EXHIBIT 10.1
LINE OF CREDIT INSTRUMENT
LEASE AGREEMENT,
CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS LEASE AGREEMENT, CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT
OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Agreement"
herein), dated as of December 5, 1997 is entered into by and among:
(1) ETEC SYSTEMS, INC., a Nevada corporation ("Lessee");
(2) LEASE PLAN NORTH AMERICA, INC., an Illinois
corporation ("Lessor"); and
(3) FIRST AMERICAN TITLE INSURANCE COMPANY OF OREGON, as
trustee under the deed of trust contained herein (in such
capacity, "Trustee").
RECITALS
A. Lessee has requested Lessor and the financial institutions
which are "Participants" under the Participation Agreement referred to
in Recital B below (such financial institutions to be referred to
collectively as the "Participants") to provide to Lessee a lease
facility pursuant to which:
(1) Lessor would (a) lease from Lessee certain land owned
by Lessee, (b) sublease to Lessee such land and lease to Lessee
certain improvements to be constructed on such land, (c) appoint
Lessee as Lessor's agent to make such improvements (which
improvements will be owned by Lessor), (d) make advances to
finance such improvements and to pay certain related expenses and
(e) grant to Lessee the right to purchase such improvements; and
(2) The Participants would participate in such lease
facility by (a) funding the advances to be made by Lessor and (b)
acquiring participation interests in the rental and certain other
payments to be made by Lessee.
B. Pursuant to a Participation Agreement dated of even date
herewith (the "Participation Agreement") among Lessee, Lessor, the
Participants and ABN AMRO Bank N.V., as agent for the Participants (in
such capacity, "Agent"), Lessor and the Participants have agreed to
provide such lease facility upon the terms and subject to the conditions
set forth therein, including without limitation the execution and
delivery of this Agreement setting forth the terms of the lease by
Lessor to Lessee of the property.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and the
mutual covenants herein contained, the parties hereto hereby agree as
follows:
SECTION 1. INTERPRETATION.
1.01. Definitions. Unless otherwise indicated in this Agreement
or any other Operative Document, each term set forth in Schedule 1.01 to
the Participation Agreement, when used in this Agreement or any other
Operative Document, shall have the respective meaning given to that term
in such Schedule 1.01 or in the provision of this Agreement or other
document, instrument or agreement referenced in such Schedule 1.01.
1.02. Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set
forth in Schedule 1.02 to the Participation Agreement shall apply to
this Agreement and the other Operative Documents.
SECTION 2. BASIC PROVISIONS.
2.01. Lease of the Property. Subject to the acquisition thereof
by Lessor pursuant to the Participation Agreement and the Ground Lease
either as of the date hereof or during the term hereof, Lessor agrees to
lease to Lessee and Lessee agrees to lease from Lessor the following
property (the "Property") to the extent of Lessor's estate, right, title
and interest therein, thereto or thereunder:
(a) All lots, pieces, tracts and parcels of land described
in Exhibit A (the "Land");
(b) All Improvements located on the Land;
(c) All Appurtenant Rights belonging, relating or
pertaining to any of the Land or Improvements;
(d) All Related Goods (including those described in
Exhibit B and in each Exhibit B Supplement), Related Permits and
Related Agreements related to any of the foregoing Land,
Improvements or Appurtenant Rights; and
(e) All accessions and accretions to and replacements and
substitutions for the foregoing.
(Lessee acknowledges that Lessor's only estate, right, title and
interest in the Land is through the Ground Lease and is a leasehold
interest only.)
2.02. Term.
(a) Original Term. The original term of this Agreement
shall commence on the Closing Date (the "Commencement Date") and
shall end on the first Business Day of November, 2004 (such date
as it may be extended pursuant to Subparagraph 2.02(b) to be
referred to as the "Scheduled Expiration Date"). (For purposes of
Oregon law, the Scheduled Expiration Date shall be the maturity
date if this Agreement is construed as the parties intend.)
(b) Extensions. Lessee may request Lessor to extend the
Scheduled Expiration Date in effect for three (3) additional
periods of one (1) year each, as provided in Subparagraph 2.09(b)
of the Participation Agreement. If Lessor and each Participant
consents to any such a request in accordance with such provision,
the current Scheduled Expiration Date shall be deemed extended by
one (1) year. Lessee acknowledges that neither Lessor nor any
Participant has any obligation or commitment (either express or
implied) to extend, or consent to the extension of, the Scheduled
Expiration Date at any time.
2.03. Rent.
(a) Base Rent.
(i) Lessee shall pay as base rent hereunder ("Base
Rent") for each Rental Period an amount equal to the product
of (A) the Rental Rate for such Rental Period, times (B) the
Outstanding Lease Amount on the first day of such Rental
Period, times (C) a fraction, the numerator of which is the
number of days in such Rental Period and the denominator of
which is 360. If the Rental Rate shall change during any
Rental Period, the Rental Rate for such Rental Period shall
be the weighted average of the Rental Rates in effect from
time to time during such Rental Period.
(ii) The Term shall consist of the following rental
periods (individually, a "Rental Period"):
(A) The period which begins on the
Commencement Date and ends on the first Business Day
in the first calendar month immediately following the
month in which the Commencement Date occurs;
(B) Each successive period thereafter which
begins on the last day of the immediately preceding
Rental Period and ends one (1) month thereafter on the
first Business Day of a calendar month through and
including the Commitment Termination Date; and
(C) Each successive period thereafter which
begins on the last day of the immediately preceding
Rental Period and ends one (1), two (2), three (3) or
six (6) months thereafter, as determined in accordance
with this clause (ii), on the first Business Day of a
calendar month through and including the Scheduled
Expiration Date.
Lessee may select a Rental Period of one (1), two (2), three
(3) or six (6) months for the Rental Period which begins on
the Commitment Termination Date or for any Rental Period
thereafter by delivering to Lessor, at least three (3)
Business Days prior to the first day of such Rental Period,
a written notice of such selection (a "Notice of Rental
Period Selection"); provided, however, that (1) each Rental
Period shall begin and end on the first Business Day of a
calendar month, (2) no Rental Period shall end after the
Scheduled Expiration Date, (3) no Rental Period shall be
longer than one (1) month if a Default has occurred and is
continuing on the date three (3) Business Days prior to the
first day of such Rental Period and (4) each Rental Period
for which Lessee fails to make a selection in accordance
with this clause (ii) shall be one (1) month. Each Notice
of Rental Period Selection shall be delivered by first-class
mail or facsimile as required by Subparagraph 2.02(a) and
Paragraph 7.01 of the Participation Agreement; provided,
however, that Lessee shall promptly deliver the original of
any Notice of Rental Period Selection initially delivered by
facsimile.
(iii) The rental rate for each Rental Period ("Rental
Rate") shall be the LIBOR Rental Rate for such Rental
Period, except as follows:
(A) The Rental Rate for the Rental Period that
begins on the Closing Date and ends on January 1, 1998
shall be the Alternate Rental Rate; or
(B) If any other Rental Period is less than
seven (7) days, the Rental Rate for such Rental Period
shall be the Alternate Rental Rate; or
(C) If the LIBOR Rental Rate is unavailable
for any Rental Period pursuant to Subparagraph 2.12(a)
or Subparagraph 2.12(b) of the Participation
Agreement, the Rental Rate for such Rental Period
shall be the Alternate Rental Rate.
(iv) Lessee shall pay Base Rent in arrears (A) on the
last day of each Rental Period and, in the case of any
Rental Period which exceeds three (3) months, each day
occurring every three (3) months after the first day of such
Rental Period (individually, a "Scheduled Rent Payment
Date") and (B) on the Expiration Date.
(b) Supplemental Rent. Lessee shall pay as supplemental
rent hereunder ("Supplemental Rent") all amounts (other than Base
Rent, the purchase price payable by Lessee for any purchase of the
Property by Lessee pursuant to the Purchase Agreement and the
Residual Value Guaranty Amount payable under the Purchase
Agreement) payable by Lessee under this Agreement and the other
Operative Documents. Lessee shall pay all Supplemental Rent
amounts on the dates specified in this Agreement and the other
Operative Documents for the payment of such amounts or, if no date
is specified for the payment of any such amount, upon the demand
of Lessor or any other Person to whom such amount is payable.
2.04. Use. Lessee may use the Property for office, research and
development, warehouse and manufacturing purposes, and for any other
purpose which is in compliance with applicable zoning laws and
ordinances for the Property.
