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LEASE AND DEVELOPMENT AGREEMENT
Dated as of November 14, 1997
between
ASSET XVII HOLDINGS COMPANY, L.L.C., as Lessor
and
STB SYSTEMS, INC., as Lessee
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Lease Financing for
STB SYSTEMS, INC.
Corporate Headquarters and Office Facility
Collin County, Texas
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TABLE OF CONTENTS
(Lease and Development Agreement)
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ARTICLE I - DEFINITIONS; INTERPRETATION. . . . . . . . . . . . . . . . . . . 1
ARTICLE II - LEASE OF LEASED PROPERTY. . . . . . . . . . . . . . . . . . . . 1
SECTION 2.1 Lease of Land. . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2.2 Lease of Improvements. . . . . . . . . . . . . . . . . . 1
SECTION 2.3 Other Property.. . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.4 Nature of Transaction. . . . . . . . . . . . . . . . . . 2
ARTICLE III - CONSTRUCTION AND EQUIPPING OF THE IMPROVEMENTS . . . . . . . . 2
SECTION 3.1 Commencement of Construction.. . . . . . . . . . . . . . 2
SECTION 3.2 Completion of Construction.. . . . . . . . . . . . . . . 2
SECTION 3.3 Permits; Approvals; Storage. . . . . . . . . . . . . . . 3
SECTION 3.4 Inspection.. . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV - RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4.1 Basic Rent.. . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4.2 Supplemental Rent. . . . . . . . . . . . . . . . . . . . 5
SECTION 4.3 Method of Payment. . . . . . . . . . . . . . . . . . . . 5
SECTION 4.4 Late Payment.. . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4.5 Net Lease; No Setoff, Etc. . . . . . . . . . . . . . . . 5
SECTION 4.6 Lessee to Cooperate with Lessor. . . . . . . . . . . . . 7
ARTICLE V - CONDITION AND USE OF LEASED PROPERTY . . . . . . . . . . . . . . 7
SECTION 5.1 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI- LIENS; EASEMENTS; PARTIAL CONVEYANCES. . . . . . . . . . . . . . 8
ARTICLE VII- MAINTENANCE AND REPAIR; ALTERATIONS, MODIFICATIONS
AND ADDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7.1 Maintenance and Repair; Compliance With Law. . . . . . . 9
SECTION 7.2 Alterations. . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7.3 Title to Alterations.. . . . . . . . . . . . . . . . . . 10
ARTICLE VIII - USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IX - INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 9.1 Insurance Coverages. . . . . . . . . . . . . . . . . . . 11
SECTION 9.2 Liability Insurance. . . . . . . . . . . . . . . . . . . 12
SECTION 9.3 Policies . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 9.4 Loss Payee Provisions. . . . . . . . . . . . . . . . . . 12
SECTION 9.5 Other Insurance. . . . . . . . . . . . . . . . . . . . . 13
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SECTION 9.6 Loss Deductibles . . . . . . . . . . . . . . . . . . . . 13
SECTION 9.7 Failure to Maintain Insurance. . . . . . . . . . . . . . 13
ARTICLE X - ASSIGNMENT AND SUBLEASING. . . . . . . . . . . . . . . . . . . . 13
ARTICLE XI - LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE . . . . . . . . . . . 14
SECTION 11.1 Event of Loss. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 11.2 Event of Taking. . . . . . . . . . . . . . . . . . . . . 14
SECTION 11.3 Casualty.. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 11.4 Condemnation.. . . . . . . . . . . . . . . . . . . . . . 15
SECTION 11.5 Verification of Restoration and Rebuilding.. . . . . . . 16
SECTION 11.6 Application of Payments. . . . . . . . . . . . . . . . . 16
SECTION 11.7 Prosecution of Awards. . . . . . . . . . . . . . . . . . 17
SECTION 11.8 Application of Certain Payments Not Relating to an
Event of Taking. . . . . . . . . . . . . . . . . . . . . 18
SECTION 11.9 Other Dispositions.. . . . . . . . . . . . . . . . . . . 18
SECTION 11.10 No Rent Abatement. . . . . . . . . . . . . . . . . . . . 18
ARTICLE XII- INTEREST CONVEYED TO LESSEE . . . . . . . . . . . . . . . . . . 18
ARTICLE XIII - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XIV - ENFORCEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 14.1 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 14.2 Remedies Cumulative; No Waiver; Consents . . . . . . . . 23
ARTICLE XV - SALE, RETURN OR PURCHASE OF LEASED PROPERTY . . . . . . . . . . 24
SECTION 15.1 Lessee's Option to Purchase. . . . . . . . . . . . . . . 24
SECTION 15.2 Purchase Obligation. . . . . . . . . . . . . . . . . . . 24
SECTION 15.3 Acceleration of Purchase Obligation. . . . . . . . . . . 24
SECTION 15.4 Determination of Purchase Price. . . . . . . . . . . . . 25
SECTION 15.5 Purchase Procedure . . . . . . . . . . . . . . . . . . . 25
SECTION 15.6 Option to Remarket . . . . . . . . . . . . . . . . . . . 26
SECTION 15.7 Rejection of Sale. . . . . . . . . . . . . . . . . . . . 29
SECTION 15.8 Return of Leased Property. . . . . . . . . . . . . . . . 30
SECTION 15.9 Effect of Conveyance to Lessee . . . . . . . . . . . . . 30
ARTICLE XVI - LESSEE'S EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XVII - RIGHT TO PERFORM FOR LESSEE . . . . . . . . . . . . . . . . . 31
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ARTICLE XVIII - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 18.1 Reports. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 18.2 Binding Effect; Successors and Assigns . . . . . . . . . 32
SECTION 18.3 Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . 32
SECTION 18.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 18.5 Severability . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 18.6 Amendment; Complete Agreements . . . . . . . . . . . . . 32
SECTION 18.7 Construction.. . . . . . . . . . . . . . . . . . . . . . 33
SECTION 18.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 18.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 18.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . 33
SECTION 18.11 Discharge of Lessee's Obligations by its Affiliates. . . 33
SECTION 18.12 Liability of Lessor Limited. . . . . . . . . . . . . . . 34
SECTION 18.13 Estoppel Certificates. . . . . . . . . . . . . . . . . . 34
SECTION 18.14 No Joint Venture . . . . . . . . . . . . . . . . . . . . 34
SECTION 18.15 No Accord and Satisfaction . . . . . . . . . . . . . . . 34
SECTION 18.16 No Merger. . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 18.17 Survival . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 18.18 Chattel Paper. . . . . . . . . . . . . . . . . . . . . . 35
SECTION 18.19 Time of Essence. . . . . . . . . . . . . . . . . . . . . 35
SECTION 18.20 Recordation of Lease . . . . . . . . . . . . . . . . . . 35
SECTION 18.21 Investment of Security Funds . . . . . . . . . . . . . . 35
SECTION 18.22 No Illegal Interest to be Charged. . . . . . . . . . . . 36
APPENDIX I Definitions and Interpretation
APPENDIX II Description of Leased Property
APPENDIX III Scheduled Rent
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LEASE AND DEVELOPMENT AGREEMENT
THIS LEASE AND DEVELOPMENT AGREEMENT (the "Lease"), dated as of November
14, 1997 is between ASSET XVII HOLDINGS COMPANY, L.L.C., a Massachusetts limited
liability company, as Lessor, and STB SYSTEMS, INC., a Texas corporation, as
Lessee.
