided to pay (or retain
for reimbursement of) the costs described in the Funding Request.
(b) DESIGNATION OF INTEREST RATE IN CONNECTION WITH FUNDING REQUESTS.
(i) Lessee shall have the right to elect that a Lease Advance be
funded through a Loan Advance made as a Eurodollar Advance or a
Alternate Base Rate Advance; PROVIDED that, unless the Bank shall
otherwise agree in writing, Lessee may not elect that a Lease Advance
be funded through a Loan Advance made as a Eurodollar Advance if
(A) after giving effect to such Loan Advance there shall be more than
three (3) different Eurodollar Advances outstanding at any time, or
(B) the designated Interest Period or Rental Period for any requested
Eurodollar Advance terminates after the Maturity Date.
(ii) TIMING OF NOTICE. Each Funding Request shall be submitted
to and received by Bank prior to 12:00 noon (Portland, Oregon time)
(A) at least two (2) Business Days prior to the specified Funding
Date, in the case of Eurodollar Advances; and (B) at least one (1)
Business Day prior to the specified Funding Date, in the case of
Alternate Base Rate Advances.
(iii) CONTENTS OF NOTICE. In addition to the information
required in SECTION 3.4(a), each Funding Request shall set forth the
following information with respect to the Loan or Lease Advance
subject thereto:
(A) a single, specific Funding Date, which shall be a
Business Day;
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(B) a single, exact amount for the Loan or Lease Advance,
which shall be in an aggregate minimum principal amount of
$500,000;
(C) if the Loan or Lease Advance is to be made as a
Eurodollar Advance, the applicable Interest Period or Rental
Period. If a Funding Request shall fail to specify the
applicable Interest Period or Rental Period for any Eurodollar
Advance requested, such Loan or Lease Advance will be made in
accordance with SECTION 3.4(b)(v).
(iv) FREQUENCY OF BORROWINGS. No more than two (2) Funding
Requests may be given in any calendar month.
(v) AUTOMATIC EURODOLLAR ADVANCE. Subject to SECTION
3.4(b)(i)-(iv), if in connection with any Funding Request, the Lessee
shall fail to specify the applicable Interest Period or Rental Period
for any Eurodollar Advance requested, such Loan or Lease Advance will
be made as a Eurodollar Advance for an Interest Period or Rental
Period equal to one month; PROVIDED, HOWEVER, that the Bank reserves
the right not to have such Loan or Lease Advance constitute a one
month Eurodollar Advance (and instead to make such Loan or Lease
Advance as an Alternate Base Rate Advance) if (A) a Lease Event of
Default shall exist, (B) after giving effect to the such Loan or Lease
Advance there shall be (i) more than three (3) different Eurodollar
Advances outstanding or (ii) the aggregate outstanding principal
amount of all Eurodollar Advances having the same Interest or Rental
Period shall have been reduced, by payment, prepayment, or partial
conversion to less than $500,000, (C) the designated Interest Period
or Rental Period terminates after the Maturity Date, or (D) any
representations or warranties of the Lessee contained in or made
pursuant to the Operative Documents, including those contained in
SECTION 8.3, are not true and correct as of the date of the Requested
Lease Advance (as defined in the Funding Request), both before and
after giving effect to such Loan or Lease Advance.
(c) DESIGNATION OF INTEREST RATE IN CONNECTION WITH
CONVERSION/CONTINUATION REQUESTS. Each conversion or continuation of an
outstanding Alternate Base Rate Advance or Eurodollar Advance shall be made
upon the irrevocable written notice delivered to the Bank by Lessee in the
form of a request, substantially in the form of EXHIBIT C (a
"Conversion/Continuation Request"), as follows:
(i) DESIGNATION OF INTEREST RATE. Lessee shall have the right
to make the following elections with respect to the conversion or
continuation of any outstanding Alternate Base Rate Advance or
Eurodollar Advance:
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(A) to convert, on any Business Day, any Alternate Base
Rate Advance, in a minimum principal amount of $500,000, into a
Eurodollar Advance; or
(B) to convert, on the last day of any Interest or Rental
Period with respect to a Eurodollar Advance (or, on any other day
of any Interest or Rental Period, upon payment of any loss or
expense incurred or sustained by the Bank with respect to the
early termination of such Eurodollar Advance prior to the last
day of the Interest or Rental Period as provided in SECTION
13.6), such Eurodollar Advance into a Alternate Base Rate
Advance; or
(C) to continue, on the last day of any Interest or Rental
Period with respect to a Eurodollar Advance (or, on any other day
of any Interest or Rental Period, upon payment any loss or
expense incurred or sustained by the Bank with respect to the
early termination of such Eurodollar Advance prior to the last
day of the Interest or Rental Period as provided in SECTION
13.6), such Eurodollar Advance (or any part thereof in a minimum
principal amount of $500,000) for a subsequent Interest Period or
Rental Period;
PROVIDED, that unless the Bank shall otherwise agree in writing,
Lessee may not elect to have any outstanding Eurodollar Advance
or Alternate Base Rate Advance (or any portion thereof) continued
as or converted into a Eurodollar Advance if (A) a Lease Event of
Default shall exist, (B) after giving effect to the such
continuation or conversion there shall be more (i) than three (3)
different Eurodollar Advances outstanding or (ii) the aggregate
outstanding principal amount of all Eurodollar Advances having
the same Interest or Rental Period shall have been reduced, by
payment, prepayment, or partial conversion to less than $500,000,
or (C) the designated Interest or Rental Period terminates after
the Maturity Date
(ii) TIMING OF NOTICE. Each Conversion/Continuation Request
shall be submitted to and received by Bank prior to 12:00 noon
(Portland, Oregon time): (A) at least two (2) Business Days prior to
the Pricing Conversion Date of any outstanding Loan Advance or Lease
Advance to be converted into or continued as a Eurodollar Advance; and
(B) at least one (1) Business Day prior to the Pricing Conversion Date
of any outstanding Loan Advance or Lease Advance to be converted into
or continued as a Alternate Base Rate Advance.
(iii) CONTENTS OF NOTICE. The Conversion/Continuation
Request shall set forth the following information with respect to the
Loan or Lease Advance subject thereto:
(A) the Pricing Conversion Date, which shall be a Business
Day;
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(B) the amount of the Eurodollar Advance or Alternate Base
Rate Advance to be converted or continued;
(C) whether such Loan or Lease Advance is to be converted
into/continued as a Eurodollar Advance or a Alternate Base Rate
Advance; and
(D) if such Loan or Lease Advance (or any portion thereof)
is to be converted into/continued as a Eurodollar Advance, the
applicable Interest Period or Rental Period.
(d) AUTOMATIC CONVERSION - EURODOLLAR ROLLOVER. Subject to SECTION
3.4(e), if the Bank does not receive a timely Conversion/Continuation
Request under SECTION 3.4(c), any outstanding Eurodollar Advance shall
automatically continue for a subsequent Interest Period equal to one month,
without notice to the Bank, effective on the last day of the applicable
Interest Period or Rental Period, provided that as of such date, the Lessee
shall be deemed to have made each of the certifications set forth in the
Conversion/Continuation Request; PROVIDED, HOWEVER, that the Bank reserves
the right not to have any outstanding Eurodollar Advance continued as a
Eurodollar Advance if (A) a Lease Event of Default shall exist, (B) after
giving effect to the such continuation there shall be more (i) than three
(3) different Eurodollar Advances outstanding or (ii) the aggregate
outstanding principal amount of all Eurodollar Advances having the same
Interest or Rental Period shall have been reduced, by payment, prepayment,
or partial conversion to less than $500,000, (C) the designated Interest or
Rental Period terminates after the Maturity Date, or (D) any
representations or warranties of the Lessee contained in or made pursuant
to the Operative Documents, including those contained in SECTION 8.3, is
not true and correct in all material respects as of the Pricing Conversion
Date, both before and after giving effect to the continuation of the
Eurodollar Advance.
(e) AUTOMATIC CONVERSIONS - ALTERNATE BASE RATE. Any outstanding
Eurodollar Advance shall automatically convert to a Alternate Base Rate
Advance, effective on the last day of the applicable Interest Period or
Rental Period, if as of such date:
(i) LEASE EVENT OF DEFAULT. A Lease Event of Default shall
exist;
(ii) FAILURE TO MAINTAIN MINIMUM LOANS. If the aggregate
outstanding principal amount of Eurodollar Advances having the same
Interest or Rental Period shall have been reduced, by payment,
prepayment, or partial conversion to be less than $500,000
(iii) EURODOLLAR ADVANCES. After giving effect to the such
continuation there shall be (i) more than three (3) different
Eurodollar
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Advances outstanding or (ii) the aggregate outstanding principal
amount of all Eurodollar Advances having the same Interest or Rental
Period shall have been reduced, by payment, prepayment, or partial
conversion to less than $500,000;
(iv) INTEREST PERIOD EXCEEDS MATURITY DATE. The designated
Interest or Rental Period terminates after the Maturity Date; or
(v) REPRESENTATIONS AND WARRANTIES. Any representations or
warranties of the Lessee contained in or made pursuant to the
Operative Documents, including those contained in SECTION 8.3, are not
true and correct as of the Pricing Conversion Date, both before and
after giving effect to such conversion.
SECTION 3.5. ALLOCATION OF ADVANCES AMONG THE COMMITMENTS. The amount of
each Lease Advance funded by the Bank through Loan Advances pursuant to SECTION
3.4 shall irrevocably and unconditionally be deemed, as of the time such Loan
Advance is credited to the account of the Lessee, to be, and shall for all
purposes of the Operative Documents be: (i) a Loan Advance of the proceeds of
the Wolverine/Bank Loan by Bank for the account of Wolverine, in an amount equal
to the Wolverine/Bank Commitment Percentage of the amount of such Lease Advance,
which advance shall be evidenced by the Wolverine/Bank Note and shall reduce the
Available Wolverine/Bank Commitment; and (ii) a Loan Advance of the proceeds of
the Matisse/Bank Loan by Bank for the account of Matisse, in an amount equal to
the Matisse/Bank Commitment Percentage of the amount of such Lease Advance,
which advance shall be evidenced by the Matisse Note and shall reduce the
Available Matisse/Bank Commitment. That portion of the amount of such Lease
Advance deemed in accordance with the provisions of clause (ii) above to be a
Loan Advance of the proceeds of the Matisse/Bank Loan by Bank for the account of
Matisse shall irrevocably and unconditionally be deemed, as of the time such
Lease Advance is credited to the account of the Lessee, to be, and shall for all
purposes of the Operative Documents be: (A) a Loan Advance of the proceeds of
the Wolverine/Matisse Loan by Matisse for the account of Wolverine, in an amount
equal to the Wolverine/Matisse Commitment Percentage of the amount of such Loan
Advance of the proceeds of the Matisse/Bank Loan, which shall be evidenced by
the Wolverine/Matisse Note and shall reduce the Available Wolverine/Matisse
Commitment; and (B) an equity contribution by Matisse to Wolverine in an amount
equal to the Matisse Equity Commitment Percentage of the amount of such Loan
Advance of the proceeds of the Matisse/Bank Loan and shall reduce the Available
Matisse Equity Commitment.
SECTION 3.6. INTEREST RATES AND PAYMENT DATES.
(a) RATES. Subject to SECTION 3.6(b), each Loan Advance shall bear
interest on the outstanding principal amount thereof from the date such
Loan Advance is made until the date such Loan Advance becomes due (or, if
earlier, the date such Loan Advance is repaid) at a rate per annum equal to
the Eurodollar
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Rate or the Alternate Base Rate, as designated in accordance with
SECTION 3.4, PLUS the Applicable Margin. Any additional interest or other
amounts required to be paid under the terms of the promissory note
evidencing such loan shall be payable as provided therein.
(b) OVERDUE SUMS. If all or a portion of (i) the amount of any Loan
Advance, (ii) any interest payable thereon or (iii) any other amount
payable hereunder shall not be paid within five (5) Business Days after the
date on which such payment is due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum which is equal to the Overdue Rate.
(c) SCHEDULED PAYMENTS. Interest on the Wolverine/Bank Loan,
interest on the Matisse/Bank Loan and interest on the Wolverine/Matisse
Loan shall be payable in immediately available funds (except as provided in
PARAGRAPH (d) below) in arrears on each Scheduled Payment Date, PROVIDED
that (i) interest accruing pursuant to PARAGRAPH (b) of this SECTION 3.6
shall be payable from time to time on demand, (ii) any prepayment of any
portion of the Wolverine/Bank Loan, the Matisse/Bank Loan or the
Wolverine/Matisse Loan shall be accompanied by accrued interest to the date
of such prepayment on the amount so prepaid, (iii) upon any prepayment,
Wolverine and Matisse shall also pay such additional sums as are then
payable under the promissory notes evidencing the loans made to them, and
(iv) such interest shall be paid in accordance with SECTION 3.6(d) during
the Commitment Period.
(d) INTEREST AND RENTAL PAYMENT ADVANCES. On each date which is two
(2) Business Days prior to each Scheduled Payment Date during the
Commitment Period, the Lessee shall be deemed to have requested a Lease
Advance pursuant to SECTION 3.4 constituting an Interest Payment Advance
(under the Wolverine/Bank Loan and Matisse/Bank Loan) and a Rental Payment
Advance (under the Lease) in an amount equal to the aggregate accrued but
unpaid interest on the Wolverine/Bank Loan and the Matisse/Bank Loan and
the accrued Basic Rent under the Lease through such Scheduled Payment Date
(and not previously covered by an Interest Payment Advance or Rental
Payment Advance made or deemed made hereunder), which Lease Advance shall
be made as a one-month Eurodollar Advance, unless (A) a Lease Event of
Default shall exist, (B) after giving effect to such Lease Advance there
shall be (i) more than three (3) different Eurodollar Advances outstanding
or (ii) the aggregate outstanding principal amount of all Eurodollar
Advances having the same Interest or Rental Period shall have been reduced,
by payment, prepayment, or partial conversion to less than $500,000, (C)
the designated Interest Period or Rental Period terminates after the
Maturity Date, (D) the Lessee requests that such Lease Advance be made as
an Alternative Base Rate Advance or as a Eurodollar Advance with a longer
Interest Period or Rental Period, in which case such Lease Advance shall be
made as an
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Alternative Base Rate Advance or as a Eurodollar Advance with a longer
Interest Period or Rental Period. The Funding Date with respect to any
such Interest Payment Advance or Rental Payment Advance shall be the
relevant Scheduled Payment Date (PROVIDED that each such Interest Payment
Advance or Rental Payment Advance shall be subject to satisfaction of the
applicable conditions precedent set forth in SECTION 6) and the proceeds of
such payment shall be applied to pay such accrued interest and Basic Rent,
as the case may be; proceeds applied to pay accrued but unpaid interest on
the Matisse/Bank Loan shall discharge the obligation of Wolverine to pay
accrued but unpaid Basic Interest under the Wolverine/Matisse Loan (in an
amount not to exceed the accrued but unpaid Basic Interest on the
Wolverine/Matisse Loan through the Scheduled Payment Date in question). On
each Funding Date on which an Interest Payment Advance is funded, the
Property Costs shall be increased by an amount equal to the Interest
Payment Advance so made. Each Interest Payment Advance shall be allocated
among the Wolverine/Bank Commitment, the Matisse/Bank Commitment, the
Wolverine/Matisse Commitment and the Matisse Equity Commitment in
accordance with the provisions of SECTION 3.5 above.
(e) PREPAYMENT. Loan Advances may be prepaid prior to the Expiration
Date only upon any purchase or sale of the Property prior to the Expiration
Date pursuant to the terms of the Lease; PROVIDED, HOWEVER, that, if any
such purchase or sale occurs on any day which is not the last day of an
Interest Period for such advance, the Lessee shall also pay on the date of
such purchase or sale all amounts payable under SECTION 13.6 hereof. Loan
Advances so prepaid may not be reborrowed.
(f) PAYMENTS DUE UPON MATURITY. Wolverine shall repay the
Wolverine/Bank Loan plus all accrued but unpaid interest thereon and all
other sums due under the promissory note evidencing such loan on the
Maturity Date. Wolverine shall repay the Wolverine/Matisse Loan plus all
accrued but unpaid interest thereon and all other sums due under the
promissory note evidencing such loan on the Maturity Date. Matisse shall
repay the Matisse/Bank Loan plus all accrued but unpaid interest thereon
and all other sums due under the promissory note evidencing such loan on
the Maturity Date.
(g) PURCHASE OPTION. The parties acknowledge that Lessee has the
right to exercise the Purchase Option set forth in SECTION 20.1 OF THE
LEASE on the terms set forth therein.
SECTION 3.7. COMPUTATION OF INTEREST.
(a) CALCULATION, EFFECTIVE DATE OF CHANGES. Whenever they are
calculated on the basis of the Alternate Base Rate, interest and Basic Rent
shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed; and, otherwise, interest and Basic
Rent shall be calculated on
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the basis of a 360-day year for the actual days elapsed. The Bank shall as
soon as practicable notify the Lessee of each determination of a Eurodollar
Rate. Any change in the interest rate on a Loan Advance or in the rate of
Basic Rent on any Lease Advance resulting from a change in the Alternate
Base Rate or the Eurocurrency Reserve Requirements (and resulting changes
in Basic Rent) shall become effective as of the opening of business on the
day on which such change becomes effective. The Bank shall as soon as
practicable notify the Lessee of the effective date and the amount of each
such change in interest rate.
(b) DETERMINATIONS BINDING. Each determination of an interest rate
by the Bank pursuant to any provision of this Agreement shall be conclusive
and binding on Wolverine, Matisse and the Lessee in the absence of manifest
error. The Bank shall, at the request of such parties, deliver to such
parties a statement showing the quotations used by the Bank in determining
any interest rate pursuant to SECTIONS 3.4, 3.6 AND 3.7(a).
SECTION 3.8. PAYMENTS. All payments (including prepayments) to be made by
the Lessee, Wolverine or Matisse under the Operative Documents to the Bank,
whether on account of principal, interest, Basic Rent, Supplemental Rent, or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 noon, Portland, Oregon time, on the due date thereof to United States
National Bank of Oregon, Oregon Commercial Loan Servicing, Plaza Building 7th
Floor, P.O. Box 5308, Portland, Oregon 97228, in Dollars and in immediately
available funds; provided, however, that Lessee may designate in writing an
account maintained with the Bank from which such payments may be debited on the
due date thereof. Such designation shall remain in effect until the Bank is
notified in writing that the designation is canceled. The Bank shall distribute
such payments in accordance with the succeeding provisions of this ARTICLE III
promptly upon receipt. If any payment under the Operative Documents becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day. In the case of any extension of any
payment pursuant to the preceding sentence, interest thereon shall be payable at
the then applicable rate during such extension.
SECTION 3.9. RESERVED.
SECTION 3.10. BASIC RENT. Each payment (or portion thereof) of Basic Rent
(and any payment of interest on overdue installments of Basic Rent) received by
the Bank shall be applied first to pay accrued but unpaid interest on the
Wolverine/Bank Loan and the Matisse/Bank Loan, including any interest accrued at
the Overdue Rate (pro rata in accordance with the respective outstanding
balances of the Wolverine/Bank Loan and the Matisse/Bank Loan), and then, any
residue shall be deposited into an account for Matisse to be established at the
Bank. That portion of the payment so applied to pay interest on the
Matisse/Bank Loan in an amount equal to the Wolverine/Matisse Commitment
Percentage thereof shall be deemed to pay accrued but unpaid interest on the
Wolverine/Matisse Loan.
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SECTION 3.11. PURCHASE PAYMENTS BY LESSEE. Any payment received by the
Bank as a result of:
(a) the purchase of the Property in connection with Lessee's exercise
of its Purchase Option under SECTION 20.1 OF THE LEASE, or
(b) Lessee's compliance with its obligation to purchase the Property
in accordance with SECTION 20.2 OF THE LEASE, or
(c) the payment of the Asset Termination Value in accordance with
SECTIONS 16.2(b), 16.3 OR 16.4 OF THE LEASE, or
(d) the Lessee failing to fulfill one or more of the conditions to
exercise of the Remarketing Option pursuant to SECTION 22.1 OF THE LEASE
and the Bank's receipt pursuant to the next-to-last paragraph of SECTION
22.1 OF THE LEASE of the Asset Termination Value in accordance with SECTION
20.2 OF THE LEASE, or
(e) the sale of the Property sold pursuant to the Lessee's exercise
of the Remarketing Option pursuant to ARTICLE XXII OF THE LEASE, together
with any payment made by the Lessee as a result of an appraisal pursuant to
SECTION 13.2 OF THIS AGREEMENT,
shall be applied first to pay the outstanding principal balance of the
Wolverine/Bank Loan and the Matisse/Bank Loan plus accrued but unpaid interest,
including any interest accrued at the Overdue Rate (pro rata in accordance with
the respective outstanding balances of the Wolverine/Bank Loan and the
Matisse/Bank Loan), until such loans are paid in full, and then any residue (but
not in excess of any then accrued but unpaid Basic Rent not paid to Bank under
the preceding provisions of this Section, as certified to Bank jointly by Lessee
and Matisse) shall be paid to Matisse; provided, however, that if the amount
paid to the Bank is insufficient to pay such loans in full, then the amount so
paid to the Bank plus accrued but unpaid interest, including any interest
accrued at the Overdue Rate, shall be applied first to pay the outstanding
principal balance of, plus accrued but unpaid interest, including any interest
accrued at the Overdue Rate, on the Wolverine/Bank Loan until such loan is paid
in full, then to pay the outstanding principal balance of, plus accrued but
unpaid interest, including any interest accrued at the Overdue Rate, on the
Matisse/Bank Loan until such loan is paid in full. That portion of any such
payment applied to pay the principal of, plus accrued but unpaid interest,
including any interest accrued at the Overdue Rate, on the Matisse/Bank Loan
shall be deemed, as between Wolverine and Matisse, to reduce in an amount equal
to the Wolverine/Matisse Commitment Percentage of such payment, the outstanding
principal of, accrued but unpaid interest on and all other amounts payable under
the Wolverine/Matisse Loan. In case the amount so received shall exceed the
sums described herein the balance shall be paid to the Lessee.
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SECTION 3.12. RESIDUAL VALUE GUARANTEE AMOUNT PAYMENT BY LESSEE. The
payment by the Lessee of the Residual Value Guarantee Amount to the Bank in
accordance with ARTICLE XXII OF THE LEASE upon the Lessee's exercise of the
Remarketing Option shall be applied to pay the outstanding principal balance of,
plus accrued but unpaid interest, including any interest accrued at the Overdue
Rate, on the Wolverine/Bank Loan and the Matisse/Bank Loan (pro rata in
accordance with the respective outstanding balances of the Wolverine/Bank Loan
and the Matisse/Bank Loan) until such loans are paid in full, and then any
residue (but not in excess of any then accrued but unpaid Basic Rent not paid to
Bank under the preceding provisions of this Section, as certified to Bank
jointly by Lessee and Matisse) shall be paid to Matisse; provided, however, that
if the amount paid to the Bank is insufficient to pay such loans in full, then
the amount so paid to the Bank shall be applied first to pay the outstanding
principal balance of, plus accrued but unpaid interest, including any interest
accrued at the Overdue Rate, on the Wolverine/Bank Loan until such loan is paid
in full, then to pay the outstanding principal balance of, plus accrued but
unpaid interest, including any interest accrued at the Overdue Rate, on the
Matisse/Bank Loan until such loan is paid in full. That portion of any such
payment applied to pay the principal of the Matisse/Bank Loan plus accrued but
unpaid interest, including any interest accrued at the Overdue Rate, shall be
deemed, as between Wolverine and Matisse, to reduce in an amount equal to the
Wolverine/Matisse Commitment Percentage of such payment, the outstanding
principal of, accrued but unpaid interest on and all other amounts payable under
the Wolverine/Matisse Loan. In case the amount so received shall exceed the
sums described herein the balance shall be paid to the Lessee.
SECTION 3.13. PROCEEDS OF PLEDGED COLLATERAL. Any payments received by
the Bank as proceeds of Pledged Collateral shall be applied to pay the
outstanding principal balance of, plus accrued but unpaid interest, including
any interest accrued at the Overdue Rate, on the Wolverine/Bank Loan until it is
paid in full, and then to pay the outstanding principal balance of, plus accrued
but unpaid interest, including any interest accrued at the Overdue Rate, on the
Matisse/Bank Loan until such loan is paid in full. If the amount paid to the
Bank exceeds the amount necessary to pay such loans in full, the balance, if
any, shall be distributed to, or as directed by, the Lessee. That portion of
any such payment applied to pay the principal of the Matisse/Bank Loan plus
accrued but unpaid interest, including any interest accrued at the Overdue Rate,
shall be deemed, as between Wolverine and Matisse, to reduce in an amount equal
to the Wolverine/Matisse Commitment Percentage of such payment, the outstanding
principal of, plus accrued but unpaid interest on and all other sums payable on
the Wolverine/Matisse Loan.
SECTION 3.14 SUPPLEMENTAL RENT. All payments of Supplemental Rent
received by Wolverine, Matisse or the Bank (excluding any amounts payable
pursuant to the preceding provisions of this SECTION 3) shall be paid promptly
by such Person upon receipt thereof to the Persons entitled thereto pursuant to
the Operative Documents.
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SECTION 3.15. EXCEPTED PAYMENTS. Notwithstanding any other provision of
this Agreement or the Operative Documents, any Excepted Payment received at any
time by Wolverine, Matisse or the Bank shall be paid promptly to the Person
entitled to receive such Excepted Payment pursuant to the Operative Documents.
SECTION 3.16. DISTRIBUTION OF PAYMENTS AFTER LEASE EVENT OF DEFAULT. All
payments received and amounts realized by Wolverine, Matisse or the Bank after
any Lease Event of Default exists, including proceeds from the sale of any of
the Property, proceeds of any amounts from any insurer or any Governmental
Authority in connection with any Casualty or Condemnation, or from the Lessee as
payment in accordance with the Lease, including any payment received from the
Lessee pursuant to ARTICLE XVII THE LEASE, shall, if received by Wolverine or
Matisse, be paid to the Bank as promptly as possible and shall be distributed by
the Bank as promptly as possible in the following order of priority:
FIRST, so much of such payment or amount as shall be required to
reimburse the Bank for any tax, expense or other loss incurred by the Bank
with respect to the Lease in accordance with the Operative Documents shall
be distributed to it for its own account;
SECOND, so much of such payments or amounts as shall be required to
reimburse the Bank as assignee of lessor's interest in the Lease for
payments made by it to cure defaults under the Lease pursuant to SECTION
18.1 OF THE LEASE (to the extent not previously reimbursed) and to pay the
Bank the amounts payable to it pursuant to any expense reimbursement or
indemnification provisions of the Operative Documents shall be distributed
to the Bank;
THIRD, (i) in the case of a sale of the Property, in the order of
priority set forth in SECTION 3.13 and (ii) in all other cases, to pay the
outstanding principal balance of, plus accrued but unpaid interest,
including any interest accrued at the Overdue Rate, on the Wolverine/Bank
Loan and the Matisse/Bank Loan (pro rata in accordance with the respective
outstanding balances of the Wolverine/Bank Loan and the Matisse/Bank Loan)
until such loans are paid in full, and then any residue (but not in excess
of any then accrued but unpaid Basic Rent not paid to Bank under the
preceding provisions of this Section, as certified to Bank jointly by
Lessee and Matisse) shall be paid to Matisse; provided, however, that if
the amount paid to the Bank is insufficient to pay such loans in full, then
the amount so paid to the Bank shall be applied first to pay the
outstanding principal balance of, plus accrued but unpaid interest,
including any interest accrued at the Overdue Rate, on the Wolverine/Bank
Loan until such loan is paid in full, then to pay the outstanding principal
balance of, plus accrued but unpaid interest, including any interest
accrued at the Overdue Rate, on the Matisse/Bank Loan until such loan is
paid in full. That portion of any such payment applied to pay the
principal of, plus accrued but unpaid interest, including any interest
accrued at the Overdue Rate, on the Matisse/Bank Loan shall be deemed, as
between Wolverine and
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Matisse, to reduce the outstanding principal of, accrued but unpaid
interest on and all other amounts payable on the Wolverine/Matisse Loan;
FOURTH, to Wolverine, to the extent of any unpaid amount due to
Wolverine from Lessee pursuant to SECTION 13;
FIFTH, to Matisse, to the extent of any unpaid amount due to Matisse
from Lessee pursuant to SECTION 13;
SIXTH, the balance, if any, of such payment or amounts remaining
thereafter shall be promptly distributed to, or as directed by, the Lessee.
SECTION 3.17. OTHER PAYMENTS.
(a) Except as otherwise provided in SECTIONS 3.10, 3.11, 3.16 and
PARAGRAPH (b) below,
(i) any payment received by the Bank for which no provision as
to the application thereof is made in the Operative Documents or
elsewhere in this SECTION 3, and
(ii) all payments received and amounts realized by the Bank as
assignee of Lessor's interest under the Lease or otherwise with
respect to the Property to the extent received or realized at any time
after indefeasible payment in full of the Wolverine/Bank Loan and the
Matisse Loan,
shall be distributed forthwith by the Bank in the order of priority set
forth in SECTION 3.11 (in the case of any payment described in CLAUSE (i)
above) or in SECTION 3.16 hereof (in the case of any payment described in
CLAUSE (ii) above), except, that in the case of any payment described in
CLAUSE (ii) above, such payment shall be distributed omitting CLAUSE THIRD
of such SECTION 3.16; and the balance, if any (in the case of any payment
described in CLAUSE (i) OR (ii) above), shall be distributed to, or as
directed by, the Lessee.
(b) Except as otherwise provided in SECTIONS 3.10 and 3.11 hereof,
any payment received by the Bank for which provision as to the application
thereof is made in an Operative Document but not elsewhere in this SECTION
3 shall be distributed forthwith by the Bank to the Person and for the
purpose for which such payment was made in accordance with the terms of
such Operative Document.
SECTION 3.18. CASUALTY AND CONDEMNATION PROCEEDS. Any proceeds payable to
the Lessor under the Lease as a result of a Casualty or Condemnation pursuant to
SECTION 15.1 OF THE LEASE (but excluding any amounts payable pursuant to SECTION
16.2 OF THE LEASE) shall, if no Lease Event of Default exists, be paid over to
the Lessee for the rebuilding or restoration of that portion of the Property
affected by such Casualty or
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Condemnation, and any excess proceeds shall be applied pursuant to SECTION 3.19
OF THIS AGREEMENT. If a Lease Event of Default exists, then during the
continuance of such Lease Event of Default, all such proceeds shall be delivered
pursuant to the Investment Collateral Security Agreement to be held as
collateral and invested in Treasury Securities having the shortest possible
maturity from the date of purchase (in which case the collateral release
provisions of SECTION 3.3(c) OF THE INVESTMENT COLLATERAL SECURITY AGREEMENT
shall not apply to such proceeds, and the amount of Pledged Collateral required
to be held pursuant to the Investment Collateral Security Agreement shall be
increased by the amount of such proceeds for so long as and to the extent that
such proceeds shall remain in the account described therein, pending their
release to the Lessee in compliance with the Lease) and upon exercise of the
Lessor's remedies under the Operative Document shall be distributed pursuant to
SECTION 3.16.
SECTION 3.19. ORDER OF APPLICATION. To the extent any payment made
pursuant to SECTIONS 3.11, 3.12, 3.13, 3.16, or 3.17 is insufficient to pay in
full outstanding principal balance of, plus accrued but unpaid interest on, the
Wolverine/Bank Loan and the Matisse Bank Loan, then each such payment shall be
applied first to accrued interest and then to principal (in each case except as
otherwise expressly provided herein, pro rata between the Wolverine/Bank Loan
and the Matisse/Bank Loan). Any payments made (i) on a day other than the last
day of an Interest Period for any Loan Advance shall be applied first to any
Alternate Base Rate Advances then outstanding and then to any Eurodollar
Advances then outstanding, in the order designated in writing by Lessee, or, if
Lessee has made no such designation, in the order of such Eurodollar Advances'
stated maturities and (ii) on the last day of an Interest Period for any
Eurodollar Advance shall be applied first to such maturing Eurodollar Advance,
then to any Alternate Base Rate Advances outstanding, and then to any other
Eurodollar Advances then outstanding, in the order of such Eurodollar Advances'
stated maturities.
SECTION 4.
FEES
SECTION 4.1. UPFRONT FEE. The Lessee shall pay to the Bank for its own
account the Upfront Fee on or before the Closing Date, and as a condition to the
initial Lease Advance.
SECTION 4.2. ADMINISTRATION FEE. The Lessee shall pay to Wolverine for its
own account an annual administrative fee of $2,500 which shall be payable in
advance on the Closing Date and on each anniversary thereof during the Term.
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SECTION 5.
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1. NATURE OF TRANSACTION.
(a) It is the intent of the parties hereto that: (i) the Lease
constitutes an "operating lease" pursuant to Statement of Financial
Accounting Standards No. 13, as amended, for purposes of Lessee's financial
reporting, and (ii) for purposes of federal, state and local income or
franchise taxes and for any other tax imposed on or measured by income, the
transaction contemplated hereby is to be treated as a financing arrangement
for the construction and term financing of the Property (and not as a "true
lease"). Accordingly, and notwithstanding any provision of this
Participation Agreement to the contrary, the parties hereto agree and
declare that: (i) the transactions contemplated by the Lease are intended
to have a dual, rather than single, form; and (ii) all references in this
Participation Agreement to the "lease" of the Property which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of the parties hereto as to the true form of such
arrangements.
(b) It is the intent of the parties hereto that (i) subject to
ARTICLE XXII OF THE LEASE, the obligations of the Lessee under the Lease to
pay Basic Rent and Supplemental Rent or Asset Termination Value in
connection with any purchase of the Property pursuant to the Lease shall be
treated as payments of interest on and principal of, respectively, loans
from the Bank and Matisse through Wolverine to the Lessee, and (ii) the
Lease grants a security interest and mortgage or deed of trust or lien, as
the case may be, in the Property to Wolverine and, as a result of the
Assignment of Lease-Related Documents, to the Bank, as collateral agent for
itself and Matisse, which, together with the other Lease-Related Documents,
secure the Lessee's performance and payment of all amounts under the Lease
and the other Operative Documents. Nevertheless, the Lessee acknowledges
and agrees that neither the Bank, nor Matisse, nor Wolverine has made any
representations or warranties to the Lessee concerning the tax, accounting
or legal characteristics of the Operative Documents and that the Lessee has
obtained and relied upon such tax, accounting and legal advice concerning
the Operative Documents as it deems appropriate. Furthermore, the Lessee
acknowledges and agrees that neither the Bank, nor Matisse, nor Wolverine
has made any representations or warranties to the Lessee concerning any
reporting requirements under applicable securities laws, and the Lessee
assumes full responsibility (i) for any disclosures made by Lessee, or that
should be made by Lessee, or that are required to be made to any security
holders of Lessee, under or with respect to any applicable laws, (ii) for
the accurate financial reporting by Lessee of the transactions contemplated
by the Operative Documents, and (iii) for the accuracy of any press release
issued by Lessee with respect to the transactions
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contemplated by the Operative Documents, it being understood that each of
the Bank, Matisse, and Wolverine disclaim any obligation with respect
thereto or in connection therewith.
(c) Specifically, without limiting the generality of SECTION 5.1(b)
and subject to ARTICLE XXII OF THE LEASE, the parties hereto intend and
agree that with respect to the nature of the transactions evidenced by the
Lease in the context of the exercise of remedies under the Operative
Documents, including, without limitation, in the case of any insolvency or
receivership proceedings or a petition under the United States bankruptcy
laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting the
Lessee, Wolverine, Matisse or the Bank or any enforcement or collection
actions, the transactions evidenced by the Operative Documents are loans
made by the Bank and Matisse through Wolverine as unrelated third party
lenders to the Lessee secured by the Property and the Pledged Collateral.
(d) Specifically, without limiting the generality of SECTIONS 5.1(a),
(b) and (c), the parties hereto intend and agree that, for purposes of
filing federal, state and local returns, reports and other statements
relating to income or franchise taxes, or any other taxes imposed upon or
measured by income, (i) the transactions contemplated by the Operative
Documents shall be treated as a financing arrangement for the construction
and term financing of the Property (rather than as a "true lease") and the
Lessee shall be entitled to take any deduction, credit, allowance or other
reporting position consistent with such treatment; and (ii) neither
Wolverine, nor Matisse, nor the Bank shall take a position on its federal,
state and local returns, reports and other statements relating to income or
franchise taxes that is inconsistent with such treatment. Matisse and the
Bank acknowledge and agree that they have no legal or beneficial ownership
interest in the Property except for the interest of a secured party.
SECTION 5.2. AMOUNTS DUE UNDER LEASE. Anything else herein or elsewhere
to the contrary notwithstanding, it is the intention of the Lessee, Wolverine,
Matisse and the Bank that: (i) subject to ARTICLE XXII OF THE LEASE, the amount
and timing of installments of Basic Rent due and payable from time to time from
the Lessee under the Lease shall be at least equal to the aggregate payments due
to the Bank under the Wolverine/Bank Loan and the Matisse/Bank Loan on each
Payment Date; (ii) if the Lessee elects the Purchase Option or becomes obligated
to purchase the Property under the Lease, the Wolverine/Bank Loan, the
Matisse/Bank Loan, all accrued fees and all of the interest on overdue amounts
thereon and all other obligations of the Lessee owing to Wolverine, Matisse and
the Bank shall be paid in full by the Lessee; (iii) if the Lessee properly
elects the Remarketing Option, the Lessee shall only be required to pay, or
cause to be paid, the proceeds of the sale of the Property, the Residual Value
Guarantee Amount and any amounts due pursuant to SECTION 13 OF THIS
PARTICIPATION AGREEMENT and ARTICLE XXII OF THE LEASE (which aggregate amounts
may be less than the Asset Termination Value); and
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(iv) upon a Lease Event of Default resulting in an acceleration of the Lessee's
obligation to purchase the Property under the Lease, the amounts then due and
payable by the Lessee under the Lease shall include all amounts necessary to pay
in full the Asset Termination Value, plus all other amounts then due from the
Lessee to the Bank, Matisse and Wolverine under the Operative Documents.
SECTION 6.
CONDITIONS PRECEDENT TO LOAN AND LEASE ADVANCES
SECTION 6.1. CONDITIONS PRECEDENT -- INITIAL ADVANCE. The obligation of
the Bank to make the initial Loan Advances under the Wolverine/Bank Loan and the
Matisse/Bank Loan and of Wolverine to make the Initial Lease Advance is subject
to satisfaction or waiver of the following conditions precedent and the
conditions precedent set forth in SECTION 6.3 on or prior to the Closing Date:
(a) FUNDING REQUEST. The Bank shall have received a fully executed
counterpart of the Funding Request, appropriately completed by the Lessee,
in accordance with SECTIONS 3.3 AND 3.4.