2.05. "As Is" Lease. Lessee has conducted, or will conduct from
time to time with regard to property that may be added hereto after the
date hereof, all due diligence which it deems appropriate regarding the
Property and agrees that no Lessor Party has any obligation to conduct
any such due diligence. Lessee is leasing the Property "as is, with all
faults" without any representation, warranty, indemnity or undertaking
by any Lessor Party regarding any aspect of the Property, including (a)
the condition of the Property (including any Improvements to the
Property made prior to the Commencement Date or during the Term); (b)
title to the Property (including possession of the Property by any
Person or the existence of any Lien or any other right, title or
interest in or to any of the Property in favor of any Person); (c) the
value, habitability, usability, design, operation or fitness for use of
the Property; (d) the availability or adequacy of utilities and other
services to the Property; (e) any latent, hidden or patent defect in the
Property; (f) the zoning or status of the Property or any other
restrictions on the use of the Property; (g) the economics of the
Property; (h) any Casualty or Condemnation; or (i) the compliance of the
Property with any applicable Governmental Rule or Insurance Requirement;
provided, however, that Lessor shall be obligated to remove Lessor Liens
to the extent required in Subparagraph 5.04(b) of the Participation
Agreement. Without limiting the generality of the foregoing, Lessee
specifically waives any covenant of quiet enjoyment except as otherwise
provided in Subparagraph 5.04(b) of the Participation Agreement.
2.06. Nature of Transaction. As more fully provided in Paragraph
2.10 of the Participation Agreement, Lessee and the Lessor Parties
intend that the transaction evidenced by this Agreement and the other
Operative Documents constitute an operating lease in accordance with
FASB 13 for accounting purposes and a loan secured by the Property for
other purposes, including federal, state and local income tax purposes
and commercial, real estate and bankruptcy law purposes.
2.07. Security, Etc. In order to secure the Lessee Obligations
and otherwise to assure the Lessor Parties the benefits hereof in the
event that the transaction evidenced by this Agreement and the other
Operative Documents is, pursuant to the intent of Lessee and the Lessor
Parties, treated as a loan for certain purposes, Lessee hereby makes the
following grants and agrees as follows:
(a) Real Property Security. As security for the Lessee
Obligations, Lessee hereby irrevocably and unconditionally grants,
conveys, transfers and assigns to Trustee, as beneficiary (in
trust for the benefit of the Lessor Parties), with power of sale
and right of entry and possession, all estate, right, title and
interest of Lessee in the following property, whether now owned or
leased or hereafter acquired, (collectively, the "Real Property
Collateral"):
(i) The Land;
(ii) All Improvements located on the Land;
(iii) All Appurtenant Rights belonging, relating or
pertaining to any of the foregoing Land or Improvements;
(iv) All Subleases of and all Issues and Profits
accruing from any of the foregoing Land, Improvements or
Appurtenant Rights to the extent that such Subleases and
Issues and Profits constitute real property;
(v) All Related Goods, Related Permits and Related
Agreements related to any of the foregoing Land,
Improvements or Appurtenant Rights to the extent that such
Related Goods, Related Agreements and Related Permits
constitute real property;
(vi) All other Property to the extent that such
property constitutes real property; and
(vii) All proceeds of the foregoing, including
Casualty and Condemnation Proceeds.
(b) Personal Property Security. As security for the
Lessee Obligations, Lessee hereby irrevocably and unconditionally
assigns and grants to Lessor, for the benefit of the Lessor
Parties, a security interest in all estate, right, title and
interest of Lessee in the following property, whether now owned or
leased or hereafter acquired, (collectively, the "Personal
Property Collateral"):
(i) All Subleases of and all Issues and Profits
accruing from any of the Land, Improvements or Appurtenant
Rights to the extent that such Subleases and Issues and
Profits constitute personal property;
(ii) All Related Goods, Related Permits and Related
Agreements related to any of the Land, Improvements or
Appurtenant Rights to the extent that such Related Goods,
Related Agreements and Related Permits constitute personal
property;
(iii) All Cash Collateral and all other deposit
accounts, instruments, investment property and monies held
by any Lessor Party in connection with this Agreement or any
other Operative Document (including any Repair and
Restoration Account);
(iv) All other Property to the extent such Property
constitutes personal property; and
(v) All proceeds of the foregoing, including
Casualty and Condemnation Proceeds.
For purpose of the provisions of this Agreement related to the
creation and enforcement of this Agreement as a security agreement
and a fixture filing with respect to the Related Goods, Lessee is
the "debtor" and Lessor is the "secured party," acting for the
benefit of the Lessor Parties. This Agreement constitutes a
fixture filing for purposes of the Oregon Commercial Code with
respect to the Related Goods which are or are to become fixtures
on the Land or Improvements. The mailing addresses of Lessee and
of Lessor from which information concerning security interests
hereunder may be obtained are as set forth on the signature page
of this Agreement. A carbon, photographic or other reproduction
of this Agreement or of any financing statement related to this
Agreement shall be sufficient as a financing statement for any of
the purposes referenced herein.
(c) Absolute Assignment of Subleases, Issues, and Profits.
Lessee hereby irrevocably assigns to Lessor, for the benefit of
the Lessor Parties, all of Lessee's estate, right, title and
interest in, to and under the Subleases and the Issues and
Profits, whether now owned or hereafter acquired. This is a
present and absolute assignment for security purposes in
accordance with Oregon Revised Statute ("ORS") Section 93.805, and
Lessor's right to the Subleases and Issues and Profits is not
contingent upon, and may be exercised without possession of, the
Property.
(i) If no Event of Default has occurred and is
continuing, Lessee shall have a revocable license to collect
and retain the Issues and Profits as they become due. Upon
the occurrence and during the continuance of an Event of
Default, such license shall automatically terminate, and
Lessor may collect and apply the Issues and Profits pursuant
to Subparagraph 5.02(d) without further notice to Lessee or
any other party and without taking possession of the
Property. All Issues and Profits thereafter collected by
Lessee shall be held by lessee as trustee in a constructive
trust for the benefit of Lessor. Lessee hereby irrevocably
authorizes and directs the sublessees under the Subleases,
without any need on their part to inquire as to whether an
Event of Default has actually occurred or is then existing,
to rely upon and comply with any notice or demand by Lessor
for the payment to Lessor of any rental or other sums which
may become due under the Subleases or for the performance of
any of the sublessees' undertakings under the Subleases.
Collection of any Issues and Profits by Lessor shall not
cure or waive any default or notice of default hereunder or
invalidate any acts done pursuant to such notice.
(ii) The foregoing irrevocable assignment shall not
cause any Lessor Party to be (A) a mortgagee in possession;
(B) responsible or liable for (1) the control, care,
management or repair of the Property or for performing any
of Lessee's obligations or duties under the Subleases, (2)
any waste committed on the Property by the sublessees under
any of the Subleases or by any other Persons, (3) any
dangerous or defective condition of the Property, or (4) any
negligence in the management, upkeep, repair or control of
the Property resulting in loss or injury or death to any
sublessee, licensee, employee, invitee or other Person; or
(C) responsible for or impose upon any Lessor Party any duty
to produce rents or profits. No Lessor Party, in the
absence of gross negligence or willful disregard on its
part, shall be liable to Lessee as a consequence of (y) the
exercise or failure to exercise any of the rights, remedies
or powers granted to Lessor hereunder or (z) the failure or
refusal of Lessor to perform or discharge any obligation,
duty or liability of Lessee arising under the Subleases.
SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.
3.01. Maintenance, Repair, Etc.
(a) General. Lessee shall not permit any waste of the
Property, except for ordinary wear and tear, and shall, at its
sole cost and expense, maintain the Property in good working
order, mechanical condition and repair and make all necessary
repairs thereto, of every kind and nature whatsoever, whether
interior or exterior, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required
by all applicable Governmental Rules and Insurance Requirements
and on a basis consistent with the operation and maintenance of
commercial properties comparable in type and location to the
Property and in compliance with prudent industry practice.
(b) New Improvements. Lessee shall make or cause to be
made all of the New Improvements authorized and required by the
Construction Agency Agreement in accordance with the Construction
Agency Agreement.
(c) Other Modifications. Lessee, at its sole cost and
expense, may from time to time make alterations, renovations,
improvements and additions to the Property and substitutions and
replacements therefor (collectively, "Modifications") in addition
to the New Improvements; provided that:
(i) No Modification impairs the value, utility or
useful life of the Property or any part thereof from that
which existed immediately prior to such Modification;
(ii) All Modifications are made expeditiously and, in
no case unless Lessee currently is exercising either the
Term Purchase Option or the Expiration Date Purchase Option,
shall Modifications in an aggregate amount of $1,000,000
remain uncompleted later than six (6) months prior to the
Scheduled Expiration Date;
(iii) All Modifications are made in a good and
workmanlike manner and in compliance with all applicable
Governmental Rules and Insurance Requirements;
(iv) Subject to Paragraph 3.12 relating to permitted
contests, Lessee pays all costs and expenses and discharges
(or cause to be insured or bonded over) any Liens arising in
connection with any Modification not later than the earlier
of (A) sixty (60) days after the same shall be filed (or
otherwise becomes effective) and (B)unless Lessee currently
is exercising either the Term Purchase Option or the
Expiration Date Purchase Option, six (6) months prior to the
Scheduled Expiration Date;
(v) At least one (1) month prior to the commencement
of (A) any Modifications which are anticipated to cost
$1,000,000 or more in the aggregate, or (B) any
Modifications which cause the total of all Modifications
undertaken during the previous twelve-month period to exceed
an aggregate cost of $2,500,000, Lessee shall deliver to
Lessor, with sufficient copies for Agent and each
Participant, a brief written description of such
Modifications; and
(vi) All Modifications otherwise comply with this
Agreement and the other Operative Documents.