PRELIMINARY STATEMENT
In accordance with the terms and provisions of the Deed, this Lease and the
other Operative Documents, (i) the Lessor has acquired the Land and agreed to
lease the Land to the Lessee, (ii) the Lessee has agreed to construct the
Improvements on the Land for the Lessor and, when completed, to lease the
Improvements from the Lessor as part of the Leased Property under this Lease,
(iii) the Lessor and the Lessee wish to obtain, and the Lender has agreed to
provide, two Loans in an aggregate amount of up to the Loan Commitment for the
payment of Development Costs in connection with the acquisition of the Land and
the Construction of the Improvements, and (iv) Lessor has agreed to make
Contribution Advances from its own equity resources in an amount up to the
Equity Commitment to pay a portion of the Development Costs in connection with
the construction of the Improvements.
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Lease and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in Appendix I hereto for
all purposes hereof and the rules of interpretation set forth in Appendix I
hereto shall apply to this Lease.
ARTICLE II
LEASE OF LEASED PROPERTY
SECTION 2.1 LEASE OF LAND. Lessor hereby demises and leases Lessor's
interest in the Land to Lessee, and Lessee hereby rents and leases Lessor's
interest in the Land from Lessor, for the Lease Term.
SECTION 2.2 LEASE OF IMPROVEMENTS. Lessor hereby demises and leases
Lessor's interest in the Improvements (whether or not the Construction thereof
has been completed) to Lessee, and Lessee hereby rents and leases Lessor's
interest in the Improvements (whether or not the Construction thereof has been
completed) from Lessor, for the Lease Term. The demise and lease of the
Improvements pursuant to this Section shall include any additional right, title
or interest in the Improvements which may at any time be acquired by Lessor, the
intent being
that all right, title and interest of Lessor in and to the Improvements shall
at all times be demised and leased hereunder.
SECTION 2.3 OTHER PROPERTY. Lessee may from time to time own or hold
under lease from Persons other than Lessor furniture, trade fixtures and
equipment located on or about the Leased Property which is not subject to this
Lease.
SECTION 2.4 NATURE OF TRANSACTION. It is the intent of the parties
hereto that: (a) for Federal, State and local income tax purposes, this Lease
shall be treated as the repayment and security provisions of a loan by Lessor to
Lessee, and that Lessee shall be treated as the legal and beneficial owner
entitled to any and all benefits of ownership of the Leased Property or any part
thereof; and that all payments of Basic Rent during the Lease Term shall be
treated as payments of interest and principal, as the case may be, in respect of
such loan; (b) if a bankruptcy court or other court of competent jurisdiction
shall at any time determine that the transactions represented by this Lease and
the other Operative Documents either (i) do not constitute a true leasing
transaction or (ii) shall be treated as a financing or other transaction, then
in any such event, this Lease shall be treated as a deed of trust and security
agreement, mortgage and security agreement or other similar instrument with a
power of sale from Lessee, as mortgagor to Lessor for the benefit of the Lender,
as mortgagee, encumbering the Leased Property, and the payment by Lessee of the
Basic Rent (other than Scheduled Rent) shall be treated as payments of interest
and the payment of Lessee of Scheduled Rent and any other amounts in respect of
the Lease Balance shall be treated as repayments of principal (all such payments
are obligatory and shall, to the fullest extent permitted by law, have priority
over any and all mechanics' liens and other liens and encumbrances arising after
the Memorandum of Lease is recorded); and (c) the Mortgage and the Assignment of
Lease and Rents create a lien and security interest in the Collateral (as
defined in the Mortgage) and this Lease, subject to certain limited exceptions.
ARTICLE III
CONSTRUCTION AND EQUIPPING OF THE IMPROVEMENTS
SECTION 3.1 COMMENCEMENT OF CONSTRUCTION. Lessee shall, for the benefit
of Lessor, cause the Construction to be commenced, performed and completed by
the General Contractor pursuant to the Construction Contract. Until the
Construction is completed, the portions of the Improvements under construction
shall, and upon completion of Construction the completed Improvements shall, be
a part of the Leased Property.
