EXHIBIT 10.52
AMENDMENT NO.2 TO LEASE AGREEMENT
Dated as of July 16,2001
by and between
FLATIRONS FUNDING, LIMITED PARTNERSHIP,
as Lessor
and
ELECTRONIC ARTS REDWOOD, INC.,
as Lessee
Property located in Redwood City, San Mateo County, California
The Lease Agreement and all amendments thereto, including this Amendment No.2 to
Lease Agreement and is subject to a lien in favor of KeyBank National
Association, as the Agent ("Agent") under the Credit Agreement. This Amendment
No.2 to Lease Agreement has been executed in several counterparts. To the
extent, if any, that the Lease Agreement and this Amendment No.2 to Lease
Agreement constitute chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no lien on the
Lease Agreement or on this Amendment No.2 to Lease Agreement may be created
through the transfer or possession of any counterpart other than the original
counterpart containing the receipt therefore executed by the Agent on or
following the signature page hereof.
This counterpart is the original counterpart.
AMENDMENT NO.2 TO LEASE AGREEMENT
THIS AMENDMENT NO.2 TO LEASE AGREEMENT (this "Amendment"), dated as of
July 16, 2001, is entered into by and among:
(1) FLATIRONS FUNDING, LIMITED PARTNERSHIP, a Delaware limited
partnership (the "Lessor");
and
(2) ELECTRONIC ARTS REDWOOD, INC., a Delaware corporation (the
"Lessee").
RECITALS
A. The Lessee and the Lessor are parties to that certain Lease Agreement dated
as of February 14, 1995, for which a Memorandum of Lease was recorded on
February 15, 1995, in the Official Records of San Mateo County, California, as
Document No. 95015509, for which an Amended and Restated Memorandum Lease
Agreement was recorded March 27, 1997, as Document No. 97034604, which Lease
Agreement was amended by that certain Amendment No.1 to Lease Agreement dated as
of March 7, 1997, and supplemented by that certain AFL Unit Leasing Record dated
December 1, 1998, which memorandum of lease was further amended by that certain
Second Amended and Restated Memorandum Lease Agreement dated as of August
31,1998, recorded on September 2, 1998, as Document No. 98141934, and further
amended by that certain Third Amended and Restated Memorandum of Lease Agreement
dated as of May 5, 1999, and recorded on May 5, 1999, as Document No. 99078944,
and further amended by that certain Fourth Amended and Restated Memorandum of
Lease Agreement dated as of December 6,2000, and recorded on December 8, 2000,
as Document No. 2000-155930 (the Lease Agreement, together with all memoranda
thereto, as so amended and modified, the "Lease Agreement") affecting certain
real property and improvements located in San Mateo County, California, more
specifically described in Exhibit A attached hereto and made a part hereof.
B. The Lessor, the Lessee, and certain other parties have entered into that
certain Credit Agreement dated as of July 16,2001 (the "Credit Agreement").
C. The Lessor and the Lessee have now agreed to amend the Lease Agreement upon
the terms and subject to the conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Lessee and Lessor hereby agree as follows:
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1. Definitions. Interpretation. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms shall have the respective meanings
given to those terms in Section 1 of the Lease Agreement, as amended by this
Amendment.
2. Amendments to Lease Agreement. Subject to the satisfaction of the conditions
set forth in paragraph 4 below, the Lease Agreement is hereby amended as
follows:
(a) Section 1 of the Lease Agreement is hereby amended by:
(i) deleting therefrom in their entirety the following terms:
"Acquisition Cost"
"Additional General Partner"
"Adjusted Acquisition Cost"
"Cash Proceeds"
"Computation Period"
"Lease Rate Date"
"Level 1"
"Level 2"
"Level 3"
"Level 4"
"Level 5"
"Monthly Rent Component"
"Variable Component of Basic Rent"
(ii) deleting therefrom in their entirety the definitions of the terms
"▇▇▇▇▇▇▇", "▇▇▇▇▇▇▇ Leasing", and "▇▇▇▇▇▇▇ ▇▇▇▇▇." Wherever these terms appear
in the Lease Agreement, they shall be interpreted to refer to the Agent wherever
the context requires;
(iii) adding thereto in the appropriate alphabetical order the following new
definitions:
"Adverse Environmental Condition" means the occurrence of any Hazardous
Condition or any of the matters referred to in the definition of Environmental
Claim.
"Agent" means KeyBank National Association, and its permitted successors and
assigns.
"Alternate Rate" means, on any day, the greater of (i) the Prime Rate in effect
on such date and (ii) the Federal Funds Rate for such day plus one-half percent
(0.50%).
"Applicable Law" means all existing and future applicable laws, rules,
regulation (including Environmental Laws), statutes, treaties, codes, ordinance,
permits, certificates, orders and licenses of and
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interpretations by, any Governmental Authority, and applicable judgments,
decrees, injunctions, writs, orders or like action of any court, arbitrator or
other administrative, judicial or quasi judicial tribunal or agency of competent
jurisdiction (including those pertaining to health, safety or the environment,
those pertaining to the use or occupancy of the Property and those which in any
way limit the use or enjoyment thereof), or common law, in each case affecting
the Lessee, the Guarantor or the Property, and any restrictive covenant or deed
restriction or easement of record encumbering the Property.
"Applicable Margin" means the spread over the one (1) month LIBOR rate
determined by reference to the Guarantor's Total Consolidated Debt/Tangible Net
Worth Ratio set forth in the following pricing grid:
Total Consolidated Debt/ Liquidity Loan Tranche B Loan
------------------------ --------------- ---------------
Consolidated Tangible Net Worth LIBOR Margin LIBOR Margin
-------------------------------- ------------ ------------
*0.33 1.25% 1.50%
*0.50 1.50% 1.75%
*0.65 1.75% 2.00%
**0.65 2.00% 2.25%
* Less Than or Equal to.
** Greater Than.
"Conduit Agent" means The Bank of Tokyo-Mitsubishi, Ltd., New York Branch, and
its permitted successors and assigns.
"Consenting Parties" shall have the meaning specified in Section 11.1(b) of the
Credit Agreement.
"CP Rate" means, with respect to the Note Purchaser, the all-in- cost of funding
its acquisition of the Notes and the funding of the advances thereunder to the
extent such funding is being provided by the Note Purchaser's issuance of
Commercial Paper (including discount, dealer commissions and such other amounts
as the Conduit Agent determines to be appropriate). The determination of the
Note Purchaser's CP Rate, as well as the determination of which maturities of
Commercial Paper to issue, will be made by the Conduit Agent, whose
determination shall be binding for all purposes absent manifest error; provided,
however, that the Conduit Agent shall consult with the Lessee concerning
Commercial Paper maturities. Accrued discount on the Commercial Paper maturing
between Basic Rent Payment Dates will be capitalized.
"Credit Documents" means, collectively, this Lease, the Credit Agreement, the
Guaranty, the Note Purchase Agreement, and any other documents contemplated
hereby or thereby.
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"Default" means any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
"Environmental Audit" means a written report from an environmental consultant
selected by the Lessee and approved by the Lessor Parties, documenting that such
environmental consultant has performed a review of the environmental condition
of and compliance of the Property and that such review contains, at a minimum,
site assessment information that generally meets or exceeds applicable industry
standards and practices and the most current ASTM Standard Practice for
Environmental Site Assessments: Phase One Environmental Site Assessment.
"Environmental Claim" means any legal obligation or notice of violation, claim,
action, proceeding, demand, abatement, lien or other order or direction
(conditional or otherwise) by any Governmental Authority or any Person relating
to personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions, resulting from or based upon (i) the existence
(whether currently known or unknown), or the continuation of the existence, of a
Release (including sudden or non- sudden, accidental or nonaccidental Releases)
of, or exposure to, any Hazardous Substance, odor or audible noise or other
release or emission in, into or onto the environment (including the air, ground,
water or any surface) at, in, by, from, or related to (a) the Property or (b)
the transportation, storage, treatment or disposal of materials in connection
with the operation of the Property, or (ii) the violation, or alleged violation,
of any Environmental Laws or Permits of, or from, any Governmental Authority
relating to environmental matters connected with the Property.
"Environmental Law" means all present and future Applicable Laws relating to the
environment, including without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, the Hazardous
Material Transportation Act, as amended, the Resource Conservation and Recovery
Act, as amended, the Federal Clean Water Act, as amended, the Federal Clean Air
Act as amended, the Toxic Substances Control Act as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended and the Occupational
Safety and Health Act, as amended, and any other federal, state or local
statutes, present or future, relating to health, safety, or the environment,
including, without limitation, transfer of ownership notification statutes and
the regulations promulgated pursuant thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time,
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and any regulations promulgated thereunder.
"ERISA Reportable Event" means a reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss. 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
"Equity Investment" means the equity investment to be made pursuant to Article
III of the Credit Agreement.
"Event of Loss" means, with respect to the Property, any of the following
events: (i) any casualty that renders the Property unsuitable for continued use
as property of its type immediately prior to such casualty, (ii) any casualty
that is so substantial in nature that restoration of the Property to
substantially its condition as existed immediately prior to such casualty would
be impracticable or impossible, (iii) any casualty which results in an insurance
settlement with respect to the Property on the basis of a total loss of the
improvements; (iv) any Taking that involves the taking of the Lessor's entire
title to the Property, (v) any Taking that is such that restoration of the
Property to substantially its condition as existed immediately prior to such
Taking would be impracticable or impossible, or (vi) any Taking whereby the use
or occupancy of the Property by the Lessee thereof shall have been prohibited,
directly or indirectly, for a period equal to the lesser of (vii) ninety (90)
consecutive days and (y) the remaining Lease Term.
"Fair Market Value" means, with respect to the Property, the amount, which in
any event shall not be less than zero, that would be paid in cash in an
arm's-length transaction between an informed and willing purchaser and an
informed and willing seller, neither of whom is under any compulsion to purchase
or sell, respectively, for the ownership of the Property. The Fair Market Value
shall be determined based on the assumption that (x) the Property is in the
condition and state of repair required under Section 9 of this Lease and (y) the
Lessee is in compliance with the other requirements of the Credit Documents
relating to the condition of the Property.
"Federal Funds Rate" means, for any day, the rate per annum set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor publication, "H.15 (519)") for such day opposite the caption "Federal
Funds (Effective)". If on any relevant day, such rate is not yet published in
H.15 (519), the rate for such day shall be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day
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under the caption "Federal Funds Effective Rate". If on any relevant day, such
rate is not yet published in either B.15 (519) or the Composite 3:30 p.m.
Quotations, the rate for such day shall be the arithmetic means, as determined
by Agent, of the rates quoted to the Agent for such day by three (3) Federal
funds brokers of recognized standing selected by the Agent.
"Governmental Authority' means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranteed Pension Plan" means any employee pension benefit plan within the
meaning of Section (3)(2) of ERISA (other than a Multiemployer Plan) which the
Guarantor, any of its Subsidiaries or any ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of participants and which is
guaranteed on termination in full or in part by the PBGC pursuant to Title IV of
ERISA.
"Hazardous Condition" means any condition at the Property that violates or
threatens to violate, that results in or threatens noncompliance with, or that
creates liability under, any Environmental Law.