(d) Abandonment. Lessee shall not abandon the Property or
any material portion thereof for any period in excess of thirty
(30) consecutive days during the term hereof, except as a part of
any New Improvements or Modifications as permitted herein or in
the other Operative Documents.
(e) Maintenance. Lessee shall maintain the Property and
each material portion thereof in a manner consistent with other
similar properties in the same area, except as a part of any New
Improvements or Modifications as permitted herein.
3.02. Risk of Loss. Lessee assumes all risks of loss arising from
any Casualty or Condemnation which arises or occurs prior to the
Expiration Date or while Lessee is in possession of the Property and all
liability for all personal injuries and deaths and damages to property
suffered by any Person or property on or in connection with the Property
which arises or occurs prior to the Expiration Date or while Lessee is
in possession of the Property, except in each case to the extent any
such loss or liability is primarily caused by the gross negligence or
willful misconduct of a Lessor Party. Lessee hereby waives any and all
applicable existing or future Governmental Rules permitting the
termination of this Agreement as a result of any Casualty or
Condemnation, and Lessor shall in no event be answerable or accountable
for any risk of loss of or decrease in the enjoyment and beneficial use
of the Property as a result of any such event.
3.03. Insurance.
(a) Coverage. Lessee, at its sole cost and expense, shall
carry and maintain the following insurance coverage:
(i) At all times during the Term, commercial
liability insurance covering claims for injuries or death
sustained by persons or damage to property while on the
Property, and workers' compensation insurance;
(ii) At all times after commencement of construction
of the structure, (A) unless covered by builders' risk
insurance pursuant to clause (ii) of Subparagraph 3.03(a),
property insurance covering loss or damage by earthquake in
an amount not less than the then current probable maximum
loss (as determined by a seismic expert reasonably approved
by Lessor and Agent) and (B) property insurance covering
loss or damage by fire, flood and other risks (other than
earthquake) in an amount not less than the then current
replacement cost of the Improvements on the Property;
(iii) During the construction of any Improvements,
builders' risk insurance covering fire, flood, earthquake
and other normal insured risks; and
(iv) At all times during the Term as appropriate,
such other insurance of the types customarily carried by a
reasonably prudent Person owning or operating properties
similar to the Property in the same geographic area as the
Property.
Except as otherwise specifically required above, such insurance
shall be in amounts, in a form and with deductibles approved by
Lessor.
(b) Carriers.
(i) Any primary insurance carried and maintained by
Lessee pursuant to this Paragraph 3.03 shall be underwritten
by an insurance company which (A) has, at the time such
insurance is placed and at the time of each renewal thereof,
a general policyholder rating of "A" and a financial rating
of at least 13 from A.M. Best and Company or any successor
thereto (or if there is none, an organization having a
similar national reputation) or (B) is otherwise approved by
Lessor and Required Participants.
(ii) Any "differences in conditions" insurance carried
and maintained by Lessee in addition to insurance carried
and maintained by Lessee in accordance with clause (b)(i) of
this Paragraph 3.03 shall be underwritten by an insurance
company which has, at the time such insurance is placed and
at the time of each renewal thereof, a general policyholder
rating of at least "B+" and a financial rating of at least 7
from A.M. Best and Company or any successor thereto (or if
there is none, an organization having a similar national
reputation). With respect to the foregoing, at no time
shall "differences in conditions" insurance underwritten by
any such "B+/7" rated insurance company exceed in the
aggregate 20% of the total insurance coverage limits in
place pursuant to this Paragraph 3.03 or be in the "primary"
or "first excess" position.
(c) Terms. Each insurance policy maintained by Lessee
pursuant to this Paragraph 3.03 shall provide as follows, whether
through endorsements or otherwise:
(i) Lessor and Agent shall be named as additional
insureds, in the case of each policy of liability insurance,
and additional loss payees, in the case of each policy of
property insurance.
(ii) In respect of the interests of Lessor in the
policy, the insurance shall not be invalidated by any action
or by inaction of Lessee or by any Person having temporary
possession of the Property while under contract with Lessee
to perform maintenance, repair, alteration or similar work
on the Property, and shall insure the interests of Lessor
regardless of any breach or violation of any warranty,
declaration or condition contained in the insurance policy
by Lessee, Lessor or any other additional insured (other
than by such additional insured, as to such additional
insured); provided, however, that the foregoing shall not be
deemed to (A) cause such insurance policies to cover matters
otherwise excluded from coverage by the terms of such
policies or (B) require any insurance to remain in force
notwithstanding non-payment of premiums except as provided
in clause (iii) below.
(iii) If the insurance policy is cancelled for any
reason whatsoever, or substantial change is made in the
coverage that affects the interests of Lessor, or if the
insurance coverage is allowed to lapse for non-payment of
premium, such cancellation, change or lapse shall not be
effective as to Lessor for thirty (30) days after receipt by
Lessor of written notice from the insurers of such
cancellation, change or lapse.
(iv) No Lessor Party shall have any obligation or
liability for premiums, commissions, assessments, or calls
in connection with the insurance.
(v) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment
or otherwise, that it may have against any Lessor Party.
(vi) The insurance shall be primary without right of
contribution from any other insurance that may be carried by
any Lessor Party with respect to its interest in the
Property.
(vii) The insurer shall waive any right of subrogation
against any Lessor Party.
(viii) All provisions of the insurance, except
the limits of liability, shall operate in the same manner as
if there were a separate policy covering each insured party.
(ix) The insurance shall not be invalidated should
Lessee or any Lessor Party waive, in writing, prior to a
loss, any or all rights of recovery against any Person for
losses covered by such policy, nor shall the insurance in
favor of any Lessor Party or Lessee, as the case may be, or
their respective rights under and interests in said policies
be invalidated or reduced by any act or omission or
negligence of any Lessee Party or Lessor, as the case may
be, or any other Person having any interest in the Property.
(x) All insurance proceeds with a value of less than
five million Dollars ($5,000,000) in respect of any loss or
occurrence with respect to the Property shall be paid to and
adjusted solely by Lessee and all other insurance proceeds
shall be paid to Lessor and adjusted jointly by Lessor and
Lessee, except that, from and after the date on which the
insurer receives written notice from Lessor that an Event of
Default has occurred and is continuing (and unless and until
such insurer receives written notice from Lessor that all
Events of Default have been cured), all losses shall be
adjusted solely by, and all insurance proceeds shall be paid
solely to, Lessor.
(xi) Each policy shall contain a standard form
mortgagee endorsement in favor of Lessor.
(d) Evidence of Insurance. Lessee, at its sole cost and
expense, shall furnish to Lessor from time to time upon the
request of Lessor such certificates or other documents as Lessor
may reasonably request to evidence Lessee's compliance with the
insurance requirements set forth in this Paragraph 3.03.
(e) Release of Lessor Parties. Lessee hereby waives,
releases and discharges each Lessor Party and its directors,
officers, employees, agents and advisors from all claims
whatsoever arising out of any loss, claim, expense or damage to or
destruction covered or coverable by insurance required under this
Paragraph 3.03, notwithstanding that such loss, claim, expense or
damage may have been caused by any such Person, and, as among
Lessee and such Persons, Lessee agrees to look to the insurance
coverage only in the event of such loss.
(f) Forced Placement of Insurance. Pursuant to Oregon
Revised Statutes Section 746.201, Lessor hereby provides Lessee
with the following notice:
"WARNING"
Unless you provide us with evidence of the insurance
coverage as required by our contract or loan agreement, we
may purchase insurance at your expense to protect our
interest. This insurance may, but need not, also protect
your interest. If the collateral becomes damaged, the
coverage we purchase may not pay any claim you make or any
claim made against you. You may later cancel this coverage
by providing evidence that you have obtained property
coverage elsewhere.
You are responsible for the cost of any insurance
purchased by us. The cost of this insurance may be added to
your contract or loan balance. If the cost is added to your
contract or loan balance, the interest rate on the
underlying contract or loan will apply to this added amount.
The effective date of coverage may be the date your prior
coverage lapsed or the date you failed to provide proof of
coverage.
The coverage that we purchase may be considerably more
expensive than insurance you can obtain on your own and may
not satisfy any need for property damage coverage or any
mandatory liability insurance requirements imposed by
applicable law.
As used in the above notice, (i) "you" and "your" shall refer to
Lessee, (ii) "we", "us" and "our" shall refer to Lessor, (iii)
"contract or loan agreement" shall refer to the Participation
Agreement, this Agreement and the other Operative Documents, (iv)
"collateral" shall refer to the Property, (v) "contract or loan
balance" shall refer to the Outstanding Lease Amount and (vi)
"interest rate" shall refer to Rental Rate.