SECTION 3.2 COMPLETION OF CONSTRUCTION. Lessee shall endeavor to
achieve satisfactory performance from the General Contractor under the
Construction Contract. Lessee shall cause the Completion Date for the
Improvements to occur on or prior to the Completion Deadline. Lessee may make
changes to the Plans and Specifications, shall review requests for changes,
shall negotiate proposals for changes made by the General Contractor and shall
prepare and sign change orders. Lessee shall develop and implement procedures
for the review and
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processing of applications by the General Contractor, subcontractors,
materialmen and other Persons involved in the Construction for progress and
final payments, and shall provide to Lessor such certifications for payment
as are required under the Participation Agreement. Lessee's obligations
under this Section shall not be diminished or affected by any insufficiency
of the proceeds of the Loan or the amount of the Contribution, or by the
Development Costs exceeding amounts received as Loan Advances and
Contribution Advances. In the event that the Development Costs which are due
and payable exceed the aggregate amount of Loan Advances and Contribution
Advances, such excess shall be paid by Lessee from Lessee's own funds.
SECTION 3.3 PERMITS; APPROVALS; STORAGE. Lessee shall be responsible
for obtaining or causing the General Contractor to obtain all applicable zoning,
wetlands, subdivision, building and other permits for the Construction, and
shall also be responsible for obtaining or causing the General Contractor to
obtain all other approvals from authorities having jurisdiction over the
Construction, the Land or the Improvements. Lessee shall monitor the progress
of the Construction. Lessee shall arrange for the delivery and storage,
protection and security of materials, systems and equipment which are to be
incorporated into the Improvements until such items are incorporated into the
Improvements.
SECTION 3.4 INSPECTION. At any time during normal business hours upon
three (3) Business Days prior notice to Lessee, Lessor, the Lender and their
authorized representatives may inspect the Leased Property and the books and
records of Lessee relating to the Leased Property and make copies and abstracts
therefrom, subject to the rights of the General Contractor. All reasonable and
documented out-of-pocket costs of such inspection incurred by Lessor or Lender
shall be paid by Lessee promptly after receipt by Lessee of a written request
for such payment. No inspection shall unreasonably interfere with Lessee's
operations or the operations of any other occupant of the Leased Property. None
of the inspecting parties shall have any duty to make any such inspection or
inquiry and none of the inspecting parties shall incur any liability or
obligation by reason of not making any such inspection or inquiry. None of the
inspecting parties shall incur any liability or obligation by reason of making
any such inspection or inquiry unless and to the extent such inspecting party,
during the course of such inspection, causes damage to either the Leased
Property, any property of Lessee or any property of any other Person or to a
Person.
ARTICLE IV
RENT
SECTION 4.1 RENT.
(a) BASIC RENT. The first Rent Payment Date shall be the first
Loan Payment Date which next follows the Closing Date, and beginning on that
date, Lessee shall commence making payments of Basic Rent to Lessor in
installments payable in arrears on each Rent Payment Date and on any date (if
not a Rent Payment Date) which is the Lease Termination
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Date. Basic Rent shall equal the sum of the Index Rent, the Scheduled Rent,
and the Facility Rent, and shall be payable in installments on each Rent
Payment Date in the respective amounts set forth below.
(b) INDEX RENT. On each Rent Payment Date, the Lessee shall pay as
Index Rent an amount equal to the sum of all interest accrued and unpaid on Loan
A and Loan B of the Rent Payment Date in question.
(c) FACILITY RENT. On each Rent Payment Date, the Lessee shall,
until (i) the Lease Balance shall be paid in full on the Lease Termination Date,
or (ii) the payment by Lessee of the Recourse Deficiency Amount on the Scheduled
Termination Date and the fulfillment of the provisions of CLAUSES (i) through
(xiii) of SECTION 15.6, pay installments of Facility Rent in arrears with
respect to the period elapsed since, in the case of the first Rent Payment Date,
the Closing Date, and in the case of each subsequent Rent Payment Date, the
immediately preceding Rent Payment Date, and each such installment shall be in
an amount which equals the Contribution Return accrued and unpaid. In addition,
the Lessee agrees to pay as Facility Rent an amount equal to the Lessor's
Breakage Costs in the event of the imposition of such Lessor's Breakage Costs.
(d) SCHEDULED RENT. On each Rent Payment Date, Lessee shall pay the
installment of Scheduled Rent, if any, then due and payable. Attached hereto as
APPENDIX III is a schedule of the installments of Scheduled Rent due and payable
on each Rent Payment Date. It is the intention of the parties hereto and the
Lender that the installments of Scheduled Rent set forth on APPENDIX III shall
be in an aggregate amount sufficient (but not in excess) to pay required
payments of principal on the Loans and the Notes, and the proceeds of each such
installment shall be applied by the Lender in reduction of the Loans and the
Notes; PROVIDED, HOWEVER, that the Lessee, in order to avoid Breakage Costs,
hereby directs the Lender to deposit payments of Scheduled Rent in the
Reinvestment Account maintained pursuant to SECTION 3.6 of the Loan Agreement
for payment of principal on the Rent Payment Date at the end of the Interest
Period; PROVIDED, FURTHER, that until amounts in the Reinvestment Account shall
be applied to pay the Loans, interest will continue to accrue with respect to
100% of the principal balance of the Loans without any setoff or deduction
relating to the amounts so deposited. The parties hereto agree to adjust the
schedule of Scheduled Rent set forth in APPENDIX III to the extent necessary to
reflect the actual outstanding principal amount of the Loans, in the event of
(i) a partial prepayment of the Loans, or (ii) that the aggregate total of the
Loan Advances made under the Loans as of the Completion Deadline equals less
than the Loan Commitment. Any such adjustment shall be made (i) in the case of
a partial prepayment, by multiplying the remaining unpaid installments of
Scheduled Rent on by a fraction, the numerator of which is the aggregate total
of Loan Advances made under the Loans less the amount of principal prepaid on
the Loan, and the denominator of which is the amount of the Loan Commitment,
and (ii) in the event that the aggregate total of Loan Advances equals less
than the Loan Commitment as of the Completion Date, by multiplying each of
the installments of Scheduled Rent as set forth on APPENDIX III by a
fraction, the numerator of which is the aggregate total of Loan Advances
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under the Loans, and the denominator of which is the Loan Commitment.