(b) OPERATIVE DOCUMENTS. Each of the Operative Documents shall have
been duly authorized, executed and delivered by the parties thereto, and
shall be in full force and effect, and Lessee shall have delivered to Bank
the Pledged Collateral required in respect of such initial Lease and Loan
Advances. No Loan Default, Loan Event of Default, Lease Default or Lease
Event of Default shall exist thereunder (both before and after giving
effect to the transactions contemplated by the Operative Documents), and
Wolverine, Matisse and the Bank shall each have received a fully executed
copy of each of the Operative Documents (other than the Lease and the
Memorandum of Lease, of which the Bank shall receive the original and
Wolverine and Matisse shall receive specimens, and other than the
Wolverine/Bank Note, the Matisse/Bank Note and the Wolverine/Matisse Note,
as to which a single original shall be delivered to Bank). The Operative
Documents (or memoranda thereof), any supplements thereto and any financing
statements in connection therewith required under the Uniform Commercial
Code shall have been recorded, registered and filed, if necessary, in such
manner as to enable the counsel to the Lessee, Wolverine and Matisse to
render the opinions referred to in CLAUSES (1)(i), (ii) AND (iii) below.
(c) ENVIRONMENTAL AND ACCESSIBILITY LAWS QUESTIONNAIRE AND DISCLOSURE
STATEMENT. The Bank, Matisse and Wolverine shall have received an
Environmental and Accessibility Laws Questionnaire and Disclosure Statement
in form and substance satisfactory to Bank (an "ENVIRONMENTAL AND
ACCESSIBILITY LAWS QUESTIONNAIRE AND DISCLOSURE STATEMENT") with respect to
the Property, PROVIDED that such Environmental and Accessibility Laws
Questionnaire and Disclosure Statement shall be delivered not less than
five (5) Business Days prior
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to the Closing Date and shall be accompanied by the Environmental Audit for
the Property, each of which shall have been approved by the Bank, Matisse
and Wolverine.
(d) APPRAISAL. The Bank shall have received an Appraisal of the
Property, which Appraisal shall (i) show, as of the projected Completion
Date, the Fair Market Sales Value of such Land Interest and the Financed
Improvements, to be constructed thereon in accordance with the Plans and
Specifications, which shall be not less than $15,000,000, and (ii) meet the
other requirements set forth in the definition of the term "Appraisal"
contained in APPENDIX 1.
(e) [Reserved].
(f) DESCRIPTIONS OF FINANCED IMPROVEMENTS. The Bank shall have
received reasonably detailed descriptions of the Financed Improvements and
a copy of the Plans and Specifications therefor, as well as breakdown of
the projected costs for completion of, and construction timetable for the
Financed Improvements, all in form and substance reasonably satisfactory to
Bank.
(g) SURVEY AND TITLE INSURANCE; UCC SEARCHES. The Lessee shall have
delivered either (i) an ALTA/ACSM (1992) (Urban) Survey of the Property,
certified to Wolverine, Matisse, the Bank and the title company and
otherwise in form acceptable to the Bank, or (ii) a plat of the Property in
a form acceptable to the Bank. The Lessee shall also have delivered: (i)
to Wolverine, an ALTA (1970) owner's title insurance policy with extended
coverage over the general exceptions, in the amount of $20,000,000,
insuring fee title in Wolverine to the Land Interest and the Improvements,
subject only to the Permitted Exceptions with such endorsements as
Wolverine and the Bank may require, including, without limitation, Oregon
Land Title Association ("OLTA") endorsement numbers 80 and 74; and (ii) to
Bank and Matisse (as their interests may appear), an ALTA (1970) Loan
Policy in the amount of $6,750,000, insuring Matisse and the Bank that the
Wolverine/Matisse Deed of Trust has been duly assigned to the Bank of
record, and that the Lien thereof is first and primary in the Lessor's Land
Interest and the Improvements, subject only to the Permitted Exceptions,
with such endorsements as the Bank may require, including, without
limitation, OLTA endorsement numbers 52, 80, 63, and 74, and including a
package of ten statutory construction lien endorsements. The Bank shall
also have received a report, as of a current date, of judgment liens, lis
pendens, tax liens and Uniform Commercial Code filings with respect to
Lessee, Wolverine, Matisse and the Land filed of record in each applicable
jurisdiction.
(h) EVIDENCE OF RECORDING AND FILING. The Bank shall have received
evidence reasonably satisfactory to it that each of the Memorandum of
Lease, the Assignment of Lease-Related Documents, the Wolverine/Matisse
Deed of Trust and the recordable assignment of the Wolverine/Matisse Deed
of Trust shall have
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been or are being recorded with the appropriate Governmental Authorities in
the order in which such documents are listed in this clause, and the UCC
Financing Statements shall have been or are being filed with the
appropriate Governmental Authorities.
(i) EVIDENCE OF INSURANCE. The Bank, Wolverine and Matisse shall
have received evidence of the insurance required to be maintained by the
Lessee pursuant to the Lease.
(j) EVIDENCE OF USE OF PROCEEDS. The Bank shall have received
evidence reasonably satisfactory to the Bank as to the anticipated use of
the proceeds of such Lease Advance in accordance with this Participation
Agreement.
(k) TAXES. All taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Documents shall have been paid or provisions for such payment shall have
been made to the satisfaction of the Bank, Matisse and Wolverine.
(l) OPINIONS OF COUNSEL. (i) Wolverine shall have delivered to the
Bank opinions of Texas and Oregon counsel satisfactory to the Bank and the
Lessee; (ii) the Lessee shall have delivered to Wolverine, Matisse and the
Bank an opinion of Oregon counsel satisfactory to the Bank; and (iii)
Matisse shall have delivered to the Bank opinions of Texas and Oregon
counsel satisfactory to the Bank and the Lessee.
(m) APPROVALS. All necessary Governmental Actions and consents and
approvals of or by any other Person, in shall have been obtained or made
and be in full force and effect.
(n) LITIGATION. No action or proceeding shall have been instituted,
nor shall any action or proceeding be overtly threatened, before any
Governmental Authority, nor shall any order, judgment or decree have been
issued or proposed to be issued by any Governmental Authority (i) to set
aside, restrain, enjoin or prevent the full performance of any Operative
Document or any transaction contemplated thereby or (ii) which is
reasonably likely to materially and adversely affect the Lessee, Wolverine
or Matisse.
(o) REQUIREMENTS OF LAW. In the reasonable opinion of the Bank, or
its counsel, the transactions contemplated by the Operative Documents do
not and will not violate any Requirement of Law.
(p) RESPONSIBLE OFFICER'S CERTIFICATE OF THE LESSEE. The Bank shall
have received, in form and substance satisfactory to Bank, a Responsible
Officer's Certificate, dated as of the Closing Date, of the Lessee stating
that (i) each and every representation and warranty of the Lessee contained
in the Operative
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Documents to which it is a party is true and correct in all material
respects on and as of the Closing Date; (ii) no Lease Default or Lease
Event of Default has occurred and is continuing; and (iii) each Operative
Document to which the Lessee is a party is in full force and effect with
respect to it.
(q) THE LESSEE'S RESOLUTIONS AND INCUMBENCY CERTIFICATE, ETC. The
Bank shall have received, in form and substance satisfactory to Bank, (i) a
certificate of the Secretary or an Assistant Secretary of the Lessee
attaching and certifying as to (A) the resolutions of the Board of
Directors duly authorizing the execution, delivery and performance by the
Lessee of documents and agreements of the type represented by each
Operative Document to which it is or will be a party, (B) its certificate
of incorporation and by-laws, and (C) the incumbency and signature of
persons authorized to execute and deliver on its behalf the Operative
Documents to which it is a party, and (ii) a certificate of existence from
the appropriate officer of the state in which the Property is located.
(r) OFFICER'S CERTIFICATE OF WOLVERINE. The Bank shall have
received, in form and substance satisfactory to Bank, a certificate of an
authorized officer of Wolverine, dated as of the Closing Date, stating that
(i) each and every representation and warranty of Wolverine contained in
the Operative Documents to which it is a party is true and correct in all
material respects on and as of the Closing Date, (ii) each Operative
Document to which Wolverine is a party is in full force and effect with
respect to it, and (iii) Wolverine has duly performed and complied with all
covenants, agreements and conditions contained herein or in any Operative
Document required to be performed or complied with by it on or prior to the
Closing Date and no Loan Default or Loan Event of Default has occurred and
is continuing.
(s) WOLVERINE'S RESOLUTIONS AND INCUMBENCY CERTIFICATE, ETC. The
Bank shall have received, in form and substance satisfactory to Bank, (i) a
certificate of the Secretary or an Assistant Secretary of Wolverine
attaching and certifying as to (A) the resolutions of the Board of
Directors duly authorizing the execution, delivery and performance by
Wolverine of documents and agreements of the type represented by each
Operative Document to which it is or will be a party, (B) its certificate
of incorporation and by-laws, and (C) the incumbency and signature of
persons authorized to execute and deliver on its behalf the Operative
Documents to which it is a party, and (ii) a certificate of existence from
the appropriate officer of the state in which the Property is located.
(t) OFFICER'S CERTIFICATE OF MATISSE. The Bank shall have received,
in form and substance satisfactory to Bank, a certificate of an authorized
officer of Matisse, dated as of the Closing Date, stating that (i) each and
every representation and warranty of Matisse contained in the Operative
Documents to which it is a party is true and correct in all material
respects on and as of the Closing Date, (ii) each Operative Document to
which Matisse is a party is in full
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force and effect with respect to it, and (iii) Matisse has duly performed
and complied with all covenants, agreements and conditions contained herein
or in any Operative Document required to be performed or complied with by
it on or prior to the Closing Date, and no Loan Default or Loan Event of
Default has occurred and is continuing.
(u) MATISSE'S RESOLUTIONS AND INCUMBENCY CERTIFICATE, ETC. The Bank
shall have received, in form and substance satisfactory to Bank, a
certificate of the Secretary or an Assistant Secretary of Matisse attaching
and certifying as to (A) the resolutions of the Board of Directors duly
authorizing the execution, delivery and performance by Matisse of documents
and agreements of the type represented by each Operative Document to which
it is or will be a party, (B) its certificate of incorporation and by-laws
and (C) the incumbency and signature of persons authorized to execute and
deliver on its behalf the Operative Documents to which it is a party.
(v) NO MATERIAL ADVERSE CHANGE. As of the Closing Date, there shall
not have occurred any material adverse change in the financial condition of
Wolverine or Matisse from that in effect on the date of the respective
commitment letters delivered by the Bank to Wolverine and Matisse for the
financial accommodations hereunder, nor any change since that date in the
senior management of the Lessee, Wolverine or Matisse, nor shall the Bank
have discovered any information which the Bank reasonably determines has a
material adverse effect on the transactions contemplated by the Operative
Documents.
(w) PURCHASE AGREEMENT AND DEED. The Bank shall have received a
certified copy of the Purchase Agreement and the deed for the acquisition
of the Land by Wolverine.
(x) RELEASE OF PREVIOUS TRANSACTION. The financing provided by Bank
to Wolverine, evidenced by the Note, dated December 21, 1995, in the
principal amount of $3,500,000, shall, using the proceeds of such initial
Lease Advance, be paid, and any lease (other than the Lease) of the
Property between Wolverine and Lessee shall have been canceled.
Notwithstanding anything in this Participation Agreement to the contrary, the
Bank shall not be obligated to fund directly any Loan Advance or indirectly any
Lease Advance pursuant to this Participation Agreement unless the Closing Date
shall have occurred and all conditions to the initial Loan Advance and Lease
Advance hereunder shall have been satisfied on or prior to 5:00 P.M., Portland,
Oregon time, on June 20, 1996.
SECTION 6.2. CONDITIONS PRECEDENT -- SUBSEQUENT ADVANCES. The obligation
of the Bank to make any Loan Advances under the Wolverine/Bank Loan and the
Matisse/Bank Loan and of Wolverine to make any Lease Advances on any Funding
Date
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subsequent to the Closing Date is subject to satisfaction or waiver of the
following conditions precedent and the conditions precedent set forth in SECTION
6.3 on or prior to such Funding Date, as the case may be:
(a) FUNDING REQUEST. The Bank shall have received a fully executed
counterpart of the Funding Request, appropriately completed by the Lessee,
in accordance with SECTION 3.4.
(b) CONDITIONS PRECEDENT TO INITIAL ADVANCE. Each of the conditions
precedent to the initial Loan Advance and Lease Advance set forth in
SECTION 6.1 shall have been satisfied on or prior to the Closing Date.
(c) EVIDENCE OF USE OF PROCEEDS. The Bank shall have received
evidence reasonably satisfactory to the Bank as to the anticipated use of
the proceeds of such Loan Advance and Lease Advance in accordance with this
Participation Agreement.
(d) APPROVALS. All necessary Governmental Actions and consents and
approvals of or by any other Person shall have been obtained or made and be
in full force and effect.
(e) LITIGATION. No action or proceeding shall have been instituted,
nor shall any action or proceeding be overtly threatened, before any
Governmental Authority, nor shall any order, judgment or decree have been
issued or proposed to be issued by any Governmental Authority (i) to set
aside, restrain, enjoin or prevent the full performance of any Operative
Document or any transaction contemplated thereby or (ii) which is
reasonably likely to have a material adverse effect either on the ability
of the Lessee to perform its obligations under any of the Operative
Documents, or on the operation or value of the Property.
(f) REQUIREMENTS OF LAW. In the reasonable opinion of the Bank or
its counsel, the transactions contemplated by the Operative Documents do
not and will not violate any material Requirement of Law and do not and
will not subject the Bank to any adverse regulatory prohibitions.
(g) NO SALES. Lessee shall not have sent any notice exercising the
Purchase Option pursuant to SECTION 20.1 OF THE LEASE or the REMARKETING
OPTION pursuant to SECTION 22.1 OF THE LEASE.
(h) PLEDGED COLLATERAL. Lessee shall have delivered to the Bank such
additional Pledged Collateral in respect of the Lease Advance and Loan
Advance requested on such Funding Date, as required by the Investment
Collateral Security Agreement.
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SECTION 6.3. FURTHER CONDITIONS PRECEDENT. The obligation of the Bank to
make any Loan Advances under the Wolverine/Bank Loan and the Matisse/Bank Loan
and of Wolverine to make any Lease Advances on any Funding Date is subject to
satisfaction or waiver of the further conditions precedent that:
(a) REPRESENTATIONS AND WARRANTIES. On such date the representations
and warranties of the Lessee, Wolverine and Matisse contained herein and in
each of the other Operative Documents shall be true and correct in all
material respects as though made on and as of such date, except to the
extent such representations or warranties relate solely to an earlier date,
in which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date.
(b) TITLE. Title to the Property shall conform to the
representations and warranties set forth in SECTION 8.4(c).
(c) NO DEFAULT. There shall not have occurred and be continuing any
Lease Event of Default or Loan Event of Default under any of the Operative
Documents, and no Lease Event of Default or Loan Event of Default under any
of the Operative Documents will have occurred after giving effect to the
making of such Loan Advance or Lease Advance.
(d) CONSTRUCTION ASSURANCES. Within sixty (60) days after the date
hereof, Lessee shall deliver to Wolverine, Matisse and the Bank a copy of
the construction contract entered into between Lessee and the contractor
for the Financed Improvements, together with the contractor's consent
described in the Construction Agency Agreement. With respect to each
material construction, architectural and engineering contract in effect as
of such Funding Date, Lessee shall have delivered to the Bank on or prior
to such Funding Date a consent and agreement from each party to such
contract, in form and substance satisfactory to the Bank, acknowledging and
covenanting that (i) such party will provide written notice to the Bank of
any material breach under such contract and the Bank shall have at least
thirty (30) days following the receipt of such notice to cure such breach,
and (ii) upon written request of the Bank, such party shall provide to the
Bank an estoppel certificate in respect to such contract in a form
reasonably requested by the Bank.
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SECTION 7.
COMPLETION DATE CONDITIONS
SECTION 7.1. CONDITIONS. The occurrence of the Completion Date shall be
subject to the fulfillment to the satisfaction of, or waiver by, the Bank of the
following conditions precedent:
(a) CONSTRUCTION COMPLETION. The construction of the Financed
Improvements shall have been completed substantially in accordance with the
Plans and Specifications and all Requirements of Law, and such Property
shall be ready for occupancy and operation. All fixtures contemplated
under the Plans and Specifications (excluding without limitation trade
fixtures not contemplated by the Plans and Specifications) to be
incorporated into or installed in the Property or otherwise financed
through Loan Advances shall have been incorporated or installed free and
clear of all Liens except for Permitted Exceptions.
(b) LESSEE CERTIFICATION. The Lessee shall have furnished the Bank
with a certification of the Lessee (substantially in the form of EXHIBIT D)
as follows:
(i) The representations and warranties of the Lessee with
respect to the Property set forth in SECTION 8.4(b) are true and
correct in all material respects as of the Completion Date, except to
the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties shall
have been true and correct in all material respects on and as of such
earlier date. All amounts owing to third parties for the construction
of the Financed Improvements have been paid in full (other than
contingent obligations for which the Lessee has made adequate reserves
and mechanics' liens which are being contested in accordance with the
Lease), and a final inspection has occurred.
(ii) No changes or modifications were made to the related Plans
and Specifications after the Closing Date that have had a material
adverse effect on the value, use or useful life of the Property except
those agreed to in writing by the Bank and those made pursuant to
SECTION 3.2 OF THE CONSTRUCTION AGENCY AGREEMENT.
(iii) The Improvements have been completed substantially in
accordance with Construction Documents and Plans and Specifications
prepared in accordance with the Architect's Agreement and such
Improvements are ready for occupancy.
(iv) The Improvements, as so completed, comply in all material
respects with applicable laws and ordinances pertaining to the
construction
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and occupancy thereof, including applicable building and zoning laws
and ordinances.
(v) Attached hereto or delivered previously or concurrently
herewith, are true and complete copies of an "as built" or "record"
set of the plans and specifications for the Improvements, and a plat
of survey of such Property "as built" showing all paving, driveways,
fences and exterior improvements.
SECTION 8.
REPRESENTATIONS
SECTION 8.1. REPRESENTATIONS OF WOLVERINE. Wolverine represents and
warrants to the Bank and the Lessee as follows:
(a) DUE ORGANIZATION, ETC. Wolverine (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Texas, (ii) is duly qualified and in good standing in every
jurisdiction where it is required to qualify in order to execute, deliver
and perform its obligations under the Operative Documents and (iii) has the
corporate power and authority to enter into and perform its obligations
under each of the Operative Documents to which it is or will be a party and
each other agreement, instrument and document to be executed and delivered
by it in connection with or as contemplated by each such Operative Document
to which it is or will be a party.
(b) AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance of each Operative Document to which it is or will be a party
has been duly authorized by all necessary action on its part and neither
the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the
terms and provisions thereof (i) does or will require any approval or
consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any current applicable law,
governmental rule or regulation, (iii) does or will contravene or result in
any breach of or constitute any default under, or result in the creation of
any Lien upon any of its property under, its articles of incorporation or
by-laws, or any indenture, mortgage, deed of trust, conditional sales
contract, credit agreement or other agreement or instrument to which it is
a party or by which it or its properties may be bound or affected or (iv)
does or will require any Governmental Action by any Governmental Authority,
except such as have been obtained.
(c) ENFORCEABILITY, ETC. Each Operative Document to which Wolverine
is or will be a party has been, or on or before the Closing Date will be,
duly executed and delivered by Wolverine and each such Operative Document
to which Wolverine is a party constitutes, or upon execution and delivery
will
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constitute, a legal, valid and binding obligation enforceable against
Wolverine in accordance with the terms thereof, except as the same may be
limited by insolvency, bankruptcy, reorganization or other laws relating to
or affecting creditors' rights or by general equitable principles.
(d) LITIGATION. There is no action or proceeding pending or, to its
knowledge, overtly threatened to which it is a party, before any
Governmental Authority that, if adversely determined, would materially and
adversely affect its ability to perform its obligations under the Operative
Documents to which it is a party, would have a material adverse effect on
the financial condition of Wolverine or would question the validity or
enforceability of any of the Operative Documents to which it is or will
become a party.
(e) ASSIGNMENT. It has not assigned or transferred any of its right,
title or interest in or under the Lease except to the Bank as collateral
agent for itself and Matisse in accordance with this Agreement and the
other Operative Documents.
(f) DEFAULTS. No Loan Event of Default under the Operative Documents
attributable to it has occurred and is continuing.
(g) USE OF PROCEEDS. Loan Advances of the Wolverine/Bank Loan and
advances of the Wolverine/Matisse Loan received by Wolverine shall be
applied by Wolverine solely in accordance with the provisions of the
Operative Documents.
(h) SECURITIES ACT. Neither Wolverine nor any Person authorized by
Wolverine to act on its behalf has offered or sold any interest in the
Lease, or in any similar security relating to the Property, or in any
security the offering of which for the purposes of the Securities Act would
be deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of the
same from, any Person other than the Bank and neither Wolverine nor any
Person authorized by Wolverine to act on its behalf will take any action
which would subject the issuance or sale of any interest in the Lease or
the Property to the provisions of Section 5 of the Securities Act or
require the qualification of any Operative Document under the Trust
Indenture Act of 1939, as amended.
(i) CHIEF PLACE OF BUSINESS. Unless otherwise notified by Wolverine
in accordance with SECTION 10.3(b) hereof, Wolverine's chief place of
business, chief executive office and office where the documents, accounts
and records relating to the transactions contemplated by this Participation
Agreement and each other Operative Document are kept are located at 6750
LBJ Freeway, Suite 1100, Dallas, Texas 75240.
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(j) FEDERAL RESERVE REGULATIONS. Wolverine is not engaged
principally in, and does not have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board), and no part
of the Wolverine/Bank Loan on the Wolverine/Matisse Loan will be used by it
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for any purpose
that violates, or is inconsistent with, the provisions of Regulation G, T,
U, or X of the Board.
(k) INVESTMENT COMPANY ACT. Wolverine is not an "investment company"
or a company controlled by an "investment company" within the meaning of
the Investment Company Act.
(l) NO PLAN ASSETS. Wolverine is not acquiring its interests in the
Property with the assets of any Plan (or its related trust).
(m) TITLE; NO LESSOR LIENS. Wolverine holds a valid fee estate in
the Property, subject only to Permitted Exceptions. Wolverine will at all
times during the Term have good title to all property located on the
Property (if acquired through Lease Advances) and in any Improvements,
subject only to Permitted Exceptions and Liens arising as a result of
actions of, or claims against, the Lessee. The Land is free and clear of
all Lessor Liens.
(n) ADVERSE INFORMATION. All material information and materials
regarding Wolverine which have been or will be provided by Wolverine to the
Bank are or will be true and accurate in all material respects on the date
as of which such information and materials are dated or certified and do
not and will not omit to state any material fact necessary to make such
information not misleading at such time in light of the circumstances under
which such information was provided. There is no particular fact of which
Wolverine has knowledge that has not been disclosed by Wolverine in writing
to the Bank that, as far as Wolverine can reasonably foresee, is reasonably
likely to have a Material adverse effect.
SECTION 8.2. REPRESENTATIONS OF MATISSE. Matisse represents and warrants
to the Bank and to the Lessee as follows:
(a) DUE ORGANIZATION, ETC. Matisse (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Texas, (ii) is duly qualified and in good standing in every
jurisdiction where it is required to qualify in order to execute, deliver
and perform its obligations under the Operative Documents and (iii) has the
corporate power and authority to enter into and perform its obligations
under each of the Operative Documents to which it is or will be a party and
each other agreement, instrument and document to be
29
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executed and delivered by it in connection with or as contemplated by each
such Operative Document to which it is or will be a party.
(b) AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance of each Operative Document to which it is or will be a party
has been duly authorized by all necessary action on its part and neither
the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the
terms and provisions thereof (i) does or will require any approval or
consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any current applicable law,
governmental rule or regulation, (iii) does or will contravene or result in
any breach of, or constitute any default under, or result in the creation
of any Lien upon any of its property under, its articles of incorporation
or by-laws, or any indenture, mortgage, deed of trust, conditional sales
contract, credit agreement or other agreement or instrument to which it is
a party or by which it or its properties may be bound or affected or (iv)
does or will require any Governmental Action by any Governmental Authority,
except such as have been obtained.
(c) ENFORCEABILITY, ETC. Each Operative Document to which Matisse is
or will be a party has been, or on or before the Closing Date will be, duly
executed and delivered by Matisse and each such Operative Document to which
Matisse is a party constitutes, or upon execution and delivery will
constitute, a legal, valid and binding obligation enforceable against
Matisse in accordance with the terms thereof, except as the same may be
limited by insolvency, bankruptcy, reorganization or other laws relating to
or affecting creditors' rights or by general equitable principles. Matisse
has delivered to the Bank true and correct copies of the Matisse
Subscription Agreements which have been delivered by the shareholders in
Matisse. The obligation of each shareholder of Matisse to contribute
capital to Matisse in accordance with the terms of the Matisse Subscription
Agreement entered into by it constitutes a legal, valid and binding
obligation enforceable against such shareholder in accordance with the
terms thereof, except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting creditors' rights or
by general equitable principles.
(d) LITIGATION. There is no action or proceeding pending or, to its
knowledge, overtly threatened to which it is a party, before any
Governmental Authority that, if adversely determined, would materially and
adversely affect its ability to perform its obligations under the Operative
Documents to which it is a party, would have a material adverse effect on
the financial condition of Matisse or would question the validity or
enforceability of any of the Operative Documents to which it is or will
become a party.
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(e) ASSIGNMENT. It has not assigned or transferred any of its right,
title or interest in or under the Wolverine/Matisse Loan Documents except
to the Bank in accordance with this Agreement and the other Operative
Documents.
(f) DEFAULTS. No Loan Event of Default under the Operative Documents
attributable to it has occurred and is continuing.
(g) USE OF PROCEEDS. The Loan Advances of the Matisse/Bank Loan
shall be applied by Matisse solely in accordance with the provisions of the
Operative Documents.
(h) SECURITIES ACT. Neither Matisse nor any Person authorized by
Matisse to act on its behalf has offered or sold any interest in the Lease,
or in any similar security relating to the Property, or in any security the
offering of which for the purposes of the Securities Act would be deemed to
be part of the same offering as the offering of the aforementioned
securities to, or solicited any offer to acquire any of the same from, any
Person other than the Bank, and neither Matisse nor any Person authorized
by Matisse to act on its behalf will take any action which would subject
the issuance or sale of any interest in the Lease or the Property to the
provisions of Section 5 of the Securities Act or require the qualification
of any Operative Document under the Trust Indenture Act of 1939, as
amended.
(i) CHIEF PLACE OF BUSINESS. Unless otherwise notified by Matisse in
accordance with SECTION 10.4(b) hereof, Matisse's chief place of business,
chief executive office and office where the documents, accounts and records
relating to the transactions contemplated by this Participation Agreement
and each other Operative Document are kept are located at 6750 LBJ Freeway,
Suite 1100, Dallas, Texas 75240.
(j) FEDERAL RESERVE REGULATIONS. Matisse is not engaged principally
in, and does not have as one of its important activities, the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation U of the Board), and no part of the
proceeds of the Matisse/Bank Loan will be used by it to purchase or carry
any margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any purpose that
violates, or is inconsistent with, the provisions of Regulation G, T, U, or
X of the Board.
(k) INVESTMENT COMPANY ACT. Matisse is not an "investment company"
or a company controlled by an "investment company" within the meaning of
the Investment Company Act.
(l) NO PLAN ASSETS. Matisse is not acquiring its interests in the
Property with the assets of any Plan (or its related trust).
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(m) LESSOR LIENS. The Land is free and clear of all Lessor Liens
attributable to it.
(n) ADVERSE INFORMATION. All material information and materials
regarding Matisse which have been or will be provided by Matisse to the
Bank are or will be true and accurate in all material respects on the date
as of which such information and materials are dated or certified and do
not and will not omit to state any material fact necessary to make such
information not misleading at such time in light of the circumstances under
which such information was provided. There is no particular fact of which
Matisse has knowledge that has not been disclosed by Matisse in writing to
the Bank that, as far as Matisse can reasonably foresee, is reasonably
likely to have a Material adverse effect.
SECTION 8.3. REPRESENTATIONS OF THE LESSEE. The Lessee represents and
warrants to the Bank, Wolverine, and Matisse that:
(a) CORPORATE STATUS. The Lessee (i) is a duly organized and validly
existing corporation under the laws of the State of California and is in
active status under the laws of the State of Oregon and (ii) has duly
qualified and is authorized to do business and is in good standing in the
jurisdiction where the Property is located and in each other jurisdiction
where the failure to so qualify is reasonably likely to be Material and
adverse.
(b) CORPORATE POWER AND AUTHORITY. The Lessee has the corporate
power and authority to execute, deliver and carry out the terms and
provisions of the Operative Documents to which it is or will be a party and
has taken all necessary corporate action to authorize the execution,
delivery and performance of the Operative Documents to which it is or will
be a party and has or will have duly executed and delivered each Operative
Document required to be executed and delivered by it and, assuming the due
authorization, execution and delivery thereof on the part of each other
party thereto, each such Operative Document to which it is a party or will
be a party constitutes or will constitute a legal, valid and binding
obligation enforceable against it in accordance with its terms, except as
the same may be limited by insolvency, bankruptcy, reorganization or other
laws relating to or affecting the enforcement of creditors' rights or by
general equitable principles.
(c) NO VIOLATION. Neither the execution, delivery and performance by
the Lessee of the Operative Documents to which it is or will be a party,
nor compliance with the terms and provisions thereof, nor the consummation
by the Lessee of the transactions contemplated therein (i) will result in a
violation by the Lessee of any applicable provision of any law, statute,
rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality having jurisdiction over the Lessee or the
Property that would materially and adversely affect (x) the validity or
enforceability of the Operative Documents to which the
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Lessee is a party, or the title to, or value or condition of, the Property
or the Pledged Collateral, or (y) the consolidated financial position,
business or consolidated results of operations of the Lessee or the ability
of the Lessee to perform its obligations under the Operative Documents,
(ii) will result in any material breach under, or (other than pursuant to
the Operative Documents) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets
of the Lessee pursuant to the terms of, any indenture, loan agreement or
other agreement for borrowed money or other material contract to which the
Lessee is a party or by which it or any of its property or assets is bound
or to which it may be subject (other than Permitted Exceptions), or (iii)
will violate any provision of the articles of incorporation or bylaws of
the Lessee.
(d) LITIGATION. Except as set forth on SCHEDULE 8.3(d), there are no
actions, suits or proceedings pending or, to the knowledge of the Lessee,
overtly threatened that are reasonably likely to have a material adverse
effect on (i) the Lessee, the Property or the Pledged Collateral or (ii)
the validity of the Operative Documents or enforceability of the rights or
remedies of Wolverine, Matisse or the Bank under the Operative Documents.
(e) GOVERNMENTAL APPROVALS. No Governmental Action (other than those
which have been obtained from the Governmental Authority having
jurisdiction) is required to authorize, or is required in connection with,
the execution, delivery and performance by the Lessee of, or is required in
connection with the legality, validity, binding effect or enforceability
against the Lessee of, any Operative Document.
(f) INVESTMENT COMPANY ACT. The Lessee is not an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act.
(g) PUBLIC UTILITY HOLDING COMPANY ACT. The Lessee is not a "holding
company," or a "subsidiary company," or an "affiliate" of a "holding
company," or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(h) INFORMATION.
(i) The consolidation balance sheet of Lessee and its
consolidated Subsidiaries as of December 31, 1995 and the related
consolidated statements of operations, cash flows and common
shareholders' equity for the fiscal year then ended, reported on by
KPMG Peat Marwick, a copy of which has been delivered to the Bank,
fairly present, in conformity with GAAP, the consolidated financial
position of Lessee and its consolidated Subsidiaries as of such date
and their
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consolidated results of operations and changes in financial position
for such fiscal year.
(ii) The consolidation balance sheet of Lessee and its
consolidated Subsidiaries as of December 31, 1995 and the related
consolidated statements of operations and cash flows for the portion
of Lessee's fiscal year ended at the end of such quarter, a copy of
which has been delivered to the Bank, fairly present, in conformity
with GAAP, the consolidated financial position of Lessee and its
consolidated Subsidiaries as of such date and their consolidated
results of operations and changes in financial position for such
fiscal quarter, subject to normal year-end auditing adjustments.
(iii) All regular or periodic reports filed by the Lessee with
the Securities and Exchange Commission and all other material
information and materials regarding the Lessee and the Property which
have been or will be provided by the Lessee to the Bank are or will be
true and accurate in all material respects on the date as of which
such information and materials are filed, dated or certified and do
not and will not omit to state any material fact necessary to make
such information not misleading at such time in light of the
circumstances under which such information was provided.
(iv) The information provided or to be provided by Lessee and its
Affiliates to the appraiser who performs an Appraisal and which forms
the basis for the conclusion set forth in each Appraisal, taken as a
whole, was or when provided will be true and correct in all material
respects and did not or when provided will not omit any information
known and available to Lessee necessary to make the information
provided not materially misleading.
(i) TAXES. All United States federal income tax returns and all
other Material tax returns which are required to have been filed by or on
behalf of Lessee have been or will be prepared in accordance with
applicable law and filed by or on behalf of the Lessee by the respective
due dates, including extensions, and all taxes due with respect to the
Lessee pursuant to such returns or pursuant to any assessment received by
the Lessee have been or will be paid when due, except any such taxes which
are being contested in good faith by appropriate proceedings and with
respect to which the Lessee has established proper reserves in accordance
with GAAP. The charges, accruals and reserves on the books of the Lessee
in respect of taxes or other governmental charges are, in the opinion of
the Lessee, adequate.
(j) COMPLIANCE WITH ERISA. Except in a respect which could not
reasonably be expected to result in a liability to the Lessee in excess of
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$1,000,000 in any single occurrence or $2,000,000 in the aggregate, (i)
each member of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all Material respects with the presently applicable
provisions of ERISA and the Code with respect to the Plan and (ii) no
member of the ERISA Group has (A) sought a waiver of the minimum funding
standard under Section 412 of the Code in respect of any Plan, (B) failed
to make any contribution or payment to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under ERISA or the
Code or (C) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
(k) ENVIRONMENTAL AND OTHER REGULATIONS. To the Lessee's knowledge:
(i) The Property is in compliance with all Environmental Laws,
except such non-compliance as would not (if enforced in accordance
with Environmental Laws) result in liability in excess of $500,000 in
the aggregate.
(ii) The Lessee has obtained and maintained Governmental Actions
required under any Environmental Law with respect to the Property; all
such Governmental Actions are in good standing, and Lessee is in
compliance in all material respects with all terms and conditions
thereof.
(iii) There are no outstanding written orders from or agreements
with any Governmental Authority with respect to which Lessee or the
Property is not in compliance, nor any judicial or docketed
administrative proceedings respecting any Environmental Law, Hazardous
Activity, Hazardous Condition or Hazardous Substance to which the
Lessee or the Property is subject.
(iv) Other than Permitted Hazardous Substance Activity, there is
no Hazardous Activity with respect to the Property, or arising from
operations thereon, that would reasonably be expected to give rise to
any Hazardous Condition. In addition, (i) there are not located on
the Property underground storage tanks (x) that are not properly
registered or permitted under applicable Environmental Laws, or
(y) that are leaking or emitting Hazardous Substances whether on-or
off-site, and (ii) the Lessee has notified all of its employees of the
existence, if any, of any health hazard arising from the conditions of
their employment and have met all notification requirements under
Environmental Laws.
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(v) The Lessee is in compliance with all Environmental Laws
relating to pollution and environmental control or employee safety,
except for violations which would not have a material adverse effect
on the consolidated results of operations, business, or consolidated
financial position of the Lessee.
(l) OFFER OF SECURITIES, ETC. Neither the Lessee nor any Person
authorized to act on its behalf has, directly or indirectly, offered any
interest in the Property or the Lease or any other interest similar thereto
(the sale or offer of which would be integrated with the sale or offer of
such interest in the Property or the Lease), for sale to, or solicited any
offer to acquire any of the same from, any Person other than the Bank,
Wolverine, Matisse and other "accredited investors" (as defined in
Regulation D of the Securities and Exchange Commission).
(m) SOLVENCY. The consummation by Lessee of the transactions
contemplated by the Operative Documents do not constitute a fraudulent
transfer within the meaning of the Oregon Uniform Fraudulent Transfer Act,
ORS 95.200 ET. SEQ.
(n) BEYOND WORDS. Lessee has delivered to Wolverine, Matisse and the
Bank a true and current copy of the lease entered into with Beyond Words
Publishing Co. Said lease is in full force and effect, without default on
the part of Lessee or, to Lessee's knowledge, Beyond Words Publishing
Company thereunder. The expiration date of said lease is no later than May
31, 1997 and the Lessee has no option to renew the term thereof.
SECTION 8.4. REPRESENTATIONS OF THE LESSEE WITH RESPECT TO THE PROPERTY ON
EACH FUNDING DATE. The Lessee hereby represents and warrants to the Bank,
Wolverine, and Matisse as of each Funding Date as follows:
(a) REPRESENTATIONS. The representations and warranties of the
Construction Agent and the Lessee set forth in the Operative Documents are
true and correct as of such Funding Date as if made on such Funding Date.
The Construction Agent and the Lessee are in compliance in all material
respects with their respective obligations under the Operative Documents
and there exists no Lease Event of Default. No Lease Event of Default will
occur as a result of, or after giving effect to, the Lease Advances
requested by the Funding Request on such Funding Date.
(b) PROPERTY. The Property consists of a Land Interest in the Land.
On the Land Interest, the Lessee will be or is constructing, pursuant to
the Construction Agency Agreement, a manufacturing, research and
development corporate campus containing approximately 190,000 square feet
of floor area to house corporate headquarters and administrative offices,
and research and development, manufacturing and related uses for the
manufacture and marketing
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of semiconductors and other goods, together with parking, landscaping, and
recreational and related facilities, amenities and improvements. Such
Property is improved in accordance with the related Plans and
Specifications and the use thereof by the Lessee and its agents, assignees,
employees, invitees, lessees, licensees, contractors and tenants will
comply in all material respects with all Requirements of Law (including,
without limitation, Title III of the Americans with Disabilities Act, all
zoning and land use laws and Environmental Laws) and Insurance
Requirements, except for such Requirements of Law as the Lessee shall be
contesting in good faith by appropriate proceedings. The related Plans and
Specifications have been prepared and are in accordance with all material
applicable Requirements of Law (including, without limitation, Title III of
the Americans with Disabilities Act, applicable Environmental Laws and
building, planning, zoning and fire codes). The Land complies in all
material respects with all applicable zoning ordinances, regulations and
restrictive covenants and all requirements thereof necessary for the use,
occupancy and operation of the Land as a manufacturing and office facility
have been satisfied, and the current use of the Land is a conforming use.