3.04. Casualty and Condemnation.
(a) Notice. Lessee shall give Lessor prompt written
notice of the occurrence of any Material Casualty affecting, or
the institution of any proceedings for the Condemnation of, the
Property or any portion thereof.
(b) Repair or Purchase Option. After the occurrence of
any Material Casualty or Condemnation affecting the Property or
any portion thereof, Lessee shall either (i) repair and restore
the Property as required by Subparagraph 3.04(c) or (ii) exercise
the Term Purchase Option and purchase the Property pursuant to the
Purchase Agreement; provided, however, that Lessee may not elect
to repair and restore the Property if such casualty or
condemnation is a Major Casualty or Major Condemnation or if an
Event of Default has occurred and is continuing, unless Lessor and
the Required Participants shall consent in writing. Not later
than one (1) month after the occurrence of any Material Casualty
or Condemnation, Lessee shall deliver to Lessor a written notice
indicating whether it elects to repair and restore or purchase the
Property.
(c) Repair and Restoration. If Lessee elects to repair
and restore the Property following any Material Casualty or
Condemnation, Lessee shall diligently proceed to repair and
restore the Property to the condition in which it existed
immediately prior to such Material Casualty or Condemnation and
shall use reasonable efforts to complete all such repairs and
restoration as soon as reasonably practicable, but not later than
the earlier of (y) six (6) months after the occurrence of the
Material Casualty or Condemnation and (z) six (6) months prior to
the Scheduled Expiration Date unless Lessee currently is
exercising either the Term Purchase Option or the Expiration Date
Purchase Option,. Lessee shall use its own funds to make such
repairs and restoration, except to the extent any Casualty and
Condemnation Proceeds are available and are released to Lessee for
such purpose pursuant to Subparagraph 3.04(f). Lessee's exercise
of the repair and restoration option shall, if Lessor or Required
Participants direct, be subject to satisfaction of the following
conditions:
(i) Within two (2) months after the occurrence of
the Material Casualty or Condemnation, Lessee shall deposit
in a deposit account acceptable to and controlled by Lessor
(a "Repair and Restoration Account") of funds (including any
Casualty and Condemnation Proceeds which are available and
are released to Lessee pursuant to Subparagraph 3.04(f)) in
the amount which Lessor determines is needed to complete and
fully pay all costs of the repair or restoration (including
taxes, financing charges, insurance and rent during the
repair period).
(ii) As soon as reasonably possible and in no event
later than six (6) months after the occurrence of the
Material Casualty or Condemnation, Lessee shall establish an
arrangement for lien releases and disbursement of funds
acceptable to Lessor and in a manner and upon such terms and
conditions as would be required by a prudent interim
construction lender.
(iii) As soon as reasonably possible and in no event
later than six (6) months after the occurrence of the
Material Casualty or Condemnation, Lessee shall deliver to
Lessor the following, each in form and substance acceptable
to Lessor;
(A) Evidence that the Property can, in
Lessor's reasonable judgment, with diligent
restoration or repair, be returned to a condition at
least equal to the condition thereof that existed
prior to the Casualty or partial Condemnation causing
the loss or damage within the earlier to occur of (A)
six (6) months after the occurrence of the Casualty or
Condemnation and (B) unless Lessee currently is
exercising either the Term Purchase Option or the
Expiration Date Purchase Option, six (6) months prior
to the Scheduled Expiration Date;
(B) Evidence that all necessary governmental
approvals can be timely obtained to allow the
rebuilding and reoccupancy of the Property;
(C) Copies of all plans and specifications for
the work;
(D) Copies of all contracts for the work,
signed by a contractor reasonably acceptable to
Lessor;
(E) A cost breakdown for the work;
(F) A payment and performance bond for the
work or other security satisfactory to Lessor;
(G) Evidence that, upon completion of the
work, the size, capacity and total value of the
Property will be at least as great as it was before
the Casualty or Condemnation occurred; and
(H) Evidence of satisfaction of any additional
conditions that Lessor or Required Participants may
reasonably establish to protect their rights under
this Agreement and the other Operative Documents.
All plans and specifications for the work must be reasonably
acceptable to Lessor, except that Lessor's approval shall
not be required if the restoration work is based on the same
plans and specifications as were originally used to
construct the Property. To the extent that the funds in a
Repair and Restoration Account include both Casualty and
Condemnation Proceeds and other funds deposited by Lessee,
the other funds deposited by Lessee shall be used first.
Lessee acknowledges that the specific conditions described
above are reasonable.
(d) Prosecution of Claims for Casualty and Condemnation
Proceeds. Lessee shall proceed promptly and diligently to
prosecute in good faith the settlement or compromise of any and
all claims for Casualty and Condemnation Proceeds; provided,
however, that any settlement or compromise of any such claim
shall, except as otherwise provided in clause (x) of Subparagraph
3.03(c), be subject to the written consent of Lessor and Required
Participants, which consents shall not be unreasonably withheld.
Lessor may participate in any proceedings relating to such claims,
and, after the occurrence and during the continuance of any Event
of Default, Lessor is hereby authorized, in its own name or in
Lessee's name, to adjust any loss covered by insurance or any
Casualty or Condemnation claim or cause of action, and to settle
or compromise any claim or cause of action in connection
therewith, and Lessee shall from time to time deliver to Lessor
any and all further assignments and other instruments required to
permit such participation.
(e) Assignment of Casualty and Condemnation Proceeds.
Lessee hereby absolutely and irrevocably assigns to Lessor all
Casualty and Condemnation Proceeds and all claims relating
thereto. Except as otherwise provided in clause (x) of
Subparagraph 3.03(c), Lessee agrees that all Casualty and
Condemnation Proceeds are to be paid to Lessor and Lessee hereby
authorizes and directs any insurer, Governmental Authority or
other Person responsible for paying any Casualty and Condemnation
Proceeds to make payment thereof directly to Lessor alone, and not
to Lessor and Lessee jointly. If Lessee receives any Casualty and
Condemnation Proceeds payable to Lessor hereunder, Lessee shall
promptly pay over such Casualty and Condemnation Proceeds to
Lessor. Lessee hereby covenants that until such Casualty and
Condemnation Proceeds are so paid over to Lessor, Lessee shall
hold such Casualty and Condemnation Proceeds in trust for the
benefit of Lessor and shall not commingle such Casualty and
Condemnation Proceeds with any other funds or assets of Lessee or
any other Person. Except as otherwise provided in clause (x) of
Subparagraph 3.03(c), Lessor may commence, appear in, defend or
prosecute any assigned right, claim or action, and may adjust,
compromise, settle and collect all rights, claims and actions
assigned to Lessor, but shall not be responsible for any failure
to collect any such right, claim or action, regardless of the
cause of the failure.
(f) Use of Casualty and Condemnation Proceeds.
(i) If (A) no Event of Default has occurred and is
continuing, (B) Lessee exercises the repair and restoration
option pursuant to Subparagraphs 3.04(b) and 3.04(c) and (C)
Lessee complies with any conditions imposed pursuant to
Subparagraph 3.04(c); then Lessor shall release any Casualty
and Condemnation Proceeds to Lessee for repair or
restoration of the Property, but may condition such release
and use of the Casualty and Condemnation Proceeds upon
deposit of the Casualty and Condemnation Proceeds in a
Repair and Restoration Account. Lessor shall have the
option, upon the completion of such restoration of the
Property, to apply any surplus Casualty and Condemnation
Proceeds remaining after the completion of such restoration
to the payment of Rent and/or the reduction of the
Outstanding Lease Amount, notwithstanding that such amounts
are not then due and payable or that such amounts are
otherwise adequately secured.
(ii) If (A) an Event of Default has occurred and is
continuing, (B) Lessee fails to or is unable to comply with
any conditions imposed pursuant to Subparagraph 3.04(c) or
(C) Lessee elects to exercise the Term Purchase Option and
purchase the Property pursuant to the Purchase Agreement;
then, at the absolute discretion of Lessor and the Required
Participants, regardless of any impairment of security or
lack of impairment of security, but subject to applicable
Governmental Rules governing use of Casualty and
Condemnation Proceeds, if any, Lessor may (1) apply all or
any of the Casualty and Condemnation Proceeds it receives to
the expenses of Lessor Parties in obtaining such proceeds;
(2) apply the balance to the payment of Rent and/or the
reduction of the Outstanding Lease Amount, notwithstanding
that such amounts are not then due and payable or that such
amounts are otherwise adequately secured and/or (3) release
all or any part of such proceeds to Lessee upon any
conditions Lessor and the Required Participants may elect.
(iii) Lessor shall apply any Casualty and Condemnation
Proceeds which are to be used to reduce the Outstanding
Lease Amount only on the last day of a Rental Period unless
a Default has occurred and is continuing.
(iv) Application of all or any portion of the
Casualty and Condemnation Proceeds, or the release thereof
to Lessee, shall not cure or waive any Default or notice of
default or invalidate any acts done pursuant to such notice.