Notwithstanding the foregoing, on the Scheduled Termination Date, the Lessee
shall pay an amount equal to the Recourse Deficiency Amount or the Lease
Balance, as the case may be, in accordance with the provisions of ARTICLE XV
hereof, in addition to the installment of Scheduled Rent due hereunder.
SECTION 4.2 SUPPLEMENTAL RENT. Lessee shall pay to Lessor, or to
whomever shall be entitled thereto as expressly provided herein or in any other
Operative Document or in the Facilitation Agreement dated the date hereof
between the Lessee, the Lessor and JH Management Corporation (the "Facilitation
Agreement"), any and all Supplemental Rent promptly as the same shall become due
and payable. In particular, the Lessee agrees to pay to the Lessor or its
designee as Supplemental Rent (i) on the Closing Date and on May 1st of each
succeeding year during the Lease Term, the annual Facilitation Fee in the sum of
$3,300, (ii) amounts necessary to reimburse Lessor for reasonable legal fees and
expenses in connection with the transaction contemplated by the Operative
Documents; and (iii) such other amounts as Lessor and Lessee shall mutually
agree upon. In the event of any failure on the part of Lessee to pay any
Supplemental Rent, which failure constitutes an Event of Default, Lessor shall
have all rights, powers and remedies provided for herein or by law or in equity
or otherwise in the case of nonpayment of Basic Rent. All Supplemental Rent to
be paid pursuant to this Section shall be payable in the type of funds and in
the manner set forth in SECTION 4.3.
SECTION 4.3 METHOD OF PAYMENT. All Basic Rent shall be paid by Lessee
directly to the Lender. Supplemental Rent (including amounts due under ARTICLE
XV hereof) shall be paid to Lessor (or to such Person as may be entitled
thereto) or, in each case, to such Person as Lessor (or such other Person) shall
specify in writing to Lessee, and at such place as Lessor (or such other Person)
shall specify in writing to Lessee, which specifications by Lessor shall be
given by Lessor at least ten Business Days prior to the due date therefor. Each
payment of Rent (including payments under ARTICLE XV hereof) shall be made by
Lessee prior to 1:00 p.m., Dallas, Texas time, at the place of payment in funds
consisting of lawful currency of the United States of America which shall be
immediately available on the scheduled date when such payment shall be due,
unless such scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day.
SECTION 4.4 LATE PAYMENT. If any Rent, other than (i) Supplemental Rent
payable by reason of this Section, or (ii) Rent due on the Scheduled Termination
Date (as to which no grace period shall apply), shall not be paid when due or
within five (5) days thereafter, Lessee shall pay to Lender, as assignee of
Lessor, as Supplemental Rent, interest (to the maximum extent permitted by law)
on such overdue amount from and including the due date thereof to but excluding
the Business Day of payment thereof at the Overdue Rate.
SECTION 4.5 NET LEASE; NO SETOFF, ETC. This Lease is a net lease and,
notwithstanding any other provision of this Lease, Lessee shall pay all Basic
Rent and Supplemental Rent, and all costs, charges, taxes, assessments and other
expenses (foreseen or unforeseen) for which Lessee or any Indemnitee is or shall
become liable by reason of Lessee's
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or such Indemnitee's estate, right, title or interest in the Leased Property,
or that are connected with or arise out of the acquisition, installation,
possession, use, occupancy, maintenance, ownership, leasing, repairs and
rebuilding of, or addition to, the Leased Property or any portion thereof,
including, without limitation, the Construction or the financing of the
Construction and any other amounts payable hereunder shall be paid without
counterclaim, setoff, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and Lessee's obligation to pay all such
amounts throughout the Lease Term is absolute and unconditional. The
obligations and liabilities of Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including without limitation
(i) any defect in the condition, merchantability, design, quality or fitness
for use of the Leased Property or any part thereof, or the failure of the
Leased Property to comply with all Applicable Law, including any inability to
occupy or use the Leased Property by reason of such non-compliance, (ii) any
damage to, removal, abandonment, salvage, loss, contamination of or Release
from, scrapping or destruction of or any requisition or taking of the Leased
Property or any part thereof, (iii) any restriction, prevention or
curtailment of or interference with any use of the Leased Property or any
part thereof including eviction, (iv) any defect in title to or rights to the
Leased Property or any Lien on such title or rights or on the Leased
Property, (v) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of any Person
requested or consented to by Lessee, (vi) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other
like proceedings relating to Lessee, Lessor, the Lender (except to the extent
Lender's or Lessor's bankruptcy or insolvency terminates Lender's obligation
to advance the Loans or Lessee's obligation to fund the Equity Commitment) or
any other Person, or any action taken with respect to this Lease by any
trustee or receiver of Lessee, Lessor, the Lender or any other Person, or by
any court, in any such proceeding, (vii) any failure on the part of the
Lessor to perform or comply with any of the terms of this Lease, any other
Operative Document or of any other agreement where such failure was caused by
Lessee's failure to perform its obligations under the Operative Documents,
(viii) any disaffirmance of this Lease or any provision hereof or any of the
other Operative Documents or any provision of any thereof by Lessee, (ix) any
action by any court, administrative agency or other Governmental Authority,
(x) any restriction, prevention or curtailment of or interference with the
Construction or any use of the Leased Property or any part thereof or (xi)
any other occurrence whatsoever, whether similar or dissimilar to the
foregoing, whether or not either Lessee shall have notice or knowledge of any
of the foregoing; provided that the waivers and acknowledgements in this
SECTION 4.5 shall not be deemed to be or construed as a waiver of the
Purchase Option or any of Lessee's rights set forth in ARTICLE XV. Except as
specifically set forth in ARTICLES XV or XI of this Lease, this Lease shall
be noncancellable by Lessee for any reason whatsoever and Lessee, to the
extent permitted by Applicable Law, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender this Lease,
or to any diminution, abatement or reduction of Rent payable by Lessee
hereunder. Lessee assumes the sole responsibility for the condition, use,
operation, maintenance, and management of the Leased Property and Lessor
shall have no responsibility in respect thereof and shall have no liability
for damage to the property of either Lessee or any subtenant of Lessee on any
account
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or for any reason whatsoever other than by reason of Lessor's willful
misconduct or breach of any of its express obligations under any Operative
Document.