Upon completion of the Financed Improvements in accordance with the Plans
and Specifications, such Financed Improvements and the other Improvements
on such Property will not encroach in any manner onto any adjoining land
(except as permitted by express written easements or as insured over by
appropriate title insurance) and such Financed Improvements and other
Improvements will comply in all material respects with all applicable
Requirements of Law (including, without limitation, Title III of the
Americans with Disabilities Act, all applicable Environmental Laws and
building, planning, zoning and fire codes). Upon completion of such
facility in accordance with the related Plans and Specifications, the
improvements including, without limitation, structural members, the
plumbing, heating, air conditioning and electrical systems thereof, and all
water, sewer, electric, gas, telephone and drainage facilities will be
completed substantially in accordance with the Plans and Specifications and
will be in condition and fit for use as a manufacturing research and
development corporate campus as described above, and all other utilities
required to adequately service the Financed Improvements for their intended
use are or will be available and "tapped on" and hooked up pursuant to
adequate permits (including any that may be required under applicable
Environmental Laws). There is no action, suit or proceeding (including any
proceeding in condemnation or eminent domain or under any Environmental
Law) pending or, to the Lessee's knowledge, threatened in writing with
respect to the Lessee, its affiliates or the Property which materially and
adversely affects the title to, or the marketability, use, operation or
value of, the Property, except for mechanics' liens which are being
contested in accordance with the Lease. As of such Funding Date, no fire
or other casualty with respect to the Property has occurred that
constitutes a Significant Casualty with respect to which the Lessee has
delivered a Termination Notice under SECTION 16.1 OF THE LEASE. The
Property has or, upon completion of the contemplated improvements, will
have available all material services of public facilities and other
utilities
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necessary for use and operation of such Financed Improvements and the other
Improvements for their primary intended purposes, including, without
limitation, adequate water, gas and electrical supply, storm and sanitary
sewerage facilities, telephone, other required public utilities and means
of access to such facility from publicly dedicated streets and public
highways for pedestrians and motor vehicles. All utilities serving such
Property, or proposed to serve such Property in accordance with the related
Plans and Specifications, are located in, and vehicular access to the
Improvements on such Property is provided by, either public rights-of-way
abutting such Property or Appurtenant Rights. All material licenses,
approvals, authorizations, consents, permits (including, without
limitation, building, demolition and environmental permits, licenses,
approvals, authorizations and consents), easements and rights-of-way,
including proof of dedication, required for (x) the use, treatment,
storage, transport, disposal or disposition of any Hazardous Substance on,
at, under or from such Property during the construction of the Financed
Improvements thereon, and (y) construction of such Financed Improvements in
accordance with the related Plans and Specifications and the Construction
Agency Agreement have either been obtained from the appropriate
Governmental Authorities having jurisdiction or from private parties, as
the case may be, or will be obtained from the appropriate Governmental
Authorities having jurisdiction or from private parties, as the case may
be, prior to commencing any such construction or use and operation, as
applicable.
(c) TITLE. Wolverine holds a valid fee estate in the Property,
subject only to Permitted Exceptions and Lessor Liens.
(d) INSURANCE. Insurance coverage covering the Property which meets
the requirements of ARTICLE XIV OF THE LEASE is in full force and effect.
(e) LEASE. Upon the execution and delivery of the Lease, (i) the
Lessee will have unconditionally accepted the Property and will be bound by
the terms of the Lease and will have a valid leasehold interest in the
Property, subject only to the Permitted Exceptions; (ii) the Lessee's
obligation to pay Rent will be an independent covenant and no right of
deduction or offset will exist with respect to any Rent or other sums
payable under the Lease; and (iii) no Rent under the Lease will have been
prepaid and the Lessee will have no right to prepay the Rent, except as
specifically set forth therein.
(f) PROTECTION OF INTERESTS. (i) The Memorandum of Lease, the
Assignment of Lease-Related Documents, the Consent to Assignment and the
Wolverine/Matisse Deed of Trust are each in a form sufficient, and will
have been recorded in all recording offices necessary, to grant perfected
first priority liens on the Property to the Bank, Wolverine, or Matisse, as
the case may be, (ii) the Lessee Financing Statements are each in a form
sufficient, and have been filed in all filing offices necessary, to perfect
a valid first priority security interest in all of
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the Property which might constitute personal property; and (iii) Wolverine
Financing Statements are each in a form sufficient, and have been filed in
all filing offices necessary, to perfect the Lessor's interest under the
Lease to the extent the Lease is a security agreement covering personal
property.
(g) FLOOD HAZARD AREAS; SEISMIC RISK. 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 agency, or if any 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 agency,
then flood insurance has been obtained for the Property or such portion
thereof in accordance with SECTION 14.2 OF THE LEASE and in accordance with
the National Flood Insurance Act of 1968, as amended. To Lessee's
knowledge, the Land is not subject to any special seismic risks, based on
and except as disclosed in that certain Preliminary Geotechnical
Investigation and Soils Report dated October, 1995, prepared by AGRA Earth
& Environmental, Inc.
(h) NO LIENS. There have been no Liens asserted against the Property
since the Closing Date other than Permitted Exceptions.
(i) ADVANCE. The amount of the Lease Advance requested on such
Funding Date represents amounts owing in respect of amounts that are due to
third parties in respect of Property Costs. The conditions precedent to
such Lease Advance and the related remittances by the Bank with respect
thereto set forth in SECTION 6 have been satisfied.
SECTION 8.5. EFFECT OF MISREPRESENTATION. In no event shall any
misrepresentation by any party entitle any party other than the Bank to refuse
to perform any obligations hereunder or under the other Operative Documents.
SECTION 9.
PAYMENT OF CERTAIN EXPENSES
The Lessee agrees, for the benefit of Wolverine, Matisse and the Bank,
that:
SECTION 9.1. TRANSACTION EXPENSES.
(a) The Lessee shall pay, or cause to be paid, from time to time all
Transaction Expenses in respect of the transactions consummated on the
Closing Date or any Funding Date (including the fee payable by Lessee to
The Staubach Company), IT BEING UNDERSTOOD AND AGREED that neither the
Bank, Wolverine nor Matisse shall be required to pay for such Transaction
Expenses. Such Transaction Expenses and the Upfront Fee may be paid from a
Lease Advance.
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(b) The Lessee shall pay or cause to be paid (i) the Upfront Fee,
(ii) all Transaction Expenses incurred by the Lessee, the Bank, Matisse and
Wolverine in entering into any future amendments or supplements with
respect to any of the Operative Documents, whether or not such amendments
or supplements are ultimately entered into, or giving or withholding of
waivers or consents hereto or thereto, in each case (except after the
occurrence of a Lease Event of Default) which have been requested by or
approved by the Lessee, (iii) all Transaction Expenses incurred by
Wolverine, Matisse, the Lessee or the Bank in connection with any purchase
of the Property by the Lessee or other Person pursuant to ARTICLES XVI,
XVII, XX OR XXII OF THE LEASE, (iv) all Transaction Expenses incurred by
any of the parties hereto in respect of enforcement of any of their rights
or remedies against the Lessee in respect of the Operative Documents after
any Lease Event of Default and (v) all costs for any reappraisal of the
Property and/or of any appraisal review required by applicable Requirements
of Law applicable to the Bank or conducted in accordance with ARTICLE XXII
OF THE LEASE, provided that the maximum costs for which the Lessee shall be
responsible in connection with any single such reappraisal or appraisal
review shall not exceed the sum of $10,000.
SECTION 9.2. BROKERS' FEES AND STAMP TAXES. The Lessee shall pay or cause
to be paid any brokers' fees and any and all stamp, transfer and other similar
taxes, fees and excises, if any, including any interest and penalties, which are
payable in connection with the transactions contemplated by this Participation
Agreement and the other Operative Documents, except those arising from any
Lessor Liens or any transfer by Matisse, Wolverine or the Bank of any of their
respective interests in the Property or the Operative Documents.
SECTION 9.3. OBLIGATIONS. The Lessee shall pay, on or before the due date
thereof, all payments due to third parties and all costs and expenses required
to be paid under the Wolverine/Matisse Deed of Trust and the Assignment of
Lease-Related Documents, including, without limitation, those of Wolverine;
provided that to the extent that the amount or due date of such expense is not
set forth in the Wolverine/Matisse Deed of Trust or the Assignment of Lease-
Related Documents, Lessee is notified in writing, at least ten (10) Business
Days prior to the date on which payment is due, of the amount and nature of such
expense and the name and address of the Person to whom payment is to be made and
is provided with a copy of the statement, bill, invoice, or other documentation
evidencing such expense.
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SECTION 10.
OTHER COVENANTS AND AGREEMENTS
SECTION 10.1. COVENANTS OF THE LESSEE. The Lessee hereby agrees that so
long as this Participation Agreement is in effect:
(a) INFORMATION. The Lessee will deliver to the Bank, Wolverine, and
Matisse:
(i) within ten (10) Business Days after such statement is filed
with the Securities and Exchange Commission after the end of each
fiscal year of the Lessee, an audited statement of financial position
of the Lessee and its consolidated Subsidiaries as of the end of such
fiscal year and the related consolidated statements of income,
shareholder's equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous
fiscal year, all accompanied by the unqualified opinion of KPMG Peat
Marwick or other independent public accountants of nationally
recognized standing stating that such consolidated financial
statements present fairly the financial position of the Lessee and the
Lessee for the periods indicated, in conformity with GAAP, and, for
years subsequent to the Lessee's first fiscal year, applied on a basis
consistent with prior years; together with a Responsible Officer's
Certificate containing a computation of, and showing compliance with,
each of the financial ratios and restrictions contained in SECTIONS
10.1(d), (e), AND (f) and to the effect that the Responsible Officer
executing such certificate is not aware of any Lease Event of Default
or Lease Default that has occurred and is continuing, or if such
officer is aware of any such Lease Event of Default or Lease Default,
describing it and the steps, if any, being taken to cure it;
(ii) as soon as available and in any event within fifty (50) days
after the end of each of the first three quarters of each fiscal year
of the Lessee, a consolidated statement of financial position of the
Lessee as of the end of such quarter and the related consolidated
statements of income, shareholders, equity and cash flows for such
quarter and for the portion of the Lessee's fiscal year ended at the
end of such quarter, together with a Responsible Officer's Certificate
containing a computation of, and showing compliance with, each of the
financial ratios and restrictions contained in SECTIONS 10.1(d), (e),
AND (f) and that no Lease Default or Lease Event of Default has
occurred or is continuing or, if any Lease Default or Lease Event of
Default has occurred and is continuing, describing it and the steps,
if any, being taken to cure it;
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(iii) promptly after the filing thereof, copies (without
exhibits thereto other than, in the case of reports on Form 10-K, the
portions of the annual report incorporated therein by reference) of
all reports on Forms 10-K, 10-Q and 8-K (or their equivalents), which
the Lessee shall have filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended;
(iv) if and when any member of the ERISA Group (1) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (2) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (3) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (4) applies for a waiver
of the minimum funding standard under Section 412 of the Code, a copy
of such application; (5) gives notice of intent to terminate any Plan
under Section 4041(c) of ERISA, a copy of such notice and other
information filed with the PBGC; (6) gives notice of withdrawal from
any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(7) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes
any amendment to any Plan or Benefit Arrangement which has resulted or
could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the
chief accounting officer of the Lessee setting forth details as to
such occurrence and action, if any, which the Lessee or applicable
member of the ERISA Group is required or proposes to take; and the
aggregate liability of the Lessee or any member of the ERISA Group
with respect to any of the matters described in CLAUSES (1) THROUGH
(5) is reasonably likely to exceed $1,000,000 in any single occurrence
or $2,000,000 in the aggregate;
(v) within ten (10) days after the end of each month during the
Construction Period, a monthly summary report on a form approved by
the Bank, setting forth such details concerning construction of the
Financed Improvements as the Bank shall require, including (i) a
summary of the status of the completion and costs of the various
phases of construction of the Financed Improvements, showing the
amounts expended (on a month-to-date and project-to-date basis) for
such construction and the amounts
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then due and unpaid, an estimate of the amount necessary to complete
construction of the Financed Improvements in their entirety, and a
certificate by Lessee that construction of the Financed Improvements
to the date of such certificate complies with the Plans and
Specifications therefor and (ii) if requested by the Bank, a list of
the names and addresses of all material dealers, laborers and
subcontractors with whom written agreements have been made by Lessee
or Lessee's general contractor (if any);
(vi) promptly after the occurrence of any Lease Default or Lease
Event of Default, notice thereof in writing, together with information
regarding the steps, if any, being taken to cure it;
(vii) promptly upon Lessee's receiving notice or actual
knowledge of (x) the intent by a Governmental Authority to take an
action which would constitute a Condemnation, investigate the Land for
a material violation of any Requirements of Law on or at the Land,
including any Environmental Law, under which liability may be imposed
upon Wolverine, Matisse, the Bank, or Lessee, or investigate the Land
(other than routine fire, life-safety and similar inspections) for any
violation of Requirements of Law under which criminal liability may be
imposed upon Wolverine, Matisse, the Bank, the Bank or Lessee, or (y)
the commencement of any litigation, action, proceeding or labor
controversy materially adversely affecting, or which may materially
adversely affect, the Land, written notice thereof.
(viii) from time to time such additional information regarding
the Lessee or the Property as Wolverine, Matisse or the Bank may
reasonably request.
(b) COMPLIANCE WITH LAWS. The Lessee will, and will cause its
Subsidiaries to, comply in all material respects with all Requirements of
Law except where the necessity of compliance therewith is contested in good
faith by appropriate proceedings and such contest is not reasonably likely
to result in a Material adverse effect.
(c) FURTHER ASSURANCE. Subject to SECTION 10.3(j) HEREOF, the Lessee
shall take or cause to be taken from time to time all action within its
control necessary to assure during the Term that title to the Property
remains in Wolverine as contemplated by the Operative Documents (provided
that the Lessee shall not be responsible for removing Lessor Liens with
respect to the Property), that Wolverine holds a perfected Lien on the
Property securing the Asset Termination Value as contemplated by SECTION
17.4 OF THE LEASE, and that the Bank as collateral agent for itself and
Matisse holds a perfected assignment of the rights of Wolverine under the
Lease.
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(d) MAXIMUM CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED TANGIBLE
NET WORTH. The Lessee will maintain a maximum ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth of 0.75:1.0 at all times
during the Term.
(e) MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Lessee's
Consolidated Tangible Net Worth at all times during the Term shall be equal
to or greater than $50,000,000.
(f) MINIMUM CASH EQUIVALENTS. The Lessee shall not permit the market
value of its Cash Equivalents (inclusive of the amount of the Pledged
Collateral) at any time during the Term to be less than $45,000,000.
(g) CORPORATE EXISTENCE; FRANCHISES; BUSINESSES. Except as otherwise
expressly permitted in this Agreement, the Lessee shall: (i) maintain in
full force and effect its separate existence and all material rights,
licenses, leases and franchises reasonably necessary to the conduct of
Lessee's business and (ii) continue doing business as a whole in the
semiconductor manufacturing and related businesses.
(h) LIENS. The Lessee shall not create or permit to exist any Lien
with respect to the Property (other than the Permitted Exceptions), the
Pledged Collateral, or such Cash Equivalents required to be maintained by
Lessee under SECTION 10.1(f) (other than Liens on the Pledged Collateral in
favor of Bank).
(i) TAKEOVERS, MERGERS, CONSOLIDATIONS, SALES. No person or group
(as such terms are defined in the Securities Exchange Act of 1934, as
amended) shall acquire beneficial ownership (as defined in the Securities
Exchange Act of 1934, as amended) of voting stock of the Lessee that
constitutes, immediately following such acquisition, more than thirty-three
percent (33%) of the outstanding voting stock of the Lessee. In addition,
the Lessee shall not, and shall not permit any Material Subsidiary to, be a
party to any merger or consolidation, or purchase or otherwise acquire all
or substantially all of the assets or stock of any class of, or any
partnership or joint venture interest in, any other Person, or, except in
the ordinary course of its business, sell, transfer, convey, or lease all
or any substantial part of its assets, or sell or assign with or without
recourse any receivables not in connection with the borrowing of money,
except for:
(i) Any such merger, consolidation, purchase, or acquisition in
which (A) the Lessee shall be the surviving entity and shall continue
to comply with SECTION 10.1(g), and (B) at least thirty (30) days
prior to the consummation of such merger, consolidation, purchase, or
acquisition, the Lessee shall deliver to the Bank a certificate, in
such detail as the Bank may reasonably request, certifying that no
Lease Event of Default under
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SECTIONS 10.1(d), (e), (f), (h) OR (j) of this Agreement will exist
on a pro forma basis after such consummation;
(ii) Any such merger or consolidation, sale, transfer,
conveyance, lease or assignment of or by any wholly-owned Subsidiary
into the Lessee or into, with or to any other wholly-owned Subsidiary;
(iii) Any such purchase or other acquisition by the Lessee or
any wholly-owned Subsidiary of the assets or stock of any wholly-owned
Subsidiary;
(iv) Any sales by the Lessee and its Subsidiaries of receivables,
whether or not in connection with the borrowing of money and whether
or not with recourse, provided that all such sales are for cash in an
amount equal to or greater than the face value of such receivables
less a discount not exceeding fifteen percent (15%); and
(v) Agreements with suppliers, subcontractors, vendors and
customers, and research and development joint ventures or other
research and development arrangements, entered into in the ordinary
course of business.
(j) INVESTMENTS. Neither the Lessee nor any of its Subsidiaries
shall make any Investments, except for:
(i) Investments permitted by Section 10.1(i);
(ii) Investments permitted by the investment policy attached
hereto as SCHEDULE 1 hereto or any amendment thereto approved by the
Bank; and
(iii) Investments in Subsidiaries.
(j) BEYOND WORDS. If required by Bank, Lessee shall request and
diligently seek to obtain from Beyond Words Publishing Co. a subordination
and attornment agreement in a form reasonably acceptable to Bank, within
thirty (30) days after Bank's request therefor. All provisions of the
Lease and the other Operative Documents relating to subleases shall apply
to any amendment of the lease to Beyond Words Publishing Co.
SECTION 10.2. COOPERATION WITH THE LESSEE. Wolverine and Matisse shall,
to the extent reasonably requested by the Lessee (but without assuming
additional liabilities, duties or other obligations on account thereof), at the
Lessee's expense, cooperate with the Lessee in connection with its covenants
contained herein including, without limitation, at any time and from time to
time, upon the request of the Lessee, to promptly and duly execute and deliver
any and all such further instruments, documents and
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financing statements (and continuation statements related thereto) as the Lessee
may reasonably request in order to perform such covenants.
SECTION 10.3. COVENANTS OF WOLVERINE. Wolverine hereby agrees that so
long as this Participation Agreement is in effect:
(a) DISCHARGE OF LIENS. Wolverine will not create or permit to exist
at any time, and will, at its own cost and expense, promptly take such
action as may be necessary duly to discharge, or to cause to be discharged,
all Lessor Liens on the Property; PROVIDED, HOWEVER, that Wolverine shall
not be required to so discharge any such Lessor Lien while the same is
being contested in good faith by appropriate proceedings diligently
prosecuted so long as Wolverine delivers to the Bank a good and sufficient
bond in amounts and on terms satisfactory to the Bank securing the
discharge of the same and such proceedings shall not involve any material
danger of impairment of the Liens of the Lease or the other Operative
Documents or of the sale, forfeiture or loss of, shall not interfere with
the use or disposition of, the Property or title thereto or any interest
therein or the payment of Rent, shall not result in any cost or expense to
the Lessee or the Bank and shall be completed prior to the consummation of
any purchase or sale of the Property pursuant to the terms of the Lease.
(b) CHANGE OF CHIEF PLACE OF BUSINESS. Wolverine shall give prompt
notice to the Lessee and the Bank if Wolverine's chief place of business or
chief executive office, or the office where the records concerning the
accounts or contract rights relating to the Property are kept, shall cease
to be located at 6750 LBJ Freeway, Suite 1100, Dallas, Texas 75240, or if
it shall change its name, identity or corporate structure.
(c) SALE OF THE PROPERTY. Wolverine shall not sell, transfer,
encumber, hypothecate, mortgage or otherwise dispose of all or any portion
of the Property or any interest therein, or grant any easement, right or
restriction with respect thereto at any time prior to the Expiration Date,
except for the Wolverine/Matisse Deed of Trust and except as otherwise
permitted or required by the Operative Documents.
(d) NATURE OF BUSINESS. Without the prior written consent of both the
Bank and the Lessee, Wolverine shall not contract for, assume, create or
incur any Indebtedness, Guaranty Obligations or other contractual
obligations, except for its Indebtedness under the Wolverine/Bank Loan
Documents, its Indebtedness under the Wolverine/Matisse Loan Documents, its
contractual obligations under the Operative Documents and Indebtedness and
contractual obligations arising in connection with Permitted Synthetic
Leasing Activities.
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(e) INFORMATION. Wolverine will deliver to the Bank, and upon
written request, Lessee:
(i) within thirty (30) days after Wolverine has filed its
federal income tax return for the previous fiscal year, a copy of an
unaudited financial statement for Wolverine and federal income tax
return for Wolverine for the previous fiscal year, certified by a
Responsible Officer of Wolverine as being true and correct in all
material respects, together with a Responsible Officer's Certificate
to the effect that the Responsible Officer executing such certificate
is not aware of any Loan Event of Default or Loan Default that has
occurred and is continuing, or if such officer is aware of any such
Loan Event of Default or Loan Default, describing it and the steps, if
any, being taken to cure it;
(ii) within forty-five (45) days after the end of the first and
third fiscal quarters of Wolverine, a Responsible Officer's
Certificate to the effect that the Responsible Officer executing such
certificate is not aware of any Loan Event of Default or Loan Default
that has occurred and is continuing, or if such officer is aware of
any such Loan Event of Default or Loan Default, describing it and the
steps, if any, being taken to cure it;
(iii) from time to time upon the written request of the Bank
or Lessee, such information regarding Wolverine and its financial
condition, business, assets and liabilities as the Bank or Lessee may
reasonably request; and
(iv) promptly after the occurrence of any Loan Default or Loan
Event of Default attributable to it, notice thereof in writing,
together with information regarding the steps, if any, being taken to
cure it.
(f) COMPLIANCE WITH LAWS. Wolverine shall comply in all material
respects with all applicable Requirements of Law relating to the
transactions under the Operative Documents other than those for which
Lessee is responsible thereunder.
(g) CORPORATE EXISTENCE; FRANCHISES; BUSINESSES. Wolverine shall
maintain in full force and effect its separate existence and all material
rights, licenses, leases and franchises reasonably necessary to the conduct
of its business. Wolverine shall at all times remian qualified to do
business in, and shall maintain a registered agent for service of process
in, the State of Oregon.
(h) LIENS. Except for the Liens granted by it in the Operative
Documents and except for Liens granted by it in connection with Permitted
Synthetic Leasing Activities, Wolverine shall not create or permit to exist
any Lien with respect to any assets now owned or hereafter acquired,
except:
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(i) Liens existing on the date hereof;
(ii) Liens on assets (other than the Property or its rights under
any of the Operative Documents) owned by it which are leased to third
parties in connection with Permitted Synthetic Leasing Activities,
which Liens are permitted under the terms of the documents for such
Permitted Synthetic Leasing Activities.
(i) ASSURANCES CONCERNING TITLE. Wolverine shall take, or cause to
be taken, from time to time all action necessary to assure that, during the
Term, title to the Property remains in Wolverine as contemplated by Section
12.1 of the Lease, that Wolverine holds a perfected Lien on the Property
securing the Asset Termination Value as contemplated by Section 12.1 of the
Lease, and that the Bank as collateral agent for itself and Matisse holds a
perfected assignment of the rights of Wolverine under the Lease. Wolverine
further covenants that, subject to its indemnification rights under SECTION
13, Wolverine will, upon the request of the Lessee, take any reasonable
action required in fulfillment of this subsection 10.3(i).
(j) TRANSFER OF TITLE. Within sixty (60) days after the occurrence
of any Loan Event of Default which is not a Lease Event of Default or a
Loan Event of Default described in Section 11,1(c) OR (d) hereof, and so
long as no Lease Event of Default shall have occurred or be continuing,
upon written request by the Lessee, and subject to the following
conditions, Wolverine shall convey the Land, and assign all of its interest
in the Operative Documents, to a third party transferee identified by the
Lessee that assumes all of Wolverine's obligations thereunder; provided,
however, that no such transfer shall occur without the prior written
consent of the Bank, which consent may be given, withheld, or conditioned
in the reasonable discretion of the Bank. In addition to the Bank's
consent, it shall be a condition to any such transfer that: (i) such
transfer shall be at no cost or expense to the Bank and Matisse and without
any increased liability to the Bank; (ii) the Lessee shall provide to the
Bank and Matisse upon the Bank's request (A) an opinion of counsel
acceptable to the Bank to the effect that after such transfer, each of the
Operative Documents will be valid, binding, and enforceable obligations of
such transferee and such other opinions as Bank may request, (B) a title
policy insuring the Bank's and Matisse's interest with respect to the
Property, (C) any other documentation that Bank may request in its sole
discretion; and (iii) such transferee shall be able to truthfully make all
of the representations and warranties of Wolverine (and delivers to the
Bank and Matisse a certification to such effect) other than representations
and warranties that are unique to Wolverine (such as state of
incorporation, location of principal place of business, notice address,
etc.) with respect to which such transferee shall make comparable
representations; (iv) such Loan Event of Default, if it is monetary in
nature or otherwise reasonably susceptible of cure, shall be cured prior to
or upon the
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consummation of such transfer. In the event that, pursuant to Section
10.3(j) Wolverine conveys its entire interest in the Property and its
entire interest in the Operative Documents, Wolverine shall be relieved of
any further obligation or liability under the Operative Documents arising
after the date of the conveyance; provided, however, that Wolverine shall
not be relieved of any obligation or liability under the Operative
Documents attributable to a breach of the Operative Documents by it on or
before such date, subject to the provisions of SECTION 14.11 hereof and
SECTION 31.7 OF THE LEASE.
SECTION 10.4. COVENANTS OF MATISSE. Matisse hereby agrees that so long as
this Participation Agreement is in effect:
(a) DISCHARGE OF LIEN. Matisse will not create or permit to exist at
any time, and will, at its own cost and expense, promptly take such action
as may be necessary duly to discharge, or to cause to be discharged, all
Lessor Liens on the Property attributable to it; PROVIDED, HOWEVER, that
Matisse shall not be required to so discharge any such Lessor Lien while
the same is being contested in good faith by appropriate proceedings
diligently prosecuted so long as Matisse delivers to the Bank a good and
sufficient bond in amounts and on terms satisfactory to the Bank securing
the discharge of the same and such proceedings shall not involve any
material danger of impairment of the Liens of the Lease or the other
Operative Documents or of the sale, forfeiture or loss of, shall not
interfere with the use or disposition of, the Property or title thereto or
any interest therein or the payment of Rent, shall not result in any cost
or expense to the Lessee or the Bank and shall be completed prior to the
consummation of any purchase or sale of the Property pursuant to the terms
of the Lease.
(b) CHANGE OF CHIEF PLACE OF BUSINESS. Matisse shall give prompt
notice to the Lessee and the Bank if Matisse's chief place of business or
chief executive office, or the office where the records concerning the
accounts or contract rights relating to the Property are kept, shall cease
to be located at 6750 LBJ Freeway, Suite 1100, Dallas, Texas 75240, or if
it shall change its name, identity or corporate structure.
(c) NATURE OF BUSINESS. Without the prior written consent of the
Bank, Matisse shall not contract for, assume, create or incur any
Indebtedness, Guaranty Obligations or other contractual obligations, except
for its Indebtedness under the Matisse/Bank Loan Documents, its contractual
obligations under the Operative Documents and Indebtedness and contractual
obligations arising in connection with Permitted Synthetic Leasing
Activities.
(d) INFORMATION. Matisse will deliver to the Bank, and upon written
request, Lessee:
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(i) within thirty (30) days after Matisse's filing of its tax
return at the end of the fiscal year of Matisse, a copy of an
unaudited financial statement for Matisse and federal income tax
return for Matisse for the previous fiscal year, certified by a
Responsible Officer of Matisse as being true and correct in all
material respects, together with a Responsible Officer's Certificate
to the effect that the Responsible Officer executing such certificate
is not aware of any Loan Event of Default or Loan Default that has
occurred and is continuing, or if such officer is aware of any such
Loan Event of Default or Loan Default, describing it and the steps, if
any, being taken to cure it;
(ii) within forty-five (45) days after the end of the second
fiscal quarter of Matisse, a Responsible Officer's Certificate to the
effect that the Responsible Officer executing such certificate is not
aware of any Loan Event of Default or Loan Default that has occurred
and is continuing, or if such officer is aware of any such Loan Event
of Default or Loan Default, describing it and the steps, if any, being
taken to cure it;
(iii) from time to time upon the written request of the Bank
or Lessee, such information regarding Matisse and its financial
condition, business, assets and liabilities as the Bank or Lessee may
reasonably request; and
(iv) promptly after the occurrence of any Loan Default or Loan
Event of Default attributable to it, notice thereof in writing,
together with information regarding the steps, if any, being taken to
cure it.
(e) COMPLIANCE WITH LAWS. Matisse shall comply in all material
respects with all applicable Requirements of Law relating to the
transactions under the Operative Documents other than those for which
Lessee is responsible thereunder.
(f) CORPORATE EXISTENCE; FRANCHISES; BUSINESSES. Matisse shall
maintain in full force and effect its separate existence and all material
rights, licenses, leases and franchises reasonably necessary to the conduct
of its business.
(g) SALE OF LIENS. Matisse shall not convey, transfer, sell, pledge
or encumber (except to the Bank) all or any portion of interest in the
Wolverine/Matisse Loan Documents or in any of the collateral covered by the
Matisse Subscription Pledge Agreement. Except for the Liens granted by it
in the Operative Documents and except for Liens granted by it in connection
with Permitted Synthetic Leasing Activities, Matisse shall not create or
permit to exist any Lien with respect to any assets now owned or hereafter
acquired, except:
(i) Liens existing on the date hereof; and
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(ii) Liens (on assets other than the Property or its rights under
any of the Operative Documents) owned by it which are leased to third
parties in connection with Permitted Synthetic Leasing Activities,
which Liens are permitted under the terms of the documents for such
Permitted Synthetic Leasing Activities.
(h) OWNERSHIP OF WOLVERINE; MAINTENANCE OF MATISSE SUBSCRIPTION
AGREEMENTS. Prior to the full repayment of the Wolverine/Bank Loan and the
Matisse/Bank Loan and for so long as the Lease is outstanding, (i) Matisse
shall not assign, sell, hypothecate, or otherwise transfer any of its
interest in the stock of Wolverine, or any interest in such stock, (ii)
neither the Matisse Subscription Agreements, nor the obligations of the
shareholders thereunder, shall be amended or modified in any respect, or
terminated, and (iii) Matisse shall maintain the Matisse Subscription
Agreements in full force and effect, valid, binding, and enforceable
against such shareholders without diminution.
(i) ASSIGNMENT OF INTEREST. Within sixty (60) days after the
occurrence of any Loan Event of Default which is not a Lease Event of
Default or a Loan Event of Default described in SECTION 11.1(c) OR (d)
hereof, and so long as no Lease Event of Default shall have occurred or be
continuing, upon written request by the Lessee, and subject to the
following conditions, Matisse shall assign all of its interest in the
Operative Documents to a third party transferee identified by the Lessee
that assumes all of Matisse's obligations thereunder; provided, however,
that no such transfer shall occur without the prior written consent of the
Bank, which consent may be given, withheld, or conditioned in the
reasonable discretion of the Bank. In addition to the Bank's consent, it
shall be a condition to any such transfer that: (i) such transfer shall be
at no cost or expense to the Bank and without any increased liability to
the Bank; (ii) the Lessee shall provide to the Bank upon the Bank's request
(A) an opinion of counsel acceptable to the Bank to the effect that after
such transfer, each of the Operative Documents will be valid, binding, and
enforceable obligations of such transferee and such other opinions as Bank
may request, (B) any other documentation that Bank may request in its sole
discretion; (iii) such transferee shall be able to truthfully make all of
the representations and warranties of Matisse (and delivers to the Bank a
certification to such effect) other than representations and warranties
that are unique to Matisse (such as state of incorporation, location of
principal place of business, notice address, etc.) with respect to which
such transferee shall make comparable representations; and (iv) such Loan
Event of Default, if it is monetary in nature or otherwise reasonably
susceptible of cure, shall be cured prior to or upon the consummation of
such transfer. In the event that, pursuant to SECTION 10.4(I), Matisse
conveys its entire interest in the Operative Documents, Matisse shall be
relieved of any further obligation or liability under the Operative
Documents arising after the date of the conveyance; provided, however, that
Matisse shall not be relieved of any obligation or liability under the
Operative Documents
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attributable to a breach of the Operative Documents by it on or before such
date subject to the provisions of SECTION 14.11 hereof. Upon any such
transfer, the Matisse Shareholder Subscription Pledge shall be null and
void.
(j) COOPERATION. Provided that the conditions set forth in Section
10.3(j) OR 10.4(I) hereof, as the case may be, are met, Wolverine and
Matisse shall cooperate with Lessee and the assignees or transferees of
Wolverine or Matisse, as the case may be, in any further amendments or
modifications to the Operative Documents submitted to the Bank for its
approval (which shall be granted or withheld in good faith) as may be
necessary to accomplish the assignment or transfer of the rights or
interests of Wolverine or Matisse pursuant to such Sections.
SECTION 10.5 BANK'S COVENANTS. Without affecting in any way the validity
of any such notice given to Wolverine and Matisse, the Bank agrees to send to
Lessee a copy of any notice of any Loan Default or Loan Event of Default that
the Bank sends to either Wolverine or Matisse under the Operative Documents.
Bank agrees to accept any cure from Lessee of any Loan Default or Loan Event of
Default which can be cured by the payment of money, provided that Lessee
reimburses Bank for any out-of-pocket costs incurred by Bank as a result of such
Loan Event of Default. If Bank shall become the owner of the Property as a
result of Bank's foreclosure thereon, or accepting a deed in lieu thereof, Bank
shall not disturb the tenancy of Lessee under the Lease so long as no Lease
Event of Default has occurred thereunder, and the protections afforded the Bank
under SECTION 13 shall not be diminished by virtue of any such foreclosure or
deed in lieu thereof.
SECTION 11.
LOAN EVENTS OF DEFAULT AND REMEDIES
SECTION 11.1. LOAN EVENTS OF DEFAULT. The occurrence of any one or more
of the following events (whether such event shall be voluntary or involuntary or
shall arise by operation of law or pursuant to any Governmental Action) shall
constitute a "Loan Event of Default":
(a) Wolverine or Matisse shall fail to observe or perform any term,
covenant or condition of Wolverine or Matisse set forth in SECTIONS
10.3(c), (d), OR (h) OR 10.4(c) OR (g) hereof OR set forth in SECTION 5.1
OF THE LEASE.
(b) Wolverine or Matisse shall fail to observe or perform any term,
covenant or condition of Wolverine or Matisse under any Operative Document
to which it is a party (other than those described in SECTION 11.1(a) OR
(f) hereof), or any representation or warranty given by Wolverine or
Matisse set forth in this Participation Agreement or in any other Operative
Document or in any document entered into in connection herewith or
therewith or in any document, certificate or
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financial or other statement delivered by Wolverine or Matisse pursuant
hereto or thereto shall be false or inaccurate in any material way, and
such failure or misrepresentation or breach of warranty shall remain
uncured for a period of thirty (30) days after receipt of written notice
thereof;
(c) Wolverine or Matisse shall (i) admit in writing its inability to
pay its debts generally as they become due, (ii) file a petition under the
United States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof, (iii) make a general assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver for itself or the whole or
any substantial part of its property, (v) fail to cause the discharge of
any custodian, trustee or receiver appointed for Wolverine or Matisse or
the whole or a substantial part of its property within ninety (60) days
after such appointment, or (vi) file a petition or answer seeking or
consenting to reorganization under the United States bankruptcy laws or any
other applicable insolvency law or statute of the United States of America
or any State or Commonwealth thereof;
(d) Insolvency proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the
United States of America or any State or Commonwealth thereof shall be
filed against Wolverine or Matisse and not dismissed within sixty (60) days
from the date of its filing, or a court of competent jurisdiction shall
enter an order or decree appointing, without the consent of Wolverine or
Matisse, a receiver of Wolverine or Matisse or the whole or a substantial
part of its property, and such order or decree shall not be vacated or set
aside within sixty (60) days from the date of the entry thereof;
(e) One or more final non-appealable judgments, decrees or orders for
the payment of money in excess of $25,000 in the aggregate shall be
rendered against Wolverine or Matisse and such judgments, decrees or orders
shall continue unsatisfied and in effect for a period of thirty (30)
consecutive days without Wolverine or Matisse's having obtained a written
agreement delivered to Bank (or after the expiration or termination of such
agreement) of the Persons entitled to enforce such judgment, decrees or
orders not to enforce the same pending negotiations with Wolverine or
Matisse concerning the satisfaction or other discharge of the same and
without the same having otherwise been satisfied or stayed;
(f) Any act, event or occurrence specifically described as a Loan
Event of Default under any of the Operative Documents shall occur;
(g) The occurrence of any Lease Event of Default; or
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(h) The occurrence of any material adverse change in Wolverine's or
Matisse's capital structure, ownership or consolidated assets, liabilities,
results of operations, or financial condition from that in effect on the
Closing Date.
SECTION 11.2. REMEDIES.
(a) Upon the occurrence of a Loan Event of Default hereunder, (i) if
such event is a Loan Event of Default specified in CLAUSE (c) OR (d) of
SECTION 11.1 hereunder or SECTION 17.1(f) OR (g) OF THE LEASE,
automatically, the Wolverine/Bank Loan and the Matisse/Bank Loan (with
accrued interest thereon) and all other amounts owing under this
Participation Agreement and the Wolverine/Bank Note and Matisse/Bank Note
shall immediately become due and Loan payable, and (ii) if such event is
any other Loan Event of Default, the Bank may by notice of default to
Wolverine and Matisse, declare the Wolverine/Bank Loan and the Matisse/Bank
Loan (with accrued interest thereon) and all other amounts owing under this
Participation Agreement and the Wolverine/Bank Note and Matisse/Bank Note
to be due and payable forthwith, whereupon the same shall immediately
become due and payable. If at any time the Matisse/Bank Loan shall become
or be declared due and payable, then automatically, without notice, the
Wolverine/Matisse Loan (including all accrued interest and all other sums
due thereunder) shall be due and payable.
(b) Upon the occurrence of any Loan Event of Default, the Bank may
exercise any or all of the rights and powers and pursue any and all of the
remedies available to it hereunder and (subject to the terms thereof) under
the Wolverine/Bank Loan Documents and Matisse/Bank Loan Documents, and
shall have and may exercise any and all rights and remedies available under
the Uniform Commercial Code or any provision of law.