3.05. Taxes. Subject to Paragraph 3.12 relating to permitted
contests, Lessee shall promptly pay when due all Indemnified Taxes
imposed on or payable by Lessee or any Lessor Party in connection with
the Property, this Agreement or any of the other Operative Documents, or
any of the transactions contemplated hereby or thereby. As promptly as
possible after any Indemnified Taxes are payable by Lessee, Lessee shall
send to Lessor for the account of the applicable Lessor Party a
certified copy of an original official receipt received by Lessee
showing payment thereof. If Lessee fails to pay any such Indemnified
Taxes when due to the appropriate taxing authority or fails to remit to
Lessor the required receipts or other required documentary evidence,
Lessee shall indemnify the Lessor Parties for any incremental taxes,
interest or penalties that may become payable by the Lessor Parties as a
result of any such failure. The obligations of Lessee under this
Paragraph 3.05 shall survive the payment and performance of the Lessee
Obligations and the termination of this Agreement.
3.06. Environmental Matters.
(a) Lessee's Covenants. Lessee shall not cause or permit
Hazardous Materials to be used, generated, manufactured, stored,
treated, disposed of, transported or present on or released or
discharged from the Property in any manner that is reasonably
likely to have a Material Adverse Effect. Lessee may use
Hazardous Materials in connection with the operation of its
business (or the business of permitted subtenants) so long as such
use is consistent with the preceding sentence. Lessee shall
immediately notify Lessor in writing of (i) any knowledge by
Lessee that the Property does not comply with any Environmental
Laws; and (ii) any claims against Lessee or the Property relating
to Hazardous Materials or pursuant to Environmental Laws. In
response to the presence of any Hazardous Materials on, under or
about the Property, Lessee shall immediately take, at Lessee's
sole expense, all remedial action required by any Environmental
Laws or any judgment, consent decree, settlement or compromise in
respect to any claim based thereon.
(b) Inspection By Lessor. Upon reasonable prior notice to
Lessee, Lessor, its employees and agents, may from time to time
(whether before or after the commencement of a nonjudicial or
judicial foreclosure proceeding), enter and inspect the Property
for the purpose of determining the existence, location, nature and
magnitude of any past or present release or threatened release of
any Hazardous Materials into, onto, beneath or from the Property,
provided that any such Person so entering and inspecting the
Property shall do so without materially disrupting the operations
of Lessee.
(c) Indemnity. Without in any way limiting any other
indemnity contained in this Agreement or any other Operative
Document, Lessee agrees to defend, indemnify and hold harmless the
Lessor Parties and the other Indemnitees from and against any
claim, loss, damage, cost, expense or liability directly or
indirectly arising out of (i) the use, generation, manufacture,
storage, treatment, release, threatened release, discharge,
disposal, transportation or presence of any Hazardous Materials
which are found in, on, under or about the Property or (ii) the
breach of any covenant, representation or warranty of Lessee
relating to Hazardous Materials or Environmental Laws contained in
this Agreement or any Operative Document. This indemnity shall
include (A) the costs, whether foreseeable or unforeseeable, of
any investigation, repair, cleanup or detoxification of the
Property which is required by any Governmental Authority or is
otherwise necessary to render the Property in compliance with all
Environmental Laws; (B) all other direct or indirect consequential
damages (including any third party claims, claims by any
Governmental Authority, or any fines or penalties against the
Indemnitees; and (C) all court costs and attorneys' fees
(including expert witness fees and the cost of any consultants)
paid or incurred by the Indemnitees. Lessee shall pay immediately
upon Lessor's demand any amounts owing under this indemnity.
Lessee shall use legal counsel reasonably acceptable to Lessor in
any action or proceeding arising under this indemnity. The
obligations of Lessee under this Subparagraph 3.06(c) shall
survive the payment and performance of the Lessee Obligations and
the termination of this Agreement.
(d) Legal Effect of Section. Lessee and Lessor agree that
(i) this Paragraph 3.06 and clause (i) of Subparagraph 4.01(u) of
the Participation Agreement are intended as Lessor's written
request for information (and Lessee's response) concerning the
environmental condition of the real property security as required
by California Code of Civil Procedure Section 726.5 and (ii) each
representation and warranty and covenant herein and therein
(together with any indemnity applicable to a breach of any such
representation and warranty) with respect to the environmental
condition of the Property is intended by Lessor and Lessee to be
an "environmental provision" for purposes of California Code of
Civil Procedure Section 736.
3.07. Liens, Easements, Etc.
(a) Lessee's Covenants. Subject to Paragraph 3.12
relating to permitted contests, Lessee shall not create, incur,
assume or permit to exist any Lien or easement on or with respect
to any of the Property of any character, whether now owned or
hereafter acquired, except for the following ("Permitted Property
Liens"):
(i) Liens in favor of a Lessor Party securing the
Lessee Obligations and other Lessor Liens;
(ii) Liens and easements in existence on the
Commencement Date to the extent reflected in the title
insurance policies delivered to Agent pursuant to Paragraph
3.01 of and Schedule 3.01 to the Participation Agreement and
approved by Lessor;
(iii) Liens for taxes or other Governmental Charges
not at the time delinquent or thereafter payable without
penalty; and
(iv) Liens of carriers, warehousemen, mechanics,
materialmen and vendors and other similar Liens imposed by
law incurred in the ordinary course of business for sums not
overdue.
Subject to Paragraph 3.12 relating to permitted contests, Lessee
shall promptly (A) pay all Indebtedness of Lessee and other
obligations prior to the time the non-payment thereof would give
rise to a Lien on the Property and (B) discharge, at its sole cost
and expense, any Lien on the Property which is not a Permitted
Property Lien.
(b) No Consents. Nothing contained in this Agreement
shall be construed as constituting the consent or request of any
Lessor Party, express or implied, to or for the performance by any
contractor, mechanic, laborer, materialman, supplier or vendor of
any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or
to the Property or any part thereof. NOTICE IS HEREBY GIVEN THAT
NO LESSOR PARTY IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE
HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE,
AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES
OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF ANY LESSOR
PARTY IN AND TO THE PROPERTY.
3.08. Subletting. Lessee may, in the ordinary course of business,
sublease the Property or any portion thereof to any Person, provided,
that (a) Lessee remains directly and primarily liable for performing its
obligations under this Agreement and all other Lessee Obligations; (b)
each sublease is subject to and subordinated to this Agreement; (c) each
sublease has a term which expires on or prior to the Scheduled
Expiration Date (or, if longer, includes a provision that the sublease
terminates on the Expiration Date if such Expiration Date occurs prior
to the Scheduled Expiration Date unless Lessee purchases the Property on
the Expiration Date pursuant to the Purchase Agreement); (d) each
sublease prohibits the sublessee from engaging in any activities on the
Property other than those permitted by Paragraph 2.04; and (e) no
sublease has a Material Adverse Effect. Any sublease which does not
satisfy each of the requirements of the immediately preceding sentence
shall be null and void as to the Lessor Parties and their successor and
assigns. Except for such permitted subleases, Lessee shall not assign
any of its rights or interests under this Agreement to any other Person.
3.09. Utility Charges. Lessee shall pay all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service
and all other utilities and services to, on or in connection with the
Property during the Term.
3.10. Removal of Property. Lessee shall not remove any
Improvements from the Land or any other Property from the Land or
Improvements, except that, during the Term, Lessee may remove any
Modification or any trade fixture, machinery, equipment, inventory or
other personal property if such Modification or property (a) was not
financed by an Advance, (b) is not required by any applicable
Governmental Rule or Insurance Requirement and (c) is readily removable
without impairing the value, utility or remaining useful life of the
Property.
3.11. Compliance with Governmental Rules and Insurance
Requirements. Lessee, at its sole cost and expense, shall, unless its
failure is not reasonably likely to have a Material Adverse Effect, (a)
comply, and cause its agents, sublessees, assignees, employees,
invitees, licensees, contractors and tenants, and the Property to
comply, with all Governmental Rules and Insurance Requirements relating
to the Property (including the construction, use, operation,
maintenance, repair and restoration thereof, whether or not compliance
therewith shall require structural or extraordinary changes in the
Improvements or interfere with the use and enjoyment of the Property),
and (b) procure, maintain and comply with all licenses, permits, orders,
approvals, consents and other authorizations required for the
construction, use, maintenance and operation of the Property and for the
use, operation, maintenance, repair and restoration of the Improvements.