SECTION 4.6 LESSEE TO COOPERATE WITH LESSOR. The Lessee hereby agrees
to use its best efforts to supply Lessor with all such information necessary in
order for Lessor to maintain its books and accounts and prepare all required
federal, state and local tax returns.
ARTICLE V
CONDITION AND USE OF LEASED PROPERTY
During the Lease Term, Lessor's interest in the Improvements and the Land
is demised and let by Lessor "AS IS" subject to (i) the rights of any parties in
possession thereof, (ii) the state of the title thereto existing at the time
Lessor acquired its interest in the Leased Property, (iii) any state of facts
which an accurate survey or physical inspection might show (including the survey
delivered on the Closing Date), (iv) all Applicable Law and (v) any violations
of Applicable Law which may exist upon or subsequent to the commencement of the
Lease Term. LESSEE ACKNOWLEDGES THAT, ALTHOUGH LESSOR WILL OWN AND HOLD TITLE
TO THE LEASED PROPERTY, LESSEE IS SOLELY RESPONSIBLE FOR THE DESIGN,
DEVELOPMENT, BUDGETING AND CONSTRUCTION OF THE PROJECT ALTERATIONS. NEITHER
LESSOR NOR THE LENDER HAVE MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE VALUE, MERCHANTABILITY, TITLE, HABITABILITY,
CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE LEASED PROPERTY (OR ANY
PART THEREOF), OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE LEASED PROPERTY (OR ANY PART THEREOF), ALL SUCH
WARRANTIES BEING HEREBY DISCLAIMED, AND NEITHER LESSOR NOR THE LENDER SHALL BE
LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE
LEASED PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAW except
that Lessor hereby represents and warrants that the Leased Property is and shall
at all times remain free of Lessor Liens. As between Lessor and Lessee, Lessee
has been afforded full opportunity to inspect the Land and the Improvements, is
satisfied with the results of its inspections of the Land and the Improvements
and is entering into this Lease solely on the basis of the results of its own
inspections and all risks incident to the matters discussed in the two preceding
sentences, as between Lessor or the Lender, on the one hand, and Lessee, on the
other, are to be borne by Lessee. The provisions of this Article have been
negotiated and, except to the extent otherwise expressly stated, the foregoing
provisions are intended to be a complete exclusion and negation of any
representations or warranties by Lessor or the Lender, express or implied, with
respect to the Leased Property that may arise pursuant to any law now or
hereafter in effect or otherwise.
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ARTICLE VI
LIENS; EASEMENTS; PARTIAL CONVEYANCES
Commencing on the Closing Date and thereafter, Lessee shall not directly or
indirectly create, incur or assume, any Lien on or with respect to the Leased
Property, the Construction, title thereto, or any interest therein including any
Liens which arise out of the possession, use, occupancy, construction, repair or
rebuilding of the Leased Property or by reason of labor or materials furnished
or claimed to have been furnished to Lessee, or any of its contractors or agents
or by reason of the financing of any personalty or equipment purchased or leased
by Lessee or Alterations constructed by Lessee, except in all cases Permitted
Liens.
Notwithstanding the foregoing paragraph, at the request of Lessee, Lessor
shall, from time to time during the Lease Term and upon reasonable advance
written notice from Lessee and receipt of the materials specified in the next
succeeding sentence, consent to and join in any (i) grant of easements,
licenses, rights of way and other rights in the nature of easements, including,
without limitation, utility easements to facilitate Lessee's use, development
and construction of the Leased Property, (ii) release or termination of
easements, licenses, rights of way or other rights in the nature of easements
which are for the benefit of the Land, the Improvements or any portion thereof,
(iii) dedication or transfer of portions of the Land, not improved with a
building, for road, highway or other public purposes, (iv) execution of
agreements for ingress and egress and amendments to any covenants and
restrictions affecting the Land, the Improvements or any portion thereof and (v)
request to any Governmental Authority for platting or subdivision or replatting
or resubdivision approval with respect to the Land or any portion thereof or any
parcel of land of which the Land or any portion thereof forms a part or a
request for any variance from zoning or other governmental requirements.
Lessor's obligations pursuant to the preceding sentence shall be subject to the
requirements that:
(i) any such action shall be at the sole cost and expense of Lessee
and Lessee shall pay all reasonable and documented out-of-pocket costs of Lessor
in connection therewith (including, without limitation, the reasonable and
documented fees of attorneys, architects, engineers, planners, appraisers and
other professionals reasonably retained by Lessor in connection with any such
action);
(ii) Lessee shall have delivered to Lessor a certificate of a
Responsible Officer of Lessee stating that (1) such action will not cause the
Land, the Improvements or any portion thereof to fail to comply in any material
respect with the provisions of this Lease or any other Operative Documents or in
any material respect with Applicable Law and (2) such action will not materially
reduce the Fair Market Sales Value, utility or useful life of the Land or the
Improvements nor Lessor's interest therein;
(iii) all consideration received, if any, in connection with such
action (net of all reasonable out-of-pocket expenses incurred by Lessee in
connection therewith) shall be paid to the Lender within ten (10) Business Days
following receipt thereof and shall constitute a
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Qualified Payment (to the extent consistent with the definition thereof) and
be applied to reduce the Loan; and
(iv) in the case of any release or conveyance, if Lessor so requests
and to the extent available without undue expense, Lessee will cause to be
issued and delivered to Lessor by the Title Insurance Company, to the extent
available in the State of Texas, an endorsement to the Title Policy pursuant to
which the Title Insurance Company agrees that its liability for the payment of
any loss or damage under the terms and provisions of the Title Policy will not
be affected by reason of the fact that a portion of the real property referred
to in Schedule A of the Title Policy has been released or conveyed by Lessor.