(c) Upon the occurrence of any Loan Event of Default, the Bank may
proceed to protect and enforce this Participation Agreement, the
Wolverine/Bank Note, the other Wolverine/Bank Loan Documents, the
Matisse/Bank Note, the other Matisse/Bank Loan Documents, the Wolverine/
Matisse Note and the other Wolverine/Matisse Loan Documents, by suit or
suits or proceedings in equity, at law or in bankruptcy, and whether for
the specific performance of any covenant or agreement herein contained or
in execution or aid of any power herein granted, or for foreclosure, or for
the appointment of a receiver or receivers for any property securing the
Wolverine/Bank Loan and Matisse/Bank Loan, or for the recovery of judgment
for the indebtedness thereunder or for the enforcement of any other proper,
legal or equitable remedy available under any applicable law.
(d) Subject to SECTION 14.10 and the reimbursement obligations of
Lessee under the Lease, Wolverine and Matisse shall be liable for any and
all accrued and unpaid amounts due hereunder before, after or during the
exercise of any of the foregoing remedies, including all reasonable legal
fees and other
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reasonable costs and expenses incurred by the Bank by reason of the
occurrence of any Loan Event of Default or the exercise of remedies with
respect thereto.
(e) Except as expressly provided above, no remedy under this SECTION
11.2 is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy provided under this SECTION 11.2 or under the
other Operative Documents or otherwise available at law or in equity. The
exercise by the Bank of any one or more of such remedies shall not preclude
the simultaneous or later exercise of any other remedy or remedies. No
express or implied waiver by the Bank of any Loan Event of Default shall in
any way be, or be construed to be, a waiver of any future or subsequent
Loan Event of Default. The failure or delay or the Bank in exercising any
rights granted it hereunder upon any occurrence of any of the contingencies
set forth herein shall not constitute a waiver of any such right upon the
continuation or recurrence of any such contingencies or similar
contingencies and any single or partial exercise of any particular right by
the Bank shall not exhaust the same or constitute a waiver of any other
right provided herein.
(f) No failure to exercise and no delay in exercising, on the part of
the Bank, any right, remedy, power or privilege hereunder shall operate as
waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
(g) In the event of a Loan Event of Default that constitutes or
results from a Lease Event of Default, the Bank may, pursuant to the
Assignment of Lease-Related Documents, exercise all rights and remedies
available to the Lessor under the Lease.
SECTION 12.
ARBITRATION
SECTION 12.1. ARBITRATION.
(a) ARBITRATION OF CLAIMS. Except as set forth in SECTION 12.1(d), the
Lessee, Wolverine, Matisse, or the Bank may require that all disputes, claims,
counterclaims, and defenses, including those based on or arising from any
alleged tort, relating in any way to this Agreement, any loan, any of the
Operative Documents, or any transaction of which this Agreement is a part (each
a "Claim"), be settled by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and Title 9 of the
U.S. Code. All Claims will be subject to the statutes of limitation applicable
if they were litigated. This provision is void if the effect of the arbitration
procedure (as opposed to any Claims of any of the aforementioned parties) would
be to
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materially impair the Bank's ability to realize (either for itself or as
assignee of Matisse) on any collateral securing the Wolverine/Bank Loan, the
Matisse/Bank Loan, or the Wolverine/Matisse Loan.
(b) ARBITRATORS. If arbitration occurs and each party's Claim is less
than $100,000, one neutral arbitrator will decide all issues; if any party's
Claim is $100,000 or more three neutral arbitrators will decide all issues. All
arbitrators will be active Oregon State Bar members in good standing, and shall
have substantial experience in advising clients with respect to sale-leasebacks,
leveraged leases or other complex real estate transactions. All arbitration
hearings will be held in Portland, Oregon. In addition to all other powers, the
arbitrator(s) shall have the exclusive right to determine all issues of
arbitrability. Judgment on any arbitration award may be entered in any court
with jurisdiction.
(c) OTHER REMEDIES. If any party institutes any judicial proceeding
relating to any Claim, such action shall not be a waiver of the right to submit
any Claim to arbitration. In addition, each has the right before, during, and
after any arbitration to exercise any number of the following remedies, in any
order or concurrently: (a) setoff; (b) self-help repossession; (c) judicial or
non-judicial foreclosure against real or personal property collateral; (d)
provisional remedies, including injunction, appointment of receiver, attachment,
claim and delivery and replevin.
(d) GOVERNING PROVISION. Each of the Lessee, Wolverine, Matisse, and the
Bank agrees that, notwithstanding any contrary provision herein or in any other
Operative Document, the provisions of this Article shall govern the arbitration
of all matters described herein; provided, however, that Lessee shall have the
absolute right, without arbitration, to pursue in a court of competent
jurisdiction, the remedy of specific performance of any obligation of the Lessor
under the Operative Documents to convey title to the Property..
SECTION 13.
INDEMNIFICATION
SECTION 13.1. GENERAL INDEMNIFICATION. The Lessee agrees, whether or not
any of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless each
Indemnitee, on an After Tax Basis, from and against, any and all Claims that may
be imposed on, incurred by or asserted against such Indemnitee (whether because
of action or omission by such Indemnitee or otherwise), whether or not such
Claim arises or accrues prior to the Closing Date or after the Expiration Date,
relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby or any violation thereof, and any amendment,
modification or waiver in respect thereof;
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(b) the Property, the Lease or any part thereof or interest therein;
(c) the purchase, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, ownership,
management, possession, operation, rental, lease, sublease, repossession,
maintenance, repair, alteration, modification, addition or substitution,
storage, transfer of title, redelivery, use, financing, refinancing,
disposition, operation, condition, sale (including, without limitation, any
sale pursuant to SECTIONS 16.2, 16.3, 16.4, 17.2(c), 17.2(e) OR 17.4 OF THE
LEASE or any sale pursuant to ARTICLES XX OR XXII OF THE LEASE), return or
other disposition of all or any part or any interest in the Property or the
imposition of any Lien (or incurring of any liability to refund or pay over
any amount as a result of any Lien) thereon, including, without limitation,
any of the following relating to the Property: (1) Claims or penalties
arising from any violation of federal, state or local law, rule, regulation
or order or in tort (strict liability or otherwise), (2) latent or other
defects, whether or not discoverable, (3) any Claim based upon a violation
or alleged violation of the terms of any restriction, easement, condition
or covenant or other matter affecting title to the Property, (4) the making
of any modifications in violation of any standards imposed by any insurance
policies required to be maintained by Lessee pursuant to the Lease which
are in effect at any time with respect to the Property or any part thereof,
(5) any Claim of patent, trademark or copyright infringement, (6) Claims
arising from any public improvements with respect to the Property resulting
in any charge or special assessments being levied against the Property or
any plans to widen, modify or realign any street or highway adjacent to the
Property, and (7) Claims arising from any condition of the Property, the
Improvements or any street, curb or sidewalk adjoining the Property, or of
any passageways or spaces therein or appurtenant thereto.
(d) the breach by the Lessee of any covenant, representation or
warranty made by it or deemed made by it in any Operative Document or any
certificate required to be delivered by any Operative Document;
(e) the existence of any Lien on or with respect to the Property, the
Improvements, any Basic Rent or Supplemental Rent, title thereto, or any
interest therein, including any Liens which arise out of the possession,
use, occupancy, construction, repair or rebuilding of the Property or by
reason of labor or materials furnished or claimed to have been furnished to
the Lessee, Wolverine, Matisse, any prior owner of the Land or any of their
contractors or agents or by reason of the financing of the Property or any
personalty or equipment purchased or leased by the Lessee or Improvements
or Modifications constructed by the Lessee, except Lessor Liens and Liens
in favor of the Bank, Wolverine or Matisse arising under the Operative
Documents;
(f) the transactions contemplated by the Lessee hereby or by any
other Operative Document, in respect of the application of Parts 4 and 5 of
Subtitle B of
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Title I of ERISA and any prohibited transaction described in Section
4975(c) of the Code (provided that (i) Wolverine shall not be entitled to
indemnification under this CLAUSE (f) if it shall have been determined by a
court of competent jurisdiction to have breached the representation made by
it in SECTION 8.1(1) hereof and (ii) Matisse shall not be entitled to
indemnification under this CLAUSE (f) if it shall have been determined by a
court of competent jurisdiction to have breached the representation made by
it in SECTION 8.2(l) hereof);
(g) [Reserved];
(h) any act or negligence of the Lessee, its agents, servants,
employees or licensees, or arising from any accident, injury or damage
whatsoever caused to any Person, in or about the Property, or upon the
sidewalk and the land adjacent thereto;
(i) the occurrence of any Loan Default described in SECTION 11.1(c)
OR (d) of this Agreement;
(j) any disclosure requirements of Lessee or in favor of any of
Lessee's security holders under applicable securities laws or any financial
reporting requirements under applicable laws relating to the Lessee, the
Property, or the transactions contemplated by the Operative Documents.
PROVIDED, HOWEVER, that the Lessee shall not be required to indemnify an
Indemnitee (herein, an "Excluded Indemnitee") under this SECTION 13.1 for
any of the following:
(i) Any Claim to the extent resulting from the willful
misconduct or gross negligence of such Excluded Indemnitee (it being
understood that the Lessee shall, except as otherwise provided in this
SECTION 13.1, be required to indemnify each Indemnitee even if the
ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim);
(ii) Any Claim to the extent resulting from Lessor Liens
attributable to such Excluded Indemnitee or from a transfer by such
Excluded Indemnitee in violation of the Operative Documents;
(iii) Any Claim to the extent resulting from the wrongful
failure of such Indemnitee to pay to any other party to this
Agreement, as required by the Operative Documents, any funds received
by such Excluded Indemnitee;
(iv) Any Imposition or other claims for Taxes; or
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(v) any Claim arising as a result of the violation by an
Indemnitee of any federal or state banking or securities law, rule or
regulation;
provided, further, that nothing contained herein shall limit the
obligations of the Lessee to indemnify all Indemnitees other than the
Excluded Indemnitee as a result of any of the acts or occurrences described
in CLAUSES (i), (ii) OR (iii) above.
It is expressly understood and agreed that the indemnity provided for
herein shall survive the expiration or termination of and shall be separate
and independent from any remedy under the Lease or any other Operative
Document. Without limiting the express rights of any indemnitee under this
SECTION 13.1, this SECTION 13.1 shall be construed as an indemnity only and
not a guaranty of residual value of the Property or as a guaranty of the
Wolverine/Bank Loan, the Matisse/Bank Loan or the Wolverine/Matisse Loan.
Each of Wolverine and Matisse agrees to execute such documents and perform
such acts as may be necessary to enable Lessee to perform its
indemnification obligations hereunder.
SECTION 13.2. END OF TERM INDEMNITY.
(a) If the Lessee elects the Remarketing Option and there would,
after giving effect to the proposed remarketing transactions, be a
Shortfall Amount, then prior to the Termination Date or Maturity Date, as
the case may be, and as a condition to the Lessee's right to complete the
remarketing of the Property pursuant to SECTION 22.1 OF THE LEASE, as the
case may be, the Lessee shall cause to be delivered to the Lessor at least
sixty (60) days prior to the Expiration Date in the case of a marketing
pursuant to SECTION 22.1 OF THE LEASE, at the Lessee's sole cost and
expense, both (i) an appraisal of the Property by an appraiser selected by
the Lessor and reasonably satisfactory to the Lessee and the Bank and (ii)
a report from such appraiser in form and substance satisfactory to the Bank
which shall state the appraiser's conclusions as to the reason for any
decline in the Fair Market Sales Value of the Property from that
anticipated for the Property upon completion (such appraisal and report to
be referred to as the "END OF THE TERM REPORT").
(b) Prior to the Termination Date or Expiration Date, as the case may
be, the Lessee shall pay to the Lessor an amount (not to exceed the
Shortfall Amount) equal to the portion of the Shortfall Amount that the End
of the Term Report indicates was the result of a decline in the Fair Market
Sales Value of the Property due to:
(i) the failure of the Lessee to maintain the Property in the
condition acquired on the Closing Date, as improved pursuant to the
Plans and Specifications (ordinary wear and tear excepted) or the
failure of the
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Lessee to maintain the Property in accordance with the Maintenance
Standard;
(ii) any modification made to, or any rebuilding of, the Property
or any part thereof by the Lessee; or
(iii) the existence of any Hazardous Activity, Hazardous
Substance or Hazardous Conditions; or
(iv) any restoration or rebuilding carried out by the Lessee; or
(v) any condemnation of any portion of the Property pursuant to
ARTICLE XV OF THE LEASE (except to the extent the proceeds thereof
previously applied to reduce the Asset Termination Value or the
principal balances of the Wolverine/Bank Loan or the Matisse/Bank
Loan); or
(vi) any use of the Property or any part thereof by the Lessee
other than as permitted by the Operative Documents or by any
sublessee; or
(vii) any grant, release, dedication, transfer, annexation or
amendment made pursuant to SECTION 12.2 OF THE LEASE; or
(viii) the failure of the Lessor to have good and marketable
title to the Improvements and a valid fee estate in the Land Interest
free and clear of all Liens and exceptions to title (except for
Permitted Exceptions), whether or not such Liens or exceptions to
title existed on the Closing Date or were disclosed in any title
report; PROVIDED, that any portion of the Shortfall Amount that is (A)
attributable to the existence of Lessor Liens or Liens shown on the
policy of title insurance delivered pursuant to SECTION 6.1 hereof or
(B) offset by the proceeds of title insurance payable under such
policy, shall not be subject to indemnification under this SECTION
13.2.
SECTION 13.3. ENVIRONMENTAL INDEMNITY. Without limitation of the other
provisions of this SECTION 13, the Lessee hereby agrees to indemnify, hold
harmless and defend each Indemnitee from and against any and all claims
(including without limitation third party claims for personal injury or real or
personal property damage), losses (including but not limited to any loss of
value of the Property), damages, liabilities, fines, penalties, charges,
administrative and judicial proceedings (including informal proceedings) and
orders, judgments, remedial action, requirements, enforcement actions of any
kind, and all reasonable and documented costs and expenses incurred in
connection therewith (including but not limited to reasonable and documented
attorneys' and/or paralegals' fees and expenses), including, but not limited to,
all costs incurred in connection with any investigation or monitoring of site
conditions or any clean-up,
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remedial, removal or restoration work by any federal, state or local government
agency, which such Indemnitee becomes subject to with respect to with the
Property, the transactions contemplated by the Operative Documents or any other
matter referred to in SECTIONS 13.1(a)-(h) arising in whole or in part, out of:
(a) the presence on or under the Property of any Hazardous
Substances, or any Hazardous Activity, or any Releases of any Hazardous
Substances on, under, from or onto the Property at any time;
(b) any activity, including, without limitation, construction,
carried on or undertaken on or off the Property, and whether by the Lessee,
the Lessor (if such activity was undertaken with the consent or at the
direction of the Lessee), any predecessor in title or any employees,
agents, contractors or subcontractors of the Lessee, the Lessor, or any
predecessor in title, or any other Persons, in connection with the
handling, treatment, removal, storage, decontamination, cleanup, transport
or disposal of any Hazardous Substances that at any time are located or
present on or under or that at any time migrate, flow, percolate, diffuse
or in any way move onto or under the Property; provided that this
SUBSECTION 13.3(b) shall not apply with respect to the Lessor, its
officers, directors, shareholders, employees, agents and assigns in the
case of any activity carried on by the Lessor, its officers, directors,
shareholders, employees, agents or assigns without the written consent of
Lessee.
(c) loss of or damage to any property or the environment (including,
without limitation, cleanup costs, response costs, remediation and removal
costs, cost of corrective action, costs of financial assurance, fines and
penalties and natural resource damages), or death or injury to any Person,
and all expenses associated with the protection of wildlife, aquatic
species, vegetation, flora and fauna, and any mitigative action required by
or under Environmental Laws as a result of any condition of the Property;
(d) any claim concerning lack of compliance with Environmental Laws,
or any act or omission causing an environmental condition that requires
remediation or would allow any Governmental Authority to record a Lien on
the land records as a result of any condition of the Property; or
(e) any residual contamination on or under the Property, or affecting
any natural resources, or any contamination of any property or natural
resources arising in connection with the generation, use, handling,
storage, transport or disposal of any such Hazardous Substances, and
irrespective of whether any of such activities were or will be undertaken
in accordance with applicable Environmental Laws;
PROVIDED, HOWEVER, the Lessee shall not be required to indemnify an Indemnitee
under this SECTION 13.3 for (1) any Claim to the extent resulting from the
willful misconduct or
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gross negligence of such Indemnitee (IT BEING UNDERSTOOD that the Lessee shall
be required to indemnify an Indemnitee even if the ordinary (but not gross)
negligence of such Indemnitee caused or contributed to such Claim), (2) subject
to the provisions SECTION 15.2 OF THE LEASE, any Claim to the extent
attributable to the initial introduction onto the Property of any Hazardous
Substances after the consummation of a purchase of the Property by Lessee or a
third party in accordance with the Lease or the cessation of occupancy of the
Property by Lessee as a result of the completion of foreclosure, eviction or
other dispossessory remedies against Lessee (other than as a result of
migration, flowage, percolation, diffusion or other movement of Hazardous
Substances present on the Property prior to any such purchase or cessation of
occupancy), (3) any Imposition or other claims for Taxes of the type(s)
described in SECTION 13.5 or (4) any Claims of the type(s) described in SECTIONS
13.2 (only with respect to claims in respect of a decline in the Fair Market
Sales Value of the Property and the Lessee's exercise of the Remarketing
Option), 13.6, 13.8 and 13.10. It is expressly understood and agreed that the
indemnity provided for herein shall survive the expiration, termination,
reconveyance or release of, and shall be separate and independent from any
remedy under, the Lease or any other Operative Document.
SECTION 13.4. PROCEEDINGS IN RESPECT OF CLAIMS.
(a) With respect to any amount that the Lessee is requested by an
Indemnitee to pay by reason of SECTION 13.1 or 13.3, such Indemnitee shall,
if so requested by the Lessee and prior to any payment, submit such
additional information to the Lessee as the Lessee may reasonably request
and which is in the possession of such Indemnitee or an affiliate, officer,
director, employee, agent or assign of such Indemnitee to substantiate
properly the requested payment;
(b) In case any action, suit or proceeding shall be brought against
any Indemnitee, such Indemnitee shall notify the Lessee of the commencement
thereof, and the Lessee shall be entitled, at its expense, to participate
in, and, to the extent that the Lessee desires to, assume and control the
defense thereof; PROVIDED, HOWEVER, that the Lessee shall have acknowledged
in writing its obligation to fully indemnify such Indemnitee in respect of
such action, suit or proceeding (and such Indemnitee is reasonably
satisfied that Lessee is capable of doing so), and the Lessee shall keep
such Indemnitee fully apprised of the status of such action, suit or
proceeding and shall provide such Indemnitee with all information with
respect to such action, suit or proceeding as such indemnitee shall
reasonably request, and PROVIDED FURTHER, that the Lessee shall not be
entitled to assume and control the defense of any such action, suit or
proceeding if and to the extent that, (i) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any possibility of
imposition of criminal liability or any risk of material civil liability on
such Indemnitee or will involve a material risk of the sale, forfeiture or
loss of, or the creation of any Lien (other than a
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Permitted Exception) on the Property or any part thereof unless, in the
case of civil liability, the Lessee shall have posted a bond or other
security satisfactory to the relevant Indemnitee in respect to such risk or
(y) the control of such action, suit or proceeding would involve an actual
or potential conflict of interest, (ii) such proceeding involves Claims not
fully indemnified by the Lessee which the Lessee and the Indemnitee have
been unable to sever from the indemnified claim(s), (such Indemnitee hereby
agreeing to cooperate with Lessee in efforts to sever such claims) or (iii)
a Lease Event of Default has occurred and is continuing. The Indemnitee
may participate in a reasonable manner at its own expense and with its own
counsel in any proceeding conducted by the Lessee in accordance with the
foregoing. The Lessee shall not enter into any settlement or other
compromise with respect to any Claim which is entitled to be indemnified
under SECTION 13.1 or without the prior written consent of the Indemnitee
which consent shall not be unreasonably withheld in the case of a money
settlement not involving an admission of liability of such Indemnitee.
(c) Each Indemnitee shall at the expense of the Lessee supply the
Lessee with such information and documents reasonably requested by the
Lessee as are necessary or advisable for the Lessee to participate in any
action, suit or proceeding to the extent permitted by SECTION 13.1 or 13.3.
Unless a Lease Event of Default shall have occurred and be continuing, no
Indemnitee shall enter into any settlement or other compromise with respect
to any Claim which is entitled to be indemnified under SECTION 13.L or 13.3
without the prior written consent of the Lessee, which consent shall not be
unreasonably withheld, unless such Indemnitee waives its right to be
indemnified under SECTION 13.1 or 13.3 with respect to such Claim.
(d) Upon payment in full of any Claim by the Lessee pursuant to
SECTION 13.1 or 13.3 to or on behalf of an Indemnitee, the Lessee, without
any further action, shall be subrogated to any and all claims that such
Indemnitee may have relating thereto (other than claims in respect of
insurance policies maintained by such Indemnitee at its own expense), and
such Indemnitee shall execute such instruments of assignment and
conveyance, evidence of claims and payment and such other documents,
instruments and agreements as may be necessary to preserve any such claims
and otherwise cooperate with the Lessee and give such further assurances as
are necessary or advisable to enable the Lessee vigorously to pursue such
claims.
(e) Any amount payable to an Indemnitee pursuant to SECTION 13.1 or
13.3 shall be paid to such Indemnitee promptly upon receipt of a written
demand therefor from such Indemnitee, accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable and, if requested by the Lessee, such
determination shall be verified by
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a nationally recognized independent accounting firm mutually acceptable to
the Lessee and the Indemnitee at the expense of the Lessee.
SECTION 13.5. GENERAL IMPOSITIONS INDEMNITY.
(a) INDEMNIFICATION. The Lessee shall pay and assume liability for,
and does hereby agree to indemnify, protect and defend the Property and all
Indemnitees, and hold them harmless against, all Impositions on an After
Tax Basis.
(b) PAYMENTS.
(i) Subject to the terms of SECTION 13.5(F), the Lessee shall
pay or cause to be paid all Impositions directly to the taxing
authorities where feasible and otherwise to the Indemnitee, as
appropriate, and the Lessee shall at its own expense, upon such
Indemnitee's reasonable request, furnish to such Indemnitee copies of
official receipts or other satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest is conducted
pursuant to SECTION 13.5(f) and which the Lessee pays directly to the
taxing authorities, the Lessee shall pay such Impositions prior to the
latest time permitted by the relevant taxing authority for timely
payment. In the case of Impositions for which the Lessee reimburses
an Indemnitee, the Lessee shall do so within twenty (20) days after
receipt by the Lessee of demand by such Indemnitee describing in
reasonable detail the nature of the Imposition and the basis for the
demand (including the computation of the amount payable), but in no
event shall the Lessee be required to pay such reimbursement prior to
the latest time permitted by the relevant taxing authority for timely
payment. In the case of Impositions for which a contest is conducted
pursuant to SECTION 13.5(f), the Lessee shall pay such Impositions or
reimburse such Indemnitee for such Impositions, to the extent not
previously paid or reimbursed pursuant to SECTION 13.5(a), prior to
the latest time permitted by the relevant taxing authority for timely
payment after conclusion of all contests under SECTION 13.5(f).
(iii) Impositions imposed with respect to the Property for a
period during which the Lease expires or terminates (unless the Lessee
has exercised the Renewal Option or the Purchase Option with respect
to the Property) shall be adjusted and prorated on a daily basis
between the Lessee and Wolverine, whether or not such Imposition is
imposed before or after such expiration or termination and each party
shall pay or reimburse the other for each party's pro rata share
thereof.
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(iv) At the Lessee's request, the amount of any indemnification
payment by the Lessee pursuant to SECTION 13.5(a) shall be verified
and certified by an independent public accounting firm mutually
acceptable to the Lessee and the Indemnitee. The fees and expenses of
such independent public accounting firm shall be paid by the Lessee
unless such verification shall result in an adjustment in the Lessee's
favor of 5% or more of the payment as computed by the Indemnitee, in
which case such fee shall be paid by the Indemnitee.
(v) In the event that the Indemnitee receives a refund (or like
adjustment) in respect of any Impositions (or deduction or withholding
thereof) paid by the Lessee or for which the Indemnitee has been
reimbursed by the Lessee, the Indemnitee shall within ten (10) days
remit the amount of such refund (or like adjustment) to the Lessee,
net of all reasonable costs and expenses incurred by such Indemnitee.
(c) REPORTS AND RETURNS.
(i) Except as provided in Section 13.5(c)(ii), the Lessee shall
be responsible for preparing and filing any real and personal property
or ad valorem tax returns in respect of the Property.
(ii) In the case of real property, personal property tax and
other ad valorem tax returns with respect to the Property (or any
portion thereof) that are required to be filed by or in the name of an
Indemnitee and in the case any other report or tax return which shall
be required to be made with respect to any obligations of the Lessee
under or arising out of SECTION 13.5(a) and of which the Lessee has
knowledge or should have knowledge, the Lessee, at its sole cost and
expense, shall notify the relevant Indemnitee of such requirement and
(except if such Indemnitee notifies the Lessee that such Indemnitee
intends to file such report or return) and: (A) to the extent required
or permitted by and consistent with Requirements of Law, shall make
and file in its own name such return, statement or report; and (B) in
the case of any other such return, statement or report required to be
made in the name of such Indemnitee, shall advise such Indemnitee of
such fact and prepare such return, statement or report for filing by
such Indemnitee or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the Lessee
under or arising out of SECTION 13.5(a), provide such Indemnitee at
the Lessee's expense with information sufficient to permit such
return, statement or report to be properly made with respect to any
obligations of the Lessee under or arising out of SECTION 13.5(a).
Such Indemnitee shall, upon the Lessee's request and at the Lessee's
expense, provide any data maintained by-such Indemnitee (and not
otherwise available to or within
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the control of the Lessee) with respect to the Property which the
Lessee may reasonably require to prepare any required tax returns or
reports.
(iii) If pursuant to SECTION 13.5(c)(ii) an Indemnitee
notifies the Lessee of its intention to file a return or report itself
with respect to the Property (or any portion thereof) or with respect
to a Tax or Imposition for which such Indemnitee is entitled to
indemnification pursuant to this SECTION 13.5 or if Lessee has
prepared a return or report for filing by an Indemnitee pursuant to
SECTION 13.5(c)(ii)(b), such Indemnitee shall timely file such return
and provide a copy of such return to the Lessee within ten days after
it is filed. Prior to filing any return with respect to the Property
(or any portion thereof), an Indemnitee shall consult with Lessee as
to the proposed form of the return and shall provide a copy of the
proposed return to Lessee at least ten days before such return is due.
(iv) Each Indemnitee shall promptly forward to Lessee, by means
calculated to provide Lessee with sufficient time to respond, any
correspondence or other written communication received from a taxing
authority or jurisdiction with respect to the Property (or any portion
thereof).
(d) INCOME INCLUSIONS. If as a result of the payment or
reimbursement by the Lessee of any expenses of Wolverine, Matisse or the
Bank or the payment of any Transaction Expenses incurred in connection with
the transactions contemplated by the Operative Documents, Wolverine,
Matisse, or any Bank shall suffer a net increase in any federal, state or
local income tax liability, the Lessee shall indemnify such Persons
(without duplication of any indemnification required by SECTION 13.5(a)) on
an After Tax Basis for the amount of such increase. The calculation of any
such net increase shall take into account any current or future tax savings
realized or reasonably expected to be realized by such person in respect
thereof, as well as any interest, penalties and additions to tax payable by
Wolverine, Matisse, the Bank or such Affiliate, in respect thereof,
provided that the amount of such tax increase and savings shall be
calculated based on the following assumptions: (A) the Indemnitee is, and
will be, taxed at the highest marginal rate for all Taxes; and (B) the
Indemnitee will claim, and will be able to fully utilize in the year in
which they are first allowable, all tax deductions, credits and other tax
benefits that are allowable with respect to such expense, payment or
reimbursement (including, without limitation, the federal income tax
deduction for state and local income taxes).
(e) WITHHOLDING TAXES. As between the Lessee on one hand, and
Wolverine, Matisse or the Bank on the other hand, the Lessee shall be
responsible for, and the Lessee shall indemnify and hold harmless
Wolverine, Matisse and the Bank (without duplication of any indemnification
required by SECTION 13.5(a)) on an After Tax Basis against, any obligation
for United States withholding taxes
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imposed in respect of payments with respect to the Wolverine/Bank Loan, the
Matisse/Bank Loan or the Wolverine/Matisse Loan and with respect to Rent
payments under the Lease or payments of the Asset Termination Value (and,
if Wolverine, Matisse or the Bank receives a demand for such payment from
any taxing authority, the Lessee shall discharge such demand on behalf of
Wolverine, Matisse or the Bank). Notwithstanding the foregoing, the Lessee
shall not be required to indemnify for such withholding taxes to the extent
that (i) they are actually creditable against a pre-existing net income tax
liability of the Person receiving the payment subject to withholding, or
(ii) arise as a result of an assignment, participation, or syndication by
the Bank of its rights under the Operative Documents to a Person who is not
a "United States person" within the meaning of Code Section 7701(a)(30).
Any taxes withheld with respect to any payment pursuant to the previous
sentence shall be deemed, for purposes of the Operative Documents, to have
been paid to the Person to whom the payment was due and shall be credited
as though such payment had been made to the Person to whom the payment was
due. Wolverine, Matisse and the Bank shall use commercially reasonable
efforts to avoid withholding, including, without limitation, timely filing
all necessary forms with the appropriate taxing authorities and Lessee as
are required to avoid the imposition of such withholding, PROVIDED, that
such efforts shall not include the incurrence of any expense or submitting
to taxation in any jurisdiction where they were not previously subject to
tax.
(f) CONTESTS OF IMPOSITIONS.
(i) If a written claim is made against any Indemnitee or if any
proceeding shall be commenced against such Indemnitee (including a
written notice of such proceeding), for any Impositions, or an
Indemnitee receives a "thirty day letter" from the Internal Revenue
Service or similar notice of proposed adjustment from the Internal
Revenue Service or any state or local taxing authority; such
Indemnitee shall promptly notify the Lessee in writing and shall not
take action with respect to such claim or proceeding without the
consent of the Lessee for thirty (30) days after the receipt of such
notice by the Lessee; provided, however, that, in the case of any such
claim or proceeding, if action shall be required by law or regulation
to be taken prior to the end of such 30-day period, such Indemnitee
shall, in such notice to the Lessee, inform the Lessee of such shorter
period, and no action shall be taken with respect to such claim or
proceeding without the consent of the Lessee before two (2) days
before the end of such shorter period; provided, further, that the
failure of such Indemnitee to give the notices referred to in this
sentence shall not diminish the Lessee's obligation hereunder except
to the extent such failure precludes the Lessee from contesting all or
part of such claim.
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(ii) If, within thirty (30) days of receipt of such notice from
the Indemnitee (or such shorter period as the Indemnitee has notified
the Lessee is required by law or regulation for the Indemnitee to
commence such contest), the Lessee shall request in writing that such
Indemnitee contest such Imposition, the Indemnitee shall, at the
expense of the Lessee, in good faith conduct and control such contest
(including, without limitation, by pursuit of appeals) relating to the
validity, applicability or amount of such Impositions (provided,
however, that (A) if such contest involves a tax other than a tax on
net income and can be pursued independently from any other proceeding
involving a tax liability of such Indemnitee, the Indemnitee, at the
Lessee's request, shall allow the Lessee to conduct and control such
contest and (B) in the case of any contest, the Indemnitee may request
the Lessee to conduct and control such contest) by, in the sole
discretion of the Person conducting and controlling such contest, (1)
resisting payment thereof, (2) not paying the same except under
protest, if protest is necessary and proper, (3) if the payment be
made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings, or (4) taking
such other action as is reasonably requested by the Lessee from time
to time.
(iii) The party controlling any contest shall consult in good
faith with the non-controlling party and shall keep the non-controlling
party reasonably informed as to the conduct of such contest; provided,
that all decisions with respect to the prosecution of the consent
ultimately shall be made in the sole discretion of the controlling
party. The parties agree that an Indemnitee may at any time decline
to take further action with respect to the contest of any Imposition
and may settle such contest if such Indemnitee shall waive its rights
to any indemnity from the Lessee that otherwise would be payable in
respect of such claim (and any future claim by any taxing authority,
the contest of which is precluded by reason of such resolution of such
claim) and shall pay to the Lessee any amount previously paid or
advanced by the Lessee pursuant to this SECTION 13.5 by way of
indemnification or advance for the payment of an Imposition other than
expenses of such contest.
(iv) Notwithstanding the foregoing provisions of this SECTION
13.5, an Indemnitee shall not be required to take any action and the
Lessee shall not be permitted to contest any Impositions in its own
name or that of the Indemnitee unless (A) the Lessee shall have agreed
to pay and shall pay to such Indemnitee on demand and on an After Tax
Basis all reasonable costs, losses and expenses that such Indemnitee
actually incurs in connection with contesting such Impositions,
including, without limitation, all reasonable legal, accounting and
investigatory fees and disbursements, (B) in the case of a claim that
must be pursued in the name
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of an Indemnitee (or an Affiliate thereof), the amount of the
potential indemnity (taking into account all similar or logically
related claims that have been or could be raised in any audit
involving such Indemnitee for which the Lessee may be liable to pay an
indemnity under this SECTION 13) exceeds $10,000, (C) the Indemnitee
shall have reasonably determined that the action to be taken will not
result in any material danger of sale, forfeiture or loss of the
Property, or any part thereof or interest therein, will not interfere
with the payment of Rent, and will not result in risk of criminal
liability, (D) if such contest shall involve the payment of the
Imposition prior to the contest, the Lessee shall provide to the
Indemnitee an interest-free advance in an amount equal to the
Imposition that the Indemnitee is required to pay (with no additional
net after-tax cost to such Indemnitee), (E) in the case of a claim
that must be pursued in the name of an Indemnitee (or an Affiliate
thereof), the Lessee shall have provided to such Indemnitee an opinion
of independent tax counsel selected by the Indemnitee and reasonably
satisfactory to the Lessee stating that a reasonable basis exists to
contest such claim (or, in the case of an appeal of an adverse
judicial determination, an opinion of such counsel to the effect that
the position asserted in such appeal will more likely than not
prevail) and (F) no Lease Event of Default hereunder shall have
occurred and be continuing. In no event shall an Indemnitee be
required to appeal an adverse judicial determination to the United
States Supreme Court. In addition, an Indemnitee shall not be
required to contest any claim in its name (or that of an Affiliate) if
the subject matter thereof shall be of a continuing nature and shall
have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest completed in accordance with the
provisions of this SECTION 13.5, which decision has become final
unless there shall have been a change in law (or interpretation
thereof) and the Indemnitee shall have received, at the Lessee's
expense, an opinion of independent tax counsel selected by the Lessee
and reasonably acceptable to the Indemnitee stating that as a result
of such change in law (or interpretation thereof), it is more likely
than not that the Indemnitee will prevail in such contest.
(g) DOCUMENTATION OF WITHHOLDING STATUS.
(i) Any party to the Operative Documents that is organized under
the laws of a jurisdiction outside of the United States of America,
shall on or before the date it is to receive any payment under any
Operative Document, deliver to the Bank and the Lessee any
certificates, documents, or other evidence that shall be required by
the Code or Treasury Regulations issued pursuant thereto to establish
its exemption from United States Federal withholding requirements,
including two valid, duly completed, original copies of Internal
Revenue Service Form 1001 or
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Form 4224 or successor applicable form, properly and duly executed,
certifying in each case that such party is entitled to receive
payments pursuant to the Operative Documents without deduction or
withholding of United States Federal income taxes.
(ii) Each Person required to deliver any form pursuant to CLAUSE
(i) above shall, on or before the date that such form expires or
becomes obsolete, or after the occurrence of any event requiring a
change in the most recent such form previously delivered to the Bank
and the Lessee, deliver to the Bank and the Lessee two further valid,
duly completed, original copies of any such form or certification,
properly and duly executed.
(h) LIMITATION ON TAX INDEMNIFICATION. The Lessee shall not be
required to indemnify any Indemnitee, or to pay any increased amounts to
any Indemnitee or tax authority with respect to any Impositions pursuant to
this SECTION 13.5 to the extent that (i) any obligation to withhold,
deduct, or pay amounts with respect to Tax existed on the date such
Indemnitee became a party to any Operative Document (and, in such case, the
Lessee may deduct and withhold such Tax from payments pursuant to the
Operative Documents), or (ii) such Indemnitee fails to comply with the
provisions of SECTION 13.5(g) (and, in such case, the Lessee may deduct and
withhold all Taxes required by law as a result of such noncompliance from
payments made by the Lessee pursuant to the Operative Documents).
(i) COOPERATION BY INDEMNITEES. Each Indemnitee agrees it will
conduct its negotiations and any administrative and judicial proceedings
under this SECTION 13.5 concerning any Imposition reasonably and in good
faith. Each Indemnitee shall provide Lessee with information, at Lessee's
expense, and shall confer with Lessee or Lessee's independent tax counsel
about the progress and course of any audit, contest or proceeding, as
Lessee may reasonably request from time to time. Each Indemnitee shall
provide to Lessee a copy of any written notice from the Internal Revenue
Service or state or local taxing authority of any adjustment or tax for
which Lessee is liable pursuant to this SECTION 13.5 and shall use its best
efforts to provide Lessee's counsel the opportunity to review and comment
in advance on submissions to such taxing authorities (including the
Internal Revenue Service) contesting such adjustment or tax. Without
limiting the foregoing, each Indemnitee agrees to cooperate in all
reasonable respects with any property tax appeal requested by Lessee, and
shall execute such documents as Lessee may reasonably request in connection
therewith.
SECTION 13.6. FUNDING LOSSES. In the event of (a) any failure to borrow
or accept a Eurodollar Advance or to continue or convert into a Eurodollar
Advance after the Lessee has given (or is deemed to have given) a Funding
Request or a Conversion/Continuation Request therefor; (b) any failure to pay a
Eurodollar Advance
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on the Termination Date after the Lessee has given a notice in accordance with
SECTION 20.1 OF THE LEASE; (c) the prepayment of a Eurodollar Advance on a day
which is not the last day of the Interest or Rental Period with respect thereto;
or (d) the conversion of any Eurodollar Advance to a Alternate Base Rate Advance
on a day that is not the last day of the Interest or Rental Period with respect
thereto, then the Lessee shall reimburse the Bank within fifteen (15) days after
demand for any resulting loss or expense incurred by it, including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties (such amount or amounts to include an amount equal to the
excess, if any, of (i) the amount of interest that would have accrued on the
amount not borrowed or otherwise obtained, not prepaid, prepaid, or converted
for the period from the date of such failure to borrow, failure to prepay,
prepayment, or conversion to the last day of then current Interest or Rental
Period (or in the case of a failure to borrow, the Interest or Rental Period
which would have commenced on the date of such failure) at the interest rate
applicable to that Eurodollar Advance, over (ii) the amount of interest that
would accrue to the Bank on such amount at the Eurodollar Rate in effect on such
date by placing such amount on deposit for a comparable period with leading
banks in the London interbank market), PROVIDED that the Bank shall have
delivered to the Lessee a certificate as to the amount of such loss or expense,
which certificate shall constitute prima facie evidence of the matters set forth
therein. The Bank will, at the request of the Lessee, furnish such additional
information concerning the determination of such loss as the Lessee may
reasonably request.