"Hazardous Substance" means any of the following: (i) any petroleum or petroleum
product (or additives thereto, such as, but not limited to, MTBE), explosives,
radioactive materials, asbestos, ureaformaldehyde, polychlorinated biphenyls,
lead and radon gas; (ii) any substance, material, product, derivative, compound
or mixture, mineral, chemical, waste, gas, medical waste, or pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic or hazardous to the environment or human health or safety, or
which is now or hereafter defined or regulated as such under any regulation
under any Environmental Law; or (iii) any substance, material, product,
derivative, compound or mixture, mineral, chemical, waste, gas, medical waste or
pollutant that would support the assertion of any claim under any Environmental
Law, whether or not defined as hazardous as such under any Environmental Law.
"Imputed Return" means the cost to the Lessor Parties of maintaining their
unrecovered investment after the Financing Termination Date or the expected
return to such persons, determined as (i) the average daily Outstanding Lease
Balance after the Financing Termination Date multiplied by (ii) the number of
days from and excluding the Financing Termination Date to and including the date
of the sale of the Property multiplied by (iii) the rate equal to the applicable
interest rate, with respect to amounts owing to each Note Purchaser and each
Tranche B Bank, respectively, multiplied by (iv) 1/365.
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"Indemnitees" means, collectively, the Lessor Parties and the Program
Administrator (as defined in the Credit Agreement), together with their
respective Affiliates, successors, assigns, directors, shareholders, partners,
members (and direct and indirect owners of its members), officers, managers,
employees and agents.
"KevBank Financing Term" means a period of five (5) years commencing on (and
including) the Initial Funding Date (as defined in the Credit Agreement) and
ending on (but excluding) the Maturity Date (as defined in the Credit
Agreement).
"Lessor Lien" means any Lien on or against the Property, lease or sublease or
disposition of title, easement, covenant, restriction or other matter affecting
title to the Property arising as a result of (i) any claim against the Lessor
not resulting from the transactions contemplated by the Credit Documents, (ii)
any act or omission of the Lessor which is not required or expressly permitted
by the Credit Documents, requested by the Lessee or is in violation of any of
the terms of the Credit Documents, (iii) any claim against the Lessor with
respect to Taxes or Transaction Expenses against which neither the Guarantor nor
the Lessee is required to indemnify the Lessor pursuant to the Participation
Agreement or the other Credit Documents or (iv) any claim against the Lessor
arising out of any transfer by the Lessor of all or any portion of its interest
in the Property or the Credit Documents other than the transfer of title to or
possession of the Property by the Lessor pursuant to and in accordance with the
Credit Documents.
"Lessor Parties" means collectively, the Transaction Parties (as defined in the
Credit Agreement), except for the Lessee Parties (as defined in the Credit
Agreement).
"LIBOR " means, with respect to a Rent Period, the rate for deposits in Dollars
for a period comparable to such Rent Period appearing on the Telerate Page 3750
(or any successor publication) as of 11 :00 A.M. (London time) two (2) Business
Days preceding the applicable Basic Rent Payment Date; provided, however, that
if such rate is not reasonably available, then "LIBOR" shall mean the arithmetic
means of the rates, expressed in decimal, quoted to the Agent at such time on
such day by two or more major banks in the London interbank market selected in
good faith by the Agent as a rate per annum for such deposit, for such period
commencing on such first day and in such amount that the Agent reasonably
determines is representative for a single transaction on such market on such
day.
"Liquidity Agreement" means the Liquidity Agreement, dated as of July 16,2001,
among the Note Purchaser, Bankers Trust Company, The Bank of Tokyo-Mitsubishi,
Ltd. and the Banks (as defined therein), as the
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same may be amended, modified and in effect from time to time.
"Liquidity Banks" mean the banks defined in the introductory paragraph of the
Credit Agreement.
"Liquidity Documentation" means any other contract, instrument or documentation
pursuant to which one or more Liquidity Banks agree, from time to time, to
provide liquidity, credit, asset purchase and/or cash collateral support to the
Note Purchaser's Commercial Paper notes issued to fund its acquisition of the
Notes and the funds advanced thereunder.
"Liquidity Loans" means "Loans" as defined in Section 1.1 of the Liquidity
Agreement.
"Material Adverse Environmental Condition" shall mean an Adverse Environmental
Condition with respect to which the Remediation Costs will exceed Six Million
Dollars ($6,000,000).
"Material Subsidiary" means (a) the Lessee and (b) at any time during any Fiscal
Year of the Guarantor, any Subsidiary of the Guarantor whose assets equal or
exceed ten percent (10%) of the total consolidated assets of the Guarantor at
such time.
"Maximum Lessor Risk Payment" has the meaning as set forth in the Credit
Agreement.
"Maximum Recourse Amount" has the meaning as set forth in the Credit Agreement.
"Modifications" has the meaning set forth in Section 12.1 of this Lease.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of July
16,2001, among the Lessor, the Lessee, the Guarantor and the Note Purchaser, as
the same may be amended, modified and in effect from time to time.
"Note Purchaser" means Victory Receivables Corporation, a Delaware corporation,
together with its permitted successors and assigns.
"Notes" means the notes to be issued by the Lessor pursuant to the Note Purchase
Agreement and Section 3.1 of the Credit Agreement.
"Notice of Default" is defined in the Note Purchase Agreement.
"Outstanding Lease Balance" means, as of any date of determination, (i) the
aggregate outstanding principal amount of the Notes plus (ii) the aggregate
outstanding principal amount of the Tranche B
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Loan plus (iii) the aggregate amount of made but unredeemed Equity Investment.
"Overdue Rate" means the rate of interest otherwise applicable to any payment
plus two percent (2.00%).
"Prime Rate" means the per annum rate publicly announced by KeyBank from time to
time at its office in Cleveland, Ohio. The Prime Rate is determined by KeyBank
from time to time as a means of pricing credit extensions to some customers and
is neither directly tied to any external rate of interest or index nor
necessarily the lowest rate of interest charged by KeyBank at any given time for
any particular class of customers or credit extensions. Any change in the Prime
Rate resulting from a change in the Prime Rate shall become effective on the
Business Day on which each change in the Prime Rate occurs.
"Release" means, the presence (whether currently known or unknown) of Hazardous
Substances or any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any property, including the movement of
Hazardous Substances through or in the air, soil, surface water, ground water or
property and/or the threat thereof.
"Remedial Action" means all actions, including corrective actions, equipment
upgrades or relocation, or building demolition, repair or reconstruction
necessary or appropriate to (i) investigate, clean up, remove, treat or in any
other way address any Hazardous Substances or other substance in the indoor or
outdoor environment, (ii) prevent the Release or threat of Release or minimize
the further Release of any Hazardous Substances or other substance so it does
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, or (iii) perform pre-remedial studies and
investigations, remedial designs and actions and post-remedial monitoring and
care including, without limitation, any such actions performed pursuant to any
voluntary cleanup program or similar program administered by any Governmental
Authority for the purposes of addressing any Hazardous Conditions.
"Remediation Costs" means all costs and expenses associated with Remedial
Action.
"Rent Period" means the period beginning on each Basic Rent Payment Date and
ending as of (but excluding) the following Basic Rent Payment Date.
"Subsidiary" means, with respect to any Person, any corporation,
10
partnership or other business entity (including business trusts) of which an
aggregate of more than 50% of the outstanding stock, having ordinary voting
power to elect or appoint a majority of the members of the board of directors,
trustees or members of a similar governing body of such corporation, partnership
or other entity (irrespective of whether, at the time, stock of any other class
or classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency), is, or of
which an aggregate of more than 50% of the interests in which are, at the time,
directly or indirectly, owned by such Person and/or one or more Subsidiaries of
such Person.
"Tranche B Banks" is defined in the introductory paragraph of the Credit
Agreement. .
"Tranche B Loan" means the loan to be made by the Tranche B Banks pursuant to
Article III of the Credit Agreement.
(iv) amending and restating the following definitions to be read in their
entirety as follows:
"Basic Rent" means, with respect to any Parcel of Property or Unit of Equipment,
an amount equal to the sum of the Note Interest Amount, the Tranche B Interest
Amount, and the Yield Amount calculated as follows:
(a) The Note Interest Amount portion of Basic Rent with respect to the
outstanding principal amount of the Notes shall be computed based upon one of
the rates set forth below:
(i) To the extent that the Note Purchaser is funding advances under the Notes by
issuance of Commercial Paper, the Note Interest Amount portion of Basic Rent
with respect to the amounts outstanding under the Notes shall be computed based
upon the CP Rate as in effect from time to time plus fifteen one hundredths of
one percent (.15%); and
(ii) To the extent the Note Purchaser is not funding advances under the Notes by
issuance of Commercial Paper or the Notes have been purchased by the Liquidity
Banks pursuant to the Liquidity Documentation, the Note Interest Amount portion
of Basic Rent with respect to the amounts outstanding under the Notes shall be
computed as follows: (A) until such time as a Liquidity Loan based upon a one
(1) month LIB OR rate can be advanced by the Liquidity Banks pursuant to the
Liquidity Documentation, the Alternate Rate, and (B) thereafter, one of the
following two rates as selected by the Note Purchaser (or if the Notes have been
purchased by the Liquidity Banks pursuant to the Liquidity Documentation, the
Agent) in its reasonable
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discretion: (x) the one (1) month LIBOR rate as in effect from time to time
(adjusted for reserve requirements in effect on the first day of each period for
which a payment is due) plus the Applicable Margin; or (y) if the one (1) month
LIBOR rate is not available for any reason, the Alternate Rate.
The aggregate amount payable in accordance with this clause (a) with respect to
all Notes as of any Basic Rent Payment Date shall be the "Note Interest Amount"
payable as of such date.
(b) The Tranche B Interest Amount portion of Basic Rent with respect to the
outstanding principal amount of the Tranche B Loan shall be computed based upon
either (i) the one (1) month LIBOR rate as in effect from time to time, adjusted
for reserve requirements in effect on the first day of each period for which a
payment is due, plus the Applicable Margin or (B) if the one (1) month LIBOR
rate is not available or cannot be determined for the reasons set forth in
Section 4.5 of the Credit Agreement, the Alternate Rate. Notwithstanding the
foregoing, for the period beginning on the Initial Funding Date and ending on
the first Basic Rent Payment Date, the Tranche B Interest Amount portion of
Basic Rent payable with respect to the outstanding Tranche B Loan shall be
computed based upon the Alternate Rate or such other rate as agreed upon between
the Lessee and the Lessor immediately prior to the Initial Funding Date. The
aggregate amount payable in accordance with this clause (b) with respect to the
Equity Investment as of any Basic Rent Payment Date shall be the "Tranche B
Interest Amount" payable as of such date.
(c) The Yield Amount portion of Basic Rent payable with respect to the Equity
Investment shall be computed based upon either (i) the one (1) month LIBOR rate
as in effect from time to time, adjusted for reserve requirements in effect on
the first day of each period for which a payment is due, plus two percent
(2.00%) or (ii) if the one (1) month LIBOR rate is not available or cannot be
determined for the reasons set forth in Section 4.5 of the Credit Agreement, the
Alternate Rate. Notwithstanding the foregoing, for the period beginning on the
Initial Funding Date and ending on the first Basic Rent Payment Date, the Yield
Amount portion of Basic Rent payable with respect to the outstanding Equity
Investment shall be computed based upon the Alternate Rate or such other rate as
agreed upon between the Lessee and the Lessor immediately prior to the Initial
Funding Date. The aggregate amount payable in accordance with this clause (b)
with respect to the Equity Investment as of any Basic Rent Payment Date shall be
the "Yield Amount" payable as of such date.