ARTICLE VII
MAINTENANCE AND REPAIR;
ALTERATIONS, MODIFICATIONS AND ADDITIONS
SECTION 7.1 MAINTENANCE AND REPAIR; COMPLIANCE WITH LAW. Lessee, at its
own expense, shall at all times during the Lease Term (i) maintain the Leased
Property in good repair and condition (subject to ordinary wear and tear), in
accordance with prudent industry standards and, in any event, in no less a
manner as other similar facilities owned or leased by Lessee in the United
States, (ii) make all Alterations in accordance with, and maintain (whether or
not such maintenance requires structural modifications or Alterations) and
operate and otherwise keep the Leased Property in compliance with, all
Applicable Laws and (iii) make all material repairs, replacements and renewals
of the Leased Property or any part thereof which may be required to keep the
Leased Property in the condition required by the preceding clauses (i) and (ii).
Lessee shall perform the foregoing maintenance obligations regardless of whether
the Leased Property is occupied or unoccupied. Lessee waives any right that it
may now have or hereafter acquire to (i) require Lessor to maintain, repair,
replace, alter, remove or rebuild all or any part of the Leased Property or (ii)
make repairs at the expense of Lessor pursuant to any Applicable Law or other
agreements or otherwise. Lessor shall not be liable to Lessee or to any
contractors, subcontractors, laborers, materialmen, suppliers or vendors for
services performed or material provided on or in connection with the Leased
Property or any part thereof. Lessor shall not be required to maintain, alter,
repair, rebuild or replace the Leased Property in any way.
SECTION 7.2 ALTERATIONS. The Lessee shall have the right, at any time
and from time to time, to make such Alterations, structural or otherwise, to the
Leased Property as the Lessee shall deem necessary or desirable, subject to the
following conditions:
(a) No Alterations shall be undertaken until the Lessee shall have
procured and paid for, so far as the same may be required from time to
time, all required municipal and other governmental permits and
authorizations of the various municipal departments and governmental
subdivisions having jurisdiction,
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and the Lessor, at the Lessee's expense, shall join in the application for
such permits or authorizations whenever such action is necessary;
(b) Any structural Alterations, or any Alterations undertaken as a
single project and involving an estimated cost aggregating more than
$500,000, shall, if requested by the Lender, be conducted under the
supervision of an architect or engineer licensed as such in the State;
selected by the Lessee and reasonably acceptable to the Lender, and no such
work shall be undertaken until preliminary plans and outline specifications
and budget estimates therefor, prepared and approved in writing by such
architect or engineer, stating that the same comply with the provisions of
this Article, shall have been submitted to and approved by the Lessor and
the Lender;
(c) All Alterations will comply in all respects with the provisions
of the Operative Documents and shall be of such a character that, when
completed, the Fair Market Sales Value of the Improvements shall be not
less than the Fair Market Sales Value of the Improvements immediately
before any such Alterations;
(d) All work done in connection with any Alterations shall be done in
a good and workmanlike manner and in compliance with applicable building
and zoning laws and with all other Applicable Laws; the cost of any such
Alterations shall be paid in cash or its equivalent, so that the Leased
Property shall at all times be free of Liens for labor and materials
supplied or claimed to have been supplied (other than inchoate liens or
liens bonded off in accordance with Applicable Law and with Lender's
consent); and the work of any Alterations shall be prosecuted with
reasonable dispatch, unavoidable delays excepted; and
(e) Worker's compensation insurance covering all persons employed in
connection therewith and with respect to whom death or bodily injury claims
could be asserted against the Lessor, the Lender or the Lessee or the
Leased Property and general liability and property damage insurance (which
may be effected by indorsement, if obtainable, on the insurance required to
be carried pursuant to SECTION 9.2) for the mutual benefit of the Lessor,
the Lender or the Lessee with limits of not less than those required to be
carried pursuant to said SECTION 9.2 shall be maintained by the Lessee at
all times when any work is in process in connection with any Alterations.
SECTION 7.3 TITLE TO ALTERATIONS. Title to all Alterations shall
without further act vest in Lessor (subject to Lessee's right to remove trade
fixtures, personal property and equipment which were not acquired with funds
advanced by Lessor or Lender) and shall be deemed to constitute a part of the
Leased Property and be subject to this Lease.
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ARTICLE VIII
USE
Lessee shall use the Leased Property or any part thereof only for the
purpose of a corporate headquarters and office facility and related uses
(including product development and manufacturing), and such other uses that may
be available under the zoning applicable to the Land as of the date of this
Lease.