SECTION 13.7. [RESERVED]
SECTION 13.8. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
If Bank shall have determined that reasonable means do not exist for
ascertaining the Eurodollar Rate for any requested Interest or Rental Period
with respect to a proposed Eurodollar Advance, Bank will forthwith give notice
of such determination to the Lessee. Thereafter, the obligation of the Bank to
make or maintain Eurodollar Advances hereunder shall be suspended until Bank
revokes such notice in writing. Upon receipt of such notice, the Lessee may
revoke any Funding Request or Conversion/Continuation Request then submitted by
it. If the Lessee does not revoke such notice, the Bank shall make, convert or
continue the Loan or Lease Advances, as proposed by the Lessee, in the amount
specified in the applicable notice submitted by the Lessee, but such Loan and
Lease Advances shall be made, converted or continued as Alternate Base Rate
Advances instead of Eurodollar Advances.
SECTION 13.9. ILLEGALITY. If, on or after the date of this Participation
Agreement, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for the Bank to purchase, maintain or fund Loan or
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Lease Advances in any Eurodollar Advance and the Bank shall so notify the
Lessee, whereupon until the circumstances giving rise to such suspension no
longer exist, the obligation of the Bank to fund in any such Eurodollar Advance
shall be suspended. Before giving any notice pursuant to this Section, the Bank
shall, if practicable, with the consent of the Lessee (which consent shall not
unreasonably be withheld), designate a different funding office (if one exists)
if such designation will avoid the need for giving such notice and will not, in
the judgment of the Bank, adversely affect the Bank. If such notice is given
(i) the Lessee shall be entitled upon its request to a reasonable explanation of
the factors underlying such notice and (ii) each Eurodollar Advance then
outstanding shall begin to bear interest or Basic Rent at the Alternate Base
Rate either (a) on the last day of the then current Interest or Rental Period
applicable to such Loan or Lease Advance if the Bank may lawfully continue to
maintain and fund such to such day or (b) immediately if the Bank shall
determine that it may not lawfully continue to maintain and fund such Eurodollar
Advance to such day.
SECTION 13.10. INCREASED COST AND REDUCED RETURN.
(a) In the event that, after the Closing Date, the adoption of any
applicable law, rule or regulation, or any change therein or in the
interpretation or application thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof or compliance by the Bank with any request or
directive after the date hereof (whether or not having the force of law) of
any such authority, central bank or comparable agency:
(i) does or shall subject the Bank to any additional tax of any
kind whatsoever with respect to the Operative Documents or any Loan or
Lease Advance, or change the basis or the applicable rate of taxation
of payments due under the Operative Documents to the Bank or any other
amount payable hereunder (except for the imposition of or change in
any tax on or measured by the overall net income of the Bank (other
than any such tax imposed by means of withholding) or otherwise
excluded from the tax indemnification in SECTION 13.5);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, insurance assessment, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities
in or for the account of, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of the
Bank which are not otherwise included in determination of the rate of
interest on Eurodollar Advances hereunder; or
(iii) does or shall impose on the Bank any other condition
with respect to the Operative Documents or any class of Loan or Lease
Advances or commitments of which the Loan or Lease Advances or the
Bank's Commitment forms a part;
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and the result of any of the foregoing is to increase the cost to the Bank
of making, funding or maintaining any Eurodollar Advance or to reduce any
amount receivable hereunder with respect thereto, then in any such case,
the Lessee shall promptly pay the Bank, upon its demand, any additional
amounts necessary to compensate the Bank for such increased cost or reduced
amount receivable which the Bank deems to be material.
(b) If the Bank shall have determined that the adoption after the
Closing Date of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of
return on capital of the Bank (or any entity directly or indirectly
controlling the Bank) as a consequence of the Bank's obligations under the
Operative Documents to a level below that which the Bank (or any entity
directly or indirectly controlling the Bank) could have achieved but for
such adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by the Bank
to be material, and such reduction is not reflected in the Eurodollar Rate
or Alternate Base Rate, as the case may be, then from time to time, within
fifteen (15) days after demand by the Bank, the Lessee shall pay to the
Bank such additional amount or amounts as will compensate the Bank (or its
parent) for such reduction.
(c) The Bank will promptly notify the Lessee of any event of which it
has knowledge, occurring after the date hereof, which will entitle the Bank
to compensation pursuant to this Section and will, if practicable, with the
consent of the Lessee (which consent shall not unreasonably be withheld),
designate a different funding office or take any other reasonable action if
such designation or action will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of the Bank, be
otherwise disadvantageous to the Bank. A certificate of the Bank claiming
compensation under this Section and setting forth in reasonable detail its
computation of the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, the Bank may use any reasonable averaging and attribution methods.
This Section shall survive the termination of this Participation Agreement
and payment of the outstanding Loan Advances.
SECTION 13.11. INDEMNITY PAYMENTS IN ADDITION TO RESIDUAL VALUE GUARANTEE
AMOUNT; SURVIVAL. The Lessee acknowledges and agrees that its obligations to
make indemnity payments under this SECTION 13 are separate from, in addition to,
and do not reduce, its obligation to pay the Residual Value Guarantee Amount
under the Lease. The
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agreements and obligations of the Lessee in this SECTION 13 shall survive the
payment of all other obligations due under the Operative Documents.
SECTION 14.
MISCELLANEOUS
SECTION 14.1. SURVIVAL OF AGREEMENTS. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Participation Agreement, the
construction of any Improvements, any disposition of any interest of Wolverine
in the Property or any Improvements, payment of the Wolverine/Bank Loan, the
Matisse/Bank Loan and the Wolverine/ Matisse Loan and any disposition thereof
and shall be and continue in effect notwithstanding any investigation made by
any party and the fact that any party may waive compliance with any of the other
terms, provisions or conditions of any of the Operative Documents. Except as
otherwise expressly set forth herein or in other Operative Documents, the
indemnities of the parties provided for in the Operative Documents shall survive
the expiration, termination, reconveyance or release of any thereof. All
references in the Operative Documents to the "Guarantor" and to the "Guarantor"
are hereby declared to be null, void and of no effect.
SECTION 14.2. NO BROKER, ETC. Each of the parties hereto represents to
the others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Participation Agreement or
the transactions contemplated herein, nor has it authorized any broker, finder
or financial adviser retained or employed by any other Person so to act;
PROVIDED, that the Lessee has retained The Staubach Company and shall be solely
responsible for the payment of its fees and expenses. Any party who is in
breach of this representation shall indemnify and hold the other parties
harmless from and against any liability arising out of such breach of this
representation.
SECTION 14.3. NOTICES. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Wolverine, the Lessee, Matisse or the Bank under this Agreement or the other
Operative Documents shall be in writing and faxed, mailed or delivered to such
Person at its respective facsimile number or address set forth in SCHEDULE 2 (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 overnight service of
recognized standing upon delivery; (b) when mailed, first class postage prepaid
and addressed as aforesaid through the United States Postal Service, three (3)
Business Days after mailing; (c) when delivered by hand, upon delivery; and (d)
when faxed, upon confirmation of receipt as indicated in the sender's facsimile
activity report. In the event that delivery by mail overnight delivery service,
courier or personal service is refused, delivery shall be deemed to occur on the
date that delivery is refused.
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SECTION 14.4. COUNTERPARTS. This Participation Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 14.5. AMENDMENTS. No Operative Document nor any of the terms
thereof may be terminated, amended, supplemented, waived or modified without the
written agreement or consent of the Lessee, Wolverine, Matisse and the Bank.
SECTION 14.6. HEADINGS, ETC.. The Table of Contents and headings of the
various Sections of this Agreement are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof.
SECTION 14.7. PARTIES IN INTEREST. Except as expressly provided herein,
none of the provisions of this Participation Agreement are intended for the
benefit of any Person except the parties hereto. Subject to the provisions of
SECTION 25.1 of the Lease, the Lessee shall not assign or transfer any of its
rights or obligations under the Operative Documents without the prior written
consent of the Bank. In the event that the Bank assigns or transfers any of the
Operative Documents in whole or in part, or any rights or interest therein, to
more than one person or entity, Bank shall designate in writing one person to
whom notices may be sent on behalf of both Bank and any assignee or transferee
thereof. Neither Wolverine nor Matisse may assign any of its rights and
obligations under the Operative Documents (including any right, title and
interest in and to the Property) to another Person, without the prior written
consent of the Bank and the Lessee. Subject to the foregoing, this
Participation Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns.
SECTION 14.8. GOVERNING LAW. THIS PARTICIPATION AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF OREGON (EXCLUDING ANY CONFLICT-
OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE
INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, BUT IF THE BANK HAS GREATER RIGHTS OR REMEDIES UNDER
FEDERAL LAW, THEN SUCH RIGHTS AND REMEDIES UNDER FEDERAL LAW WILL ALSO BE
AVAILABLE TO THE BANK.
SECTION 14.9. SEVERABILITY. Any provision of this Participation Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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SECTION 14.10. LIMITATIONS OF WOLVERINE AND MATISSE'S LIABILITY. Except
in the case of the representations, warranties and covenants of Wolverine and
Matisse made in SECTIONS 8.1, 8.2, 10.3(a), (c), (d), (f) AND (h), AND 10.4(a),
(c), (e), (f), (g) AND (h), and except in the case of the gross negligence or
willful misconduct of Wolverine and Matisse, as to which individual liability
shall attach to the extent of any damages resulting therefrom, anything in this
Participation Agreement to the contrary notwithstanding, neither the Bank nor
any other holder of the Wolverine/Bank Note, the Matisse/Bank Note or the
Wolverine/Matisse Note, nor the successors or assigns of any said Persons, shall
have any claim, remedy or right to proceed against Wolverine and Matisse or any
past, present or future stockholder, subscriber or capital stock, officer,
employee, director, incorporator or partner of Wolverine and Matisse whether by
virtue of any constitutional provision, statute or rule of law or by enforcement
of any penalty or assessment or otherwise, for the payment of any deficiency of
any other sum owing on account of the indebtedness evidenced by the
Wolverine/Bank Note, the Matisse/Bank Note or the Wolverine/Matisse Note or for
the payment of any liability resulting from the breach of any representation,
agreement or warranty of any nature whatsoever in this Participation Agreement
or any other Operative Document, from any source other than the collateral for
the Wolverine/Bank Loan, the collateral for the Matisse/Bank Loan, and the
collateral for the Wolverine/Matisse Note (excluding the Excepted Payments), and
the Bank and each holder of the Wolverine/Bank Note, the Matisse/Bank Note and
the Wolverine/Matisse Loan agree to look solely to the collateral for the
Wolverine/Bank Loan, the collateral for the Matisse/Bank Loan, and the
collateral for the Wolverine/Matisse Note (excluding the Excepted Payments) for
the payment of said indebtedness or the satisfaction of such liability;
PROVIDED, HOWEVER, that nothing herein contained shall limit, restrict or impair
the rights of the Bank to accelerate the maturity of the Wolverine/Bank Note,
the Matisse/Bank Note or the Wolverine/Matisse Note upon a Loan Event of Default
or, subject to the limitations hereinabove described, to bring suit and obtain a
judgment against Wolverine on the Wolverine/Bank Note and the Wolverine/Matisse
Loan and Matisse on the Matisse/Bank Note or to exercise all rights and remedies
provided under this Participation Agreement or otherwise realize upon the
collateral for the Wolverine/Bank Loan, the collateral for the Matisse/Bank Loan
and the collateral for the Wolverine/Matisse Note, including, without
limitation, the rights under the Matisse Shareholder Subscription Pledge and
against the shareholders in Matisse under the Matisse Subscription Agreements
granted thereby and in accordance with the express terms of the Matisse
Shareholder Subscription Pledge.
SECTION 14.11. FURTHER ASSURANCES. The parties hereto shall promptly
cause to be taken, executed, acknowledged or delivered, at the sole expense of
the Lessee, all such further acts, conveyances, subordinations, documents and
assurances as the other parties may from time to time reasonably request in
order to carry out and effectuate the intent and purposes of this Participation
Agreement, the other Operative Documents, and the transactions contemplated
hereby and thereby (including, without limitation, the preparation, execution
and filing of any and all Uniform Commercial Code financing statements and other
filings or registrations which the parties hereto may from time to
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time request to be filed or effected). The Lessee, at its own expense and
without need of any prior request from any other party, shall take such action
as may be necessary (including any action specified in the preceding sentence),
or (if Wolverine, Matisse or the Bank shall so request) as so requested, in
order to maintain and protect all security interests provided for hereunder or
under any other Operative Document.
SECTION 14.12. SUBMISSION TO JURISDICTION. Each of the Lessee, Wolverine,
Matisse and the Bank hereby submits to the nonexclusive jurisdiction of the
United States District Court for the District of Oregon and of any Oregon State
court sitting in Portland, Oregon for purposes of all legal proceedings arising
out of or relating to the Operative Documents or the transactions contemplated
hereby. Each of the Lessee, Wolverine, Matisse and the Bank irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
SECTION 14.13. WAIVER OF JURY TRIAL. EACH OF THE LESSEE, WOLVERINE,
MATISSE AND THE BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE OPERATIVE
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14.14. USURY SAVINGS CLAUSE. Nothing contained in this
Participation Agreement or the other Operative Documents shall be deemed to
require the payment of interest or other charges by Lessee, Wolverine, Matisse
or any other Person in excess of the amount which may be lawfully charged under
any applicable usury laws. In the event that the Bank, Wolverine, Matisse or
any other Person shall collect moneys under this Participation Agreement or any
other Operative Document, which are deemed to constitute interest (including,
without limitation, the Basic Rent or Supplemental Rent) which would increase
the effective interest rate to a rate in excess of that permitted to be charged
by applicable law, all such sums deemed to constitute interest in excess of the
legal rate shall, upon such determination, at the option of the Person to whom
such payment was made, be returned to the Person making such payment or credited
against other amounts owed by the person making such payment.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE BANK
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE, MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
THE BANK TO BE ENFORCEABLE.
WARNING: UNLESS THE BANK IS PROVIDED WITH EVIDENCE OF THE INSURANCE COVERAGE AS
REQUIRED BY THE OPERATIVE DOCUMENTS,
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THE BANK MAY PURCHASE INSURANCE AT THE LESSEE'S EXPENSE TO PROTECT THE BANK'S
INTEREST. THIS INSURANCE MAY, BUT NEED NOT, ALSO PROTECT THE LESSEE'S INTEREST.
IF THE COLLATERAL BECOMES DAMAGED, THE COVERAGE THE BANK PURCHASES MAY NOT PAY
ANY CLAIM THE PARTIES HERETO MAKE OR ANY CLAIM MADE AGAINST ANY OF SUCH PARTIES.
THIS COVERAGE MAY BE CANCELED LATER BY PROVIDING EVIDENCE THAT PROPERTY COVERAGE
HAS BEEN OBTAINED ELSEWHERE. THE LESSEE IS RESPONSIBLE FOR THE COST OF ANY
INSURANCE PURCHASED BY THE BANK. THE COST OF THIS INSURANCE MAY BE ADDED TO THE
LESSEE'S CONTRACT OR LOAN BALANCE. IF THE COST IS ADDED TO THE LESSEE'S
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
THE LESSEE'S PRIOR COVERAGE LAPSED OR THE DATE THE LESSEE FAILED TO PROVIDE
PROOF OF COVERAGE. THE COVERAGE THE BANK PURCHASES MAY BE CONSIDERABLY MORE
EXPENSIVE THAN INSURANCE THE LESSEE CAN OBTAIN ON ITS OWN AND MAY NOT SATISFY
78
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ANY NEED FOR PROPERTY DAMAGE COVERAGE OR ANY MANDATORY LIABILITY INSURANCE
REQUIREMENTS IMPOSED BY APPLICABLE LAW.
IN WITNESS WHEREOF, the undersigned has executed this Participation
Agreement as of the day and year first hereinabove written.
MATISSE MATISSE HOLDING COMPANY, a Texas
corporation
By: /s/ Kristen S. Markham
-----------------------------------
Name: Kristen S. Markham
-----------------------------------
Its: Vice President
-----------------------------------
LESSEE TRIQUINT SEMICONDUCTOR, INC., a
California corporation
By: /s/ Joseph I. Martin
-----------------------------------
Name: Joseph I. Martin
-----------------------------------
Its: CFO
-----------------------------------
WOLVERINE WOLVERINE LEASING CORP., a Texas
corporation
By: /s/ Kristen S. Markham
-----------------------------------
Name: Kristen S. Markham
-----------------------------------
Its: Vice President
-----------------------------------
BANK UNITED STATES NATIONAL BANK OF
OREGON, a national banking association
By: /s/ Jeff A. Killian
-----------------------------------
Name: Jeff A. Killian
-----------------------------------
Its: Vice President
-----------------------------------
79
<PAGE>
LEASE
between
WOLVERINE LEASING CORPORATION,
Lessor,
and
TRIQUINT SEMICONDUCTOR, INC.,
Lessee
May 17, 1996
Headquarters and Manufacturing Facility
Dawson Creek Park
Hillsboro, Oregon
This Lease has been executed in counterparts. To the extent, if any, that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no lien on this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart containing the receipt therefor executed by United
States National Bank of Oregon on the signature page hereof.
THIS LEASE IS NOT INTENDED TO CONSTITUTE A TRUE LEASE FOR INCOME TAX PURPOSES.
SEE SECTION 5.1 OF THE PARTICIPATION AGREEMENT WHICH IS INCORPORATED HEREIN BY
REFERENCE.
<PAGE>
ARTICLE I.....................................................................1
1.1. DEFINITIONS; INTERPRETATION..........................................1
ARTICLE II....................................................................1
2.1. Acceptance and Lease of Property.....................................1
2.3. LEASE TERM...........................................................2
2.4. TITLE................................................................2
ARTICLE III...................................................................2
3.1. RENT.................................................................2
3.2. PAYMENT OF BASIC RENT................................................3
3.3. SUPPLEMENTAL RENT....................................................3
3.4. METHOD OF PAYMENT....................................................4
3.5. OVERDUE SUMS.............................................................4
ARTICLE IV....................................................................4
4.1. UTILITY CHARGES......................................................4
ARTICLE V.....................................................................4
5.1. QUIET ENJOYMENT......................................................4
ARTICLE VI....................................................................5
6.1. NET LEASE............................................................5
6.2. NO TERMINATION OR ABATEMENT..........................................6
6.3. OBLIGATION TO PAY RENT NOTWITHSTANDING LEASE TERMINATION.................6
ARTICLE VII...................................................................7
7.1 OWNERSHIP OF THE PROPERTY.............................................7
ARTICLE VIII..................................................................7
8.1. CONDITION OF THE PROPERTY............................................7
8.2. POSSESSION AND USE OF THE PROPERTY...................................8
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ARTICLE IX....................................................................8
9.1. COMPLIANCE WITH REQUIREMENTS OF LAW AND INSURANCE REQUIREMENTS.......8
ARTICLE X.....................................................................8
10.1. MAINTENANCE AND REPAIR: RETURN......................................8
10.2. MAINTENANCE AND REPAIR REPORTS..........................................9
ARTICLE XI....................................................................9
11.1. MODIFICATIONS, SUBSTITUTIONS AND REPLACEMENTS.......................9
ARTICLE XII..................................................................10
12.1. WARRANTY OF TITLE..................................................10
12.2. GRANTS AND RELEASES OF EASEMENTS...................................11
12.3. ACTIONS REQUIRED OF THE TITLE HOLDER...............................11
12.4. FURTHER ACTIONS BY LESSEE..........................................12
ARTICLE XIII.................................................................12
13.1. PERMITTED CONTESTS OTHER THAN IN RESPECT OF INDEMNITIES............12
ARTICLE XIV..................................................................12
14.1. PUBLIC LIABILITY AND WORKERS' COMPENSATION INSURANCE...............12
14.2. HAZARD AND OTHER INSURANCE.........................................13
14.3. COVERAGE...........................................................13
ARTICLE XV...................................................................15
15.1. CASUALTY AND CONDEMNATION..........................................15
15.2. ENVIRONMENTAL MATTERS..............................................16
15.3. NOTICE OF ENVIRONMENTAL MATTERS....................................19
ARTICLE XVI..................................................................19
16.1. TERMINATION BY THE LESSEE UPON CERTAIN EVENTS......................19
16.2. PROCEDURES.........................................................19
16.3. TERMINATION BY THE LESSOR IN CERTAIN EVENTS........................20
16.4. PURCHASE OF PROPERTY...............................................20
ii
<PAGE>
ARTICLE XVII.................................................................20
17.1 LEASE EVENTS OF DEFAULT.............................................20
17.2 REMEDIES............................................................23
17.3. WAIVER OF CERTAIN RIGHTS...........................................29
17.4. POWER OF SALE AND FORECLOSURE......................................29
17.5. REMEDIES CUMULATIVE; RIGHTS OF BANK................................32
ARTICLE XVIII................................................................32
18.1. THE LESSOR'S RIGHT TO CURE THE LESSEE'S LEASE DEFAULTS.............32
ARTICLE XIX..................................................................32
19.1. PROVISIONS RELATING TO THE LESSEE'S TERMINATION OF THIS LEASE OR
EXERCISE OF PURCHASE OPTION OR OBLIGATION AND CONVEYANCE UPON
REMARKETING AND CONVEYANCE UPON CERTAIN OTHER EVENTS...............32
ARTICLE XX...................................................................33
20.1. PURCHASE OPTION....................................................33
20.2. EXPIRATION DATE PURCHASE OBLIGATION................................34
20.3. ACCELERATION OF PURCHASE OBLIGATION................................34
ARTICLE XXI..................................................................35
21.1. RENEWAL............................................................35
ARTICLE XXII.................................................................36
22.1. OPTION TO REMARKET.................................................36
22.2. CERTAIN OBLIGATIONS CONTINUE.......................................40
22.3. SUPPORT OBLIGATIONS................................................40
ARTICLE XXIII................................................................40
23.1. HOLDING OVER.......................................................40
ARTICLE XXIV.................................................................41
24.1. RISK OF LOSS.......................................................41
ARTICLE XXV..................................................................41
25.1. SUBLETTING AND ASSIGNMENT..........................................41
iii
<PAGE>
ARTICLE XXVI.................................................................42
26.1. ESTOPPEL CERTIFICATES..............................................42
ARTICLE XXVII................................................................42
27.1. RIGHT TO INSPECT...................................................42
27.2. NO WAIVER..........................................................43
ARTICLE XXVIII...............................................................43
28.1. ACCEPTANCE OF SURRENDER............................................43
ARTICLE XXIX.................................................................43
29.1. NO MERGER OF TITLE.................................................43
ARTICLE XXX..................................................................43
30.1. NOTICES............................................................43
ARTICLE XXXI.................................................................44
31.1. MISCELLANEOUS......................................................44
31.2. AMENDMENTS AND MODIFICATIONS.......................................44
31.3. SUCCESSORS AND ASSIGNS.............................................44
31.4. HEADINGS AND TABLE OF CONTENTS.....................................44
31.5. COUNTERPARTS.......................................................44
31.6. GOVERNING LAW......................................................44
31.7. LIMITATIONS ON RECOURSE............................................44
31.8. ORIGINAL LEASE.....................................................45
31.9. USURY SAVINGS CLAUSE...............................................45
iv
<PAGE>
LEASE
THIS LEASE ("LEASE"), dated as of May 17, 1996, between WOLVERINE
LEASING CORP., a Texas corporation, having its principal office at 6750 LBJ
Freeway, Suite 1110, Dallas, Texas 75248 as the Lessor, and TRIQUINT
SEMICONDUCTOR, INC., a California corporation, having its principal office at
3625A S.W. Murray Boulevard, Beaverton, Oregon 97005, as Lessee.
W I T N E S S E T H :
A. WHEREAS, the Lessor is the owner of certain land together with any
Improvements thereon;
B. WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee
desires to lease from the Lessor, such Property; and
C. WHEREAS, with respect to such Property the Lessee, as Construction
Agent, will construct certain Financed Improvements which as constructed will be
the property of the Lessor and will become part of such Property subject to the
terms of this Lease.
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1. DEFINITIONS; INTERPRETATION. Capitalized terms used but not
otherwise defined in this Lease have the respective meanings specified in
APPENDIX I ("APPENDIX I") to the Participation Agreement, dated of even date
herewith, among Lessor, Lessee, United States National Bank of Oregon and
Matisse Holding Company; and the rules of interpretation set forth in APPENDIX I
shall apply to this Lease.
ARTICLE II
2.1. ACCEPTANCE AND LEASE OF PROPERTY. Effective as of the
Closing Date, the Lessor, subject to the satisfaction or waiver of the
conditions set forth in SECTION 6 OF THE PARTICIPATION AGREEMENT, hereby agrees
to lease to the Lessee hereunder for the Term (as defined in SECTION 2.2
hereof), the Land Interest and the other Property together with any Financed
Improvements which thereafter may be constructed thereon pursuant to the
Construction Agency Agreement, this Lease, or the Participation Agreement, and
the Lessee hereby agrees, expressly for the direct benefit of the Lessor, to
lease commencing on such Closing Date from the Lessor for the Term, the Land
Interest to be delivered on such Closing Date and the Property, and to lease in
accordance with the terms set forth herein any Improvements now or hereafter
thereon, including, without limitation, any Financed Improvements which are
constructed thereon pursuant to the Construction Agency Agreement, this Lease or
the Participation Agreement.
1
<PAGE>
The Lessee shall, on the Closing Date, without further act, be deemed
irrevocably to have accepted the Property for all purposes of this Lease and the
other Operative Documents on the terms set forth therein and herein, and, as of
the Closing Date, the Property (including the Improvements constructed or to be
constructed thereon) shall be deemed to be included in the leasehold estate of
this Lease and shall be subject to the terms and conditions of this Lease.
2.2. LEASE TERM. The term of this Lease (the "TERM") shall begin
on the Closing Date and shall end on the fifth anniversary of the Closing Date,
unless the Term is renewed or earlier terminated in accordance with the
provisions of this Lease.
2.3. TITLE. The Property is leased to the Lessee without any
representation or warranty of title, condition of the Improvements or permitted
uses, express or implied, by the Lessor (except as expressly provided herein)
and subject to the rights of parties in possession, the existing state of title
(including, without limitation, the Permitted Exceptions other than Lessor
Liens) and all applicable Requirements of Law. The Lessee shall in no event
have any recourse against the Lessor or Bank or Matisse for any defect in or
exception to title to the Property, except for Lessor Liens in accordance with
SECTION 5.1 and as expressly provided herein. Subject only to Lessor's
agreement in Article V, the Lessee expressly waives and releases the Lessor from
any common law or statutory covenant of quiet enjoyment.
ARTICLE III
3.1. RENT. (a) During the Term, the Lessee shall pay Basic Rent
on each Payment Date after the Commitment Period, on the date required under
SECTION 22.1(I) in connection with the Lessee's exercise of the Remarketing
Option and on any date on which this Lease terminates. Prior to the expiration
of the Commitment Period, Basic Rent shall be capitalized on each Payment Date
through Rental Payment Advances made pursuant to the Participation Agreement and
pursuant hereto. Such Rental Payment Advances shall increase the Property Costs
and the Asset Termination Value as of such date.
(b) Basic Rent shall be due and payable in lawful money of the United
States and shall be paid by wire transfer of immediately available funds on the
due date therefor to such account or accounts at the Bank or in such other
manner as the Bank shall from time to time direct.
(c) Neither the Lessee's inability or failure to take possession of
all or any portion of the Property upon the Closing Date, nor the Lessor's
inability or failure to deliver all or any portion of the Property to the Lessee
on or before the Closing Date, whether or not attributable to any act or
omission of the Lessee or any act or omission of the Lessor, or for any other
reason whatsoever, shall delay or otherwise affect the Lessee's obligation to
pay Rent for the Property from and after commencement of the Term.
(d) On each date which is two (2) Business Days prior to each
Scheduled Payment Date during the Commitment Period, the Lessee shall be deemed
to have requested a Lease Advance pursuant to SECTION 3.4 OF THE PARTICIPATION
AGREEMENT constituting a Rental Payment Advance in an amount equal to the
aggregate accrued but unpaid Basic Rent through
2
<PAGE>
such Scheduled Payment Date. The Funding Date with respect to any such Rental
Payment Advance shall be the relevant Scheduled Payment Date (PROVIDED that such
Rental Payment Advance shall be subject to satisfaction of the applicable
conditions precedent set forth in SECTION 6 OF THE PARTICIPATION AGREEMENT).
(e) Whenever it is calculated on the basis of the Alternate Base
Rate, Basic Rent shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed; and, otherwise, Basic Rent
shall be calculated on the basis of a 360-day year for the actual days elapsed.
Pursuant to the Participation Agreement, the Bank shall as soon as practicable
notify the Lessee of each determination of a Eurodollar Rate. Bank shall notify
Lessee prior to any Payment Date of the amount of Basic Rent payable on such
Payment Date.
(f) Each determination of the rate for the calculation of Basic Rent
by the Bank pursuant to the Participation Agreement shall be conclusive and
binding on the Lessee in the absence of manifest error.
3.2. PAYMENT OF BASIC RENT. Basic Rent shall be paid absolutely
net to the Lessor, so that this lease shall yield to the Lessor the full amount
thereof, without setoff, deduction or reduction (except taxes on Lessor's net
income, gross receipts or the like), whether or not the Lessee's quiet
possession of the Property is disturbed.
3.3. SUPPLEMENTAL RENT. The Lessee shall pay to the Lessor or
the Person entitled thereto any and all Supplemental Rent promptly as the same
shall become due and payable, and if the Lessee fails to pay any Supplemental
Rent, the Lessor shall have all rights, powers and remedies provided for herein
or by law or equity or otherwise in the case of nonpayment of Basic Rent.
Supplemental Rent shall be due upon notice from the Lessor or other Person
entitled thereto to the Lessee (other than Supplemental Rent due on the
Expiration Date or other termination of this Lease, which shall automatically be
due on such Expiration Date or termination, without notice). The Lessee shall
pay to the Lessor, as Supplemental Rent, among other things, on demand, to the
extent permitted by Requirements of Law, interest at the applicable Overdue Rate
pursuant to SECTION 3.5 on any installment of Basic Rent not paid when due for
the period for which the same shall be overdue and on any payment of
Supplemental Rent representing a sum due Lessor hereunder not (i) paid when due
or demanded by the Lessor with respect to Supplemental Rent due on the
Expiration Date or other termination of this Lease, or (ii) within ten (10) days
of the date when due or demanded by the Lessor for all other Supplemental Rent,
in either case, for the period from the due date or the date of any such demand,
as the case may be, until the same shall be paid. The expiration or other
termination of the Lessee's obligations to pay Basic Rent hereunder shall not
limit or modify the obligations of the Lessee with respect to Supplemental Rent
accrued prior to the later of the dates upon which (i) the Lease terminates, or
(ii) the Lessee surrenders possession and control of the Property to Lessor.
Unless expressly provided otherwise in this Lease, in the event of any failure
on the part of the Lessee to pay and discharge any Supplemental Rent as and when
due, the Lessee shall also promptly pay and discharge any fine, penalty,
interest or cost which may be assessed or added under any agreement between (or
authorized by) the Lessee and a third party for nonpayment or late payment of
such Supplemental Rent,
3
<PAGE>
all of which shall also constitute Supplemental Rent.
3.4. METHOD OF PAYMENT. Each payment of Rent shall be made by
the Lessee to the Bank as the assignee of this Lease pursuant to the Assignment
of Lease-Related Documents (unless and until Lessee is instructed to do
otherwise pursuant to a written instruction from the Bank) prior to 12:00 noon,
Portland, Oregon time, at the place of payment in immediately available funds
consisting of lawful currency of the United States of America which shall be
immediately available on the scheduled date when such payment shall be due,
unless such scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day or as otherwise
required by the definition of the term "Interest Period" set forth in APPENDIX 1
OF THE PARTICIPATION AGREEMENT. Payments received after 12:00 noon, Portland,
Oregon time shall be deemed received on the next succeeding Business Day.
Lessee may designate in writing an account maintained with the Bank from which
payments of Rent may be debited on the due date thereof. Such designation shall
remain in effect until the Bank is notified in writing that the designation is
cancelled.
3.5. OVERDUE SUMS. If any Basic Rent shall not be paid within
five (5) Business Days after the date due or any Supplemental Rent or any other
sum due hereunder (including, without limitation, Asset Termination Value, the
Purchase Option Price, or the Residual Value Guarantee Amount) shall not be paid
when due (whether at the stated due date, by acceleration pursuant to SECTIONS
17.2(d) OR 20.3, or otherwise), such overdue amount shall bear interest at a
rate per annum which is equal to the Overdue Rate.
ARTICLE IV
4.1. UTILITY CHARGES. The Lessee shall pay or cause to be paid
all charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Property during the
Term. The Lessee shall be entitled to receive any credit or refund with respect
to any utility charge paid by the Lessee and the amount of any credit or refund
received by the Lessor on account of any utility charges paid by the Lessee, net
of the costs and expenses reasonably incurred by the Lessor in obtaining such
credit or refund, shall be promptly paid over to the Lessee. All charges for
utilities imposed with respect to the Property for a billing period during which
this Lease expires or terminates shall be adjusted and prorated on a daily basis
between the Lessor (or the successor to the Lessor as owner of the Property if
the Property is sold to such successor on the date of such expiration or
termination) and the Lessee, and each party shall pay or reimburse the other for
each party's pro rata share thereof, except that if the Lessee retains
possession of the Property after termination or expiration of this Lease, no
such adjustment and proration shall be made.
ARTICLE V
5.1. QUIET ENJOYMENT. The Lessor will not create or permit to
exist at any time, and will, at its own cost and expense, promptly take such
action as may be necessary duly to discharge, or to cause to be discharged, all
Lessor Liens on the Property; PROVIDED, HOWEVER, that the Lessor shall not be
required to so discharge any such Lessor Lien while the same is being contested
in good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not involve any material danger of impairment of the Liens of
the Lease or the
4
<PAGE>
Operative Documents or of the sale, forfeiture or loss of, and shall not
interfere with the use or disposition of, the Property or title thereto or any
interest therein or the payment of Rent, shall not result in any cost or expense
to the Lessee and Lessor further covenants that any such contest shall be
completed and such Lessor Lien discharged prior to the consummation of any
purchase or sale of the Property pursuant to the terms of this Lease.
ARTICLE VI
6.1. NET LEASE. This Lease shall constitute a net lease. It is
the express intent of Lessor and Lessee that the obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
that the Basic Rent and Supplemental Rent, and all other charges and sums
payable by Lessee hereunder, shall commence at the times provided herein and
shall continue to be payable in all events unless the obligations to pay the
same shall be terminated pursuant to an express provision in this Lease. Any
present or future law to the contrary notwithstanding, this Lease shall not
terminate, nor shall the Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent
(other than the defense of full payment), nor shall the obligations of the
Lessee hereunder be affected by reason of: (i) any defect in the condition,
merchantability, design, construction, quality or fitness for use of the
Property or any part thereof, or the failure of the Property to comply with all
Requirements of Law, including any inability to occupy or use the Property by
reason of such non-compliance; (ii) any damage to, removal, abandonment,
salvage, loss, contamination of or Release from, scrapping or destruction of or
any requisition or taking of the Property or any part thereof; (iii) any
restriction, prevention or curtailment of or interference with any use of the
Property or any part thereof including eviction; (iv) any defect in title to or
rights to the Property or any Lien on such title or rights or on the Property;
(v) any change, waiver, extension, indulgence or other action or omission or
breach in respect of any obligation or liability of or by the Lessor, Matisse or
the Bank; (vi) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings relating to the
Lessee, the Lessor, Matisse, the Bank, or any other Person, or any action taken
with respect to this Lease by any trustee or receiver of the Lessee, the Lessor,
Matisse, the Bank, or any other Person, or by any court, in any such proceeding;
(vii) any claim that the Lessee has or might have against any Person, including
without limitation the Lessor, any vendor, manufacturer, contractor of or for
the Property, Matisse, or the Bank; (viii) any failure on the part of the
Lessor, Matisse or the Bank to perform or comply with any of the terms of this
Lease, of any other Operative Document or of any other agreement; (ix) any
invalidity, unenforceability, illegality or disaffirmance, as against or by the
Lessee, of any provision of this Lease or any of the other Operative Documents;
(x) the impossibility or illegality of performance by the Lessee, the Lessor,
Matisse or the Bank, any one or more of them; (xi) any action by any
Governmental Authority; (xii) any restriction, prevention or curtailment of or
interference with the construction on or any use of the Property or any part
thereof; or (xiii) any other cause or circumstances, whether similar or
dissimilar to the foregoing, and whether or not the Lessee shall have notice or
knowledge of any of the foregoing, without limiting Lessee's rights under the
last sentence of Section 6.3 below. The parties intend that the obligations of
the Lessee hereunder shall be covenants and agreements that are separate and
independent both from any obligations of the Lessor hereunder and from the
obligations of Lessor, Matisse and the Bank under any other
5
<PAGE>
Operative Documents, and the obligations of the Lessee shall continue unaffected
unless such obligations shall have been modified or terminated in accordance
with an express provision of this Lease.
6.2. NO TERMINATION OR ABATEMENT. The Lessee shall remain
obligated under this Lease in accordance with its terms and shall not take any
action to terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting the Lessor, Matisse or the Bank, or any action with respect
to this Lease which may be taken by any trustee, receiver or liquidator of
Lessor, Matisse or the Bank or by any court with respect to Lessor, Matisse or
the Bank. The Lessee hereby waives all right (i) to terminate or surrender this
Lease (except as provided herein) or (ii) to avail itself of any abatement,
suspension, deferment, reduction, setoff, counterclaim or defense (other than
the defense of payment) with respect to any Rent. The Lessee shall remain
obligated under this Lease in accordance with its terms and the Lessee hereby
waives any and all rights now or hereafter conferred by statute or otherwise to
modify or to avoid strict compliance with its obligations under this Lease.
Notwithstanding any such statute or otherwise, the Lessee shall be bound by all
of the terms and conditions contained in this Lease.