3.12. Permitted Contests. Lessee, at its sole cost and expense,
may contest any alleged Lien or easement on any of the Property or any
alleged Governmental Charge, Indebtedness or other obligation which is
payable by Lessee hereunder to Persons other than the Lessor Parties or
which, if unpaid, would give rise to a Lien on any of the Property,
provided that (a) each such contest is diligently pursued in good faith
by appropriate proceedings; (b) the commencement and continuation of
such proceedings suspends the enforcement of such Lien or easement or
the collection of such Governmental Charge, Indebtedness or obligation;
(c) Lessee has established adequate reserves for the discharge of such
Lien or easement or the payment of such Governmental Charge,
Indebtedness or obligation in accordance with GAAP and, if the failure
to discharge such Lien or easement or the failure to pay such
Governmental Charge, Indebtedness or obligation might result in any
civil liability for any Lessor Party, Lessee has provided to such Lessor
Party a bond or other security satisfactory to such Lessor Party; (d)
the failure to discharge such Lien or easement or the failure to pay
such Governmental Charge, Indebtedness or obligation could not result in
any criminal liability for any Lessor Party; (e) the failure to
discharge such Lien or easement or the failure to pay such Governmental
Charge, Indebtedness or obligation is not otherwise reasonably likely to
have a Material Adverse Effect; and (f) unless Lessee currently is
exercising either the Term Purchase Option or the Expiration Date
Purchase Option, any such contest is completed and such Lien or easement
is discharged (either pursuant to such proceedings or otherwise) or such
Governmental Charge, Indebtedness or obligation is declared invalid,
paid or otherwise satisfied not later than six (6) months prior to the
Scheduled Expiration Date.
3.13. Lessor Obligations; Right to Perform Lessee Obligations. No
Lessor Party shall have any obligation to (a) maintain, repair or make
any improvements to the Property, (b) maintain any insurance on the
Property, (c) perform any other obligation of Lessee under this
Agreement or any other Lessee Obligation, (d) make any expenditure on
account of the Property (except to make Advances as required by the
Participation Agreement) or (e) take any other action in connection with
the Property, this Agreement or any other Operative Document, except as
expressly provided herein or in another Operative Document; provided
however, that Lessor may, in its sole discretion and without any
obligation to do so, perform any Lessee Obligation not performed by
Lessee when required. Lessor may enter the Property or exercise any
other right of Lessee under this Agreement or any other Operative
Document to the extent Lessor determines in good faith that such entry
or exercise is reasonably necessary for Lessor to perform any such
Lessee Obligation not performed by Lessee when required. Lessee shall
reimburse Lessor and the other Lessor Parties, within five (5) Business
Days after demand, for all fees, costs and expenses incurred by them in
performing any such obligation or curing any Default.
3.14. Inspection Rights. During the Term, Lessee shall permit any
Person designated by Lessor, upon reasonable notice and during normal
business hours, to visit and inspect any of the Property.
SECTION 4. EXPIRATION DATE.
4.01. Termination by Lessee Prior to Scheduled Expiration Date.
Subject to the terms and conditions of the Purchase Agreement, Lessee
may, at any time prior to the Scheduled Expiration Date, terminate this
Agreement and purchase the Property pursuant to Section 2 of the
Purchase Agreement. Lessee shall notify Lessor of Lessee's election so
to terminate this Agreement and purchase the Property by delivering to
Agent a Notice of Term Purchase Option Exercise pursuant to and in
accordance with the provisions of Paragraph 2.02 of the Purchase
Agreement.
4.02. Surrender of Property. Unless Lessee purchases the Property
on the Expiration Date pursuant to the Purchase Agreement, Lessee shall
vacate and surrender the Property to Lessor on the Expiration Date in
its then-current condition, subject to compliance by Lessee on or prior
to such date of its obligations under this Agreement and the other
Operative Documents (including the completion of the New Improvements
and all Modifications, the completion of all permitted contests and the
removal of all Liens which are not Permitted Property Liens of the types
described in clauses (i), (ii) (iii) or (vi) of Subparagraph 3.07(a)).
4.03. Holding Over. If Lessee does not purchase the Property on
the Expiration Date pursuant to the Purchase Agreement but continues in
possession of any portion of the Property after the Expiration Date,
Lessee shall pay rent for each day it so continues in possession,
payable upon demand of Lessor, at a per annum rate equal to the
Alternate Rental Rate plus two percent (2.0%) and shall pay and perform
all of its other Lessee Obligations under this Agreement and the other
Operative Documents in the same manner as though the Term had not ended;
provided, however, that this Paragraph 4.03 shall not be interpreted to
permit such holding over or to limit any right or remedy of Lessor for
such holding over.
SECTION 5. DEFAULT.
5.01. Events of Default. The occurrence or existence of any one
or more of the following shall constitute an "Event of Default"
hereunder:
(a) Non-Payment. Lessee shall (i) fail to pay on the
Expiration Date any amount payable by Lessee under this Agreement
or any other Operative Document on such date, (ii) fail to pay
within five (5) Business Days after any Scheduled Rent Payment
Date any Base Rent payable on such Scheduled Rent Payment Date
(other than the Base Rent payable on the Expiration Date) or (iii)
fail to pay within five (5) Business Days after the same becomes
due, any Supplemental Rent or other amount required under the
terms of this Agreement or any other Operative Document (other
than any such amount payable on the Expiration Date or Base Rent);
or
(b) Specific Defaults. Lessee or any of its Subsidiaries
shall fail to observe or perform any covenant, obligation,
condition or agreement set forth in Subparagraph 3.01(d),
Paragraph 3.03 or Subparagraph 3.07(a) hereof, in Subparagraph
2.01(c), Paragraph 5.02 or Paragraph 5.03 of the Participation
Agreement or in Paragraph 3.01 of the Construction Agency
Agreement; or
(c) Other Defaults. Lessee or any of its Subsidiaries
shall fail to observe or perform any other covenant, obligation,
condition or agreement contained in this Agreement or any other
Operative Document and such failure shall continue for a period of
thirty (30) days after written notice thereof from Lessor;
provided, however, that in the event that such failure cannot
reasonably be cured within such thirty (30) day period, such
failure shall not constitute an Event of Default hereunder so long
as Lessee shall have commenced to cure such failure within such
thirty (30) day period and shall thereafter diligently pursue such
cure to completion, provided further that such failure shall in
all events be cured by the earlier of (i) the Expiration Date and
(ii) one hundred and eighty days (180) days after Lessor's notice
thereof; or
(d) Representations and Warranties. Any representation,
warranty, certificate, information or other statement (financial
or otherwise) made or furnished by or on behalf of Lessee or any
of its Subsidiaries to any Lessor Party in or in connection with
this Agreement or any other Operative Document, or as an
inducement to any Lessor Party to enter into this Agreement or any
other Operative Document, shall be false, incorrect, incomplete or
misleading in any material respect when made or furnished and
Lessee shall not have cured the facts or circumstances causing
such representation, warranty, certificate or other statement to
be false, incorrect, incomplete or misleading within thirty (30)
days of notice thereof from Lessor; or
(e) Cross-Default. Lessee or any of its Subsidiaries (i)
shall fail to make any payment when due on account of any
Indebtedness or Contingent Obligation of such Person (excluding
the Lessee Obligations but including all other Indebtedness and
Contingent Obligations of Lessee or any of its Subsidiaries to any
Lessor Party) and such failure shall continue beyond any period of
grace provided with respect thereto, if the amount of such payment
exceeds $10,000,000 or the effect of such failure is to cause, or
permit the holder or holders thereof to cause, Indebtedness and/or
Contingent Obligations in an aggregate amount exceeding
$10,000,000 to become due or (ii) shall default in the observance
or performance of any other agreement, term or condition contained
in any agreement or instrument evidencing such Indebtedness or
Contingent Obligation, if the effect of such default is to cause,
or permit the holder or holders thereof to cause, Indebtedness
and/or Contingent Obligations in an aggregate amount exceeding
$10,000,000 to become due; or
(f) Insolvency, Voluntary Proceedings. Lessee or any of
its Subsidiaries shall (i) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian of itself or of
all or a substantial part of its property, (ii) be unable, or
admit in writing its inability, to pay its debts generally as they
mature, (iii) make a general assignment for the benefit of its or
any of its creditors, (iv) be dissolved or liquidated in full or
in part, (v) become insolvent (as such term may be defined or
interpreted under any applicable statute), (vi) commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any
official in an involuntary case or other proceeding commenced
against it, or (vi) take any action for the purpose of effecting
any of the foregoing; or
(g) Involuntary Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of
Lessee or any of its Subsidiaries or of all or a substantial part
of the property thereof, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief
with respect to Lessee or any of its Subsidiaries or the debts
thereof under any bankruptcy, insolvency or other similar law now
or hereafter in effect shall be commenced and an order for relief
entered or such proceeding shall not be dismissed or discharged
within sixty (60) days of commencement; or
(h) Judgments. (i) A final judgment or order for the
payment of money in excess of $10,000,000 (exclusive of amounts
covered by insurance issued by an insurer not an Affiliate of
Lessee and otherwise satisfying the requirements set forth in
Subparagraph 5.01(d)) shall be rendered against Lessee or any of
its Subsidiaries and the same shall remain undischarged for a
period of sixty (60) days during which execution shall not be
effectively stayed or (ii) any judgment, writ, assessment, warrant
of attachment, tax lien or execution or similar process shall be
issued or levied against a substantial part of the property of
Lessee or any of its Subsidiaries and such judgment, writ, or
similar process shall not be released, stayed, vacated or
otherwise dismissed within sixty (60) days after issue or levy; or
(i) Operative Documents. Any Operative Document or any
material term thereof shall cease to be, or be asserted by Lessee
or any of its Subsidiaries not to be, a legal, valid and binding
obligation of Lessee or any of its Subsidiaries enforceable in
accordance with its terms; or
(j) ERISA. Any Reportable Event which constitutes grounds
for the termination of any Employee Benefit Plan by the PBGC or
for the appointment of a trustee by the PBGC to administer any
Employee Benefit Plan shall occur, or any Employee Benefit Plan
shall be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by the PBGC to administer any Employee
Benefit Plan; or
(k) Change of Control. Any Change of Control shall occur;
or
(l) Major Casualty or Condemnation. Any Major Casualty or
Major Condemnation affecting the Property shall occur; or
(m) Material Adverse Effect. Any event(s) or condition(s)
which has a Material Adverse Effect shall occur or exist.