ARTICLE IX
INSURANCE
SECTION 9.1 INSURANCE COVERAGES. At all times (except as otherwise
indicated) the Lessee, at its sole cost and expense, shall keep the Leased
Property insured for the mutual benefit of the Lender, Lessor and Lessee
against:
(a) loss or damage by fire, and such other risks as may be included
in the so-called "All Risk" form of insurance providing coverage against
all risks of physical loss, in an amount satisfactory to Lender, but in any
event not less than the then Full Replacement Cost of the Leased Property;
(b) loss or damage from leakage of sprinkler systems now or hereafter
installed in the Leased Property, in such amount as Lender may reasonably
require;
(c) to the extent not covered by Lessee's business interruption
insurance, loss of rental from the Leased Property, under a rental value
insurance policy covering risk of loss due to any of the hazards described
in CLAUSES (a) and (b) of this SECTION 9.1 in an amount not less than the
aggregate requirements for the period of 12 months following the occurrence
of the insured casualty for Basic Rent and Supplemental Rent;
(d) loss or damage by explosion of high pressure steam boilers, air
conditioning equipment, pressure vessels, motors or similar apparatus, now
or hereafter installed in the Leased Property in such limits with respect
to any one accident as may reasonably be required by Lender from time to
time, but not less than $100,000;
(e) flood hazard coverage, if available under any applicable federal
flood insurance program, in an amount reasonably satisfactory to Lender
(but only if the Leased Property is located in a special flood hazard
area);
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(f) during the Construction and at any time during which any part of
the Leased Property or any Alteration are under construction, and as to any
part of the Leased Property or any Alteration under construction, builder's
risk coverage under a so-called "all risk" non-reporting completed value
form of policy; and
(g) such other hazards and in such amounts as Lender may reasonably
require provided that such insurance is then customarily maintained with
respect to similar properties in the State.
The term "Full Replacement Cost" shall mean the actual replacement cost of the
Leased Property (excluding foundation and excavation costs) without physical
depreciation. Full Replacement Cost shall be determined at the request of
Lender by an architect, appraiser, appraisal company or one of the insurers,
selected and paid by the Lessee and reasonably acceptable to Lender, but such
determination shall not be required to be made more frequently than once every
24 months.
SECTION 9.2 LIABILITY INSURANCE. The Lessee shall also maintain
insurance for the mutual benefit of the Lessor, the Lender, each other
Indemnitee, and the Lessee against claims for bodily injury or property damage
with respect to the Leased Property, under a policy of general public liability
insurance, with such limits as may reasonably be required by the Lessor or the
Lender from time to time, but not less than $1,000,000 combined single limit,
with excess umbrella liability coverage of not less than $5,000,000.
SECTION 9.3 POLICIES. All insurance provided for under this Lease shall
be effected under valid enforceable policies issued by insurers of recognized
responsibility and acceptable to the Lessor and the Lender. Upon the execution
of this Lease, the Lessee shall deliver to the Lender and the Lessor original
certificates of such insurance and copies of such policies in form reasonably
satisfactory to the Lender. At least 10 days prior to the expiration date of
any policy, a copy of the renewal policy for such insurance shall be delivered
by the Lessee to the Lessor and the Lender, and certificates thereof in form
reasonably satisfactory to the Lender shall be delivered as aforesaid, together
with satisfactory evidence of payment of the premium thereon. All policies
referred to in SECTION 9.1 shall contain agreements by the insurers that (i) any
loss shall be payable to the Lessor and the Lender, notwithstanding any act or
negligence of the Lessee which might otherwise result in forfeiture of said
insurance, (ii) such policies shall not be canceled except upon 30 days' prior
written notice to each named insured and loss payee, (iii) the coverage afforded
thereby shall not be affected by the performance of any work in or about the
Leased Property and (iv) waiving all rights of subrogation against the Lessor,
Lender, Lessee and their respective officers, employees, directors,
incorporators, shareholders and agents.
SECTION 9.4 LOSS PAYEE PROVISIONS. The rental value policy referred to
in SECTION 9.1(c) shall name Lender as the loss-payee thereunder. Upon the
receipt of same, the Lender shall apply the proceeds of such rental value
insurance paid to it first to the payment of
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Basic Rent and then to the payment of taxes, insurance premiums and other
items of Supplemental Rent becoming due during the rebuilding and restoration
of the Leased Property, and any balance of such proceeds after the completion
of such rebuilding and restoration shall be paid to Lessee. Except as
provided above in this SECTION 9.4, all policies of insurance required herein
shall name the Lender, Lessor, and Lessee as the insureds as their respective
interests may appear. Subject to the provisions and limitations of this
Section, all policies referred to in SECTION 9.1 shall also provide for any
loss to be payable to Lender as its interest may appear, pursuant to a
standard mortgagee clause or endorsement. The loss, if any, under the
policies referred to in SECTION 9.1 shall be adjusted with the insurance
companies by the Lessee except that no loss exceeding $250,000 shall be
adjusted without the prior written approval of the Lender, which approval
shall not be unreasonably withheld or delayed. The loss, if any, under all
policies referred to in SECTION 9.1 shall be payable to the Lender. All such
policies shall expressly provide that loss thereunder shall be adjusted and
paid as provided in this Section. Any loss paid to the Lessee under any
insurance policy referred to in SECTION 9.1 shall be held by the Lessee in
trust for application to the cost of restoring, repairing, replacing or
rebuilding the Leased Property. Any loss paid to the Lender shall be held in
trust by it and disbursed by it in accordance with the provisions of SECTION
11.6 of this Lease.
SECTION 9.5 OTHER INSURANCE. Nothing in this Article shall prevent the
Lessee from taking out insurance of the kind and in the amounts provided for
under SECTION 9.1 AND 9.2 under a blanket insurance policy or policies which can
cover other properties owned or operated by the Lessee as well as the Leased
Property; PROVIDED, HOWEVER, that any such policy of insurance provided for
under SECTION 9.1 shall (a) specify therein, or the Lessee shall furnish the
Lessor and the Lender with a written statement from the insurers under such
policies specifying, the amount of the total insurance allocated to the Leased
Property, which amount shall be not less than the amount required by said
SECTION 9.1 to be carried, and (b) not contain any clause which would result in
the insured thereunder being required to carry insurance with respect to the
property covered thereby in an amount equal to a minimum specific percentage of
the value of such property in order to prevent the insured therein named from
becoming a co-insurer of any loss with the insurer under such policy. The
Lessee shall furnish to the Lessor and the Lender, within 30 days after the
filing thereof with any insurance rate-making body, copies of the schedule or
make-up of all property covered by every such policy of blanket insurance.