"Business Day" means any day on which (i) commercial banks are not authorized or
required to close in San Francisco, California or New
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York, New York and (ii) if such Business Day is related to a LIBOR rate,
dealings in Dollar deposits are carried out in the London interbank market.
"Commercial Paper" means commercial paper issued by the Note Purchaser to fund
its purchase of the Notes and the advances to be funded thereunder.
"Credit Agreement" means the Participation Agreement, dated as of July 16, 2001,
by and among the Lessee, the Guarantor, the Lessor, the Note Purchaser, Agent,
and certain other parties, as the same may be amended, restated, modified or
supplemented from time to time, or any subsequent credit or loan agreement
entered into between the Lessor and a lender or lenders related to financing the
Property or Equipment.
"Guaranty" means the guaranty agreement, dated as of July 16, 2001, by Guarantor
in favor of the Lessor and the Beneficiaries as identified therein, as the same
may be amended, restated, modified or supplemented from time to time.
(v) amending the definition of the term "Additional Rent" by inserting after the
word "hereof' the following words, preceded by a comma: "and shall also include
all 'Supplemental Rent' as defined in the Credit Agreement";
(vi) amending the definition of the term "Affiliate" by inserting after the word
"foregoing" the following words, preceded by a comma: "and shall also include
any 'Affiliate' as defined in the Credit Agreement";
(vii) amending and restating the first sentence in the definition of the term
"Appraisal Procedure" to be read in its entirety as follows:
"Appraisal Procedure" means the following procedure whereby an independent
appraiser shall be appointed by the Lessor and the Lessee, with the consent of
the Assignee, to determine the fair market value of any Property or Equipment to
be leased, if such determination is required under paragraph (a) of Section 12
or paragraph (d) of Section 13 of this Lease.;
(viii) deleting from the definition of the term "Assignee" the words "clauses
(i), (iv) and (v) of' and the words "and subsection 9.6 and 12 of the Agreement
for Lease,";
(ix) deleting from the definition of the term "Assignee" the word "a" preceding
the term "Credit Agreement" and inserting in place thereof the word "the";
(x) deleting from the definition of the term "Basic Rent Payment Date" the
number "20" and inserting in place thereof the number "12";
(xi) amending the definition of the term "▇▇▇▇▇'▇" by inserting after the word
"Inc." the words "or any successor agency thereto.";
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(xii) amending the definition of the term "S&P" by deleting the word
"Corporation" and substituting therefor the words "Rating Services, a division
of The McGraw Hill Companies Inc., or any successor agency thereto";
(b) Subparagraph 5(e) of the Lease Agreement is hereby amended by
(i) inserting the words "OTHER THAN LESSOR LIENS" at the end of paragraph (C),
after the word "EQUIPMENT";
(ii) inserting the words "EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 15 AND 16 OF
THIS LEASE," at the beginning of paragraph (D), before the word "ANY";
(c) Subparagraphs 7(a) and 7(b) of the Lease Agreement are hereby amended and
restated to be read in their entirety as follows:
(a) On each Basic Rent Payment Date during the Lease Term, the Lessee shall pay
directly for the account of the Lessor, or as otherwise directed by the Lessor,
the accrued and unpaid Basic Rent then due. The Lessor hereby irrevocably
directs that the proceeds of all Basic Rent allocable to the Notes and the
Equity Investment shall be paid to Agent in accordance with the provisions of
the Credit Agreement.
(b) [Intentionally Omitted.];
(d) Subparagraph 7(d) of the Lease Agreement is hereby amended by deleting the
words "decimal equivalent of the percentage referred to in paragraph (a)(iii) of
the definition of `Basic Rent' as most recently furnished by the Lessor" and
inserting in the place thereof the words "Overdue Rate";
(e) Subparagraph 7(f) of the Lease Agreement is hereby amended and restated to
be read in its entirety as follows:
(f) All calculations of Basic Rent shall be performed by the Lessor (or by the
Agent). Such information shall be provided to the Lessee and the Guarantor no
later than 5 :00 p.m., New York time, on the third (3rd) Business Day prior to
the relevant Basic Rent Payment Date, together with reasonable detail supporting
the calculations made. The Lessee and the Guarantor shall promptly acknowledge
receipt of such calculations in writing to the Agent. Such calculations shall be
deemed final in the absence of manifest error. The Guarantor and the Lessee
shall be entitled to rely on any calculation of Basic Rent performed by the
Agent, and to deal directly with the Agent in connection with the verification
of such calculations.
(f) Section 7 of the Lease Agreement is hereby amended by adding a new clause
(g) thereto to read in its entirety as follows:
(g) If the Lessee fails to pay any Basic Rent or Additional Rent when due, the
Lessee shall pay to the Lessor or the Person entitled thereto, as Additional
Rent, among other things, on demand, to the extent permitted by applicable law,
interest at the
14
applicable Overdue Rate on any installment of Basic Rent and on any payment of
any Additional Rent not paid when due or demanded by the Lessor or any
Indemnitee for the period from and including the due date thereof to but
excluding the date paid. The expiration or other termination of the obligations
of the Lessee to pay Basic Rent hereunder shall not limit or modify the
obligations of the Lessee with respect to accrued Additional Rent. Unless
expressly provided otherwise in this Lease or the Credit Agreement, in the event
of any failure on the part of the Lessee to pay and discharge any Basic Rent or
any Additional 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 the Credit Agreement or any document related thereto for nonpayment or
late payment of such Basic Rent or Additional Rent, all of which shall also
constitute Additional Rent.
(g) Subparagraph 8(c) of the Lease Agreement is hereby amended by inserting into
the last sentence thereof after the words "Property to comply" the words "in all
material respects";
(h) Subparagraph 8(h) of the Lease Agreement is hereby amended by capitalizing
the first letter of the words "governmental" and "authority" therein to be read
in their entirety as "Governmental Authority";
(i) Subparagraph 9(e) of the Lease Agreement is hereby amended by amending and
restating the last sentence thereof to be read in its entirety as follows:
Notwithstanding anything contained herein, the Lessee shall not make any
addition or alteration which the Lessee reasonably expects will cost greater
than $2,000,000 unless the Lessee shall have delivered to the Agent on behalf of
the Lessor Parties a brief written narrative of the work to be performed in
connection with such additions or alterations and the Lessee shall have received
the written consent of Agent on behalf of the Consenting Parties to the making
of such additions or alterations, which consent shall not unreasonably be
withheld.;
(j) Subparagraph 9(f) of the Lease Agreement is hereby amended by capitalizing
the first letter of the words "governmental" and "authority" therein to be read
in their entirety as "Governmental Authority";
(k) Subparagraph lO(c) of the Lease Agreement is hereby amended by
(i) deleting from clause (i) the term "Adjusted Acquisition Cost" and inserting
in place thereof the term "Outstanding Lease Balance";
(ii) adding to the end of clause (i) new sentences to be read in their entirety
as follows:
The deductible or self-insured retention shall not exceed $100,000 per
occurrence. Such insurance shall include coverage for flood and earthquake to
the extent available on commercially reasonable terms for the Lessee.
15
(iii) deleting from clause (ii) the number "15,000,000" and inserting in place
thereof the number "50,000,000";
(iv) adding to the end of clause (ii) after the word "negligence" the following
words, preceded by a comma:
"and in the annual aggregate, with a deductible or self-insured retention which
shall not exceed $1,000,000 per occurrence without the prior written approval of
the Consenting Parties; and in no event shall such insurance be provided on a
claims made coverage basis";
(v) amending and restating the language following clause (v) to be read in its
entirety as follows:
The insurance required under this paragraph (c) shall be written by companies
that are recognized national or international insurers having claims paying
ability ratings of at least "A minus" in the most recent edition of Best's Key
Rating Guide, or similar ratings by other rating services and BBB by S&P. Such
insurance may provide for such deductibles and the Lessee may self-insure with
respect to the required coverage except as otherwise provided in this paragraph
(c) only to the extent approved in writing by the Lessor.
All insurance proceeds in respect of any loss or occurrence for which the
proceeds related thereto, in the absence of the occurrence and continuance of a
Default or an Event of Default, which are payable to the Lessee, shall be
adjusted by the Lessee and such proceeds (other than liability insurance
proceeds) shall be made available by the Lessor to the Lessee (with the
endorsement of the Agent as co-payee) for the sole purpose of reconstruction,
repair or refurbishment of the Property; provided, however, that in the event
that (i) such reconstruction, repair or refurbishment cannot be completed prior
to the end of the KeyBank Financing Term, or (ii) the Lessee shall elect not to
use such proceeds for the reconstruction, repair or refurbishment of the
Property, or (iii) if a Default or an Event of Default has occurred and is
continuing, then such proceeds shall be adjusted solely by the Lessor and held
by the Agent for application in accordance with Article XIV or XVII of the
Credit Agreement, as applicable.;
(1) Subparagraph 10 (f) of the Lease Agreement is hereby amended and restated to
be read in its entirety as follows:
(f) Additional lnsureds; Notice. The insurance referred to in clause (c) (i) for
the Property (as appropriate) may be a blanket policy and shall (i) at all times
be in an amount at least equal to the full replacement cost of the Improvements,
without any deduction for depreciation; (ii) name the Agent as loss payee and
the other Lessor Parties as additional insureds (collectively, the "Insured Loan
Parties") as their respective interests may appear; (iii) provide that the
interests of the Insured Loan Parties shall be insured regardless of any
intentional or willful breach or violation by the Lessee or the Guarantor of any
warranties, declarations or conditions contained in such insurance;
16
(iv) provide that such insurance shall not be invalidated by any act, omission
or negligence of the Lessee, the Guarantor, the Lessor, or the Insured Loan
Parties nor by any foreclosure or other proceedings or notices thereof relating
to the Property (as appropriate) or any part thereof, nor by legal title to, or
ownership of the Property or any part thereof becoming vested in or by the
Lessor or its agents, nor by occupancy or use of the Property or any part
thereof for purposes more hazardous than permitted by such policy; and (v)
subject to paragraph (c) above, provide that all partial loss insurance claims
pertaining to the Property (as appropriate) or any part thereof shall be
adjusted by the insurers thereunder with the Lessee.
All policies of insurance required to be maintained pursuant to clause (c)(ii)
which cover liability for bodily injury or property damage shall provide that
all provisions of such insurance, except the limits of liability (which shall be
applicable to all insureds as a group) and insurance premiums (which shall be
solely a liability of the Lessee), shall operate in the same manner as if there
were a separate policy covering each such insured and/or additional insured,
without right of contribution from any other insurance which may be carried by
an insured and/or additional insured.