6.3. OBLIGATION TO PAY RENT NOTWITHSTANDING LEASE TERMINATION.
Unless the Wolverine/Bank Loan and the Wolverine/Matisse Loan, plus all accrued
but unpaid interest thereon, plus all the accrued but unpaid Basic Rent have
been paid in full, if for any reason whatsoever this Lease shall be terminated
in whole or in part by operation of law or otherwise, except as expressly
provided in SECTIONS 16.1, 20.1, 20.2 AND 22.1 of this Lease, Lessee shall,
unless and to the extent prohibited by Requirements of Law, nonetheless pay to
the Bank pursuant to SECTION 3.4 (or, in the case of Supplemental Rent, to
whomever shall be entitled thereto) an amount equal to each Rent payment at the
time and in the manner that such payment would have become due and payable under
the terms of this Lease if it had not been terminated in whole or in part, and
in such case, so long as such payments are made and no Lease Event of Default
shall have occurred and be continuing, Lessor will deem this Lease to have
remained in effect. Each payment of Rent made by Lessee hereunder shall be
final and, absent manifest error in the computation of the amount thereof or the
application of any payment, Lessee shall not seek or have any right to recover
all or any part of such payment from Lessor, Matisse, the Bank or any party to
any agreements related thereto for any reason whatsoever. Lessee assumes the
sole responsibility for the condition, use, operation, maintenance, and
management of the Property and Lessor shall have no responsibility in respect
thereof and shall have no liability for damage to the Property or any other
property of Lessee or any subtenant of Lessee on any account or for any reason
whatsoever other than by reason of Lessor's willful misconduct or gross
negligence or breach of any of its obligations under any Operative Document
which is the proximate cause of such damage. Without affecting Lessee's
obligation to pay Rent, Lessee may seek damages and other relief for a breach of
Lessor of its obligations under this Lease, subject to the provisions of SECTION
31.7 hereof.
6
<PAGE>
ARTICLE VII
7.1 OWNERSHIP OF THE PROPERTY. SECTION 5.1 OF THE PARTICIPATION
AGREEMENT is incorporated herein by this reference.
ARTICLE VIII
8.1. CONDITION OF THE PROPERTY. THE LESSEE ACKNOWLEDGES AND
AGREES THAT ALTHOUGH THE LESSOR WILL OWN AND HOLD TITLE TO THE PROPERTY, THE
LESSEE IS SOLELY RESPONSIBLE FOR THE PROPERTY AND ANY ALTERATIONS OR
MODIFICATIONS. THE LESSEE FURTHER ACKNOWLEDGES AND AGREES THAT IT IS LEASING
THE PROPERTY, AND UPON ANY TRANSFER OF THE PROPERTY TO LESSEE OR ANY OTHER
PURCHASER PURSUANT HERETO, IT OR SUCH PURCHASER WILL BE ACQUIRING THE PROPERTY,
"AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE
LESSOR, MATISSE OR THE BANK AND IN EACH CASE SUBJECT TO (A) THE THEN EXISTING
STATE OF TITLE, (B) THE THEN RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C)
ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT THEN
SHOW, AND (D) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE
HEREOF OR ON THE DATE OF SUCH ACQUISITION. NEITHER THE LESSOR, NOR MATISSE, NOR
THE BANK HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY
OR COVENANT (EXPRESS OR IMPLIED) EXCEPT AS PROVIDED IN ARTICLE V ABOVE AND
EXCEPT AS PROVIDED IN THE PARTICIPATION AGREEMENT, OR SHALL BE DEEMED TO HAVE
ANY LIABILITY WHATSOEVER AS TO THE TITLE (INCLUDING BUT NOT LIMITED TO ANY
IMPLIED LIABILITY RELATING TO A COVENANT OF QUIET ENJOYMENT, WHICH THE LESSEE
HEREBY EXPRESSLY WAIVES) EXCEPT AS SET FORTH IN ANY SPECIAL WARRANTY DEED
DELIVERED BY LESSOR, VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR
FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS (EXCEPT AS PROVIDED IN
ARTICLE V ABOVE AND EXCEPT AS PROVIDED IN THE PARTICIPATION AGREEMENT) OR
IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND NEITHER THE
LESSOR, NOR MATISSE, NOR THE BANK SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR
PATENT DEFECT THEREIN OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO
COMPLY WITH ANY REQUIREMENT OF LAW. LESSEE AND ANYONE CLAIMING BY, THROUGH OR
UNDER LESSEE, AND ANY PURCHASER ACQUIRING THE PROPERTY PURSUANT HERETO AND
ANYONE CLAIMING BY, THROUGH OR UNDER ANY SUCH PERSON HEREBY FULLY AND
IRREVOCABLY RELEASE LESSOR, MATISSE, THE BANK AND EACH OTHER PERSON (OTHER THAN
LESSEE) PARTY TO THE OPERATIVE DOCUMENTS, AND EACH OF THEIR EMPLOYEES, OFFICERS,
DIRECTORS, REPRESENTATIVES, AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PARENT
COMPANIES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS, FIRMS,
CORPORATIONS AND ORGANIZATIONS ACTING ON THEIR BEHALF, FROM
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ANY AND ALL COST, LOSS, LIABILITY, DAMAGE, EXPENSE, DEMAND, ACTION OR CAUSE OF
ACTION ARISING FROM OR RELATED TO THE PRESENCE, RELEASE OR DISCHARGE ON THE
PROPERTY AT ANY TIME OF ANY HAZARDOUS SUBSTANCES OR ARISING FROM ANY HAZARDOUS
ACTIVITY AT ANY TIME OR ANY ENVIRONMENTAL VIOLATION. THIS RELEASE INCLUDES
CLAIMS OF WHICH LESSEE, ANY SUCH PURCHASER OR ANY OTHER SUCH PERSON CLAIMING BY,
THROUGH OR UNDER LESSEE OR SUCH PURCHASER IS UNAWARE ON THE DATE HEREOF OR ON
THE DATE OF SUCH ACQUISITION OR WHICH LESSEE, ANY SUCH PURCHASER OR ANY OTHER
SUCH PERSON CLAIMING BY, THROUGH OR UNDER LESSEE OR SUCH PURCHASER DOES NOT
SUSPECT ON THE DATE HEREOF OR ON THE DATE OF SUCH ACQUISITION TO EXIST WHICH, IF
KNOWN BY IT, WOULD MATERIALLY AFFECT ITS RELEASE OF LESSOR AND THE OTHER PERSONS
RELEASED HEREBY.
8.2. POSSESSION AND USE OF THE PROPERTY. The Property shall only
be used in a manner consistent with properties of a similar nature in the
businesses in which the Lessee or permitted sublessees are engaged, in
compliance with terms of this Lease and the other Operative Documents, and,
without limiting Lessee's rights under ARTICLE XIII below, any covenants,
conditions and restrictions of record and any Requirements of Law affecting the
use and occupancy of the Property. The Lessee shall pay, or cause to be paid,
all charges and costs required in connection with Lessee's use of the Property.
The Lessee shall not commit or permit any waste of the Property or any part
thereof; provided, that waste shall not include ordinary wear and tear or damage
by fire or other peril or Casualty or Condemnation.
ARTICLE IX
9.1. COMPLIANCE WITH REQUIREMENTS OF LAW AND INSURANCE
REQUIREMENTS. Subject to the terms of ARTICLE XIII relating to permitted
contests, the Lessee, at its sole cost and expense, shall (a) comply in all
material respects with all Requirements of Law (including all Environmental
Laws) and Insurance Requirements relating to the Property, including the
construction, use, operation, maintenance, repair and restoration thereof and
the sale and/or remarketing thereof pursuant to ARTICLE XXII, whether or not
compliance therewith shall require structural or extraordinary changes in the
Improvements or interfere with the use and enjoyment of the Property, and (b)
procure, maintain and comply with all licenses, permits, orders, approvals,
consents and other authorizations required for the construction, use,
maintenance and operation of the Property and for the use, operation,
maintenance, repair and restoration of the Improvements.
ARTICLE X
10.1. MAINTENANCE AND REPAIR: RETURN. (a) Except for ordinary
wear and tear, the Lessee, at its sole cost and expense, shall maintain the
Property in good working order, mechanical condition and repair and make all
necessary repairs thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or nonstructural or foreseen
or unforeseen, in each case as required by all Requirements of Law and Insurance
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Requirements and on a basis consistent with the operation and maintenance of
commercial properties comparable in type and location to the Property and in
compliance with prudent industry practice.
(b) The Lessor shall under no circumstances be required to build any
improvements on the Property, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease (except for Lease Advances required
under the Participation Agreement upon compliance with the conditions set forth
therein) or maintain the Property in any way. The Lessor shall not be required
to maintain, repair or rebuild all or any part of the Property, and the Lessee
waives any right to (i) require the Lessor to maintain, repair, or rebuild all
or any part of the Property, or (ii) make repairs at the expense of the Lessor
pursuant to any Requirement of Law, Insurance Requirement, contract, agreement,
or covenant, condition or restriction in effect at any time during the Term.
(c) The Lessee shall, upon the expiration or earlier termination of
this Lease, vacate and surrender the Property to the Lessor in compliance with
SECTIONS 9.1, 10.1(a), 11.1, 12.1, 15.1(e), 15.2 and 22.1 hereof and SECTION
13.2 OF THE PARTICIPATION AGREEMENT.
(d) The Lessee warrants that it shall cause the Financed Improvements
currently under construction or currently planned to be constructed on the
Property to be designed and constructed in a workmanlike manner and
substantially in accordance with the Plans and Specifications and all
Requirements of Law, prior to the Outside Completion Date so that, prior to such
date, such Financed Improvements will be Completed and fit for their intended
purpose.
10.2. MAINTENANCE AND REPAIR REPORTS. Lessee shall keep
maintenance and repair reports in sufficient detail, and as customary for owners
of similar commercial real estate, to indicate the nature and date of major work
done. Such reports shall be kept on file by Lessee at its offices during the
Term, and shall be made available to Lessor, Matisse and the Bank upon
reasonable request.
ARTICLE XI
11.1. MODIFICATIONS, SUBSTITUTIONS AND REPLACEMENTS. (a) The
Lessee, at its sole cost and expense, may at any time and from time to time make
alterations, renovations, improvements and additions to the Property or any part
thereof and substitutions and replacements therefor (collectively,
"MODIFICATIONS") in addition to the Financed Improvements described in the
Construction Agency Agreement; PROVIDED that: (i) no Modification shall impair
in any material respect the value, utility or useful life of the Property or any
part thereof from that which existed immediately prior to such Modification;
(ii) the Modification shall be done expeditiously and in a good and workmanlike
manner; (iii) the Lessee shall comply with all Requirements of Law (including
all Environmental Laws) and Insurance Requirements applicable to the
Modification, including the obtaining of all Governmental Actions, and the
structural integrity of the Property shall not be adversely affected; (iv)
subject to the terms of ARTICLE XIII relating to permitted contests, the Lessee
shall pay all costs and expenses and shall
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discharge (or cause to be insured or bonded over) within sixty (60) days after
the same shall be filed (or otherwise become effective) any Liens (other than
Permitted Exceptions) arising with respect to the Modification; and (v) such
Modifications shall comply with SECTIONS 8.2 and 10.1. All Modifications (other
than those that both are not Modifications required to be made pursuant to a
Requirement of Law or an Insurance Requirement ("REQUIRED MODIFICATION") and are
readily removable without impairing the value, utility or remaining useful life
of the Property) shall remain part of the realty and shall be subject to this
Lease, and title thereto shall immediately vest in the Lessor. Subject to the
proviso below, at all times prior to the time that Lessee no longer has the
right to occupy the Property, Lessee shall have the right to remove any and all
trade fixtures, machinerqy, equipment, inventory or other personal property
belonging to the Lessee or third parties and placed upon the Property (and no
such trade fixtures, machinery, equipment, inventory or other personal property
shall constitute "Modifications"); PROVIDED, further, that the Lessee shall keep
and maintain at the Property and shall not remove from the Property at any time
any Fixtures or improvements or other property financed or otherwise paid for
(directly or indirectly) through Lease Advances made for the account of the
Lessor pursuant to the Participation Agreement or any Required Modifications
thereof.
(b) The Lessee shall deliver to the Lessor and the Bank a brief
written narrative of the work to be done in connection with any Modification to
the Property, the cost of which is anticipated to exceed $250,000 in the
aggregate.
ARTICLE XII
12.1. WARRANTY OF TITLE. (a) The Lessee agrees that except as
otherwise provided herein and subject to the terms of ARTICLE XIII relating to
permitted contests, the Lessee shall not directly or indirectly create or allow
to remain, and shall promptly discharge at its sole cost and expense, any Lien,
defect, attachment, levy, title retention agreement or claim upon the Property
or any Modifications or any Lien, attachment, levy or claim with respect to the
Rent or the Pledged Collateral or with respect to any amounts held by the Bank
pursuant to the Participation Agreement or the other Operative Documents, other
than Permitted Exceptions and Lessor Liens.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of the Lessor, expressed or implied, to or
for the performance by any contractor, mechanic, laborer, materialman, supplier
or vendor of any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or to the
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER THE LESSOR,
NOR MATISSE NOR THE BANK IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE
PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S
OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF THE LESSOR MATISSE OR BANK IN AND TO THE PROPERTY.
Lessee shall post notice of this provision on the Property and shall ensure that
any and all posting requirements necessary to give effect to the provisions of
this SECTION 12.1(B) under Oregon law have been met.
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12.2. GRANTS AND RELEASES OF EASEMENTS. Provided that no Lease
Event of Default shall have occurred and be continuing and subject to the
provisions of ARTICLES VIII, IX, X and XI, the Lessor hereby consents in each
instance to the following actions by the Lessee, in the name and stead of the
Lessor, but at the Lessee's sole cost and expense: (a) the granting of
easements, licenses, rights-of-way and other rights and privileges in the nature
of easements reasonably necessary or desirable for the construction of the
Financed Improvements described in the Construction Agency Agreement or for use,
repair, operation or maintenance of the Property as herein provided or as
provided in the Participation Agreement; (b) the release of existing easements
or other rights in the nature of easements which are for the benefit of the
Property; (c) the execution of amendments to any covenants and restrictions
affecting the Property; (d) the Lessee's obtaining all necessary Governmental
Actions necessary for completion of the construction of the improvements
described in the Participation Agreement or the making of any Modifications;
PROVIDED, that, (i) such grant, release, dedication, action or amendment does
not violate the Operative Documents or materially impair the value, utility and
remaining useful life of the Property, (ii) such grant, release, dedication,
transfer, consent, action or amendment is reasonably necessary in connection
with the use, operation, maintenance, alteration or improvement of the Property
or the construction of the improvements described in the Construction Agency
Agreement, (iii) no such grant, release, action, amendment or other instrument
shall affect in any way Lessee's obligations under this Lease and under any
instrument executed by the Lessee consenting to the assignment of the Lessor's
interest in this Lease as security for indebtedness, and (iv) the Lessee shall
pay and perform any obligations of the Lessor under such grant, release, action
or amendment and all reasonable costs and expenses incurred by the Lessor,
Matisse or the Bank in connection with any such grant, release, action or
amendment. Lessee shall, upon the Bank's request (not more frequently than
twice each year) deliver to the Bank and the Lessor an Officer's Certificate
confirming that all of the conditions applicable to all such grants, releases,
actions or amendments theretofore granted or entered into by Lessee, as set
forth in this Section 12.2, have been satisifed. Without limiting the
effectiveness of the foregoing, provided that no Lease Event of Default shall
have occurred and be continuing, the Lessor shall, upon the request of the
Lessee, and at the Lessee's sole cost and expense, execute and deliver any
instruments necessary or appropriate to confirm or complete any such grant,
release, action or amendment to any Person permitted under this SECTION 12.2.
12.3. ACTIONS REQUIRED OF THE TITLE HOLDER. So long as no Lease
Event of Default shall have occurred and be continuing, Lessor shall, at no cost
or expense to Lessor, Matisse or the Bank, cooperate with Lessee in connection
with actions contemplated in clauses (a) through (d) of SECTION 12.2 and in
ARTICLE XI above, including execution of documents and taking such other action
required by the Permitted Exceptions or by Requirements of Laws; provided, that
(i) such actions shall be limited to actions that can only be taken by Lessor as
the owner of the Property, as opposed to any action that can be taken by Lessee
or any third party (and the payment of any monetary obligation shall not be an
action required of Lessor under this subparagraph unless Lessor shall first have
received funds from Lessee, in excess of any other amounts due from Lessee
hereunder, sufficient to pay such monetary obligations), (ii) Lessee requests
the action to be taken by Lessor (which request must be specific and in writing,
if required by Lessor at the time the request is made), and (iii) the action to
be taken will not constitute a violation of any Operative Documents or
Requirements of Laws or subject Lessor,
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Matisse or the Bank to any liability or defense other than those against which
Lessee has agreed to indemnify them.
12.4. FURTHER ACTIONS BY LESSEE. Subject to the other terms and
conditions of this Lease, Lessee shall be entitled to perform obligations
arising under and to exercise and enforce the rights of Lessee or the owner of
the Property under the Development Contracts and other Permitted Exceptions in
Lessee's own name and to the exclusion of Lessor during the Term without any
notice to or consent of Lessor so long as no Lease Event of Default has occurred
and is continuing and so long as Lessee does not thereby create any encumbrance
or cloud on Lessor's title to the Property (other than a Permitted Exception);
PROVIDED, that to the extent any such monetary damages may become payable as
compensation for an adverse impact on the value of the Property, the rights of
Lessor and Lessee hereunder with respect to the collection and application of
such monetary damages shall be the same as for condemnation proceeds payable
because of a taking of all or any part of the Property.
ARTICLE XIII
13.1. PERMITTED CONTESTS OTHER THAN IN RESPECT OF INDEMNITIES.
Except to the extent otherwise provided for in SECTION 13.5(f) OF THE
PARTICIPATION AGREEMENT, the Lessee, on its own or on the Lessor's behalf but at
the Lessee's sole cost and expense, may contest, by appropriate administrative
or judicial proceedings conducted in good faith and with due diligence, the
amount, validity or application, in whole or in part, of any Requirement of Law,
or utility charges payable pursuant to SECTION 4.1 hereof or any Lien,
attachment, levy, encumbrance or encroachment, and the Lessor agrees not to pay,
settle or otherwise compromise any such item, provided that (a) the commencement
and continuation of such proceedings shall suspend the collection thereof from,
and suspend the enforcement thereof against, the Property, the Lessor, Matisse
and the Bank or the commencement and continuation of such proceedings shall not
impair the collateral under the Operative Documents; (b) no part of the Property
nor any Rent would be in any danger of being sold, forfeited, lost or deferred
unless Lessee shall have provided an adequate bond for such event; (c) at no
time during the permitted contest shall there be a risk of the imposition of
criminal liability or material civil liability on the Lessor, Matisse or the
Bank for failure to comply therewith; and (d) there shall be no material risk
that the application of such item, after any such contest, shall extend beyond
the end of the Term unless Lessee shall have provided an adequate bond therefor.
The Lessor, at the Lessee's sole cost and expense, shall execute and deliver to
the Lessee such authorizations and other documents as may reasonably be required
in connection with any such contest and, if reasonably requested by the Lessee,
shall join as a party therein at the Lessee's sole cost and expense.
ARTICLE XIV
14.1. PUBLIC LIABILITY AND WORKERS' COMPENSATION INSURANCE.
During the Term, the Lessee shall procure and carry, at the Lessee's sole cost
and expense, commercial general liability insurance for claims for injuries or
death sustained by persons or damage to property while on the Property and such
other public liability coverages as are ordinarily procured by Persons who own
or operate similar properties and consistent with prudent business practice or
as otherwise specifically required by the Operative Documents. Such insurance
shall be on terms and in amounts (which shall be reasonably acceptable to the
Lessor) that are no less favorable than insurance maintained by the Lessee with
respect to similar properties that it owns and that are in accordance with
prudent business practice or
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as otherwise specifically required by the Operative Documents. The policy shall
be endorsed to name the Lessor, Matisse and the Bank as additional insureds.
The policy shall also specifically provide that the policy shall be considered
primary insurance which shall apply to any loss or claim before any contribution
by any insurance which the Lessor, Matisse or the Bank may have in force. The
Lessee shall, in the construction of the Improvements and the operation of the
Property (including in connection with any Modifications thereof) comply with
the applicable workers' compensation laws and protect the Lessor, Matisse and
the Bank against any liability under such laws.
14.2. HAZARD AND OTHER INSURANCE. During the Term, the Lessee
shall keep, or cause to be kept, the Property insured against loss or damage by
fire, flood, and other risks in an amount not less than the then current
replacement cost of the buildings and improvements on the Property and on terms
that are no less favorable than the insurance in place on the date hereof
covering other similar properties of Lessee and that are in accordance with
prudent business practice or as otherwise specifically required by the Operative
Documents. During the construction of any Improvements or Modifications, the
Lessee shall also maintain (or cause its general contractor to maintain)
builders' risk insurance. Each policy of insurance maintained by the Lessee
pursuant to this SECTION 14.2 shall provide that all insurance proceeds in
respect of any loss or occurrence shall be paid to and adjusted solely by the
Lessee, except from and after the date on which the insurer receives written
notice from Lessor or the Bank that a Lease Event of Default exists (and unless
and until such insurer receives written notice from Lessor or the Bank that all
Lease Events of Default have been cured), all losses shall be adjusted solely
by, and all insurance proceeds shall be paid solely to, the Bank (or the Lessor
if the Wolverine/Bank Loan and Matisse/Bank Loan have been fully paid) for
application pursuant to ARTICLE XV hereof.
14.3. COVERAGE. (a) The Lessee shall furnish the Lessor, Matisse
and the Bank with certificates showing the insurance required under SECTIONS
14.1 and 14.2 to be in effect and naming the Lessor, Matisse and the Bank as
additional insureds and, with respect to the insurance required under SECTION
14.2, loss payees, and showing the mortgagee endorsement required by SECTION
14.3(c). All such insurance shall be at the cost and expense of the Lessee.
Such certificates shall include a provision for thirty (30) days' advance
written notice by the insurer to the Lessor, Matisse and the Bank in the event
of cancellation of or any significant reduction in the coverage provided by such
insurance.
(b) The Lessee agrees that the insurance policy or policies required
by SECTIONS 14.2(a) and 14.2(b) shall include a so-called "Waiver of Subrogation
Clause". The Lessee hereby waives any and all such rights against the Lessor,
Matisse and the Bank to the extent of payments made to any of them under such
policies. The Lessor hereby waives all such rights against the Lessee to the
extent of payments made to the Lessor under any of such policies.
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(c) All such insurance shall be written by reputable insurance
companies that are financially sound and solvent and otherwise reasonably
appropriate considering the amount and type of insurance being provided by such
companies. Any insurance company selected by the Lessee which is rated in
Best's Insurance Guide or any successor thereto (or if there be none, an
organization having a similar national reputation) shall have a general
policyholder rating of "A" and a financial rating of at least 12 or be otherwise
acceptable to the Bank. All insurance policies required by SECTION 14.2 shall
include a standard form mortgagee endorsement in favor of the Bank and Matisse
as their interests may appear.
(d) The Lessor shall not carry separate insurance concurrent in kind
or form or contributing in the event of loss with any insurance required under
this ARTICLE XIV except that the Lessor may carry separate liability insurance
so long as (i) the Lessee's insurance is designated as primary and in no event
excess or contributory to any insurance the Lessor may have in force which would
apply to a loss covered under the Lessee's policy and (ii) each such insurance
policy will not cause the Lessee's insurance required under this ARTICLE XIV to
be subject to a coinsurance exception of any kind.
(e) The Lessee shall pay as they become due all premiums for the
insurance required by SECTION 14.1 and SECTION 14.2, and shall renew or replace
each policy prior to the expiration date thereof. Throughout the Term, at the
time each of the Lessee's insurance policies is renewed (but in no event less
frequently than once each year), the Lessee shall deliver to the Lessor, Matisse
and the Bank certificates of insurance evidencing that all insurance required by
this ARTICLE XIV is being maintained by the Lessee with respect to the Property
and is in effect.
(f) The Lessee hereby waives, releases and discharges the Lessor,
Matisse and the Bank and their agents and employees from all claims whatsoever
arising out of loss, claim, expense or damage to or destruction covered or
coverable by insurance required under this ARTICLE XIV notwithstanding that such
loss, claim, expense or damage may have been caused by the Lessor, Matisse or
the Bank or any of their agents or employees, and, as among Lessee, the Lessor,
Matisse and the Bank and their agents and employees, the Lessee agrees to look
to the insurance coverage only in the event of such loss.
(g) WARNING: UNLESS LESSEE PROVIDES LESSOR AND BANK WITH EVIDENCE OF
THE INSURANCE COVERAGE AS REQUIRED BY THE OPERATIVE DOCUMENTS, LESSOR OR BANK
MAY PURCHASE INSURANCE AT LESSEE'S EXPENSE TO PROTECT LESSOR'S INTEREST. THIS
INSURANCE MAY, BUT NEED NOT, ALSO PROTECT LESSEE'S INTEREST. IF THE COLLATERAL
BECOMES DAMAGED, THE COVERAGE LESSOR OR BANK PURCHASES MAY NOT PAY ANY CLAIM
LESSEE MAKES OR ANY CLAIM MADE AGAINST LESSEE. LESSEE MAY LATER CANCEL THIS
COVERAGE BY PROVIDING EVIDENCE THAT LESSEE HAS OBTAINED THE REQUIRED PROPERTY
COVERAGE ELSEWHERE. LESSEE IS RESPONSIBLE FOR THE COST OF ANY INSURANCE
PURCHASED BY LESSOR OR BANK. THE COST OF THIS INSURANCE MAY BE ADDED TO
LESSEE'S CONTRACT OR LOAN BALANCE. IF THE COST IS ADDED TO LESSEE'S CONTRACT OR
LOAN BALANCE, THE INTEREST RATE ON THE UNDERLYING CONTRACT OR LOAN WILL
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APPLY TO THIS ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE
LESSEE'S PRIOR COVERAGE LAPSED OR THE DATE LESSEE FAILED TO PROVIDE PROOF OF
COVERAGE. THE COVERAGE LESSOR OR BANK PURCHASES MAY BE CONSIDERABLY MORE
EXPENSIVE THAN INSURANCE LESSEE CAN OBTAIN ON ITS OWN AND MAY NOT SATISFY ANY
NEED FOR PROPERTY DAMAGE COVERAGE OR ANY MANDATORY LIABILITY INSURANCE
REQUIREMENTS IMPOSED BY APPLICABLE LAW.
ARTICLE XV
15.1. CASUALTY AND CONDEMNATION. (a) Subject to the provisions of
this ARTICLE XV and ARTICLE XVI (in the event the Lessee delivers, or is
obligated to deliver, a Termination Notice), and prior to the occurrence and
continuation of a Lease Event of Default, the Lessee shall be entitled to
receive (and the Lessor shall pay over to the Lessee, if received by the Lessor,
and hereby irrevocably assigns to the Lessee all of the Lessor's right, title
and interest in) any award, compensation or insurance proceeds to which the
Lessee or the Lessor may become entitled by reason of their respective interests
in the Property (i) if all or a portion of the Property is damaged or destroyed
in whole or in part by a Casualty or (ii) if the use, access, occupancy,
easement rights or title to the Property or any part thereof, is the subject of
a Condemnation; PROVIDED, HOWEVER, if a Lease Event of Default shall have
occurred and be continuing, such award, compensation or insurance proceeds shall
be paid directly to the Bank or, if received by the Lessee, shall be held in
trust for the Bank, and shall be paid over by the Lessee to the Bank and held in
accordance with the succeeding terms of this PARAGRAPH (A). If, contrary to
such provision, while any Lease Event of Default is continuing, any such award,
compensation or insurance proceeds are paid to the Lessor or the Lessee rather
than to the Bank, the Lessor and the Lessee, as the case may be, hereby agree to
transfer any such payment to the Bank. All amounts held by the Lessor or the
Bank when a Lease Event of Default exists hereunder on account of any award,
compensation or insurance proceeds either paid directly to the Lessor or the
Bank or turned over to the Lessor or the Bank shall either be (i) paid to the
Lessee for the repair of damage caused by such Casualty or Condemnation in
accordance with PARAGRAPH (e) of this SECTION 15.1, or (ii) applied to the
purchase price of the Property on the Termination Date, with any Excess Proceeds
being payable to the Lessee. Amounts paid to the Bank on account of any such
award, compensation or insurance proceeds shall be delivered by the Bank
pursuant to the Investment Collateral Security Agreement, but such amounts so
paid to the Bank shall not reduce in any event the amount of Pledged Collateral
otherwise required to be maintained thereunder.
(b) The Lessee may appear in any proceeding to negotiate, prosecute,
adjust or appeal any claim for any award, compensation or insurance payment on
account of any such Casualty or Condemnation and shall pay all expenses thereof.
At the Lessee's reasonable request, and at the Lessee's sole cost and expense,
the Lessor, Matisse and the Bank shall participate in any such proceeding,
action, negotiation, prosecution or adjustment including, but not limited to,
taking all such actions and executing such documents consistent with the
Operative Documents as Lessee shall reasonably request. The Lessor and the
Lessee agree that
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this Lease shall control the rights of the Lessor and the Lessee in and to any
such award, compensation or insurance payment.
(c) If the Lessor or the Lessee shall receive notice of a Casualty or
of an actual, pending or threatened Condemnation of the Property or any interest
therein, the Lessor or the Lessee, as the case may be, shall give notice thereof
to the other and to the Bank promptly after the receipt of such notice.
(d) In the event of a Casualty or receipt of notice of a Condemnation
by the Lessee or the Lessor, the Lessee may deliver to the Lessor, Matisse and
the Bank a Termination Notice with respect to the Property pursuant to SECTION
16.1. If the Lessee does not deliver a Termination Notice within ninety (90)
days after such occurrence, then this Lease shall (subject to the terms and
conditions thereof) remain in full force and effect, and the Lessee shall, at
the Lessee's sole cost and expense, promptly and diligently restore the Property
pursuant to PARAGRAPH (e) of this SECTION 15.1 and otherwise in accordance with
this Lease. If the Lessee delivers a Termination Notice within ninety (90) days
after such occurrence, a Significant Event shall irrevocably be deemed to have
occurred with respect to the Property, and, in such event, the Lessee shall
purchase the Property pursuant to ARTICLE XVI hereof.
(e) If pursuant to this SECTION 15.1 this Lease shall continue in
full force and effect following a Casualty or Condemnation, the Lessee shall, at
its sole cost and expense (and, without limitation, if any award, compensation
or insurance payment is not sufficient to restore the Property in accordance
with this paragraph, the Lessee shall pay the shortfall), promptly and
diligently repair any damage to the Property caused by such Casualty or
Condemnation in conformity with the requirements of SECTIONS 10.1 AND 11.1 using
the as-built Plans and Specifications for the Property (as modified to give
effect to any subsequent Modifications, any Condemnation affecting the Property
and all applicable Requirements of Law) so as to restore the Property to at
least the same condition, operation, function and value as existed immediately
prior to such Casualty or Condemnation. In the event of such restoration, title
to the restored Property shall remain with the Lessor.
(f) In no event shall a Casualty or Condemnation affect the Lessee's
obligations to pay Rent pursuant to SECTION 3.1 or to perform its obligations
and pay any amounts due on the Expiration Date or pursuant to ARTICLES XIX AND
XX, except in compliance with ARTICLE XVI.
(g) Any Excess Proceeds received by the Lessor or the Bank in respect
of a Casualty or Condemnation shall be turned over to the Lessee, provided that
no Lease Event of Default or Lease Default has occurred and is continuing. Any
Excess Proceeds which are not turned over to the Lessee due to the existence of
a Lease Event of Default or a Lease Default shall be applied against the
Lessee's obligations under the Lease.
15.2. ENVIRONMENTAL MATTERS.
(a) Promptly upon the Lessee's actual knowledge of the presence of
Hazardous Substances in any portion of the Property in concentrations and
conditions that constitute a
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Hazardous Condition, the Lessee shall notify the Lessor in writing of such
condition. In the event of such Hazardous Condition, the Lessee shall, not
later than thirty (30) days after the Lessee has actual knowledge of such
Hazardous Condition, deliver to Lessor a written action plan identifying the
general investigatory actions which Lessee, after consultation with reputable
professionals, plans to undertake, in order to determine the appropriate
measures for remediation of such Hazardous Condition. If such Hazardous
Condition is a Significant Event, Lessee shall deliver to the Lessor and the
Bank a Responsible Officer's Certificate and a Termination Notice with respect
to the Property pursuant to SECTION 16.1, or, if such Hazardous Condition is not
a Significant Event, at the Lessee's sole cost and expense, promptly and
diligently commence and complete Response Actions necessary to investigate,
remove, clean up or remediate the Hazardous Condition in accordance with the
terms of SECTION 9.1. If the Lessee does not deliver a Termination Notice with
respect to the Property pursuant to SECTION 16.1, the Lessee shall, upon
completion of Response Actions by the Lessee, cause to be prepared by an
environmental consultant reasonably acceptable to the Lessor and the Bank a
report describing the Hazardous Condition and the Response Actions taken by the
Lessee (or its agents) for such Hazardous Condition, and a statement by the
consultant that the Hazardous Condition has been remedied in compliance with
applicable Environmental Law. Each such Hazardous Condition shall be remedied
prior to the Expiration Date. Nothing in this ARTICLE XV shall reduce or limit
the Lessee's obligations under SECTION 13 OF THE PARTICIPATION AGREEMENT.
(b) ENVIRONMENTAL COVENANTS. During the Term, Lessee shall not cause
or permit the Property to be in violation of, or do anything or permit anything
to be done which will subject the Property to any remedial obligations under,
any Environmental Laws, including without limitation CERCLA and RCRA, assuming
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances pertaining to the Property, and Lessee shall
promptly notify Lessor in writing of any existing, pending or, to the knowledge
of Lessee, threatened investigation or inquiry by any Governmental Authority in
connection with any suspected violation of the Property under any Environmental
Laws. During the Term, Lessee shall not conduct or permit Hazardous Activities,
except Permitted Hazardous Substance Activities. During the Term, Lessee shall
keep the Property free of all Hazardous Substances (other than Permitted
Hazardous Substances) and will remove the same (or if removal is prohibited by
law, will take whatever action is required by law) promptly upon Lessee's
discovery at Lessee's sole expense. Lessee shall also diligently and without
significant interruption prosecute the completion of any remediation plan
referred to in clause (iii)(c) of the definition of "Significant Event." During
the Term, in the event Lessee fails to comply with or perform any of the
foregoing obligations concerning Hazardous Substance Activities and Hazardous
Substances, Lessor may, in addition to any other remedies available to it, after
notifying Lessee in writing in advance of the remediation efforts Lessor
believes are needed, cause the Property to be freed from all Hazardous
Substances as provided above (or if removal is prohibited by law, may take
whatever action is required by law) and take such other action as is necessary
to cause the foregoing obligations to be met, and the cost of the removal and
any such other action shall be a demand obligation owing by Lessee to Lessor.
For such removal and other action, Lessee grants to Lessor and Lessor's agents
and employees access to the Property and the license to remove Hazardous
Substances as provided above (or if removal is prohibited by law or otherwise
deemed inadvisable by Lessor, to take whatever action is required by law or
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otherwise deemed advisable by Lessor) and take such other action as is necessary
to cause the foregoing obligations to be met. During the Term, Lessee agrees to
submit from time to time, if reasonably requested by Lessor, a certificate of an
officer of Lessee, certifying that, except for Permitted Hazardous Substance
Activities, the Property is not being used for, nor to Lessee's knowledge
(except as may be described in the Environmental Report) has the Property been
used in the past for, any Hazardous Activities. Lessor reserves the right to
retain an independent professional consultant to review any report prepared by
Lessee or to conduct Lessor's own investigation to confirm whether Hazardous
Activities or the discharge of anything into groundwater or surface water has
occurred, but Lessor's right to reimbursement for the fees of such consultant
shall be limited to the following circumstances: (1) a Lease Event of Default
shall have occurred and be continuing; (2) Lessor shall have retained the
consultant to establish the condition of the Property just prior to any
conveyance thereof or just prior to the expiration of this Lease; (3) Lessor
shall have retained the consultant to satisfy any regulatory requirements
applicable to Lessor or its Affiliates; or (4) Lessor shall have obtained the
consultant because Lessor has been notified of a violation of Environmental Laws
concerning the Property or Lessor otherwise reasonably believes that Lessee has
not complied with this section. Subject to SECTION 27.1, Lessee grants to
Lessor and to Lessor's agents, employees, consultants and contractors the right
during reasonable business hours and after reasonable advance written notice to
enter upon the Property to inspect the Property and to perform such tests as are
reasonably necessary or appropriate to conduct a review or investigation of
Hazardous Substances on, or discharged into groundwater or surface water from,
the Property. Lessee shall promptly reimburse Lessor for the cost of any such
inspections and tests, but only when the inspections and tests are: (1) ordered
by Lessor after a Lease Event of Default has incurred and is continuing; (2)
ordered by Lessor to establish the condition of the Property just prior to any
conveyance thereof or just prior to the expiration of this Lease; (3) ordered by
Lessor to satisfy any regulatory requirements applicable to Lessor or its
Affiliates; or (4) ordered because Lessor has been notified of a violation of
Environmental Laws concerning the Property or Lessor otherwise reasonably
believes that Lessee has not complied with this SECTION 15.2. During the Term,
Lessee shall immediately advise Lessor of (i) Lessee's discovery of any event or
circumstance which would render any of the representations contained in this
Lease inaccurate in any material respect if made at the time of such discovery,
(ii) any remedial action taken by Lessee in response to any (A) Hazardous
Substances other than Permitted Hazardous Substances on, under or about the
Property or (B) any claim for damages resulting from Hazardous Substance
Activities, and (iii) Lessee's discovery of any occurrence or condition on any
real property adjoining or in the vicinity of the Property (but without imposing
upon Lessee any duty to investigate such other real property) which creates a
material risk of causing the Property or any part thereof to be subject to
significant ownership, occupancy, transferability or use restrictions under
Environmental Laws or that could give rise to any claim for damages resulting
from Hazardous Substance Activities. In such event, Lessee shall delivery to
Lessor within thirty (30) days after Lessor's request, a preliminary written
environmental plan setting forth a general description of the action that Lessee
proposes to take with respect thereto to bring the Property into compliance with
Environmental Laws, including, without limitation, any proposed corrective work,
the estimated cost and time of completion, the name of the contractor and a copy
of the construction contract, if any, and such additional data, instruments,
documents, agreements or other materials or information as Lessor may reasonably
request. Lessee shall thereafter diligently and
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continuously pursue the remediation of the Property in strict compliance with
all Environmental Laws and shall inform Lessor monthly as to the status of such
remediation.
15.3. NOTICE OF ENVIRONMENTAL MATTERS. Promptly, but in any event
within thirty (30) Business Days from the date the Lessee has actual knowledge
thereof, the Lessee shall provide to the Lessor written notice of any material
pending or threatened claim, action or proceeding involving any Environmental
Law, any Release, any Hazardous Activity or any Hazardous Condition on or in
connection with the Property. All such notices shall describe in reasonable
detail the nature of the claim, action or proceeding and the Lessee's proposed
response thereto. In addition, the Lessee shall provide to the Lessor, within
thirty (30) Business Days of receipt, copies of all material written
communications with any Governmental Authority or any other person relating to
any Environmental Law, any Release, any Hazardous Activity or any Hazardous
Condition in connection with the Property or any claim relating thereto other
than in relation to Permitted Hazardous Substance Archives.