5.02. General Remedies. In all cases, upon the occurrence or
existence of any Event of Default and at any time thereafter unless such
Event of Default is waived, Lessor may, with the consent of the Required
Participants, or shall, upon instructions from the Required
Participants, exercise any one or more of the following rights and
remedies (except that the remedy set forth in the first sentence of
Subparagraph 5.02(a) shall be automatic):
(a) Termination of Commitments. If such Event of Default
is an Event of Default of the type described in Subparagraph
5.01(f) or Subparagraph 5.01(g) affecting Lessee, immediately and
without notice the obligation of Lessor to make Advances and the
obligations of the Participants to fund Advances shall
automatically terminate. If such Event of Default is any other
Event of Default, Lessor may by written notice to
Lessee, terminate the obligation of Lessor to make Advances and
the obligations of the Participants to fund Advances.
(b) Appointment of a Receiver. Lessor may apply to any
court of competent jurisdiction for, and obtain appointment of, a
receiver for the Property.
(c) Specific Performance. Lessor may bring an action in
any court of competent jurisdiction to obtain specific enforcement
of any of the covenants or agreements of Lessee in this Agreement
or any of the other Operative Documents.
(d) Collection of Issues and Profits. Lessor may collect
Issues and Profits as provided in Subparagraph 2.07(c) and apply
the proceeds to pay Lessee Obligations.
(e) Protection of Property. Lessor may enter, take
possession of, manage and operate all or any part of the Property
or take any other actions which it reasonably determines are
necessary to protect the Property and the rights and remedies of
the Lessor Parties under this Agreement and the other Operative
Documents, including (i) taking and possessing all of Lessee's
books and records relating to the Property; (ii) entering into,
enforcing, modifying, or canceling subleases on such terms and
conditions as Lessor may consider proper; (iii) obtaining and
evicting tenants; (iv) fixing or modifying sublease rents; (v)
collecting and receiving any payment of money owing to Lessee;
(vi) completing any unfinished Improvements; and/or (vii)
contracting for and making repairs and alterations.
(f) Other Rights and Remedies. In addition to the
specific rights and remedies set forth above in this Paragraph
5.02 and in Paragraph 5.03 and Paragraph 5.04, Lessor may exercise
any other right, power or remedy permitted to it by any applicable
Governmental Rule, either by suit in equity or by action at law,
or both.
5.03. Lease Remedies. If the transaction evidenced by this
Agreement and the other Operative Documents is treated as a lease, upon
the occurrence or existence of any Event of Default and at any time
thereafter unless such Event of Default is waived, Lessor may, with the
consent of the Required Participants, or shall, upon instructions from
the Required Participants, exercise any one or more of the following
rights and remedies in addition to those rights and remedies set forth
in Paragraph 5.02:
(a) Termination of Lease. Lessor may, by written notice
to Lessee, terminate this Agreement on a Termination Date which is
prior to the Scheduled Expiration Date, subject to Subparagraph
3.02(1) of the Purchase Agreement. Such Termination Date shall be
the last day of a Rental Period unless Required Participants shall
otherwise direct. On such Termination Date (which shall then be
the Expiration Date), Lessee shall pay all unpaid Base Rent
accrued through such date, all Supplemental Rent due and payable
on or prior to such date and all other amounts payable by Lessee
on the Expiration Date pursuant to this Agreement and the other
Operative Documents. Lessee also shall pay to Lessor, in addition
to all accrued Base Rent, the worth at the time of such payment of
the amount by which the unpaid Base Rent through the Scheduled
Expiration Date exceeds the amount of such rental loss for the
same period that Lessee proves could reasonably be avoided.
(b) Continuation of Lease. Lessor may exercise the rights
and remedies provided by Oregon law, including the right to
continue this Agreement in effect after Lessee's breach and
abandonment and recover Rent as it becomes due. Acts of
maintenance or preservation, efforts to relet the Property, the
appointment of a receiver upon Lessor's initiative to protect its
interest under this Agreement or withholding consent to or
terminating a sublease shall not of themselves constitute a
termination of Lessee's right to possession.
(c) Removal and Storage of Property. Lessor may enter the
Property and remove therefrom all Persons and property, store such
property in a public warehouse or elsewhere at the cost of and for
the account of Lessee and sell such property and apply the
proceeds therefrom pursuant to applicable Oregon law.
5.04. Loan Remedies. If the transaction evidenced by this
Agreement and the other Operative Documents is treated as a loan, upon
the occurrence or existence of any Event of Default and at any time
thereafter unless such Event of Default is waived, Lessor may, with the
consent of the Required Participants, or shall, upon instructions from
the Required Participants, exercise any one or more of the following
rights and remedies in addition to those rights and remedies set forth
in Paragraph 5.02:
(a) Acceleration of Lessee Obligations. Lessor may, by
written notice to Lessee, terminate this Agreement on a
Termination Date which is prior to the Scheduled Expiration Date,
subject to Subparagraph 3.02(1) of the Purchase Agreement, and
declare all unpaid Lessee Obligations due and payable on such
Termination Date. Such Termination Date shall be the last day of
a Rental Period unless Required Participants shall otherwise
direct. On such Termination Date (which shall then be the
Expiration Date), Lessee shall pay all unpaid Base Rent accrued
through such date, all Supplemental Rent due and payable on or
prior to such date and all other amounts payable by Lessee on the
Expiration Date pursuant to this Agreement and the other Operative
Documents.
(b) Uniform Commercial Code Remedies. Lessor may exercise
any or all of the remedies granted to a secured party under the
Oregon Uniform Commercial Code.
(c) Judicial Foreclosure. Lessor may bring an action in
any court of competent jurisdiction to foreclose the security
interest in the Property granted to Lessor by this Agreement or
any of the other Operative Documents.
(d) Power of Sale. Lessor may cause some or all of the
Property, including any Personal Property Collateral, to be sold
or otherwise disposed of in any combination and in any manner
permitted by applicable Governmental Rules.
(i) Sales of Personal Property. Lessor may dispose
of any Personal Property Collateral separately from the sale
of Real Property Collateral, in any manner permitted by
Chapter 79 of the Oregon Uniform Commercial Code, including
any public or private sale, or in any manner permitted by
any other applicable Governmental Rule. Any proceeds of any
such disposition shall not cure any Event of Default or
reinstate any Lessee Obligation. In connection with any
such sale or other disposition, Lessee agrees that the
following procedures constitute a commercially reasonable
sale:
(A) Lessor shall mail written notice of the
sale to Lessee not later than thirty (30) days prior
to such sale.
(B) Once per week during the three (3) weeks
immediately preceding such sale, Lessor will publish
notice of the sale in a local daily newspaper of
general circulation.
(C) Upon receipt of any written request,
Lessor will make the Property available to any bona
fide prospective purchaser for inspection during
reasonable business hours.
(D) Notwithstanding, Lessor shall be under no
obligation to consummate a sale if, in its judgment,
none of the offers received by it equals the fair
value of the Property offered for sale.
(E) If Lessor so requests, Lessee shall
assemble all of the Personal Property Collateral and
make it available to Lessor at the site of the Land.
Regardless of any provision of this Agreement or any
other Operative Document, Lessor shall not be
considered to have accepted any property other than
cash or immediately available funds in satisfaction of
any Lessee Obligation, unless Lessor has given express
written notice of its election of that remedy in
accordance with Oregon Uniform Commercial Code Section
9505 (ORS Section 79.5050).
The foregoing procedures do not constitute the only
procedures that may be commercially reasonable.