Every policy required under paragraph (c) above shall (i) expressly provide that
it will not be canceled or terminated except upon thirty (30) days' written
notice (or in the case of non-payment of premium, ten (10) days' written notice)
to the Lessor, and the Insured Loan Parties; (ii) name the Insured Loan Parties
as additional insureds, as their respective interests may appear; (iii) provide
that the interests of the Lessor and the Insured Loan Parties shall be insured
regardless of any intentional or willful breach or violation by the Lessee or
the Guarantor of any warranties, declarations or conditions contained in such
insurance; (iv) provide that such insurance shall not be invalidated by any act,
omission or negligence of the Lessee, the Guarantor, the Lessor or any of the
other Lessor Parties, nor by any foreclosure or other proceedings or notices
thereof relating to the Property or any part thereof, nor by legal title to, or
ownership of, the Property or any part thereof becoming vested in or by the
Lessor or its agents, nor by occupancy or use of the Property or any part
thereof for purposes more hazardous than permitted by such policy; (v) except
for liability coverage and workers' compensation insurance, include a waiver of
all rights of subrogation against the Lessor and the Insured Loan Parties and
any recourse against the Lessor and the Insured Loan Parties for payment of any
premiums or assessments under any policy; (vi) provide that such insurance is
primary with respect to any other policies of insurance covering the
Improvements or any part thereof carried by or available to the Lessor or the
Insured Loan Parties; (vii) expressly provide that all payments of insurance
proceeds shall be made payable to the Lessee and the Agent for the benefit of
the Lessor Parties as co-payees. The Lessee shall advise the Lessor promptly of
any policy cancellation or any change adversely affecting the coverage provided
thereby.
(m) Subparagraph 10(g) of the Lease Agreement is hereby amended by deleting the
first word ("As") following the title thereof, and inserting in place thereof
the following words: "Except as otherwise provided in the Credit Agreement, as";
(n) Subparagraph 10(h) of the Lease Agreement is hereby amended by deleting the
17
first word ("As") following the title thereof, and inserting in place thereof
the following words: "Except as otherwise provided in the Credit Agreement, as
";
(o) Subparagraph 10(k) of the Lease Agreement is hereby amended and restated to
be read in its entirety as follows:
(k) Certificates. etc. The Lessee shall deliver to the Lessor the certificate of
insurance evidencing the existence of all insurance which is required to be
maintained by the Lessee hereunder, such delivery to be made (i) as provided in
Sections 6.1(p) of the Credit Agreement, (ii) within thirty (30) days after the
issuance of any additional policies or amendments or supplements to any of such
insurance, and (iii) upon issuance of any such insurance. The Lessee shall
notify the Lessor and the other Insured Loan Parties of any nonrenewal of any
policy required hereunder and shall cause each insurer under each policy
required hereunder to give the Lessor notice of any lapse under any such policy.
The Lessee shall not obtain or carry separate insurance concurrent in form, or
contributing in the event of loss, with that required by this Section 10 unless
the Agent is named as loss payee and the Lessor and the other Insured Loan
Parties are named as additional insureds therein. The Lessee shall immediately
notify the Lessor and the other Insured Loan Parties whenever any such separate
insurance is obtained and shall deliver to the Lessor the certificates of
insurance and any other documentation (other than blanket policies) required by
the Lessor evidencing the same as is required hereunder.;
(p) Section 10 of the Lease Agreement is hereby amended by adding two new
subparagraphs (n) and (0) to be read in their entirety as follows:
(n) No Negation of Certain Other Obligations. The requirements of this Section
10 shall not be construed to negate or modify any obligations of the Lessee and
the Guarantor under the Credit Agreement or any other agreement related thereto.
(o) No Insurance bv the Lessor. Note Purchaser. the Conduit Agent or the Agent.
At any time, each of the Lessor Parties may at its own expense carry insurance
with respect to its interest in the Improvements; except that such insurance
shall not interfere with the Lessee's ability to insure the Improvements as
required by this Section 10 or adversely affect the Lessee's insurance or the
cost thereof, or the ability of the Lessee to collect a claim under any such
insurance policy. Any insurance payments received from policies maintained by
any of the Lessor Parties pursuant to the previous sentence shall be retained by
such Lessor Party, as the case may be, without reducing or otherwise affecting
the Lessee's obligations hereunder.
(q) Section 12 of the Lease Agreement is hereby amended and restated to be read
in its entirety as follows:
SECTION 12. LESSEE'S RIGHT TO TERMINATE.
Section 12.1 Remarketing Option. Subject to the fulfillment of each of the
conditions set forth in this Section 12.1 and in Section 12.2 hereof (all of
such conditions, collectively, the "Surrender Conditions"), the Lessee may elect
to remarket all, but not
18
less than all, of the Property (such election being referred to as the
"Remarketing Option").
The effective exercise and consummation of the Remarketing Option by the Lessee
shall be subject to the due and timely fulfillment of each of the following
provisions as of the dates set forth below (the date of the closing of such sale
or other transfer of the Property following remarketing referred to herein as
the "Financing Termination Date").
(a) Not later than three hundred and sixty-four (364) days prior to the
expiration date of the KeyBank Financing Term or of the non-cancelable term of
any substitute or replacement financing under any successor Credit Agreement,
the Lessee shall have given to the Lessor and the other Lessor Parties written
notice (a "Remarketing Notice") of the Lessee's exercise of the Remarketing
Option, which exercise shall be irrevocable. Within thirty (30) days following
the date of the Remarketing Notice, the Lessor and the Lessee shall determine
the fair market value rental of the Property under this Lease which shall become
effective on the Financing Termination Date for the remainder of the Lease Term.
The fair market value rental shall be as agreed by the Lessor and the Lessee or,
if they are unable to agree within such thirty (30) day period, pursuant to the
Appraisal Procedure. Upon determination of such fair market value rental, the
Lessor and the Lessee shall execute an amendment to this Lease reflecting such
rental change and the effective date thereof.
(b) On the date of the Lessee's notice to the Lessor of the Lessee's exercise of
the Remarketing Option, no Event of Default or Default under this Lease or
Acceleration Event or Unmatured Acceleration Event (as such terms are defined in
the Credit Agreement) shall exist, and thereafter, no Event of Default or
Default under this Lease or Acceleration Event or Unmatured Acceleration Event
shall occur.
(c) Not later than sixty (60) days prior to the Financing Termination Date, the
Lessee shall deliver to the Lessor and the other Lessor Parties (x) an
Environmental Audit for the Property and (y) a current ALTA/ ACSM land title
survey (prepared in accordance with 1999 standards for an urban survey) with
respect to the Property. Each Environmental Audit described in this clause (c)
shall be prepared by an environmental consultant selected by the Agent in the
Agent's reasonable discretion and shall contain conclusions reasonably
satisfactory to the Agent as to the environmental status of the Property. If any
such Environmental Audit indicates any exceptions, the Lessee shall have also
delivered prior to the Financing Termination Date a Phase Two environmental
assessment by such environmental consultant and a written statement by such
environmental consultant indicating that all such exceptions have been remedied
in compliance with Applicable Law. Each ALTA Survey delivered pursuant to this
clause( c} shall be reasonably satisfactory to the Agent.
(d) The Lessee shall have completed all modifications, restoration and
rebuilding (collectively, "Modifications") of the Property required pursuant to
Sections 9 and 15 hereof (as the case may be) and shall have fulfilled all of
the conditions and requirements in connection therewith pursuant to such
Sections, in each case prior to the
19
date on which the Lessee delivers its Remarketing Notice (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 Financing Termination Date. All Modifications shall have been completed in
compliance with all Applicable Laws and Insurance Requirements. The Lessee shall
not be relieved pursuant to Section 28 from complying with any Applicable Law
relating to the Property that involved the extension of the ultimate imposition
of such Applicable Law beyond the Financing Termination Date. All Liens (other
than Permitted Liens) on the Property or any part thereof shall have been
removed.
(e) During the Marketing Period, the Lessee shall, as nonexclusive agent for the
Lessor, use best commercial efforts to obtain cash bids for the acquisition of
all of the Lessor's interest in and to the Property and will attempt in good
faith to obtain the highest purchase price for the Property and for not less
than the Fair Market Value of the Property (taking into account, and subject to,
the continuing leasehold interest of the Lessee under this Lease at fair market
value rental as determined under Section 12.I(a) above); Provided, however that
the Lessor or the Agent may, but shall be under no obligation to, market the
Property during the Marketing Period. In the event that the Lessee receives any
bid(s) for the Property, the Lessee shall, within five (5) Business Days after
its receipt thereof and at least twenty (20) Business Days prior to the
Financing Termination Date, certify to the Lessor and the Agent in writing the
amount and terms of such bid(s), and the name and address of the party or
parties submitting such bid. The Lessee shall bear its own expenses and pay, as
Additional Rent, the expenses of the Lessor, the Note Purchaser, the Agent and
the Liquidity Banks in connection with any such bidding and sale process
pursuant to this Section 12.1, as well as all costs and expenses incurred by any
Person (including a buyer or potential buyer) to cause the Property to be in the
condition required by this Section 12.1 and all costs of repairs, modifications
or improvements desired by any such buyer(s).
(f) The Lessee shall promptly upon request permit inspection of the Property and
any maintenance records relating to the Property by the Lessor and any potential
purchaser(s), and shall otherwise do all things reasonably necessary to sell and
deliver possession of the Property to any purchaser(s) thereof.
(g) The Lessee shall use all efforts reasonably requested by the Agent to
procure bids from one or more bona fide prospective purchasers and deliver the
same, if any, to the Lessor (with a copy to the Agent) not less than twenty (20)
days prior to the Financing Termination Date. No such purchaser shall be the
Lessee or any Subsidiary or Affiliate of the Lessee or any Person with whom the
Lessee has an understanding or arrangement regarding the future use of the
Property by the Lessee or such Subsidiary or Affiliate, but such purchaser may
be any Lessor Party or any Affiliate of the foregoing or any Person contacted by
the Lessor, the Agent, the Note Purchaser or any Liquidity Bank. Each written
offer must specify the Financing Termination Date as the effective date of the
sale unless the Lessor, the Agent, and the Note Purchaser shall otherwise agree,
each in its sole discretion.
20
(h) The Lessee shall submit all bids, if any, to the Lessor (with a copy to the
Agent) and any Lessor Party will have the right to submit anyone or more bids.
Any sale by the Lessee shall be for the highest cash bid submitted to the
Lessor. The determination of the highest bid shall be made by the Agent prior to
the end of the Marketing Period, but in no event shall the Agent have any
obligation to approve any bid unless such bid, together with the Maximum
Recourse Amount, if funded, equals or exceeds the sum of the Outstanding Lease
Balance and all accrued and unpaid Basic Rent and Additional Rent. All bids
shall be on an all-cash basis unless the Agent, the Lessor and the other Lessor
Parties shall otherwise agree.
(i) In connection with any such sale of the Lessor's interest in and to the
Property, the Lessee will provide to the purchaser all customary "seller's"
indemnities and representations and warranties regarding title (subject to the
Lessee's rights and obligations under this Lease), absence of Liens (other than
Permitted Liens) and the condition of the Property as reasonably required by the
Lessor, including, without limitation, an environmental indemnity, to the extent
the same are reasonably requested by the purchaser and factually accurate. The
Lessee shall have obtained, at no cost or expense to the Lessor, all required
governmental and regulatory consents and approvals and shall have made all
filings as required by Applicable Law in order to carry out and complete the
transfer of the Property. As to the Lessor, any such sale shall be made on an
"as is, with all faults" basis without representation or warranty by the Lessor
other than as to the absence of Lessor Liens. Any agreement as to such sale
shall be made subject to the Lessor's rights to receive the proceeds of such
sale in cash up to an amount equal to the Outstanding Lease Balance on the date
of such sale, plus all accrued and unpaid Basic Rent plus any Additional Rent
due and owing (including any amounts due under the Credit Agreement).