ARTICLE XVI
16.1. TERMINATION BY THE LESSEE UPON CERTAIN EVENTS. If either:
(i) the Lessee or the Lessor receives notice of a Condemnation, and the Lessee
delivers to the Lessor a Responsible Officer's Certificate that such
Condemnation is a Significant Condemnation; or (ii) a Casualty occurs, and the
Lessee delivers to the Lessor a Responsible Officer's Certificate that such
Casualty is a Significant Casualty; or (iii) a Hazardous Condition occurs or is
discovered and the Lessee delivers to the Lessor a Responsible Officer's
Certificate stating that, in the reasonable, good faith judgment of the Lessee,
the same is a Significant Event, then, the Lessee shall, simultaneously with the
delivery of the Responsible Officer's Certificate pursuant to the preceding
CLAUSES (i), (ii) OR (iii), deliver a written notice in the form described in
SECTION 16.2(A) (a "TERMINATION NOTICE").
16.2. PROCEDURES. (a) A Termination Notice shall contain: (i)
notice of termination of this Lease with respect to the entire Property on a
date that is no later than one hundred twenty (120) days after the occurrence of
the applicable event described in CLAUSES (I), (II) OR (III) of SECTION 16.1
(the "TERMINATION DATE"), such termination to be effective upon the Lessee's
payment of the Asset Termination Value and accrued Rents; and (ii) a binding and
irrevocable agreement of the Lessee to pay the Asset Termination Value and
accrued Rents and purchase the Property on the Termination Date.
(b) On the Termination Date, the Lessee shall pay to the Bank in
accordance with SECTION 3.4 the Asset Termination Value, plus all other amounts
owing in respect of Rent for the Property theretofore accruing, and shall pay
all Supplemental Rent then owing to the Persons entitled thereto. Upon receipt
thereof, the Lessor shall convey the Lessor's interest in the Property to the
Lessee (or the Lessee's designee) all in accordance with SECTION 19.1 and shall
deliver to the Lessee, any Excess Proceeds if any, arising from the Casualty or
Condemnation giving rise to the termination of this Lease with respect to the
Property theretofore received by the Lessor.
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16.3. TERMINATION BY THE LESSOR IN CERTAIN EVENTS. If the Lessor
reasonably determines that any change in, or change in the interpretation of,
any Requirements of Law after the date hereof has or would result in Lessor
being unable to continue to hold legal or beneficial title to all or any portion
of the Property or, except as provided in SECTION 16.4 hereof, subject the Bank
to onerous regulations or onerous liability on account thereof (to the extent
not covered by Lessee's indemnification obligation under SECTION 13 OF THE
PARTICIPATION AGREEMENT), the Lessor may elect to terminate this Lease by
delivering a Termination Notice with respect to the Lease to Matisse, the Bank,
and the Lessee, such termination to be effective on the termination date
specified therein (which shall be no earlier than one hundred and eighty (180)
days after the date such Termination Notice is given). In the event the Lessor
exercises its termination option, the Lessee may exercise the Remarketing Option
provided in SECTION 22.1 hereof by giving notice to the Lessor within thirty
(30) Business Days of receipt of the notice from the Lessor. If the Lessee does
not exercise its Remarketing Option, the Lessee shall be obligated to purchase,
or arrange for an Affiliate or other third party to purchase, the Property in
accordance with SECTION 20.2 hereof on such specified termination date for the
purchase price set forth therein.
16.4. PURCHASE OF PROPERTY. Upon receipt of any notice pursuant
to SECTION 15.2 OR 15.3, the Lessor, Matisse or the Bank, at the Lessee's
expense, shall have the right to select an independent environmental consultant
acceptable to the Lessee, which acceptance shall not be unreasonably withheld or
delayed, to determine the estimated cost of conducting any clean-up or
remediation required as a result of the Hazardous Condition disclosed in such
notice. If any such Hazardous Condition is a Significant Event, the Lessor
shall, at the direction of the Bank, by written notice require the Lessee to
purchase, or arrange for an Affiliate or other third party to purchase, the
Property by delivering a Termination Notice pursuant to SECTION 16.1 hereof and
following the requirements of SECTION 16.2 hereof. Such Termination Notice
delivered by the Lessor shall obligate the Lessee to pay the Asset Termination
Value and Rents and purchase the Property on the Termination Date.
ARTICLE XVII
17.1 LEASE EVENTS OF DEFAULT. The occurrence of any one or more of
the following events (whether such event shall be voluntary or involuntary or
shall arise by operation of law or pursuant to any Governmental Action) shall
constitute a "LEASE EVENT OF DEFAULT":
(a) the Lessee shall fail to make payment, in accordance with the
terms hereof and the Consent to Assignment of (i) any Basic Rent (other
than a payment of Basic Rent due on the Expiration Date or Termination
Date) within five (5) Business Days after the same has become due and
payable or (ii) Basic Rent, Supplemental Rent, Purchase Option Price, Asset
Termination Value or Residual Value Guarantee Amount or other amounts due
on the Expiration Date or the Termination Date, including, without
limitation, amounts due pursuant to SECTIONS 16.2, 16.3, 16.4, 20.1, 20.2,
20.3 OR 22.1, on the date the same has become due and payable;
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(b) the Lessee shall fail to make payment of any Supplemental Rent
other than Supplemental Rent due on the Expiration Date or other
termination of this Lease within thirty (30) days after written notice
thereof or demand therefor;
(c) the Lessee shall fail to maintain insurance as required by
ARTICLE XIV of this Lease;
(d) a Financial Covenant Event of Default shall occur or Lessee shall
fail to comply with the provisions of SECTIONS 10.1(a)(i), 10.1(a)(ii),
10.1(h), 10.1(i) OR 10.1(j) OF THE PARTICIPATION AGREEMENT;
(e) The Lessee shall fail to observe or perform any term, covenant or
condition of the Lessee under this Lease, the Participation Agreement or
any other Operative Document to which it is a party (other than those
described in SECTION 17.1(a), (b), (c) OR (d) hereof), or any
representation or warranty given by Lessee set forth in this Lease or in
any other Operative Document or in any document entered into in connection
herewith or therewith or in any document, certificate or financial or other
statement delivered by Lessee pursuant hereto or thereto shall be false or
inaccurate in any material respect, and such failure or misrepresentation
or breach of warranty shall remain uncured for a period of thirty (30) days
after receipt of written notice thereof; PROVIDED, that if such failure to
perform is not capable of being cured within such period but is capable of
being cured within ninety (90) days after the occurrence of such default
and the Lessee is proceeding diligently to cure such default, the Lessee
may request an additional period (not to exceed ninety (90) days from the
date of such default) to cure such default, which extended cure period
shall be granted by the Lessor if the Bank in its sole discretion consents;
(f) the Lessee shall (i) admit in writing its inability to pay its
debts generally as they become due, (ii) file a petition under the United
States bankruptcy laws or any other applicable insolvency law or statute of
the United States of America or any State or Commonwealth thereof, (iii)
make a general assignment for the benefit of its creditors, (iv) consent to
the appointment of a receiver of itself or the whole or any substantial
part of its property, (v) fail to cause the discharge of any custodian,
trustee or receiver appointed for the Lessee or the whole or a substantial
part of its property within sixty (60) days after such appointment, or (vi)
file a petition or answer seeking or consenting to reorganization under the
United States bankruptcy laws or any other applicable insolvency law or
statute of the United States of America or any State or Commonwealth
thereof;
(g) insolvency proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the
United States of America or any State or Commonwealth thereof shall be
filed against the Lessee and not dismissed within sixty (60) days from the
date of filing, or a court of competent jurisdiction shall enter an order
or decree appointing, without the consent of the Lessee, a receiver of the
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Lessee or the whole or a substantial part of its property, and such order
or decree shall not be vacated or set aside within sixty (60) days from the
date of the entry thereof;
(h) If any of the following shall occur, and the aggregate liability
of Lessee in respect thereof would exceed $1,000,000 in any single
occurrence or $2,000,000 in the aggregate: (i) any member of the ERISA
Group shall fail to pay when due an amount or amounts which it shall have
become liable to pay under Title IV of ERISA; or (ii) notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or (iii) the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed
to administer any Material Plan; or (iv) a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated; or (v) there shall occur a complete
or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans;
(i) One or more final non-appealable judgments, decrees or orders for
the payment of money in excess of $1,000,000 in any single occurrence or
$3,000,000 in the aggregate shall be rendered against Lessee or any
Subsidiary of Lessee and such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of sixty (60) consecutive days
without Lessee's having obtained a written agreement delivered to Lessor
(or after the expiration or termination of such agreement) of the Persons
entitled to enforce such judgment, decrees or orders not to enforce the
same pending negotiations with Lessee concerning the satisfaction or other
discharge of the same and without the same having otherwise been satisfied
or stayed;
(j) the Lessee or any of its Subsidiaries: (i) shall default in the
payment when due, whether at stated maturity or otherwise, of principal or
interest in respect of Indebtedness in an amount in excess of $1,000,000 in
any single occurrence or $3,000,000 in the aggregate; or (ii) shall fail to
perform or observe any other condition or covenant, or any other event
shall occur or condition exist, under any agreement or instrument relating
to any Indebtedness in an amount in excess of $1,000,000 in any single
occurrence or $3,000,000 in the aggregate after any applicable cure period,
if the effect of any such default, failure, event or condition described in
clause (i) or (ii) is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and
payable prior to its stated maturity, or cash collateral in respect thereof
to be demanded;
(k) a Security Agreement Event of Default shall have occurred and be
continuing;
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(l) if the Lessee shall not have exercised its Purchase Option
pursuant to SECTION 20.1 hereof and the Lessee shall have validly exercised
its Remarketing Option pursuant to SECTION 22.1 hereof, the Lessee shall
have failed (A) to consummate a sale of the Property in the manner provided
therein on or prior to the Expiration Date and to pay to the Bank (or such
other Person as the Bank may direct) pursuant to such Section the Residual
Value Guarantee Amount and the other amounts required thereby, or (B) to
purchase the Lessor's interest in the Property on or prior to the
Expiration Date as provided in SECTION 20.2 hereof and to pay to the Bank
(or such other Person as the Bank may direct) the Asset Termination Value
therefor on the Expiration Date as required thereby;
(m) the occurrence of any Construction Agency Agreement Event of
Default, or of any default or breach under the Guaranty, or of any other
act, event or occurrence which is specifically described as a Lease Event
of Default in any of the Operative Documents;
(n) the Lessee shall have abandoned all or any material portion of
the Property for a period of thirty (30) consecutive days after written
notice thereof from Lessor, unless the Lessee continues to meet all of its
obligations under this Lease and the other Operative Documents (including
all obligations relating to maintenance of and security for the Property);
(o) a Hazardous Condition shall occur that, in the reasonable opinion
of the Lessor and the Bank, based on an Environmental Audit, constitutes a
Significant Event and the Lessee shall not, within thirty (30) days after
notice from Lessor, have delivered a Termination Notice with respect
thereto pursuant to SECTION 16.1 hereof or, if so delivered, repurchase of
the Property shall not have been consummated on the Termination Date
pursuant to SECTION 16.2 hereof;
(p) if the Lessor shall have required the Lessee to purchase or
remarket the Property pursuant to SECTION 16.3 OR 16.4 hereof and the
Property shall not have been purchased by the Lessee or a third party on
the specified termination date or the Termination Date, as applicable,
required thereby; or
(q) if Lessee shall directly or indirectly contest in any manner in
any court of competent jurisdiction the validity or enforceability of any
Operative Document or the Lien granted by this Lease or the
Wolverine/Matisse Deed of Trust; or
(r) the occurrence of any material adverse change in Lessee's capital
structure, ownership or consolidated assets, liabilities, results of
operations, or financial condition from that in effect on the Closing Date.
17.2 REMEDIES. Upon the occurrence of any Lease Event of Default and
at any time thereafter, the Lessor may, so long as such Lease Event of Default
is continuing, do one or more of the following as the Lessor in its sole
discretion shall determine, without limiting any other right or remedy the
Lessor may have on account of such Lease Event of Default hereunder
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and under the Operative Documents (including, without limitation, enforcement of
the obligation of the Lessee to purchase the Property as set forth in SECTION
20.3), but subject in each case to Lessee's rights set forth in SECTION 11.1 to
remove from the Property any and all trade fixtures, machines, equipment,
inventory or other personal property belonging to the Lessee or third parties
permitted under SECTION 11.1 to be removed therefrom:
(a) The Lessor may, by notice to the Lessee, terminate this Lease as
to all of the Property as of the date specified in such notice; however, (A) no
reletting, reentry or taking of possession of the Property by the Lessor will be
construed as an election on the Lessor's part to terminate this Lease unless a
written notice of such intention, consented to in writing by the Bank, is given
to the Lessee, (B) notwithstanding any reletting, reentry or taking of
possession, the Lessor may at any time thereafter elect to terminate this Lease
for a continuing Lease Event of Default, and (C) no act or thing done by the
Lessor or any of its agents, representatives or employees and no agreement
accepting a surrender of the Property shall be valid unless the same be made in
writing, executed by the Lessor and consented to in writing by the Bank;
(b) The Lessor may (i) demand that the Lessee, and the Lessee shall
upon the written demand of the Lessor, return the Property promptly to the
Lessor in the manner and condition required hereby, and otherwise in accordance
with all of the provisions hereof, as if the Property were being returned at the
end of the Term, and the Lessor shall not be liable for the reimbursement of the
Lessee for any costs and expenses incurred by the Lessee in connection therewith
and (ii) without prejudice to any other remedy which the Lessor may have for
possession of the Property, and to the extent and in the manner permitted by
Requirements of Law, enter upon the Property and take immediate possession of
(to the exclusion of the Lessee) the Property or any part thereof and expel or
remove the Lessee and any other Person who may be occupying the Property, by
summary proceedings or otherwise, all without liability to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration of
damage to property caused by such taking or otherwise and, in addition to the
Lessor's other damages, to the extent and in the manner permitted by
Requirements of Law with respect to remedies for breach of a real estate lease,
the Lessee shall be responsible for all costs and expenses incurred by the
Lessor, Matisse and/or the Bank in connection with any reletting, including,
without limitation, brokers' fees and all costs of any alterations or repairs
made by the Lessor;
(c) The Lessor may (i) sell all or any part of the Property at public
or private sale (which private sale shall be conducted in a commercially
reasonable manner), as the Lessor may determine, free and clear of any rights of
the Lessee and without any duty to account to the Lessee with respect to such
action or inaction or any proceeds with respect thereto (except to the extent
required by CLAUSE (ii) below if the Lessor shall elect to exercise its rights
thereunder) in which event the Lessee's obligation to pay Basic Rent hereunder
for periods commencing after the date of such sale shall be terminated or
proportionately reduced, as the case may be; and (ii) if the Lessor shall so
elect, demand that the Lessee pay to the Bank in accordance with Section 3.4,
and the Lessee shall pay to the Bank in accordance with Section 3.4, on the date
of such sale, as liquidated damages for loss of a bargain and not as a penalty
(the parties agreeing that the Lessor's actual damages would be difficult to
predict, but the aforementioned liquidated damages
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represent a reasonable approximation of such amount) (in lieu of Basic Rent due
for periods commencing on or after the Payment Date coinciding with such date of
sale (or, if the sale date is not a Payment Date, the Payment Date next
preceding the date of such sale)), an amount equal to (A) the excess, if any, of
(1) the Asset Termination Value calculated as of such Payment Date (including
all Rent due and unpaid to and including such Payment Date), over (2) the net
proceeds of such sale, if any (that is, after deducting all costs and expenses
incurred by the Lessor, Matisse, and the Bank incident to such conveyance,
including, without limitation, repossession costs, brokerage commissions,
prorations, transfer taxes, fees and expenses for counsel, title insurance fees,
survey costs, recording fees, and any repair or alteration costs); plus (B)
interest at the Overdue Rate on the foregoing amount from such Payment Date
until the date of payment;
(d) Unless the Property has been sold in its entirety, the Lessor
may, whether or not the Lessor shall have exercised or shall thereafter at any
time exercise any of its rights under PARAGRAPH (b), or (c) of this SECTION 17.2
with respect to the Property or portions thereof, demand, by written notice to
the Lessee specifying a date (a "TERMINATION DATE") not earlier than thirty (30)
days after the date of such notice, that the Lessee purchase, on such
Termination Date, the Property (or the remaining portion thereof) in accordance
with the provisions of ARTICLE XIX and SECTION 20.3;
(e) The Lessor may exercise any other right or remedy that may be
available to it under Requirements of Law, or proceed by appropriate court
action (legal or equitable) to enforce the terms hereof or to recover damages
for the breach hereof. Separate suits may be brought to collect any such
damages for any period(s), and such suits shall not in any manner prejudice the
Lessor's right to collect any such damages for any subsequent period(s), or the
Lessor may defer any such suit until after the expiration of the Term, in which
event such suit shall be deemed not to have accrued until the expiration of the
Term;
(f) The Lessor may retain and apply against the Lessor's damages all
sums which the Lessor would, absent such Lease Event of Default, be required to
pay to, or turn over to, the Lessee pursuant to the terms of this Lease;
(g) In addition to the other rights and remedies set forth herein,
unless the Wolverine/Bank Loan and the Matisse/Bank Loan plus all accrued but
unpaid interest thereon plus all then accrued but unpaid Basic Rent and
Supplemental Rent have been paid in full, Lessor shall have the right to
continue this Lease in effect and to enforce, by suit or otherwise, all
covenants and conditions hereof to be performed or complied with by Lessee and
exercise all of Lessor's rights and remedies under this Lease, including,
without limitation, the right to recover Basic Rent and Supplemental Rent from
Lessee as it becomes due under this Lease, even though Lessee may have breached
this Lease and abandoned the Property. Lessor may sue periodically to recover
Basic Rent and Supplemental Rent from Lessee as it becomes due under this Lease,
and no action for the recovery of the same shall bar a later action for Rent or
Supplemental Rent attributable to any later period or from pursuing any other
remedies available under this Lease or the Requirements of Law. Acts of
maintenance or preservation, or efforts by Lessor or on Lessor's behalf to relet
the Property, or the appointment of a receiver upon the initiative of Lessor
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to protect Lessor's interest under this Lease shall not constitute a termination
of Lessee's right to possession of the Property; provided, however, that the
foregoing enumeration shall not be construed as in any way limiting the actions
Lessor may take without terminating Lessee's right to possession. In
furtherance of the rights hereby granted to Lessor, and to the extent permitted
by law, Lessee hereby appoints Lessor its agent and attorney-in-fact, which
appointment shall be deemed to be coupled with an interest and is irrevocable,
with power of substitution, to enter the Property upon a Lease Event of Default
hereunder and remove therefrom all persons and property (with the right to store
such property on the Property in a public warehouse or elsewhere at the cost and
risk and for the account of Lessee) and to alter the Property in such manner as
Lessor may deem necessary or advisable so as to put the Property in good order
and to make the same rentable and from time to time sublet the Property or any
part thereof for such term or terms whether or not extending beyond the then
current term of this Lease (but such sublease may provide for a new and
successive lease to commence immediately upon the termination of this Lease), at
such rentals and upon such other terms as Lessor in its sole discretion may deem
advisable, and with the right to make alterations and repairs to the Property;
and Lessee agrees to pay to Lessor on demand all reasonable expenses incurred by
Lessor in such subletting, and in altering, repairing and putting the Property
in good order and condition, and in reletting the same, including fees of
attorneys and architects, and all other reasonable expenses or commissions.
Lessor shall be Lessee's agent and representative on the Property in respect of
all matters arising under or in connection with any such sublease made for
Lessee by Lessor. Under each such sublease, Lessee shall retain the right to
enter upon and use the Property, subject to the terms and conditions of such
sublease and the rights of the sublessee thereunder. Lessee further agrees to
pay to Lessor, following the date of such subletting, to and including the date
provided in this Lease for the expiration of the Lease Term, on the dates and
terms otherwise set forth in this Lease, the sums of money which would have been
payable by Lessee as Basic Rent and Supplemental Rent, deducting only the net
amount of rent, if any, which Lessor shall actually receive (after deducting
from the gross receipts the expenses, costs and payments of Lessor which in
accordance with the terms of this Lease would have been borne by Lessee) in the
meantime from and by any such subletting of the Property, and Lessee hereby
agrees to remain liable for all sums otherwise payable by Lessee under this
Lease, including, but not limited to, the expenses of Lessor aforesaid, as well
as for any deficiency aforesaid. Lessor shall have the right from time to time
to begin and maintain successive actions or other legal proceedings against
Lessee for the recovery of such deficiency, expenses or damages, including,
without limitation, for a sum equal to any installments of Basic Rent or
Supplemental Rent and other sums payable hereunder, and to recover the same upon
the liability of Lessee herein provided, which liability it is expressly
covenanted shall survive the commencement or determination of any action to
secure possession of the Property. Nothing herein contained shall be deemed to
require Lessor to wait to begin such action or other legal proceedings until the
date when this Lease would have expired by limitation had there been no such
Lease Event of Default. Notwithstanding any such subletting without
termination, pursuant to the terms hereof, Lessor shall retain the right to and
may at any time thereafter elect to terminate this Lease or Lessee's right to
possession of the Property for any previous breach which remains uncured or for
any subsequent breach by giving Lessee written notice thereof as herein
provided, and in such event Lessee shall forfeit any rights or interest under
any such sublease and thereafter the obligations of any such sublessee shall run
directly to Lessor for its own account. Upon application by Lessor,
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a receiver may be appointed to take possession of the Property, exercise all
rights granted to Lessor as agent and attorney-in-fact for Lessee set forth in
this SECTION 17.2(g) and apply any rentals collected from the Property as
hereinabove provided. No taking of possession of the Property or other act by
Lessor as the agent and attorney-in-fact for Lessee pursuant to the foregoing
provisions, nor any subletting by Lessor for Lessee pursuant to the foregoing
provisions, nor any such appointment of a receiver shall constitute or be
construed as an election by Lessor to terminate this Lease or Lessee's right to
possession of the Property unless a written notice of such intention be given to
Lessee.
(h) In the event of any termination of the Lease Term pursuant to
SECTION 17.2(a) or as permitted by law, Lessee shall quit and surrender the
Property to Lessor, and Lessor may without further notice enter upon, reenter,
possess and repossess the same by summary proceedings, ejectment or otherwise,
and again have, repossess and enjoy the same as if this Lease had not been made,
and in any such event neither Lessee nor any Person claiming through or under
Lessee by virtue of any law or an order of any court shall be entitled to
possession or to remain in possession of the Property but shall forthwith quit
and surrender the Property, and Lessor shall, notwithstanding any other
provision of this Lease, be entitled to recover from Lessee the aggregate of all
amounts Lessor is permitted to recover from Lessee, including:
(i) the worth at the time of award, as computed below, of the
unpaid Rent (including, without limitation, Basic Rent and Supplemental
Rent) which had been earned at the time of termination of this Lease;
(ii) the worth at the time of award of the amount by which the
unpaid Rent (including, without limitation, Basic Rent and Supplemental
Rent) which would have been earned after the time of termination of this
Lease until the time of award exceeds the amount of such rental loss that
Lessee proves could have been reasonably avoided;
(iii) the worth at the time of award of the amount by which the
unpaid Rent (including, without limitation, Basic Rent and Supplemental
Rent) for the balance of the term after the time of award, based on the
assumption that the rate used in calculating Rent over the remainder of the
Lease equals the rate then being used, exceeds the amount of such rental
loss for said balance of the term that Lessee proves could be reasonably
avoided; and
(iv) any other amount necessary to compensate Lessor for all the
detriment proximately caused by Lessee's failure to perform its obligations
under this Lease including without limitation any loss or damage arising
out of the failure of Lessor to receive the benefit of the performance by
Lessee of any obligation to purchase the Property under the provisions of
this Lease. Lessee acknowledges and agrees that, in reliance upon this
Lease and Lessee's covenants and agreements hereunder and the
creditworthiness and financial condition of Lessee, Lessor has entered into
the transactions described in the Participation Agreement to finance the
costs of purchasing the Land Interest and constructing the Financed
Improvements and, in connection with
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such financing transactions, Lessor has incurred and will continue to incur
indebtedness and liabilities under and pursuant to the Participation
Agreement and the other Operative Documents. Lessee acknowledges and
agrees that a Lease Event of Default will cause Lessor substantial damage
and detriment due to its obligations and liabilities under the
Participation Agreement and the other Operative Documents, including,
without limitation, the failure of Lessor to be fully compensated for the
Lease Advances made to Lessee. Accordingly, in order to compensate Lessor
for all detriment proximately caused by Lessee's failure to-perform its
obligations under this Lease, Lessor shall be permitted to recover from
Lessee, without duplication, all other amounts necessary for Lessor to be
fully compensated for all of the Lease Advances made to the Lessee.
The "worth at the time of award" of the amounts referred to in the
foregoing SUBSECTIONS 17.2(h)(i) AND (ii) shall be computed by allowing interest
at the Overdue Rate (or at the highest rate permitted by Requirements of Law,
whichever is less) on each rental installment from the date the same was due
hereunder to the time of award. The "worth at the time of award" of the amount
referred to in the foregoing SUBPARAGRAPH (iii) shall be computed by discounting
such amount at the then prime rate of Bank. As used herein, the term "time of
award" shall mean either (A) the date upon which Lessee pays to Lessor the
amount recoverable by Lessor as hereinabove set forth or (B) the date of entry
of any determination, order or judgment of any court, other legally constituted
body, or any arbitrator(s), determining the amount recoverable, whichever first
occurs. If the time of award is determined under clause (B), above, then the
amount recoverable by Lessor hereunder shall bear interest from the time of
award until paid at the Overdue Rate (or at the highest rate permitted by
Requirements of Law, whichever is less). Nothing herein contained shall limit
or prejudice the right of Lessor, and Lessor is hereby expressly granted the
right, in any bankruptcy or reorganization or insolvency proceedings, to prove
for and obtain as damages by reason of such termination, an amount equal to the
maximum allowed by any statute or rule of law whether such amount shall be
greater or less than the amounts referred to above. The remedy provided for in
this SECTION 17.2(h) shall not be applicable if the Wolverine/Bank Loan and the
Matisse/Bank Loan plus all accrued but unpaid interest thereon plus all then
accrued but unpaid Basic Rent and Supplemental Rent have been paid in full.
(i) Lessor shall have the right to obtain appointment of a receiver
by any court of competent jurisdiction without further notice to Lessee, which
receiver shall be authorized and empowered to enter upon and take possession of
the Property, including all personal property used upon or in connection with
the real property herein conveyed, to let the Property, to receive all the
rents, issues and profits, if any, which may be due or become due in respect to
the leasing of the Property to another party, and apply such rents, issues and
profits, after payment of all necessary charges and expenses to reduction of the
Obligations in such order, proportion and priority as Lessor may elect. At the
option of Lessor, the receiver shall accomplish entry and taking possession of
the Property by actual entry and possession or by notice to Lessee. The
receiver so appointed by a court of competent jurisdiction shall be empowered to
issue receiver's certificates for funds advanced by Lessor for the purpose of
protecting the value of the Property as security for the Obligations. The
amounts evidenced by
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receiver's certificates shall bear interest at the Overdue Rate and may be added
to the Obligations if Lessee or a junior lienholder purchases the Property at
the trustee's sale.
(j) Lessor may exercise all other rights and remedies available
against Lessee under the Operative Documents or under applicable law, including,
without limitation, all rights and remedies under the other Lease-Related
Documents.
17.3. WAIVER OF CERTAIN RIGHTS. If this Lease shall be terminated
pursuant to SECTION 17.2, the Lessee waives, to the fullest extent permitted by
law, (a) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (b) any right of redemption, re-entry or
repossession; (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt or limiting the Lessor with respect
to the election of remedies; and (d) any other rights which might otherwise
limit or modify any of the Lessor's rights or remedies under this ARTICLE XVII.
17.4. POWER OF SALE AND FORECLOSURE. Subject to ARTICLE XXII
below, in the event that a court of competent jurisdiction rules that this Lease
constitutes a mortgage, deed of trust or other secured financing, and subject to
the availability of such remedy under Requirements of Law, then the Lessor and
the Lessee agree that the Lessee hereby mortgages to Lessor and grants to Lessor
a Lien against the Property WITH POWER OF SALE, for the purpose of securing all
of Lessee's obligations hereunder and under the Operative Documents (including,
without limitation, the payment of Basic Rent, Supplemental Rent and the Asset
Termination Value) (collectively, the "Obligations") and that this Lease
constitutes a fixture filing pursuant to the UCC with respect to any goods
included within the Property which are now or hereafter become fixtures. Upon
the occurrence of any Lease Event of Default, the Lessor shall have the power
and authority, to the extent provided by law, to exercise the following rights
and remedies:
(a) To declare the Obligations immediately due and payable;
(b) With or without notice, and without releasing Lessee from any
obligation hereunder, to cure any default of Lessee and, in connection
therewith, to enter upon the Property and to perform such acts and things as
Lessor deems necessary or desirable to inspect, investigate, assess and protect
the Property, including, without limitation of any of its other rights: to
appear in and defend any action or proceeding purporting to affect the Property
or the rights or powers of Lessor hereunder; to pay, purchase, contest or
compromise any encumbrance, charge, Lien or claim of Lien which, in the judgment
of Lessor, is prior or superior hereto, the judgment of Lessor being conclusive
as between the parties hereto; to pay any premiums or charges with respect to
insurance required to be carried hereunder; and to employ counsel, accountants,
contractors and other appropriate persons to assist Lessor;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or a deed of
trust or to obtain specific enforcement of the covenants of Lessee hereunder,
and Lessee agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that for the
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purposes of any suit brought hereunder, Lessee waives the defense of laches and
any applicable statute of limitations;
(d) Lessor or its employees, acting by themselves or through a court-
appointed receiver, may enter upon, possess, manage, operate, dispose of and
contract to dispose of the Property or any part thereof; negotiate with
governmental authorities with respect to the Property's environmental compliance
and remedial measures; contract for goods and services, hire agents, employees
and counsel, make repairs, alterations and improvements to the Property
necessary, in Lessor's judgment, to protect or enhance the security hereof; to
incur obligations ordinarily incurred by owners of property (without any
personal obligation on the part of the receiver); and/or to take any and all
other actions which may be necessary or desirable to comply with Lessee's
obligations hereunder and under the Operative Documents. All sums realized by
Lessor under this SECTION 17.4(d), less all costs and expenses incurred by it
under this SECTION 17.4(d), including attorneys, fees, and less such sums as
Lessor deems appropriate as a reserve to meet future expenses under this SECTION
17.4(d), shall be applied on any obligations secured hereby in such order as
Lessor shall determine. Neither application of said sums to said indebtedness
nor any other action taken by Lessor under this SECTION 17.4(d) shall cure or
waive any Lease Event of Default or notice of default hereunder or nullify the
effect of any such notice of default. Lessor, or any employee or agent of
Lessor, or a receiver appointed by a court, may take any action or proceeding
hereunder without regard to (i) the adequacy of the security for the
indebtedness secured hereunder, (ii) the existence of a declaration that the
indebtedness secured hereby has been declared immediately due and payable, or
(iii) the filing of a notice of default; or
(e) To execute a written notice of such Lease Event of Default and of
its election to cause the Property to be sold to satisfy the Obligations secured
hereby, Lessor shall give and record such notice as the law then requires as a
condition precedent to the exercise of the power of sale. As further security
for its obligations hereunder, Lessee hereby grants to Transnation Title
Insurance Company, as trustee (together with all successor trustees, the
"TRUSTEE"), for the benefit of the Lessor and its successors and assigns, as
beneficiary, IN TRUST, WITH POWER OF SALE, all of Lessee's right, title and
interest in and to the Property, and, upon the occurrence of a Lease Event of
Default, as an alternative to exercising the power of sale granted herein to
Lessor, Lessor shall have the power and authority to cause Trustee to sell the
Property by notifying Trustee of that election and depositing with Trustee this
instrument and receipts and evidence of expenditures made and secured hereby as
Trustee may reasonably require, whereupon the Trustee shall give and record such
notice as the law then requires as a condition precedent to the exercise of a
power of sale. THE POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT; THE POWER
OF SALE MAY ALLOW LESSOR TO CAUSE THE PROPERTY TO BE SOLD WITHOUT A JUDICIAL
HEARING. With the prior written consent of the Bank, Lessor may, from time to
time, substitute a successor or successors to any Trustee named herein or acting
hereunder in accordance with any statutory procedure for such substitution.
When the minimum period of time required by law after such notice
has elapsed, Lessor (or at Lessor's election or if otherwise required by
applicable law, the Trustee), without notice to or demand upon Lessee except as
otherwise required by law, shall sell the
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Property at the time and place of sale fixed by it in the notice of sale and in
such order as Lessor (or at Lessor's election or if otherwise required by
applicable law, the Trustee) may determine, at public auction to the highest
bidder for cash, in lawful money of the United States, payable at time of sale.
Lessor may credit bid the Obligations hereby secured against the price payable
at such sale. If the Property consists of several lots, parcels, or items of
property, Lessor may: (i) designate the order in which such lots, parcels, or
items shall be offered for sale or sold, or (ii) elect to sell such lots,
parcels or items through a single sale, through two or more successive sales, or
in any other manner Lessor deems in its best interest. Lessee shall have no
right to direct the order in which the Property is sold. Lessor may postpone
sale of all or any portion of the Property by public announcement at such time
and place of sale, and from time to time thereafter may postpone such sale by
public announcement at such time fixed by the preceding postponement. Lessor
(or at Lessor's election or if otherwise required by applicable law, the
Trustee) shall deliver to the purchaser at such sale a deed conveying the
Property or portion thereof so sold, but without any covenant or warranty,
express or implied. The recitals in such deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person, including Lessor or
Lessee may purchase at such sale.
In connection with any sale or sales hereunder, Lessor may elect
to treat any of the Property which consists of a right in action or which is
property that can be severed from the Land or any Improvements thereon without
causing structural damage thereto as if the same were personal property or a
fixture, as the case may be, and dispose of the same in accordance with
Requirements of Law, separate and apart from the sale of real property. Any
sale of any personal property or fixtures hereunder shall be conducted in any
manner permitted by the UCC.
After deducting all costs, fees and expenses of Lessor and of
this trust, including all costs of evidence of title and attorneys' fees in
connection with sale, Lessor shall apply the proceeds of sale to payment of all
sums so expended under the terms hereof not then repaid; the payment of all
other sums then secured hereby; and the remainder, if any, to the person or
persons legally entitled thereto;
(g) To resort to and realize upon the Property and any other security
now or hereafter held by Lessor in such order and manner as Lessor may, in its
sole discretion, determine; and resort to any or all such security may be taken
concurrently or successively and in one or several consolidated or independent
judicial actions or lawfully taken non-judicial proceedings, or both;
(h) All costs and expenses incurred by Lessor pursuant to SECTION
17.4 (including without limitation court costs, consultants' fees and reasonable
attorneys' fees, whether incurred in litigation or not and whether before or
after judgment) shall be added to the Obligations and shall bear interest at the
loan rate until demand for reimbursement, then at the Overdue Rate, from the
date of expenditure until said sums have been paid. Lessor shall be entitled to
bid, at the sale of the Property held pursuant to SUBSECTION 17.4(e) above, the
amount of said costs, expenses and interest in addition to the amount of the
other Obligations hereby secured as a credit bid, which shall be deemed the
equivalent of cash.
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(i) Lessee and any Person claiming through Lessee hereby waives any
right to require that any security given hereunder or under any other Operative
Document securing the Obligations be marshalled and further waives any right
otherwise available in respect to marshalling of assets which secure any
Obligation or to require Lessor or any other Person to pursue its remedies
against any such assets.
17.5. REMEDIES CUMULATIVE; RIGHTS OF BANK. The remedies here provided
shall be cumulative and in addition to (and not in limitation of) any other
remedies available at law, equity or otherwise, including, without limitation,
any mortgage foreclosure remedies. Lessor and Lessee acknowledge that the
rights and remedies of Lessor under this ARTICLE XVII have been assigned to and
are exercisable exclusively by or at the direction of the Bank pursuant to the
Assignment of Lease-Related Documents.
ARTICLE XVIII
18.1. THE LESSOR'S RIGHT TO CURE THE LESSEE'S LEASE DEFAULTS. The
Lessor, without waiving or releasing any obligation, Lease Default or Lease
Event of Default, may (but shall be under no obligation to) remedy any Lease
Default or Lease Event of Default (other than those described in SECTIONS
17.1(d), (f), (g), (h), (i) AND (j)) for the account and at the sole cost and
expense of the Lessee, including the failure by the Lessee to maintain the
insurance required by ARTICLE XIV, and may, to the fullest extent permitted by
law, and notwithstanding any right of quiet enjoyment in favor of the Lessee,
enter upon the Property for such purpose and take all such action thereon as may
be necessary or appropriate therefor. No such entry shall be deemed an eviction
of the Lessee. All out-of-pocket costs and expenses so incurred (including fees
and expenses of counsel), together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid by the Lessor, shall be
paid by the Lessee to the Lessor on demand, as Supplemental Rent.
ARTICLE XIX
19.1. PROVISIONS RELATING TO THE LESSEE'S TERMINATION OF THIS
LEASE OR EXERCISE OF PURCHASE OPTION OR OBLIGATION AND CONVEYANCE UPON
REMARKETING AND CONVEYANCE UPON CERTAIN OTHER EVENTS.
(a) In connection with any termination of this Lease pursuant to the
terms of ARTICLE XVI (if the Lessee is obligated to purchase the Property), or
in connection with the Lessee's exercise of its Purchase Option or Expiration
Date Purchase Obligation, upon the date on which this Lease is to terminate or
upon the Expiration Date, the Lessee shall pay to the Bank in accordance with
SECTION 3.4 the amounts set forth in SECTIONS 16.2(b), 20.1, 20.2 or 20.3, as
applicable. Upon receipt of such sums, the Lessor shall execute and deliver to
the Lessee (or to the Lessee's designee), at the Lessee's cost and expense, a
special warranty deed if by Lessor or a quitclaim deed if by Bank and an
assignment of the Lessor's right, title and interest in the Property (which
shall include a release, quitclaim and assignment of all of the Lessor's right,
title and interest in and to any Net Proceeds not previously received by the
Lessee), subject to the Permitted Exceptions (exclusive of Lessor Liens) and any
encumbrance caused by the act, omission, fault, neglect or intention of the
Lessee, in recordable form and otherwise in
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conformity with local custom and free and clear of the Wolverine/Matisse Deed of
Trust, the Assignment of Lease-Related Documents and any Lessor Liens
attributable to the Lessor, "AS IS" and in its then present physical condition.