(ii) Lessor's Sales of Real Property or Mixed
Collateral. Lessor may choose to dispose of some or all of
the Property which consists solely of Real Property
Collateral in any manner then permitted by applicable
Governmental Rules. In its discretion, Lessor may also or
alternatively choose to dispose of some or all of the
Property, in any combination consisting of both Real
Property Collateral and Personal Property Collateral,
together in one sale to be held in accordance with the law
and procedures applicable to real property, as permitted by
Section 9501(4) of the Oregon Uniform Commercial Code (ORS
Section 79.5010(4)). Lessee agrees that such a sale of
Personal Property Collateral together with Real Property
Collateral constitutes a commercially reasonable sale of the
Personal Property Collateral. (For purposes of this power of
sale, either a sale of Real Property Collateral alone, or a
sale of both Real Property Collateral and Personal Property
Collateral together in accordance with Oregon Uniform
Commercial Code Section 9501(4) (ORS Section 79.5010(4)),
will sometimes be referred to as a "Lessor's Sale.")
(A) Before any Lessor's Sale, Lessor shall
give such notice of default and election to sell as
may then be required by applicable Governmental Rules.
(B) When all time periods then legally
mandated have expired, and after such notice of sale
as may then be legally required has been given, Lessor
shall sell the property being sold at a public auction
to be held at the time and place specified in the
notice of sale.
(C) Neither Lessor nor Agent shall have any
obligation to make demand on Lessee before any
Lessor's Sale.
(D) From time to time in accordance with then
applicable law, Lessor may postpone any Lessor's Sale
by public announcement at the time and place noticed
for that sale.
(E) At any Lessor's Sale, Lessor shall sell to
the highest bidder at public auction for cash in
lawful money of the United States.
(F) Lessor shall execute and deliver to the
purchaser(s) a deed or deeds conveying the Property
being sold without any covenant or warranty
whatsoever, express or implied. The recitals in any
such deed of any matters or facts, including any facts
bearing upon the regularity or validity of any
Lessor's Sale, shall be conclusive proof of their
truthfulness. Any such deed shall be conclusive
against all Persons as to the facts recited in it.
(e) Foreclosure Sales.
(i) Single or Multiple. If the Property consists of
more than one lot, parcel or item of property, Lessor may:
(A) Designate the order in which the lots,
parcels and/or items shall be sold or disposed of or
offered for sale or disposition; and
(B) Elect to dispose of the lots, parcels
and/or items through a single consolidated sale or
disposition to be held or made under the power of sale
granted in Subparagraph 5.04(d), or in connection with
judicial proceedings, or by virtue of a judgment and
decree of foreclosure and sale; or through two or more
such sales or dispositions; or in any other manner
Lessor may deem to be in its best interests (any such
sale or disposition, a "Foreclosure Sale;" any two or
more, "Foreclosure Sales").
If Lessor chooses to have more than one Foreclosure Sale,
Lessor at its option may cause the Foreclosure Sales to be
held simultaneously or successively, on the same day, or on
such different days and at such different times and in such
order as it may deem to be in its best interests. No
Foreclosure Sale shall terminate or affect the security
interests granted to Lessor in the Property by this
Agreement on any part of the Property which has not been
sold, until all of the Lessee Obligations have been paid in
full.
(ii) Credit Bids. At any Foreclosure Sale, any
Person, including any Lessor Party, may bid for and acquire
the Property or any part of it to the extent permitted by
then applicable Governmental Rules. Instead of paying cash
for that property, Lessor may settle for the purchase price
by crediting the sales price of the Property against the
Lessee Obligations in any order and proportions as Lessor in
its sole discretion may choose.
5.05. Remedies Cumulative. The rights and remedies of Lessor
under this Agreement and the other Operative Documents are cumulative
and may be exercised singularly, successively, or together.
5.06. No Cure or Waiver. Neither the performance by Lessor of any
of Lessee's obligations pursuant to Paragraph 3.13 nor the exercise by
Lessor of any of its other rights and remedies under this Agreement or
any other Operative Document (including the collection of Issues and
Profits and the application thereof to the Lessee Obligations) shall
constitute a cure or waiver of any Default or nullify the effect of any
notice of default or sale, unless and until all Lessee Obligations are
paid in full.
5.07. Exercise of Rights and Remedies. The rights and remedies
provided to Lessor under this Agreement may be exercised by Lessor
itself, by Agent pursuant to Subparagraph 2.02(c) of the Participation
Agreement, by a court-appointed receiver or by any other Person
appointed by any of the foregoing to act on its behalf. All of the
benefits afforded to Lessor under this Agreement and the other Operative
Documents shall accrue to the benefit of Agent to the extent provided in
Subparagraph 2.02(c) of the Participation Agreement.
SECTION 6. MISCELLANEOUS.
6.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Lessee or Lessor under this Agreement shall be given as provided in
Subparagraph 2.02(c) and Paragraph 7.01 of the Participation Agreement.
6.02. Waivers; Amendments. Any term, covenant, agreement or
condition of this Agreement may be amended or waived only as provided in
the Participation Agreement. No failure or delay by any Lessor Party in
exercising any right hereunder shall operate as a waiver thereof or of
any other right nor shall any single or partial exercise of any such
right preclude any other further exercise thereof or of any other right.
Unless otherwise specified in any such waiver or consent, a waiver or
consent given hereunder shall be effective only in the specific instance
and for the specific purpose for which given.
6.03. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Lessor Parties and Lessee and their
permitted successors and assigns; provided, however, that the Lessor
Parties and Lessee shall not sell, assign or delegate their respective
rights and obligations hereunder except as provided in the Participation
Agreement.
6.04. No Third Party Rights. Nothing expressed in or to be
implied from this Agreement is intended to give, or shall be construed
to give, any Person, other than the Lessor Parties and Lessee and their
permitted successors and assigns, any benefit or legal or equitable
right, remedy or claim under or by virtue of this Agreement or under or
by virtue of any provision herein.
6.05. Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Agreement nor the
legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
6.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules, except as otherwise provided in
Subparagraph 7.14 of the Participation Agreement.
6.07. Counterparts. This Agreement may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
6.08. Nature of Lessee's Obligations.
(a) Independent Obligation. The obligation of Lessee to
pay the amounts payable by Lessee under this Agreement and the
other Operative Documents and to perform the other Lessee
Obligation are absolute, unconditional and irrevocable obligations
which are separate and independent of the obligations of the
Lessor Parties under this Agreement and the other Operative
Documents and all other events and circumstances, including the
events and circumstances set forth in Subparagraph 6.08(c).
(b) No Termination or Abatement. This Agreement and the
other Operative Documents and Lessee's obligation to pay Rent and
to pay and perform all other Lessee Obligations shall continue in
full force and effect without abatement notwithstanding the
occurrence or existence of any event or circumstance, including
any event or circumstance set forth in Subparagraph 6.08(c).
(c) Full Payment and Performance. Lessee shall make all
payments under this Agreement and the other Operative Documents in
the full amounts and at the times required by the terms of this
Agreement and the other Operative Documents without setoff,
deduction or reduction of any kind and shall perform all other
Lessee Obligations as and when required, without regard to any
event or circumstances whatsoever, including (i) the condition of
the Property (including any Improvements to the Property made
prior to the Commencement Date or during the Term); (ii) title to
the Property (including possession of the Property by any Person
or the existence of any Lien or any other right, title or interest
in or to any of the Property in favor of any Person); (iii) the
value, habitability, usability, design, operation or fitness for
use of the Property; (iv) the availability or adequacy of
utilities and other services to the Property; (v) any latent,
hidden or patent defect in the Property; (vi) the zoning or status
of the Property or any other restrictions on the use of the
Property; (g) the economics of the Property; (vii) any Casualty or
Condemnation; (viii) the compliance of the Property with any
applicable Governmental Rule or Insurance Requirement; (ix) any
failure by any Lessor Party to perform any of its obligations
under this Agreement or any other Operative Document; or (x) the
exercise by any Lessor Party of any of its remedies under this
Agreement or any other Operative Document; provided, however, that
this Paragraph 6.08 shall not abrogate any right which Lessee may
have to recover damages from any Lessor Party for any material
breach by such Lessor Party of its obligations under this
Agreement or any other Operative Document to the extent permitted
hereunder or thereunder.
6.09. Non-Residential Trust Deed . Lessee as grantor warrants that
this Agreement, as a deed of trust or trust deed under Oregon law, is
not and will not at anytime constitute a residential trust deed, as that
term is defined in ORS 86.705 or its successor statutes. Lessee
warrants that it is engaging in this transaction exclusively for
business, commercial or investment purposes.
[The signature page follows.]
IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement
to be executed as of the day and year first above written.
LESSEE:
ETEC SYSTEMS, INC.
By:
Name:
Title:
Etec Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Treasurer
Tel. No: (▇▇▇) ▇▇▇-▇▇▇▇
Fax. No: (▇▇▇) ▇▇▇-▇▇▇▇
LESSOR:
LEASE PLAN NORTH AMERICA, INC.
By:
Name:
Title:
Lease Plan North America, Inc.
c/o ABN AMRO Bank N.V.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel. No: (▇▇▇) ▇▇▇-▇▇▇▇
Fax. No: (▇▇▇) ▇▇▇-▇▇▇▇