(j) The Lessee shall pay directly, and not from the sale proceeds, all
prorations, credits, costs and expenses of any such sale of the Property,
whether incurred by the Lessor or the Lessee, including the cost of all title
insurance, surveys, Environmental Audits and other environmental reports,
appraisals, transfer taxes, the reasonable attorneys' fees of the Lessor,
commissions, escrow fees, recording fees and all applicable documentary' and
other transfer taxes.
(k) On or prior to the Financing Termination Date, the Lessee shall, whether or
not any or all of the Property has been sold, pay or cause to be paid to the
Agent for repayment of the outstanding balance of the Notes and the Equity
investment in the manner and priority specified in Article XI of the Credit
Agreement (or in the case of Additional Rent, to the Person entitled thereto) on
a Basic Rent Payment Date an amount equal to the sum of (i) all unpaid Basic
Rent due on or prior to the Financing Termination Date, plus (ii) the gross sale
proceeds, if any, from the sale of the Property, as adjusted for any prorations
of property taxes and utility charges ("Gross Sales Proceeds"), less any
marketing, closing or other costs, including sales commissions, plus (iii) the
excess, if any, of the Outstanding Lease Balance over the Gross Sales Proceeds;
provided, that so long as no Default, Event of Default, Acceleration Event or
Unmatured Acceleration Event shall have occurred and be continuing, the amount
of such excess so payable shall not be greater than the Maximum Recourse Amount,
plus (y) without
21
duplication, all Additional Rent due and owing on the Financing Termination Date
after giving effect to such payment plus (z) all other amounts under the Credit
Documents which have accrued or will accrue prior to or as of the Financing
Termination Date.
(1) The Lessee shall pay to the Lessor on or prior to the Financing Termination
Date the amounts, if any, required to be paid pursuant to the Credit Agreement.
(m) The sale of the Property shall be consummated on the Financing Termination
Date and the Gross Sales Proceeds of the sale of the Property shall be paid
directly to the Lessor.
(n) To the extent that the Gross Sales Proceeds from such sale exceeds the
Outstanding Lease Balance, any Additional Rent then due and owing, and together
with any unpaid Basic Rent, then the excess arising hereunder (the "Excess
Remarketing Proceeds"), shall be paid to the Lessee on the Financing Termination
Date (provided that the Lessee shall have paid all amounts due pursuant to
clause (k) above). If the Property has not been sold on or prior to the
Financing Termination Date and any such sale is consummated at any time
thereafter, then, if after giving effect to such sale there would be any Excess
Remarketing Proceeds, the Lessor shall remit to the Lessee, promptly after the
consummation of such sale, an amount equal to the Excess Remarketing Proceeds
minus the Imputed Return, determined as of the date of such sale.
Section 12.2 Procedures. If No Sale During Marketing Period. If the Lessee
effectively elects the Remarketing Option and each of the conditions and
requirements set forth in Section 12.1 hereof shall have been satisfied, but,
nevertheless, the Lessee is unable to obtain bids for the Property satisfactory
to the Agent pursuant to Section 12.1(h) above and the Property remains unsold
at the end of the Marketing Period, then the Lessee shall, in addition to making
the payments required pursuant to Sections 12.1(k) and 12.1(1) above, surrender
the Property to the Lessor (or to any other Person specified by the Lessor). In
connection with such surrender of the Property, the Lessee shall, at its own
cost and expense, do each of the following or otherwise comply with this Section
12.2:
(a) the Lessee shall, on or prior to the Financing Termination Date, execute and
deliver to the Lessor (or to the Lessor's designee) (A) a certificate of the
Lessee containing representations and warranties regarding the absence of Liens
(other than Permitted Liens), (B) if applicable or required, a ▇▇▇▇ of sale with
respect to all equipment and other personal property comprising part of the
Property and (C) a deed or other conveyance instrument of the Lessee's entire
interest in the Property (which shall include an assignment of all of the
Lessee's right, title and interest in and to any insurance or loss proceeds with
respect to the Property and an assignment of all leases and subleases the
Property), in each case in recordable form and otherwise in conformity with
local custom and free and clear of any Liens attributable to the Lessee;
(b) the Lessee shall execute and deliver to the Lessor and the Lessor's title
insurance company an affidavit in customary form as to the absence of any Liens
22
(other than Permitted Liens), and shall execute and deliver to the Lessor a
statement of termination of this Lease;
(c) the Lessee shall, on the Financing Termination Date, (i) vacate the Property
and, at the request of the Lessor, cause any subtenant or other sublessee of the
Property to vacate the Property, and (ii) transfer possession of the Property to
the Lessor or any Person designated by the Lessor, in each case by surrendering
the same into the possession of the Lessor or such Person, as the case may be,
in the condition required by the Surrender Conditions and in compliance with
Applicable Law;
(d) on or prior to the Financing Termination Date, the Lessee shall deliver to
the Lessor or any Person designated by the Lessor copies of all books and
records in any Lessee Parties' possession or control regarding the maintenance
and ownership of the Property, a current copy of the plans and specifications
for the Property and an assignment of all assignable licenses necessary for the
operation and maintenance of the Property;
(e) the Lessee shall, for so long as the Lessor shall own the Property,
cooperate reasonably with the Lessor and/or any Person designated by the Lessor
to receive the Property, which cooperation shall include seeking and obtaining
all necessary Governmental Action. The obligations of the Lessee under this
paragraph shall survive the expiration or termination of this Lease; and
(f) in the event that the Lessor disposes of the Property after the Remarketing
Period, the Lessee shall be entitled to receive the surplus, if any of (i) the
sum of (A) all amounts paid to the Lessor pursuant to Sections 12.1(k) and
12.1(1) above plus (B) the net sales proceeds of the disposition of the
Property, over (ii) the sum of (A) the Outstanding Lease Balance plus (B) any
costs incurred by the Lessor in respect of the Property which have not been
otherwise paid by the Lessee or the Guarantor plus (C) any unpaid Basic Rent or
Additional Rent plus (D) the Imputed Return.
Section 12.3 Failure to Comply with Remarketing Conditions. If the Lessee
effectively elects the Remarketing Option but if one or more of the provisions
of the Surrender Conditions shall not be fulfilled as of the applicable date set
forth in such provision (time being of the essence), then the Lessor (without
prejudice by any delay in doing so) shall declare by written notice to the
Lessee the Remarketing Option to be null and void, in which event all of the
rights of the Lessee under Section 12.1 above shall immediately terminate and,
as a consequence of the Lessee's failure to comply with such Remarketing
Conditions, the Lessee shall be deemed to have exercised its Purchase Option
with respect to the Property and the Lessee shall purchase all of the Property
on the Financing Termination Date in accordance with the provisions of Section
13(b) below.
Section 12.4 Sales. Except as expressly set forth in Section 12.1 above, the
Lessee shall not have the right, power or authority to bind the Lessor in
connection with any proposed sale of any Property. The Lessor shall have the
right, but shall be under no
23
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.
Section 12.5 Certain Obligations Continue. During the Marketing Period, the
obligations of the Lessee to pay Basic Rent and Additional Rent with respect to
the Property (including any installment of Rent due on the Financing Termination
Date) shall continue undiminished.;
(r) Section 13 of the Lease Agreement is hereby amended and restated to be read
in its entirety as follows:
SECTION 13. LESSEE'S RIGHTS OF PURCHASE AND RENEWAL.
Section 13.1 Purchase Option. Subject to the conditions contained herein, the
Lessee shall have the option ("Purchase Option") to purchase from the Lessor all
of the Lessor's interest in and to the Property for the price ("Purchase Option
Price") set forth below.
(a) Purchase of Property. The Lessee shall have the irrevocable option to
acquire all, but not less than all, of the Lessor's interest in and to the
Property on (x) any Basic Rent Payment Date or (y) the expiration date of the
KeyBank Financing Term or of the non-cancelable term of any substitute or
replacement financing under any successor Credit Agreement, at a Purchase Option
Price equal to the Outstanding Lease Balance of this Lease plus all accrued and
unpaid Basic Rent and any Additional Rent due and owing under this Lease and any
other amounts due under the Credit Agreement and the other Credit Documents,
with the amount of such Outstanding Lease Balance, Basic Rent and Additional
Rent to be determined as of such date of purchase. The Lessee's exercise of its
option pursuant to this clause (a) shall be subject to the following conditions:
(i) if the purchase date is not the expiration date of the KeyBank Financing
Term or of the non-cancelable term of any substitute or replacement financing
under any successor Credit Agreement, then the Lessee shall have delivered a
Purchase Notice at least sixty (60) days prior to such purchase date; and
(ii) if the Purchase Option is exercised by the Lessee following the occurrence
of an Event of Default, (A) such exercise by the Lessee of the Purchase Option
shall not require the Lessor to cease exercising its rights and remedies under
this Lease unless and until the Lessee completes the purchase of the Property
pursuant to this Section 13.1, and (B) the Lessee completes the purchase of the
Property pursuant to this Section 13.1 prior to the earlier of the Financing
Termination Date and the date the Lessor completes any judicial or non-judicial
foreclosure sale of the Property or similar action terminating the Lessee's
possessory interest in the Property.
Any Purchase Notice delivered in connection with an acquisition of the Lessor's
fee interest in and to the Property pursuant to this clause (a) shall be
irrevocable upon delivery thereof. Provided that no Default, Event of Default,
Acceleration Event or Unmatured Acceleration Event shall have occurred and be
continuing, the Lessor shall
24
act in good faith to accommodate any refinancing activities undertaken by the
Lessee which are scheduled to take effect within ninety (90) days prior to the
expiration date of the KeyBank Financing Term.
(b) Procedures Upon Exercise of a Purchase Option. If the Lessee exercises the
Purchase Option pursuant to this Section 13.1 then, upon the receipt by the
Lessor of the Purchase Option Price and all other amounts due in connection
therewith and the satisfaction of any additional conditions specified in Section
13.1(a) hereof, the Lessor shall transfer to the Lessee or its designee all of
the Lessor's right, title and interest in and to the Property "AS IS" and in its
then present physical condition, such transfer to be effective as of the date
specified in the Purchase Notice. The Lessor shall execute and deliver to the
Lessee (or to the Lessee's designee), at the Lessee's cost and expense, a grant
deed and a ▇▇▇▇ of sale or other appropriate conveyance document with respect to
all buildings and containing representations and warranties of grantor regarding
the absence of Lessor Liens and a conveyance of the Lessor's entire interest in
the Property (which shall include an assignment of all of the Lessor's right,
title and interest in and to any net insurance proceeds with respect to the
Property not previously received by the Lessor and an assignment and assumption
of leases of such Property), in each case in recordable form and otherwise in
conformity with local custom and free and clear of Liens created by the Credit
Documents that are attributable to the Lessor Parties, and any Lessor Liens. The
Lessor shall, at the Lessee's sole cost and expense, execute and deliver to the
Lessee and the Lessee's title insurance company an affidavit as to the Lessor's
title to the Property and the absence of Lessor Liens attributable to the Lessor
on the Property. 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, including, without limitation, the obligation to pay to the Lessor
the Purchase Option Price on the date specified in the Purchase Notice.