(b) If the Lessee properly exercises the Remarketing Option, then the
Lessee shall, on or prior to the Expiration Date, in accordance with ARTICLE
XXII and at its own cost, transfer possession of the Property to the independent
purchaser thereof, by surrendering the same into the possession of the Lessor or
such purchaser, as the case may be, free and clear of all Liens other than
Lessor Liens, in good condition (as modified by Modifications permitted by this
Lease), ordinary wear and tear excepted, and in compliance with Requirements of
Law, and the Lessor shall cause this Lease, the Wolverine/Matisse Deed of Trust,
the Assignment of Lease-Related Documents and all Lessor Liens to be released.
The Lessee shall cooperate reasonably with the Lessor and the independent
purchaser of the Property in order to facilitate the purchase by such purchaser
of the Property, which cooperation shall include the following, all of which the
Lessee shall do on or before the Expiration Date: providing all books and
records regarding the maintenance and ownership of the Property and all know-
how, data and technical information relating solely to the Property, but not to
any manufacturing, marketing, administrative or other process or product of
Lessee or any subtenant, providing a current copy of the "as built" Plans and
Specifications for the Property, granting or assigning all licenses necessary
for the operation and maintenance of the Property and cooperating reasonably in
seeking and obtaining all necessary Governmental Action. The obligations of the
Lessee under this paragraph shall survive the expiration or termination of this
Lease.
(c) Any statutory special warranty deed to be delivered by the Lessor
hereunder shall convey the Property subject to any and all matters of record,
except for Lessor Liens.
(d) Any obligation to convey the Property hereunder is absolute and
unconditional. Furthermore, the parties acknowledge and agree that any such
obligation, including the obligation of the Lessor hereunder, to convey the
Property may be enforced by the remedy of specific performance. Notwithstanding
any other provision of the Operative Documents, including any provision
requiring arbitration, the parties agree that a suit for specific performance of
any such obligation may be filed in a court of competent jurisdiction and that
such court may grant specific performance as a remedy.
ARTICLE XX
20.1. PURCHASE OPTION. Without limitation of the Lessee's
purchase obligation pursuant to SECTIONS 20.2 or 20.3, the Lessee shall have the
optionat any time prior to the completion of any foreclosure, eviction or other
dispossessory remedy (which shall be exercisable by giving the Lessor
irrevocable written notice (the "PURCHASE NOTICE") of the Lessee's election to
exercise such option) to purchase, or to designate a third party to purchase,
the Property on the date specified in such Purchase Notice, which date shall be
a Payment Date. The purchase price shall be equal to the Asset Termination
Value plus all other amounts owing in respect of Rent (including Supplemental
Rent) accruing through the date of purchase, together
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with any applicable interest at the Overdue Rate in accordance with SECTION 3.5
(the "PURCHASE OPTION PRICE"). Subject to the provisions of SECTIONS 3.7(a) AND
13.9 OF THE PARTICIPATION AGREEMENT, the Lessee shall deliver the Purchase
Notice to the Lessor not less than thirty (30) days prior to the purchase date,
which date may be extended on a one-time basis for up to an additional thirty
(30) days by a further Purchase Notice. If the Lessee exercises its option to
purchase the Property pursuant to this SECTION 20.1 (the "PURCHASE OPTION"), the
Lessee shall pay the Purchase Option Price and all Rent and other amounts then
due and payable under this Lease and any other Operative Document, in accordance
with SECTION 19.1(a). Upon receipt of such sums, the Lessor shall transfer by
special warranty deed if by Lessor or by quitclaim deed if by Bank to the Lessee
or its designee all of the Lessor's right, title and interest in and to the
Property in accordance with SECTION 19.1(a). The designation of a designee
shall not cause the Lessee to be released, fully or partially, from any of its
obligations under this Lease, including, without limitation, the obligation to
pay the Asset Termination Value and Rents on such Expiration Date.
20.2. EXPIRATION DATE PURCHASE OBLIGATION. Unless (a) the Lessee
shall have properly exercised the Purchase Option pursuant to SECTION 20.1 and
purchased the Property pursuant thereto, (b) the Lessee shall have properly
exercised the Remarketing Option and shall have fulfilled all of the conditions
set forth in SECTION 22.1 hereof and the Lessor shall have sold its interest in
the Property pursuant thereto, or (c) the Lessee shall have properly exercised
the Renewal Option pursuant to SECTION 21.1 and the terms and conditions of a
Renewal Term shall have been agreed upon pursuant to such Section, then, subject
to the terms, conditions and provisions set forth in this Article, and in
accordance with the terms of SECTION 19.1(a), the Lessee shall pay to the Bank
in accordance with SECTION 3.4, on the Expiration Date of the Term (as such Term
may be renewed pursuant to SECTION 21.1, an amount equal to the Asset
Termination Value (plus all other amounts owing in respect of Rent (including
Supplemental Rent) accruing through the date of purchase, together with any
applicable interest at the Overdue Rate in accordance with SECTION 3.5). Upon
receipt of such sums, the Lessor shall transfer by special warranty deed if by
Lessor or by quitclaim deed if by Bank to the Lessee all of the Lessor's right,
title and interest in the Property (subject to all existing Liens, other than
the Wolverine/Matisse Deed of Trust, the Assignment of Lease-Related Documents
and Lessor Liens) in accordance with SECTION 19.1(a). The Lessee may designate,
in a notice given to the Lessor not less than ten (10) Business Days prior to
the closing of such purchase (time being of the essence), the transferee or
transferees to whom the conveyance shall be made (if other than to the Lessee),
in which case such conveyance shall (subject to the terms and conditions set
forth herein) be made to such designee; provided, HOWEVER, that such designation
of a transferee or transferees shall not cause the Lessee to be released, fully
or partially, from any of its obligations under this Lease, including, without
limitation, the obligation to pay the Lessor the Asset Termination Value and
Rents on such Expiration Date.
20.3. ACCELERATION OF PURCHASE OBLIGATION. (a) The Lessee shall be
obligated to purchase for an amount equal to the Asset Termination Value (plus
all other amounts owing in respect of Rent (including Supplemental Rent)
accruing through the date of purchase, together with any applicable interest at
the Overdue Rate in accordance with SECTION 3.5) the Lessor's interest in the
Property (notwithstanding any prior election to exercise its Purchase Option
pursuant to SECTION 20.1) (i) automatically and without notice upon the
occurrence of any Lease
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Event of Default specified in CLAUSE (f) OR (g) OF SECTION 17.1, and (ii) as
provided for at SECTION 17.2(d) upon the occurrence of any other Lease Event of
Default.
(b) Immediately upon written demand of the Lessor, the Lessee shall
be obligated to purchase, for an amount equal to the Asset Termination Value
(plus all other amounts owing in respect of Rent (including Supplemental Rent)
accruing through the date of purchase, together with any applicable interest at
the Overdue Rate in accordance with SECTION 3.5), the Lessor's interest in the
Property, at any time during the Term when the Lessor's interest in the Property
is threatened to be foreclosed due to an event arising out of a violation of the
warranty of title contained in SECTION 12.1 hereof unless Lessee shall, prior to
the completion of any such foreclosure, have diligently caused such violation to
have been fully corrected and such threat eliminated.
ARTICLE XXI
21.1. RENEWAL.
(a) Subject to the conditions set forth herein, the Lessee shall have
the option (the "RENEWAL OPTION") by written request (the "RENEWAL REQUEST") to
the Lessor (with a copy to Matisse and the Bank), given not later than 180 days
prior to the Expiration Date then in effect, to request a renewal of the Term
for one five-year period commencing on the date following the Expiration Date
then in effect. No later than the date (the "RENEWAL RESPONSE DATE") which is
thirty (30) days after such request has been delivered to the Lessor (with a
copy to the Bank), the Lessor will notify the Lessee in writing (with a copy to
the Bank) whether or not it consents to such Renewal Request, PROVIDED that if
the Lessor shall fail to notify the Lessee on or prior to the Renewal Response
Date, it shall be deemed to have denied such Renewal Request. The renewal of
the Term contemplated by any Renewal Request shall become effective as of the
Expiration Date; PROVIDED that such renewal shall be subject to and conditioned
upon the following (and any consent to the Renewal Request delivered by the
Lessor shall be null and void unless all of the following conditions are
satisfied):
(A) on both the Expiration Date then in effect and the date of the
Renewal Request, (i) no Lease Event of Default shall have occurred and be
continuing, and (ii) the Lessor shall have received a Responsible Officer's
Certificate of the Lessee as to the matters set forth in CLAUSE (i) above,
(B) the Lessee shall not have exercised the Remarketing Option,
(C) the Wolverine/Bank Loan and the Matisse/Bank Loan shall, prior to
the commencement of the renewal term requested in the Renewal Request and
in no event later than the Maturity Date then in effect, be paid in full
out of the proceeds of other financing obtained by Lessor, the terms of
which shall be satisfactory both to the Lessee and the Lessor in their sole
and absolute discretion. Upon repayment in full of the Wolverine/Bank Loan
and the Matisse/Bank Loan, all rights of Bank hereunder shall be
exerciseable by Wolverine or Matisse, as applicable.
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(b) The renewal of this Lease pursuant to SECTION 21.1(a) shall be on
terms and conditions as are set forth in this Lease for the original term, with
such modifications thereto, if any, as the parties hereto and to the other
Operative Documents may negotiate based upon the current credit information
regarding the Lessee, interest rates, market conditions, the condition and value
of the Property, and such other factors as such parties may consider relevant.
No more than one Renewal Term shall be permitted hereunder.
ARTICLE XXII
22.1. OPTION TO REMARKET. Subject to the fulfillment of each of
the conditions set forth in this SECTION 22.1, the Lessee shall have the option
(the "REMARKETING OPTION") to market for the Lessor and complete the sale of
all, but not less than all, of the Lessor's interest in the Property on the
Expiration Date.
The Lessee's effective exercise and consummation of the Remarketing
Option shall be subject to the due and timely fulfillment of each of the
following provisions as of the dates set forth below.
(a) Not later than one hundred eighty (180) days prior to the
Expiration Date, the Lessee shall give to the Lessor written notice of the
Lessee's exercise of the Remarketing Option, which exercise shall be
irrevocable.
(b) Concurrently with its delivery of the notice described in SECTION
22.1(a), the Lessee shall deliver to the Lessor, Matisse and the Bank an
Environmental Audit of the Property. Such Environmental Audit shall be
prepared by an environmental consultant selected by the Lessor in the
Lessor's reasonable discretion with the consent of Matisse and the Bank
and shall contain conclusions reasonably satisfactory to the Lessor as to
the environmental status of the Property. If such Environmental Audit
indicates any material exceptions not disclosed on the Environmental Audit
delivered in connection with the Closing Date, the Lessee shall deliver, as
a condition to the consummation of the Remarketing Option, a Phase II
environmental assessment by such environmental consultant prior to the
Expiration Date showing the completion of the remedying of such exceptions
in compliance with Requirements of Law.
(c) On the date of the Lessee's notice to the Lessor of the Lessee's
exercise of the Remarketing Option, no Lease Event of Default or Lease
Default shall exist, and thereafter, no Lease Event of Default or Lease
Default shall occur.
(d) The Lessee shall have completed or caused to be completed all
Modifications, restoration and rebuilding of the Property pursuant to
SECTIONS 11.1 and 15.1 (as the case may be) and shall have fulfilled all of
the conditions and requirements in connection therewith pursuant to said
Sections, in each case by the Expiration Date (time being of the essence),
regardless of whether the same shall be within the Lessee's control. The
Lessee shall have also paid the cost of all Modifications commenced prior
to the Expiration Date. The Lessee shall not have been excused pursuant to
SECTION 13.1 from complying with any Requirements of Law that involved the
extension of the ultimate
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imposition of such Requirements of Law beyond the last day of the Term.
Any Liens, Impositions or Requirements of Law affecting the Property that
were contested by the Lessee shall have been removed, paid in full or
complied with in full before the Expiration Date.
(e) During the Marketing Period, the Lessee shall, as nonexclusive
agent (without compensation) for the Lessor, use commercially reasonable
efforts to sell the Lessor's interest in the Property and will attempt to
obtain the highest purchase price therefor, which price shall not be less
than the Fair Market Sales Value (as evidenced by the appraisal included in
the End of Term Report which must be delivered to the Lessor pursuant to
SECTION 13.2(a) OF THE PARTICIPATION AGREEMENT if the marketing transaction
will result in a Shortfall Amount). The Lessee will be responsible for
hiring and compensating brokers and making the Property available for
inspection by prospective purchasers. The Lessee shall promptly upon
request permit inspection of the Property and any maintenance records
relating to the Property by the Lessor, Matisse, the Bank and any potential
purchasers, and shall otherwise do all things necessary to sell and deliver
possession of the Property to any purchaser. All such marketing of the
Property shall be at the Lessee's sole expense. The Lessee shall allow the
Lessor and any potential qualified purchaser reasonable access to the
Property for the purpose of inspecting the same.
(f) The Lessee shall submit all bids to the Lessor, Matisse and the
Bank, and the Lessor will have the right to review the same and the right
to submit any one or more bids. All bids shall be on an all-cash basis
unless the Lessor, Matisse and the Bank shall otherwise agree in their sole
discretion. The Lessee shall solicit bids from one or more bona fide
prospective purchasers and shall deliver to the Lessor, Matisse and the
Bank not less than sixty (60) days prior to the Expiration Date a binding
written unconditional (except as set forth below), irrevocable offer by
such purchaser or purchasers offering the highest bid to purchase the
Property. No such purchaser shall be the Lessee or any Subsidiary or
Affiliate of the Lessee or a Person with which the Lessee or any Subsidiary
or Affiliate of the Lessee has an agreement to purchase, lease or otherwise
obtain use of the Property after the sale of the Property to such
purchaser. The written offer must specify the Expiration Date as the
closing date unless the Lessor, Matisse and the Bank shall otherwise agree
in their sole discretion.
(g) In connection with any such sale of the Property, the Lessee will
provide to the purchaser all customary "seller's" indemnities,
representations and warranties regarding title, absence of Liens (except
Lessor Liens) and the condition of the Property. The Lessee shall have
obtained, at its cost and expenses, all required governmental and
regulatory consents and approvals and shall have made all filings as
required of it by Requirements of Law in order to carry out and complete
the transfer of the Property. As to the Lessor, any such sale shall be
made on an "as is, with all faults" basis, in accordance with the
disclaimers set forth in SECTION 8.1, without representation or warranty by
the Lessor other than the absence of Lessor Liens, and the purchaser shall
release the Lessor from any loss, claim, liability, action, cause of
action, cost or expense
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arising from any Hazardous Condition, Hazardous Activity or Release or
relating in any way to Hazardous Substances. Any agreement as to such sale
shall be made subject to the Lessee's full performance of its obligations
under this ARTICLE XXII.
(h) The Lessee shall pay directly, and not from the sale proceeds,
all prorations, credits, costs and expenses of the sale of the Property,
whether incurred by the Lessor or the Lessee, including without limitation,
the cost of all title insurance, surveys, environmental reports,
appraisals, transfer taxes, the Lessor's reasonable attorneys' fees, the
Lessee's attorneys' fees, commissions, escrow fees, recording fees, and all
applicable documentary and other transfer taxes.
(i) On or prior to the Expiration Date, the Lessee shall cause the
Gross Proceeds to be paid to the Bank (or to such other Person as the Bank
shall notify the Lessee in writing) and the Lessee shall pay to the Bank
(or such other Person) an amount equal to the Residual Value Guarantee
Amount, PLUS all Rent and all other amounts under this Lease and the other
Operative Documents which have accrued or will accrue prior to or as of the
Expiration Date, in the type of funds specified in SECTION 3.4 hereof.
(j) If the selling price of the Property will result in a Shortfall
Amount, then the Lessee shall have caused to be delivered to the Lessor,
Matisse and the Bank the End of the Term Report required by SECTION 13.2 OF
THE PARTICIPATION AGREEMENT and shall pay to the Bank on or prior to the
Expiration Date (or to such other person as the Bank shall notify the
Lessee in writing) the amounts required to be paid pursuant to SECTION 13.2
OF THE PARTICIPATION AGREEMENT. If the selling price of the Property will
result in a Shortfall Amount which is not fully covered by the amounts paid
by the Lessee pursuant to SECTION 13.2 OF THE PARTICIPATION AGREEMENT, then
the Lessor may, by a written notice delivered to the Lessee at least ten
(10) days prior to the Expiration Date, elect to retain the Property, if
but only if Lessor shall have obtained the prior written consent of the
Bank or, if the Wolverine/Bank Loan and the Matisse/Bank Loan have been
paid in full, Matisse, thereto (which consent may be granted or withheld
in the Bank's sole and absolute discretion) and shall have paid to the
Bank, prior to the delivery of such notice to the Lessee, all sums required
to pay the Wolverine/Bank Loan and the Matisse/Bank Loan, plus all accrued
but unpaid interest thereon, in full. Such election shall be null and void
unless the Lessor shall have obtained such consent of the Bank and paid to
the Bank such sums strictly in compliance with the terms set forth in the
foregoing sentence. If the Lessor duly makes such an election, the Lessee
shall (i) pay to the Lessor on the Expiration Date all Rent accrued through
the Expiration Date and the Residual Value Guarantee Amount and portion of
the Shortfall Amount which the Lessee would have been required to pay had
the Property been sold for the proposed selling price pursuant to the
Remarketing Option, (ii) comply with SECTION 19.1 as if the Lessor was an
independent purchaser and (iii) take all other actions reasonably requested
by the Lessor, at the Lessee's expense, to transfer all interest of the
Lessee in the Property to the Lessor.
(k) The purchase of the Property shall be consummated on or within
thirty (30) days prior to the Expiration Date upon completion of the
following on such date: (i)
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the payment by the Lessee of all amounts payable pursuant to PARAGRAPHS
(h), (i) AND (j) above; (ii) the Lessee's surrender of the Property
pursuant to SECTION 22.1(i) and (iii) the delivery to the Bank of the gross
proceeds (the "GROSS PROCEEDS") of the sale of the Property (i.e., without
deduction for any marketing, closing or other costs, prorations or
commissions); PROVIDED, HOWEVER, that if the sum of the Gross Proceeds from
such sale plus the Residual Value Guarantee Amount paid by the Lessee
pursuant to SECTION 22.1(i) above exceeds the Asset Termination Value as of
such date, then the excess shall be paid to the Lessee on the Expiration
Date.
(l) The Lessee shall not be entitled to exercise or consummate the
Remarketing Option if a circumstance that would permit the Lessor to
require the Lessee to repurchase the Property under SECTION 16.4 exists and
is continuing.
If one or more of the foregoing provisions shall not be fulfilled as
of the date set forth above, or the Property is not purchased as aforesaid
on the Expiration Date (time being of the essence), then the Remarketing
Option shall be null and void (whether or not it has been theretofore
exercised by the Lessee), in which event all of the Lessee's rights under
this SECTION 22.1 shall immediately terminate and the Lessee shall be
obligated to pay all sums required to be paid pursuant to SECTION 20.2 on
the Expiration Date. Notwithstanding anything to the contrary set forth in
this SECTION 22.1, if the selling price for the Property set forth in the
written offer from the highest bidder described in SECTION 22.1(f) will
result in a Shortfall Amount, then the Lessee hereby grants to the Bank a
right of first refusal to purchase the Property upon the same terms and
conditions as are set forth in the bid, in accordance with the following
terms and conditions: Concurrently with the delivery to Lessor, Matisse
and the Bank of the offer submitted by the highest bidder as required by
SECTION 22.1(f), Lessee shall deliver to the Bank a written notice setting
forth the terms and conditions of such offer and stating that the Bank has
a right of first refusal to purchase the Property upon the same terms and
conditions as are set forth in the bid and in compliance with the terms and
conditions otherwise set forth in this SECTION 22.1 (including, without
limitation, SECTIONS 22.1 (b), (d), (g) AND (h)). At any time during the
ten (10) Business Days following the Bank's receipt of such notice, the
Bank may exercise its right of first refusal by giving written notice
thereof to the Lessee and the Lessor, whereupon the Bank shall be obligated
to purchase, and the Lessor shall be obligated to sell, the Property on
such terms and conditions. In no event shall the election by the Bank to
exercise such right of first refusal diminish or affect in any manner
whatsoever the obligation of the Lessee to pay to the Bank the sums
described in SECTION 22.1 (i) AND (j), all of which shall be payable
hereunder in connection with a sale to the Bank pursuant to such right of
first refusal, the same as if the purchaser had been the highest bidder and
not the Bank. The Lessee's exercise of the Remarketing Option shall be
null and void if the Lessee fails to deliver to the Bank the notice
required hereunder of the Bank's right of first refusal strictly in
accordance with the terms hereof, time being of the essence.
Except as expressly set forth herein, the Lessee shall have no right,
power or authority to bind the Lessor in connection with any proposed sale
of the Property.
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22.2. CERTAIN OBLIGATIONS CONTINUE. During the Marketing Period,
the obligation of the Lessee to pay Rent (including the installment of Basic
Rent due on the fifth anniversary of the Closing Date, or if earlier, at the end
of the Renewal Term, or on the Expiration Date, as the case may be) shall
continue undiminished for the remainder of the Term until the Expiration Date or
the consummation of the Remarketing Option. The Lessor shall have the right,
but shall be under no duty, to solicit bids, to inquire into the efforts of the
Lessee to obtain bids or otherwise to take action in connection with any such
sale, other than as expressly provided in this ARTICLE XXII.
22.3. SUPPORT OBLIGATIONS. If, on the Expiration Date or any
Termination Date, the Property is not purchased by the Lessee hereunder or by a
third party pursuant to the Remarketing Option, the Lessee shall (i) provide the
Lessor, effective on the Expiration Date or such Termination Date, as the case
may be, with (A) all transferable permits, certificates of occupancy,
governmental licenses and authorizations theretofore obtained by Lessee and
necessary to use and operate the Property as an operable commercial real estate
project, and (B) such easements, licenses, rights-of-way and other rights and
privileges in the nature of an easement as are reasonably necessary or desirable
in connection with the use, repair, access to or maintenance of the Property as
the Lessor shall request and which Lessee has the power to grant and
(ii) thereafter cooperate with Lessor to obtain for Lessor all other permits,
certificates of occupancy, governmental licenses and authorizations necessary to
use and operate the Property as an operable commercial real estate project, all
of which shall be obtained at Lessee's sole cost and expense. All assignments,
licenses, easements, agreements and other deliveries required by CLAUSES (i) AND
(ii) OF THIS SECTION 22.3 shall be in form reasonably satisfactory to the Lessor
and shall be fully assignable (including both primary assignments and
assignments given in the nature of security) without payment of any fee, cost or
other charge.
ARTICLE XXIII
23.1. HOLDING OVER. If the Lessee shall for any reason remain in
possession of the Property after the expiration or earlier termination of this
Lease (unless the Property is conveyed to the Lessee), such possession shall be
as a tenancy at sufferance during which time the Lessee shall continue to pay
Supplemental Rent that would be payable by the Lessee hereunder were the Lease
then in full force and effect and the Lessee shall continue to pay Basic Rent at
an annual rate equal to 150% of the average rate of Basic Rent payable hereunder
during the Term. Such Basic Rent shall be payable from time to time upon demand
by the Lessor. During any period of tenancy at sufferance, the Lessee shall,
subject to the second preceding sentence, be obligated to perform and observe
all of the terms, covenants and conditions of this Lease, but shall have no
rights hereunder other than the right, to the extent given by law to tenants at
sufferance, to continue its occupancy and use of the Property. Nothing
contained in this ARTICLE XXIII shall constitute the consent, express or
implied, of the Lessor to the holding over of the Lessee after the expiration or
earlier termination of this Lease (unless the Property is conveyed to the
Lessee), and nothing contained herein shall be read or construed to relieve the
Lessee of its obligations to purchase or remarket the Property on the Expiration
Date pursuant to ARTICLE XX or ARTICLE XXII or as preventing the Lessor from
maintaining a suit for possession of
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the Property or exercising any other remedy available to the Lessor at law or in
equity or hereunder.
ARTICLE XXIV
24.1. RISK OF LOSS. Tenant hereby waives the provisions of any
and all applicable existing or future laws, ordinances and governmental
regulations permitting the termination of this Lease as a result of the damage
or destruction of the Property by fire, the elements, casualties, thefts, riots,
wars or otherwise, and the Lessor shall in no event be answerable or accountable
for any risk of loss of or decrease in the enjoyment and beneficial use of the
Property as a result of any such event.
ARTICLE XXV
25.1. SUBLETTING AND ASSIGNMENT. The Lessee shall not assign this
Lease or any of its rights or obligations hereunder in whole or in part to any
Person, without the prior written consent of the Lessor and the Bank, which may
be withheld in their sole and absolute discretion. Notwithstanding the
foregoing, the Lessee may sublease not more than forty percent (40%) of the
gross square footage of the Improvements at any time constructed on the Property
to any Person, in the ordinary course of business PROVIDED, that the proposed
subtenant is not engaged in a business which may diminish the Fair Market Sales
Value of the Land (other than in a DE MINIMUS respect), involves any Hazardous
Activities more hazardous than those involved in Lessee's use of the Property,
involves any Hazardous Conditions more hazardous than those involved in Lessee's
use of the Property, involves any violations of Requirements of Law, or might
otherwise subject Lessor to liability; the Lessee notifies Lessor and the Bank
of such sublease and delivers to Lessor and the Bank a copy of such sublease;
and the sublease is on commercially reasonable and arms' length terms and on a
form of sublease approved by the Bank, which approval shall not be unreasonably
withheld and which approval shall be deemed granted unless written notice of
disapproval thereof shall be delivered by the Bank to Lessee within ten (10)
days after the delivery of such form to Bank for approval, provided that Lessee
accompanies such form with a written notice stating that Bank's approval will be
deemed granted unless notice of disapproval is delivered within such period. No
assignment, sublease or other relinquishment of possession of the Property shall
in any way discharge or materially diminish any of the Lessee's obligations
under this Lease, and the Lessee shall remain directly and primarily liable
under this Lease as to its rights and obligations or the Property, or portion
thereof, so assigned or sublet. Any sublease of the Property shall be expressly
subject and subordinate to this Lease, to the rights of the Lessor, Matisse and
the Bank hereunder, to the Assignment of Lease-Related Documents, and to the
Wolverine/Matisse Deed of Trust, and shall expressly provide for the surrender
of the Property (or portion thereof) if, after a Lease Event of Default has
occurred, the Lease is terminated. Any such sublease may have a term that
extends beyond the Expiration Date of the Term and all potential Renewal Terms,
provided, that such sublease must contain a provision that the Lessor shall not
be obligated to recognize the rights of the sublessee and that such sublease
shall terminate in the event that the Expiration Date occurs or the Lease is
earlier terminated without the Lessee purchasing the Property pursuant to
ARTICLES XVI, XVII, XIX OR XX HEREOF. No assignee or sublessee shall be
permitted to engage in
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any activities on the Property that are substantially different from those
engaged in by the Lessee. The payment of rent to Lessor or acceptance of rent
by Lessor from any assignee, sublessee or other Person shall not be deemed to be
a waiver by Lessor of any provisions hereof or of any rights against the Lessee.
Consent to one subletting where consent is required shall not be deemed consent
to any subsequent or further subletting. Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against any permitted
assignee or sublessee. Lessee hereby assigns to Lessor all of Lessee's right,
title and interest in and to all subleases entered into by Lessee in accordance
with this SECTION 25.1 now or hereafter in effect, including but not limited to
all rents and other sums payable to Lessee under each such sublease effective
upon any Lease Event of Default. Lessor shall have no obligation to perform,
and Lessee shall not by reason of such assignment be relieved of its obligation
to perform, any of Lessee's covenants or agreements under this Lease or any
covenants or agreements of Lessee, as sublessor, under any such sublease.
ARTICLE XXVI
26.1. ESTOPPEL CERTIFICATES. At any time and from time to time
upon not less than twenty (20) days' prior request by the Lessor or the Lessee
(the "REQUESTING PARTY") or by the Bank, the other of the Lessor or the Lessee
(whichever party shall have received such request, the "CERTIFYING PARTY") shall
furnish to the Requesting Party or to Matisse and the Bank a certificate signed
by a Responsible Officer of the Certifying Party certifying that this Lease is
in full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
and Supplemental Rent have been paid; to the best knowledge of the signer of
such certificate, whether or not it or the other party is in default under any
of its obligations hereunder (and, if so, the nature of such alleged default);
and such other matters under this Lease as the Requesting Party, Matisse or the
Bank may reasonably request. Any such certificate furnished pursuant to this
ARTICLE XXVI may be relied upon by the Requesting Party, Matisse, the Bank and
any existing or prospective mortgagee, purchaser or lender, and any accountant
or auditor, of, from or to the Requesting Party (or any Affiliate thereof),
Matisse or the Bank.
ARTICLE XXVII
27.1. RIGHT TO INSPECT. During the Term, the Lessee shall upon
reasonable notice from the Lessor (except that no notice shall be required if a
Lease Event of Default has occurred and is continuing), permit the Lessor,
Matisse, the Bank and their respective authorized representatives to inspect the
Property during normal business hours, provided that such inspections shall not
unreasonably interfere with the Lessee's business operations at the Property.
So long as Lessee remains in possession of the Property, Lessor or Lessor's
representative will, before making any inspection or performing any work on the
Property authorized by this Lease, if then requested to do so by Lessee to
maintain Lessee's security: (i) sign in at Lessee's security or information desk
if Lessee has such a desk on the premises, (ii) wear a visitor's badge or other
reasonable identification, (iii) permit an employee of Lessee to observe such
inspection or work, (iv) agree in advance to keep all processes, methods,
products and all other business matters learned in the course of such inspection
confidential and secret, and (v) comply with other
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similar reasonable nondiscriminatory security requirements of Lessee that do
not, individually or in the aggregate unreasonably interfere with the inspection
or other rights of Lessor, Matisse or Bank authorized by this Lease.
27.2. NO WAIVER. No failure by the Lessor or the Lessee to insist
upon the strict performance of any term hereof or to exercise any right, power
or remedy upon a default hereunder, and no acceptance of full or partial payment
of Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law,
no waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
ARTICLE XXVIII
28.1. ACCEPTANCE OF SURRENDER. No surrender to the Lessor of this
Lease or of all or any portion of any Property or of any part of any thereof or
of any interest therein shall be valid or effective unless agreed to and
accepted in writing by the Lessor and, prior to the payment or performance of
all obligations owed to the Bank and Matisse under the Participation Agreement
or other Operative Documents and termination of the Bank's Commitment and
Matisse's Commitment, the Bank and Matisse, and no act by the Lessor, Matisse or
the Bank or any representative or agent of the Lessor, Matisse or the Bank,
other than a written acceptance, shall constitute an acceptance of any such
surrender.
ARTICLE XXIX
29.1. NO MERGER OF TITLE. There shall be no merger of this Lease
or of the leasehold estate created hereby or of any of the rights accruing to
the beneficiary under the Wolverine/Matisse Deed of Trust with any of the
interests, estates or rights of the Lessor in or to the Land by reason of the
fact that the same Person may acquire, own or hold, directly or indirectly, in
whole or in part, (a) this Lease or the lessor's or lessee's estate created
hereby or any interest in this Lease or such leasehold estate, (b) a beneficial
interest in the Lessor, (c) an interest in the Land, and/or (d) any beneficial
interest under the Wolverine/Matisse Deed of Trust.
ARTICLE XXX
30.1. NOTICES. All notices, demands, requests, consents,
approvals and other communications hereunder shall be in writing and delivered
in the manner set forth in SECTION 14.3 of the Participation Agreement, shall be
effective as set forth in said SECTION 14.3, and shall be addressed to the
respective parties in accordance with SCHEDULE 2 to the Participation Agreement,
or such additional parties and/or other address as such party may hereafter
designate (provided, however, in no event shall either party be obligated to
notify, in the aggregate, more than three (3) designees of the other party).
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ARTICLE XXXI
31.1. MISCELLANEOUS. Anything contained in this Lease to the
contrary notwithstanding, all claims against and liabilities of the Lessee or
the Lessor arising from events commencing prior to the expiration or earlier
termination of this Lease shall survive such expiration or earlier termination.
If any term or provision of this Lease or any application thereof shall be
declared invalid or unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected thereby. If any
right or option of the Lessee provided in this Lease, including any right or
option described in ARTICLES XV, XVI, XX, XXI OR XXII, would, in the absence of
the limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule of law relating to
the vesting of an interest in or the suspension of the power of alienation of
property, then such right or option shall be exercisable only during the period
which shall end twenty-one (21) years after the date of death of the last
survivor of the lineal descendants of Franklin D. Roosevelt, the former
president of the United States, Henry Ford, the deceased automobile
manufacturer, and John D. Rockefeller, the founder of the Standard Oil Company,
known to be alive on the date of the execution, acknowledgment and delivery of
this Lease.
31.2. AMENDMENTS AND MODIFICATIONS. Subject to the requirements,
restrictions and conditions set forth in the Participation Agreement, neither
this Lease nor any provision hereof may be amended, waived, discharged or
terminated except by an instrument in writing in recordable form signed by the
Lessor and the Lessee and consented to by Matisse and the Bank. In the event of
any conflict or inconsistency between the terms hereof and the terms of the
Participation Agreement, the Participation Agreement shall control.
31.3. SUCCESSORS AND ASSIGNS. All the terms and provisions of
this Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
31.4. HEADINGS AND TABLE OF CONTENTS. The headings and table of
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
31.5. COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
31.6. GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OREGON,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, BUT IF THE BANK HAS GREATER
RIGHTS OR REMEDIES UNDER FEDERAL LAW, THEN SUCH RIGHTS AND REMEDIES UNDER
FEDERAL LAW WILL ALSO BE AVAILABLE TO THE BANK.
31.7. LIMITATIONS ON RECOURSE. The parties hereto agree that the
Lessor shall have no personal liability whatsoever to the Lessee or its
respective successors and assigns for any claim based on or in respect of this
Lease or any of the other Operative Documents or arising
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in any way from the transactions contemplated hereby or thereby; PROVIDED,
HOWEVER, that the Lessor shall be liable (a) for its own willful misconduct or
gross negligence, (b) for liabilities that may result from its breach of the
covenants set forth in SECTION 5.1 hereof or in SECTION 10.3(a), (c), (d), (f)
OR (h) of the Participation Agreement, or from any misrepresentation of Lessor
in SECTION 8.1(a) THROUGH (n) of the Participation Agreement, (c) for any Tax
based on or measured by any fees, commission or compensation received by it or
(d) as the other Operative Documents expressly provide that the Lessor shall
have personal liability. It is understood and agreed that, except as provided in
the preceding proviso: (i) the Lessor shall have no personal liability to Lessee
under any of the Operative Documents as a result of acting pursuant to and
consistent with any of the Operative Documents; and (ii) all such personal
liability of the Lessor to Lessee is expressly waived and released as a
condition of, and as consideration for, the execution and delivery of the
Operative Documents by the Lessor. This SECTION 31.7 shall not limit any
liability of the Lessor to the Bank.
31.8. ORIGINAL LEASE. The single executed original of this Lease
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature
page thereof and containing the receipt of the Bank therefor on or following the
signature page thereof shall be the original Executed Counterpart of this Lease
(the "ORIGINAL EXECUTED COUNTERPART"). To the extent that this Lease
constitutes chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the Original Executed Counterpart.
31.9. USURY SAVINGS CLAUSE. Nothing contained in this Lease or
the other Operative Documents shall be deemed to require the payment of interest
or other charges by Lessee or any other Person in excess of the amount which
Lessor may lawfully charge under any applicable usury laws. In the event that
Lessor shall collect moneys under this Lease, which are deemed to constitute
interest (including, without limitation, the Basic Rent or Supplemental Rent)
which would increase the effective interest rate to a rate in excess of that
permitted to be charged by Requirements of Law, all such sums deemed to
constitute interest in excess of the legal rate shall, upon such determination,
at the option of Lessor, be returned to Lessee or credited against other amounts
owed by Lessee.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE LESSOR
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE LESSEE'S
RESIDENCE,
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MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE LESSOR TO BE
ENFORCEABLE.
IN WITNESS WHEREOF, the undersigned have executed this Lease as of the
day and year first hereinabove written.
LESSEE: TRIQUINT SEMICONDUCTOR, INC.,
a California corporation
By: /s/ Joseph I. Martin
------------------------------------
Name: Joseph I. Martin
-----------------------------------
Its: CFO
------------------------------------
LESSOR: WOLVERINE LEASING CORP., a
Texas corporation
By: /s/ Kristin S. Markham
------------------------------------
Name: Kristin S. Markham
-----------------------------------
Its: Vice President
------------------------------------
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DEFINED TERMS
Certifying Party
Gross Proceeds
Lease
Modifications
Original Executed Counterpart
Purchase Notice
Purchase Option
Purchase Option Price
Remarketing Option
Renewal Option
Renewal Request
Renewal Response Date
Requesting Party
Required Modification
Term
Termination Date
Termination Notice
47
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[TRIQUINT SEMICONDUCTOR LETTERHEAD]
FOR MORE INFORMATION CONTACT:
JOSEPH I. MARTIN HEIDI A. FLANNERY
CHIEF FINANCIAL OFFICER INVESTOR RELATIONS COUNSEL
TRIQUINT SEMICONDUCTOR, INC. FI. COMM
(503) 644-3535, EXT. 1380 (503) 221-7403
FOR IMMEDIATE RELEASE--BUSINESS AND FINANCIAL EDITORS
TRIQUINT SEMICONDUCTOR, INC. ANNOUNCES
FINANCING OF ITS NEW SEMICONDUCTOR FAB
BEAVERTON, OREGON -- May 23, 1996 -- TriQuint Semiconductor, Inc. (NASDAQ: TQNT)
today announced that it had obtained financing for the construction of its new
187,000 square foot semiconductor manufacturing and office complex in Hillsboro,
Oregon. This transaction will be in the form of a $45 million, five year
operating lease through Wolverine Leasing Corporation with financing provided by
US Bank.
"We are very excited about being able to put in place this financing arrangement
for our new fab and office building", said Joe Martin, the Company's Chief
Financial Officer. "Our follow-on stock offering in September 1995 allowed the
Company to obtain excellent financing terms, which we believe will contribute to
improved earnings. We were also very happy to be able to secure this financing
from U.S. Bank who has been TriQuint's primary banking institution since the
Company's inception", concluded Mr. Martin.
TriQuint Semiconductor, Inc., is a leading manufacturer of radio frequency (RF),
analog and mixed signal gallium arsenide (GaAs) integrated circuits. The
Company produces standard and customer specific ICs for high performance
wireless, telecommunications, and computer systems, and also offers GaAs
manufacturing services. TriQuint is certified to the ISO9001 International
Quality Standard. TriQuint (TQNT) has been listed on the Nasdaq stock exchange
since December, 1993. The Company's headquarters are located at 3625A S.W.
Murray Blvd., Beaverton, Oregon 97005.