(c) So long as no Event of Default has occurred and is continuing, the Lessee
shall have the right, upon ninety (90) days' written notice to the Lessor, to
renew the lease of any Parcel of Property or Unit of Equipment for a term (the
"Renewal Term") equal to the number of calendar months set forth opposite such
Parcel of Property or type of Equipment under the heading "Renewal Term" in
Exhibit A hereto, commencing on the first day of the calendar month following
the last day of the Lease Term thereof, at the fair market value rental.
(d) The fair market value of any Parcel of Property or Unit of Equipment for
purposes of paragraph (c) of this Section 13 shall be as agreed by the Lessor
and the Lessee or, if they are unable to agree, pursuant to the Appraisal
Procedure.;
(s) Subparagraph 14(a) of the Lease Agreement is hereby amended by:
25
(i) deleting the word "a" preceding the first three occurrences of the term
"Credit Agreement" and inserting in place thereof the word "the";
(ii) deleting the word "or" preceding clause (iii) and inserting in place
thereof a comma;
(iii) adding new clauses (iv).(v). and (vi), preceded by a comma, to be read in
their entirety as follows:
(iv) the Lessor cannot arrange for bank borrowings to extend the term of the
KeyBank Financing Term or to refinance the purchase of such Property or
Equipment upon terms reasonably acceptable to the Lessee; (v) an Event of Loss
occurs; or (vi) a Material Adverse Environmental Condition exists.;
(t) Subparagraph 14(b) of the Lease Agreement is hereby amended by:
(i) deleting the words "at its Adjusted Acquisition Cost" and inserting in place
thereof the words "equal to the Outstanding Lease Balance of this Lease";
(ii) deleting the words "Basic Rent payable, the Variable Component of Basic
Rent accrued" and inserting in place thereof the words "accrued and unpaid Basic
Rent and any Additional Rent due and owing under this Lease and any other
amounts due under the Credit Agreement and the other Credit Documents";
(iii) deleting the final occurrence of words "Additional Rent and" therein;
(u) Subparagraph 14(c) of the Lease Agreement is hereby amended by:
(i) deleting both occurrences of the term "Adjusted Acquisition Cost" and
inserting in place thereof the term "Outstanding Lease Balance";
(ii) deleting the words "Basic Rent payable, the Variable Component of Basic
Rent accrued" and inserting in place thereof the words "accrued and unpaid Basic
Rent and any Additional Rent due and owing under this Lease and any other
amounts due under the Credit Agreement and the other Credit Documents";
(iii) deleting the final occurrence of words "Additional Rent and" therein;
(v) Section 14 of the Lease Agreement is hereby amended by adding a new
subparagraph (d) to be read in its entirety as follows:
(d) Upon any such transfer of the Property or Equipment from the Lessor to the
Lessee pursuant to this Section 14, the memorandum of lease covering this Lease
shall terminate and concurrently with the Lessor's receipt of such payment, (i)
the Lessor shall execute and deliver to the Lessee (or to the Lessee's
designee), at the Lessee's cost and expense, a grant deed and a ▇▇▇▇ of sale or
other appropriate conveyance instrument with respect to the Property containing
representations and warranties of grantor regarding the absence of Lessor Liens
and an assignment of the Lessor's entire interest in
26
the Property (which shall include an assignment of all of the Lessor's right,
title and interest in and to any net insurance proceeds with respect to the
Property not previously received by the Lessor and an assignment and assumption
of leases of such Property), in each case in recordable form and otherwise in
conformity with local custom and free and clear of the lien of this Lease and
the memorandum of lease covering the Property and any Lessor Liens attributable
to the Lessor; (ii) the Property shall be conveyed to the Lessee "AS IS" and in
its then present physical condition; (iii) the Lessor shall, at the Lessee's
sole cost and expense and as a condition to the Lessee's obligation to acquire
the Lessor's interest in the Property, (x) execute and deliver to the Lessee a
statement of termination of this Lease and the memorandum of lease and releases
of any Liens on the Property created by the Credit Documents attributable to the
Lessor and (y) obtain terminations of any Liens on the Property which may be
held by the Agent or any other Lessor Party, including, in each case,
termination statements for any financing statements (to the extent relating to
the Property) which are then of record naming the Lessor, the Agent or any other
Lessor Party, as the case may be, as the secured party with respect to the
Property; and (iv) in the case of a termination pursuant to an Event of Loss,
the Lessor shall convey to the Lessee any net insurance proceeds therefor
received by the Lessor or assign the Lessor's right to receive all insurance
proceeds with respect to the casualty or Taking giving rise to the termination
of this Lease or at the request of the Lessee, such amounts shall be applied
against sums due hereunder.;
(w) Section 15 of the Lease Agreement is hereby amended by
(i) inserting directly following the Section title, so as to precede the
subparagraphs, the words "Except as otherwise provided in the Credit
Agreement:";
(ii) deleting both occurrences of the term "Adjusted Acquisition Cost" and
inserting in place thereof the term "Outstanding Lease Balance";
(iii) deleting the only occurrence of the words "the Variable Component of Basic
Rent" with the comma preceding such words, and inserting in place thereof the
word "and";
(x) Section 16 of the Lease Agreement is hereby amended by
(i) deleting the word "Unit" and inserting in place thereof the word "Parcel";
(ii) deleting the term "Adjusted Acquisition Cost" and inserting in place
thereof the term "Outstanding Lease Balance";
(y) Section 18 of the Lease Agreement is hereby amended and restated to be read
in its entirety as follows:
SECTION 18. EVENTS OF DEFAULT.
Any of the following events of default shall constitute an "Event of Default"
and shall give rise to the rights on the part of the Lessor described in Section
19 hereof:
27
(a) (i) Failure to comply with paragraph (b) of Section 14; (ii) failure of the
Lessee to pay amounts due to the Lessor at the time of any scheduled sale or
attempted sale of any Parcel of Property or Unit of Equipment hereunder
(including, without limitation, (as applicable) the Outstanding Lease Balance,
the Purchase Option Price, the Maximum Recourse Amount or the Gross Sales
Proceeds) for more than five (5) Business Days, (iii) failure of the Lessee to
pay Basic Rent for more than five (5) Business Days after such payment is due
pursuant to Section 7 hereof, or (iv) failure of the Lessee to pay Additional
Rent or any other amount payable by the Lessee hereunder or under any other
Credit Document to which it is a party for more than five (5) Business Days
after receipt of written demand thereof from the Lessor or any assignee thereof;
or
(b) Failure to maintain the insurance required by Section 10 hereof, or default
in the performance of the covenant contained in paragraph (1) of Section 10
hereof; provided, however, that the Lessee's failure to maintain the insurance
required under Section 10 hereof shall not become an Event of Default if the
Lessee corrects such failure within one (1) Business Day following such lapse or
failure; or
(c) (i) Default in the performance of any term, covenant or condition to be
performed by it under Section 12.1 or Section 12.2 hereof, or the Guarantor
shall fail to observe or perform any term, covenant or condition to be performed
by it under the Guaranty or Sections 8.1. 8.2 or 8.3 of the Credit Agreement; or
(ii) default in the performance of any other material obligation or covenant of
the Lessee or the Guarantor pursuant to this Lease, the Guaranty or any other
Credit Document to which it is a party other than those described in this
Section 18 and, in each such case, such failure shall have continued for thirty
(30) days or such shorter period as may be specified in such Credit Document
after the earlier of (x) the date on which any Responsible Officer of the Lessee
having direct responsibility for the Property of the Lessee or the Guarantor, as
applicable, shall have actual knowledge thereof and (y) delivery to the Lessee
or the Guarantor of written notice thereof from the Lessor; or
(d) The entry of a decree or order for relief in respect of the Lessee, the
Guarantor or any Material Subsidiary by a court having jurisdiction in the
premises or the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Lessee, the Guarantor
or any Material Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law and such
decree or order remains unstayed and in effect for forty-five (45) consecutive
days, or the commencement against the Lessee, the Guarantor or any Material
Subsidiary of an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, and the continuance of any such case unstayed
and in effect for a period of forty-five (45) consecutive days; or
(e) The suspension or discontinuance of the Lessee's, the Guarantor's or any
Material Subsidiary's business operations, the Lessee's, the Guarantor's or any
Material Subsidiary's insolvency (however evidenced) or the Lessee's, the
Guarantor's or
28
any Material Subsidiary's admission of insolvency or bankruptcy, or the
commencement by the Lessee, the Guarantor or any Material Subsidiary of a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or the consent by the Lessee, the Guarantor or any Material
Subsidiary to the appointment of or possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other taking, similar official)
of the Lessee, the Guarantor, any Material Subsidiary or of any substantial part
of the Lessee's, the Guarantor's or any Material Subsidiary's property, or the
making by the Lessee, the Guarantor or any Material Subsidiary of an assignment
for the benefit of creditors, or the failure of the Lessee, the Guarantor or any
Material Subsidiary generally to pay its debts as such debts become due, or the
taking of corporate action by the Lessee, the Guarantor or any Material
Subsidiary in furtherance of any such action; or
(f) A default or event of default, the effect of which is to permit the holder
or holders of any Indebtedness, or a trustee or agent on behalf of such holder
or holders, to cause such Indebtedness to become due prior to its stated
maturity shall occur under the provisions of any agreement pursuant to which
such Indebtedness was created or instrument evidencing such Indebtedness in
excess of $10,000,000 in the aggregate of the Lessee, the Guarantor, any of the
Guarantor's other Subsidiaries or any obligation of the Lessee, the Guarantor or
any of the Guarantor's other Subsidiaries for the payment of such Indebtedness
shall become or be declared to be due and payable prior to its stated maturity,
or shall not be paid when due; or
(g) Any representation or warranty made by the Lessee in this Lease or any other
Credit Document to which it IS a party proves to be false or inaccurate in any
material respect on or as of the date made or deemed made, except for such
inaccuracies or misstatements which are not material, and if capable of remedy,
shall remain unremedied for thirty (30) days after the earlier of (i) the date
on which any Responsible Officer of the Lessee having direct responsibility for
the Property shall have actual knowledge thereof, and (ii) delivery to the
Lessee of written notice thereof from the Lessor or any permitted assignee
thereof; or
(h) Final non-appealable judgment or judgments for the payment of money in
excess of $10,000,000 in the aggregate shall be rendered against the Lessee, or
in excess of $10,000,000 in the aggregate shall be rendered against the
Guarantor or any of the Guarantor's Subsidiaries (including the Lessee) by any
court of competent jurisdiction and the same shall remain undischarged for a
period of sixty (60) days during which execution of such judgment or judgments
shall not be effectively stayed; or
(i) Any representation or warranty made by the Guarantor in the Guaranty or any
other Credit Document proves to be false or inaccurate in any material respect
or the Guarantor shall fail to perform or observe any agreement or covenant
contained in the Guaranty or any other Credit Document, except for such
inaccuracies or misstatements which are not material, and if capable of remedy,
shall remain unremedied for thirty (30) days after the earlier of (x) the date
on which any Responsible Officer of the Guarantor shall have actual knowledge
thereof, and (y) delivery to the Guarantor of written notice thereof from the
Lessor or any permitted assignee thereof; or
29
(j) The Guaranty ceases to be in full force and effect or Guarantor denies or
disaffirms its obligations under the Guaranty; or
(k) The Conduit Agent shall have delivered a Notice of Default to the Lessee; or
(1) Any provision under any Credit Document with respect to the Property or the
payment obligations of the Lessee or the Guarantor or any Lien granted under any
Credit Document shall, in whole or in part, other than solely as the result of
an intentional act of a Lessor Party, terminate, cease to be effective against,
or cease to be the legally valid, binding and enforceable obligation of, the
Lessee or the Guarantor, as the case may be, the effect of which, in any such
case, shall deprive any party to such Credit Document of any material benefits
and rights intended to be created thereby, or except as permitted under any
Credit Document, any Lien securing any Obligation shall, in whole or in part,
cease to be a perfected first priority Lien; or
(m) The Lessee or the Guarantor shall directly or indirectly contest in any
manner the effectiveness, validity, binding nature or enforceability of any
Credit Document or any Lien granted under any Credit Document; or
(n) With respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall
have occurred and the Lessor Parties shall have determined in their reasonable
discretion that such event reasonably could be expected to result in liability
of the Guarantor or any of its Subsidiaries to the PBGC or such Guaranteed
Pension Plan in an aggregate amount exceeding $500,000 and such event in the
circumstances occurring reasonably could constitute grounds for the termination
of such Guaranteed Pension Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan; or a trustee shall have been appointed by the United
States District Court to administer such Guaranteed Pension Plan; or the PBGC
shall have instituted proceedings to terminate such Guaranteed Pension Plan; or
(o) With respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall
have occurred and the Lessor Parties shall have determined in their reasonable
discretion that such event reasonably could be expected to result in liability
of the Guarantor or any of its Subsidiaries to the PBGC or such Guaranteed
Pension Plan in an aggregate amount exceeding $500,000 and such event in the
circumstances occurring reasonably could constitute grounds for the termination
of such Guaranteed Pension Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan; or a trustee shall have been appointed by the United
States District Court to administer such Guaranteed Pension Plan; or the PBGC
shall have instituted proceedings to terminate such Guaranteed Pension Plan.
(z) Section 19 of the Lease Agreement is hereby amended by
30
(i) adding immediately after the section title, so as to precede the sentence
beginning with the words "Upon the occurrence", two sentences which are to be
read in their entirety as follows:
Upon the occurrence and continuance of any Event of Default of the type
described in clause (d) or (e) of Section 18, the Lessee shall immediately
become obligated to pay the then outstanding amount of the Outstanding Lease
Balance together with all accrued and unpaid Basic Rent and Additional Rent,
without presentment, demand, protest, notice of acceleration or other notice of
any kind, all of which are hereby expressly waived, anything in this Lease or
any other Credit Document to the contrary notwithstanding. Upon written notice
by the Lessor to the Lessee after the occurrence and continuance of any other
Event of Default, the Lessee shall immediately become obligated to pay the then
outstanding amount of the Outstanding Lease Balance together with all accrued
and unpaid Basic Rent and Additional Rent.;
(ii) amending clause (c) by inserting "(i)" before the word "sell";
(iii) amending clause (c) by adding a new subclause (ii) to be read in its
entirety as follows:
and (ii) if the Lessor shall so elect, demand that the Lessee pay to the Lessor,
and the Lessee shall pay to the Lessor, on the date of such sale, as liquidated
damages for loss of a bargain and not as a penalty (the parties agreeing that
the Lessor's actual damages would be difficult to predict, but the
aforementioned liquidated damages represent a reasonable approximation of such
amount) (in lieu of Basic Rent due for periods commencing after the Basic Rent
Payment Date coinciding with such date of sale (or, if the sale date is not a
Basic Rent Payment Date, the Basic Rent Payment Date next preceding the date of
such sale>>, an amount equal to (A) the excess, if any, of (1) the Outstanding
Lease Balance calculated as of such Basic Rent Payment Date (plus all Basic Rent
and Additional Rent due and unpaid to and including such Basic Rent Payment
Date), over (2) the net proceeds of such sale (that is, after deducting all
costs and expenses incurred by the Lessor or 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 costs); plus (B) interest at the
Overdue Rate on the foregoing amount from such Basic Rent Payment Date until the
date of payment;
(iv) amending clause (d) by deleting the final word "and" with the preceding
semicolon and inserting in place thereof a period and new language to be read in
its entirety as follows:
If the Lessee has breached this Lease and abandoned the Property, this Lease
shall continue in effect for so long as the Lessor does not terminate the
Lessee's right to possession, and the Lessor may enforce all of the Lessor's
rights and remedies under this Lease, including the right to recover the Basic
Rent and Additional
31
Rent hereunder as it becomes due under this Lease. The following do not
constitute a termination of the Lessee's right to possession:
(i) Acts of maintenance or preservation or efforts to relet the Property or any
portion thereof;
(ii) The appointment of a receiver upon the initiative of the Lessor to protect
the Lessor's interest under this Lease; or
(iii) Reasonable withholding of consent to an assignment or subletting, or
terminating a subletting or assignment by the Lessee;
(v) amending clause (e) by deleting the final period and inserting in place
thereof a semicolon;
(vi) amending clause (f) by adding new language to the end thereof to be read in
its entirety as follows:
During the continuance of an Event of Default, the Lessor may enter the Property
in accordance with applicable law without terminating this Lease and sublet all
or any part of the Property for the Lessee's account to any Person, for such
term (which may be a period beyond the remaining Lease Term), at such rents and
on such other terms and conditions as are commercially reasonable. If the rents
received by the Lessor from such subletting, after application as provided
above, are insufficient in any period to pay Basic Rent and Additional Rent due
and payable hereunder for such period, the Lessee shall pay such deficiency to
the Lessor upon demand. Notwithstanding any such subletting for the Lessee's
account without termination, the Lessor may at any time thereafter, by written
notice to the Lessee, elect to terminate this Lease by virtue of a previous
Event of Default;
(vii) adding new clauses (g). (h). and (i) to be read in their entirety as
follows:
(g) Demand in writing that the Lessee surrender the Property promptly to the
Lessor in compliance with the Surrender Conditions and in the manner and
condition required by, and otherwise in accordance with all of the provisions
of, Section 12 hereof as if the Property was being surrendered after the
exercise of a Remarketing Option, 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 without prejudice to any other remedy which the Lessor
may have for possession of the Property, and to the extent and in the manner
permitted by Applicable Law, enter upon the land and take immediate possession
of (to the exclusion of the Lessee) the Property therein or any part thereof and
expel or remove the Lessee, 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 other damages of the Lessor, the Lessee shall
be responsible for all
32
costs and expenses incurred by the Lessor in connection with any reletting of
all or any of the Property (including reasonable brokers' fees) and all costs of
any repairs or alterations made by the Lessor;
(h) Demand, by written notice to the Lessee, that the Lessee purchase, on the
date specified in such notice such date in all cases to be at least twenty (20)
days from the date of notice, the Property for the Outstanding Lease Balance
plus all other amounts then due and owing hereunder in accordance with the
provisions of Section 13 hereof; or
(i) Exercise its remedies under any other Credit Document.;
(viii) deleting the three occurrences of the term "Adjusted Acquisition Cost"
and inserting in place thereof the term "Outstanding Lease Balance";
(aa) Section 20 of the Lease Agreement is hereby amended by
(i) deleting the two occurrences of the term "Adjusted Acquisition Cost" and
inserting in place thereof the term "Outstanding Lease Balance";
(ii) deleting the words "and Variable Component of Basic Rent" with the
preceding comma and inserting in place thereof the word "and";
(bb) Section 23 of the Lease Agreement is hereby amended by amending and
restating the language following the phrase "The initial addresses of the
parties hereto are as follows:" to be read in its entirety as follows:
If to the Lessor:
Flatirons Funding, Limited Partnership
c/o KeyCorp. Leasing ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy of all notices under this Section 23 to be simultaneously given,
delivered or served to the following address:
KeyBank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
33
If to the Lessee:
Electronic Arts Redwood, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy of all notices under this Section 23 to be simultaneously given,
delivered or served to the following address:
Electronic Arts, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy of all notices under this Section 23 to any Assignee at such address
as such Assignee may specify by written notice to the Lessor and the Lessee.;
(cc) Section 30 of the Lease Agreement is hereby amended by
(i) amending subparagraph 30(b) by inserting after the first occurrence of the
word "herein" the words "including, but not limited to, the Credit Documents,"
preceded by a comma;
(ii) amending and restating the bold capitalized language in subparagraph 30(d)
to be read in its entirety as follows:
THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF CALIFORNIA. THE
LESSEE AND THE LESSOR AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY THE LA W OF
THE ST ATE OF CALIFORNIA, THIS LEASE, AND THE RIGHTS AND DUTIES OF THE LESSEE
AND THE LESSOR HEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA IN ALL RESPECTS, INCLUDING
WITHOUT LIMITATION IN RESPECT OF ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THE LESSEE HEREBY IRREVOCABLY SUBMITS, FOR ITSELF AND ITS PROPERTY,
TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF CALIFORNIA AND THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN THE
COUNTY OF SAN FRANCISCO IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND
RELATED TO OR IN CONNECTION WITH THIS LEASE OR THE
34
TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE LESSEE HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE
OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS LEASE OR ANY DOCUMENT OR ANY
INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED
IN OR BY SUCH COURT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE LESSEE
AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF
ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE
CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE LESSEE AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE
ADDRESS FOR NOTICES SET FORTH IN THIS LEASE OR ANY METHOD AUTHORIZED BY THE LAWS
OF CALIFORNIA. THE LESSOR AND THE LESSEE EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM RELATED TO THIS LEASE OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE LESSOR AND THE LESSEE ACKNOWLEDGE THAT THE
PROVISIONS OF THIS PARAGRAPH (D) OF SECTION 30 HAVE BEEN BARGAINED FOR AND THAT
THEY HAVE BEEN REPRESENTED BY COUNSEL IN CONNECTION THEREWITH.;
(iii) deleting the language of subparagraphs 30(g) and 30(h) and inserting in
place thereof the words "Intentionally omitted." surrounded by brackets;
(iv) amending subparagraph 30(i} by deleting the words "the Agreement for Lease
and this Lease" and inserting in place thereof the words "this Lease and of the
other Credit Documents";
(dd) Section 31 of the Lease Agreement is hereby amended and restated to be read
in its entirety as follows:
SECTION 31. NO RECOURSE.
The parties hereto agree that neither the Lessor nor any of its general or
limited partners shall have any 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 Credit Documents or arising in any way from the
transactions contemplated hereby or thereby; provided, however, that the Lessor
shall be liable for its own willful misconduct or gross negligence (or
negligence in the handling of funds), for liabilities that may result from the
incorrectness of any representation or warranty
35
expressly made by it in Section 7.4 of the Credit Agreement or from the failure
of the Lessor to perform its covenants and agreements set forth in the Credit
Agreement, or for any tax based on or measured by any fees, commission or
compensation received by it for acting as a Lessor as contemplated by the Credit
Documents. It is understood and agreed that, except as provided in the preceding
proviso, neither the Lessor nor any of its general or limited partners shall
have any personal liability under any of the Credit Documents as a result of
acting pursuant to and consistent with any of the Credit Documents; all
obligations of the Lessor to the Lessee are solely nonrecourse obligations
except, as to the Lessor, to the extent that the Lessor has received payment
from others; all such personal liability of the Lessor and of any of its general
or limited partners is expressly waived and released as a condition of, and as
consideration for, the execution and delivery of the Credit Documents by the
Lessor.
(ee) A new Section 33 of the Lease Agreement is hereby added to be read in its
entirety as follows:
SECTION 33. ENVIRONMENTAL MATTERS
(a) Remediation of Environmental Claims. The Lessee shall, at the Lessee's sole
cost and expense, promptly and diligently commence any Remedial Action necessary
to remove, clean up or remediate all Adverse Environmental Conditions and all
Environmental Claims relating to the Property in accordance with Legal
Requirements.
(b) Notices and Reports Concerning Environmental Matters. The Lessee shall
promptly, but in any event within fifteen (15) Business Days from the date the
Lessee has actual knowledge thereof, provide to the Agent on behalf of the
Lessor Parties written notice of any pending Adverse Environmental Condition or
Environmental Claim relating to the Property for which the Remediation Costs
could reasonably be expected to exceed, or where the aggregate costs of all such
matters could reasonably be expected to exceed, $2,000,000, or of any Release
(in quantities or in a manner that may violate applicable Environmental Laws)
on, at, under or from the Property. All such notices shall describe in
reasonable detail the Adverse Environmental Condition, Environmental Claim, or
Release and the nature of the claim, action or proceeding and the Lessee's
proposed response thereto. In addition, the Lessee shall provide to Agent on
behalf of the Lessor Parties within ten (10) Business Days of receipt, copies of
all written communications with any Governmental Authority relating to any
Adverse Environmental Condition or Environmental Claim in connection with the
Property with respect to which the claims described in the first sentence of
this Section 33(b) are pending. The Lessee shall also promptly provide such
detailed reports of any Adverse Environmental Condition or Environmental Claims
relating to the Property as may reasonably be requested by the Lessor Parties.
In the event that the Lessor receives written notice of any Adverse
Environmental Condition, Environmental Claim or any Release on or in connection
with the Property, the Lessor shall promptly give notice thereof to the Lessee
and the other Lessor Parties.
Upon completion of any required Remedial Action of such Environmental Claims by
the Lessee, the Lessee shall provide to the Agent on behalf of the Lessor
36
Parties (i) a report by a consultant reasonably acceptable to such parties
describing such Adverse Environmental Conditions or Environmental Claims and the
actions taken by the Lessee (or its agents) in response to such Adverse
Environmental Conditions or Environmental Claims, (ii) a statement by the
consultant that such Adverse Environmental Conditions or Environmental Claims
have been remedied in compliance with all applicable Environmental Law, and
(iii) a "No Further Action" letter or similar documentation by an applicable
Governmental Authority, if applicable and available in a reasonable time and at
reasonable expense. The Lessee shall provide the Agent on behalf of the Lessor
Parties with copies of each such document promptly following its preparation or
receipt by the Lessee. Each Environmental Claim and Adverse Environmental
Condition relating to the Property shall, regardless of the cost of its
remediation, be remedied in accordance with Legal Requirements hereof prior to
the Financing Termination Date unless the Property shall have been purchased by
the Lessee (or its designee) in accordance with Sections 13 or 14 hereof.
(c) Upon the request of the Lessor, at any time and from time to time after the
occurrence of an Event of Default hereof or at such other time as the Lessor has
reasonable grounds to believe that Hazardous Substances have been Released,
stored (in quantities or a manner that may violate Environmental Laws) or
disposed of on or around the Property or that the Property may be in violation
of the Environmental Laws, the Lessee shall provide, at the Lessee's sole
expense, an inspection or audit of the Property prepared by a hydro geologist or
environmental engineer or other appropriate consultant reasonably approved by
the Agent on behalf of the Lessor indicating the presence or absence of
Hazardous Substances on the Property. If the Lessee fails to provide such
inspection or audit within thirty (30) days after such request, the Lessor may
order the same, and the Lessee hereby grants to the Lessor access to the
Property and an irrevocable license to undertake such inspection or audit. The
cost of such inspection or audit shall be paid by the Lessee.
(d) No Reduction of Other Obligations. Nothing in this Section 33 shall reduce
or limit the Lessee's other obligations under this Lease or in the other Credit
Documents.
(ff) A new Section 34 of the Lease Agreement is hereby added to be read in its
entirety as follows:
SECTION 34. RIGHTS OF THE LESSEE.
Subject to the terms of the other Credit Documents to which the Lessee is a
party, during the Lease Term at any time when no Event of Default shall exist,
the Lessee shall be entitled to receive, enjoy, distribute and otherwise dispose
of the income, royalties, payments, recoveries and other proceeds with respect
to (or included as a part of) the Property without the consent or joinder of the
Lessor.
(gg) A new Section 35 of the Lease Agreement is hereby added to be read in its
entirety as follows:
37
SECTION 35. EXCESS PROCEEDS
Notwithstanding anything to the contrary contained in this Lease, after the
occurrence and during the continuance of an Event of Loss, a Default, Event of
Default, Acceleration Event or Unmatured Acceleration Event other than an Event
of Default pursuant to clause (a), (d) or (e) of Section 18 of this Lease, the
Lessee shall have the right to pay an amount equal to the Outstanding Lease
Balance of this Lease plus all accrued and unpaid Basic Rent plus any
Supplemental Rent due and owing hereunder and under the Credit Agreement or any
other Credit Document, with the amount of such Outstanding Lease Balance, Basic
Rent and Supplemental Rent to be determined as of such date of payment, and upon
such payment, the Property shall be reconveyed to the Lessee or its designee in
accordance with the provisions of Section 13 of this Lease; provided, however,
that such right of the Lessee shall terminate on the earliest of (i) the date
occurring thirty (30) days after notice to the Lessee from the Lessor or any
assignee thereof of the applicable Event of Default, (ii) the date occurring
thirty (30) days after the Lessor has commenced its exercise of remedies under
Section 18 of this Lease and (iii) the occurrence of any Event of Default under
clause (a), (d) or (e) of Section 18 hereof.
3. Property Leased. The Lessor and the Lessee each acknowledge and agree that
the only property currently leased under the Lease Agreement is the property
described in AFL Unit Leasing Record dated December 1, 1998, consisting of an
eight-story office building, a six- story office building, a four-story parking
structure, and a two-story conference center, situated on the real property
commonly known as Lot 3 and 4 and Parcels A and C, as shown on the map entitled
"ELECTRONICS ARTS" filed March 27, 1997, Book 127 of Maps, pages 86 through 89,
San Mateo County Records, together with appurtenant easements, as is more
specifically described on Exhibit A attached hereto.
4. Initial Term: Extended Term. The Lessor and the Lessee each acknowledges and
agrees that the Initial Term commenced on December 1, 1998, and expires on
November 30,2001, and that the Extended Term commences on December 1, 2001 and
shall expire on November 30, 2038.
5. Effective Date. The amendments effected by Paragraph 2 above shall become
effective on July 16, 2001 (the "Effective Date"), subject to receipt by the
Lessor, on or prior to the Effective Date of the following, each in form and
substance satisfactory to the Lessor and the Lessor's counsel:
(a) This Amendment duly executed by the Lessor and the Lessee;
(b) Each of the conditions set forth in the Credit Agreement shall have been
satisfied; and
(c) Such other evidence as the Lessor may reasonably request to establish the
accuracy and completeness of the representations and warranties and the
compliance with the terms and conditions contained in this Amendment and the
other Credit Documents.
38
6. Effect of this Amendment. On and after the Effective Date, each reference in
the Lease Agreement and the other Credit Documents shall mean the Lease
Agreement as amended hereby. Except as specifically amended above, (a) the Lease
Agreement shall remain in full force and effect and is hereby ratified and
affirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Lessor, nor constitute a waiver of any provision
of the Lease Agreement, Credit Agreement or any other Credit Document.
7. Conflicts with Credit Documents in General. The parties hereto acknowledge
and agree that in the event there is deemed to be any conflict or ambiguity
between the terms and provisions of the Lease Agreement and the terms and
provisions of the other Credit Documents, the terms and provisions of the other
Credit Documents shall control.
8.Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number of identical
counterparts, any set of which signed by all the parties hereto shall be deemed
to constitute a complete, executed original for all purposes.
(b) Headings: Headings in this Amendment are for convenience of reference only
and are not part of the substance hereof.
(c) Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of California without reference to
conflicts of law rules.
[The signature page follows.]
39
IN WITNESS WHEREOF, Lessee and Lessor have caused this Amendment to be executed
as of the day and year first above written.
LESSEE:
ELECTRONIC ARTS REDWOOD, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Financial Officer
LESSOR:
FLA TIRONS FUNDING, LIMITED PARTNERSHIP, a Delaware limited partnership
By: SELCO Redwood, LLC,
a Delaware limited liability company, its general partner
By:
SELCO Service Corporation, an Ohio corporation doing business in California as
Ohio SELCO Service Corporation, its sole member
By:
___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
40
IN WITNESS WHEREOF, Lessee and Lessor have caused this Amendment to be executed
as of the day and year first above written.
LESSEE:
ELECTRONIC ARTS REDWOOD, INC.
By:__________________________________
Name:
Title:
LESSOR:
FLATIRONS FUNDING, LIMITED
PARTNERSHIP. a Delaware limited partnership
By: SELCO Redwood, LLC,
a Delaware limited liability company, its general partner
By: SELCO Service Corporation, an Ohio corporation doing business in California
as Ohio SELCO Service Corporation, its sole member
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
40
-Amendment No.2 to Lease Agreement-
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Amendment No.2 to Lease
Agreement is hereby acknowledged as of the date hereof.
KEYBANK NATIONAL ASSOCIATION, as the Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
41
Exhibit A
The land is situated in the State of California, County of San Mateo, City of
Redwood City and is described as follows:
PARCEL I:
Lots 3 and 4 and Parcels A and C as shown on the map entitled "ELECTRONICS ARTS"
filed March 27,1997, Book 127 of Maps, pages 86 through 89, San Mateo County
Records.
PARCEL II:
Non-exclusive easements appurtenant to Parcel I above for the purposes as
defined in that certain Easement and Covenants Agreement dated March 27, 1997,
by and between Shores Business Center Association and Flatirons Funding, Limited
Partnership, recorded March 27, 1997, Document ▇▇. ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Records, as amended by First Amendment to Easement and Covenants Agreement dated
August 31, 1998, recorded September 2, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Records, and by Second Amendment to Easements and Covenants Agreement
dated June 13,2000, and recorded July 10, 2000, Document No. 2000- 084044
("Second Amendment") over under and across those areas described as "Utility
Easement No.3-Lot D", "Covered Walkway Easement No.4-Lot D", "Utility Easement
No.5-Lot D", "Utility and Covered Walkway Easement No.6-Lot E" and "Utility
Easement No.7-Lot E" in Exhibit D of the Second Amendment.
PARCEL III:
Easements appurtenant to Parcels I and II above for the purposes set forth in
Sections 11.4(a), 11.4( c), 11.5( a) and 11.6 in the Declaration of Covenants,
Conditions, Easements and Restrictions, Electronic Arts Business Park recorded
September 18, 1998, Document No. 98150182, San Mateo County Records.
▇.▇.▇▇.: ▇▇▇-▇▇▇-▇▇▇ JPN 127 086 000 0003 T
▇▇▇-▇▇▇-▇▇▇ 127 086 000 0004 T
▇▇▇-▇▇▇-▇▇▇ 127 086 000 0007 T
▇▇▇-▇▇▇-▇▇▇ 127 086 000 0008 T
42