SECTION 9.6 LOSS DEDUCTIBLES. All insurance provided for under this
Lease may contain loss deductible clauses in such maximum amounts as the Lender
shall approve from time to time.
SECTION 9.7 FAILURE TO MAINTAIN INSURANCE. If Lessee shall fail to
maintain any insurance required to be maintained herein or in any other
Operative Document, then without limiting the application of the provisions of
Article XIII(c) hereof, Lessor or the Lender may, but shall not be required to,
obtain such insurance on behalf of the Lessee. In the event Lessor or Lender
shall obtain such insurance, (a) the Lessee shall pay the costs of obtaining
such
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insurance as Supplemental Rent within five (5) Business Days of demand
therefor, and (b) the Lessee may provide other insurance conforming to the
requirements of this Lease, in which instance any insurance obtained by the
Lender or the Lessor shall be cancelled at its request. The rights of the
Lessee and Lender under this SECTION 9.7 shall be in addition to, and not in
place of, any other rights such parties may have under this Lease and the
other Operative Documents.
ARTICLE X
ASSIGNMENT AND SUBLEASING
Except as provided in the next following sentence, Lessee may not assign
any of its right, title or interest in, to or under this Lease. Lessee may
assign or sublease all or any portion of the Leased Property; PROVIDED, HOWEVER,
that (i) all obligations of Lessee (or, in the case of a merger, consolidation
or sale of all or substantially all of Lessee's assets, Lessee's successor if
(A) such successor has a net worth, determined in accordance with GAAP, at least
equal to that of Lessee as of the end of the most recent fiscal quarter of
Lessee, and is acceptable to Lender (B) such successor assumes in writing all of
Lessee's obligations under the Operative Documents without qualification or
reservation and (C) immediately after giving effect to such merger,
consolidation or sale, no Event of Default exists) shall continue in full effect
as obligations of a principal and not of a guarantor or surety, as though no
assignment or sublease had been made, (ii) any such sublease shall be expressly
subject and subordinate to this Lease, the Loan Agreement, the Mortgage and the
other Operative Documents except to the extent the Lease remains effective under
the Non-Disturbance and Attornment Agreement and (iii) each such sublease shall
terminate on or before the Lease Termination Date.
ARTICLE XI
LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE
SECTION 11.1 EVENT OF LOSS. Any single event (including a Release)
affecting the Leased Property (i) which would otherwise constitute a Casualty
during the Lease Term, (ii) which, in the good-faith judgement of Lessee, (A)
renders repair and restoration of the Leased Property impractical or
uneconomical, or (B) requires in excess of $5,000,000 to remedy or repair, and
(iii) as to which Lessee, within sixty (60) days after the occurrence of such
event, delivers to Lessor and the Lender an Officer's Certificate notifying
Lessor and the Lender of such event and of such judgement, shall constitute an
"Event of Loss". In the case of any other event which constitutes a Casualty,
Lessee shall restore and rebuild the Leased Property pursuant to SECTION 11.3.
If an Event of Loss other than an Event of Taking shall occur, Lessee shall pay
to Lessor on the next Rent Payment Date following delivery of the Officer's
Certificate pursuant to clause (iii) of the preceding sentence an amount equal
to the Lease Balance. Upon Lessor's receipt of such Lease Balance on such date,
Lessor shall cause Lessor's interest in the Leased Property to be conveyed to
Lessee in accordance with and subject to the provisions of SECTION 15.5
"Purchase Procedure" hereof. Upon completion of such purchase, but not prior
thereto, this Lease and all obligations hereunder shall terminate, except with
respect to
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obligations and liabilities hereunder, actual or contingent, that have arisen
or relate to events occurring on or prior to such date of purchase, or which
are expressly stated herein to survive termination of this Lease. Upon the
consummation of the purchase of the Leased Property pursuant to this Section,
and to the extent the Loans are not paid in full any proceeds derived from
insurance required to be maintained by Lessee pursuant to this Lease for the
Leased Property remaining after payment of such purchase price shall be paid
over to Lessor and shall be applied by the Lessor to pay interest on and
principal of the Notes. If the Loans shall have been paid in full, any such
proceeds shall be paid over to, or retained by the Lessee, or as it may
direct, and Lessor shall assign to Lessee, without warranty, all of Lessor's
rights to and interest in insurance required to be maintained by Lessee
pursuant to this Lease.
SECTION 11.2 EVENT OF TAKING. Any event (i) which constitutes a taking
of title to the Leased Property, or (ii)(A) which would otherwise constitute a
Condemnation, (B) which, in the good-faith judgement of Lessee, (I) renders
restoration and rebuilding of the Leased Property impossible, impractical or
uneconomical, or (II) involves a taking in excess of $2,000,000 and (C) as to
which Lessee, within sixty (60) days after the occurrence of such event,
delivers to Lessor and the Lender an Officer's Certificate notifying Lessor and
the Lender of such event, of such judgement and of the date (or Lessee's best
estimate thereof) on which Lessee shall be required to relinquish possession of
the Leased Property (or the affected portion thereof), shall constitute an
"Event of Taking". In the case of any other event which constitutes a
Condemnation, Lessee shall restore and rebuild the Leased Property pursuant to
SECTION 11.4. If an Event of Taking shall occur, Lessee shall pay to Lessor (i)
on the next Rent Payment Date following the occurrence of such Event of Taking,
in the case of an Event of Taking described in clause (i) of the second
preceding sentence or (ii) on the Rent Payment Date next preceding the date on
which Lessee is required to relinquish possession of the Leased Property (or the
affected portion thereof), in the case of an Event of Taking described in clause
(ii) of the second preceding sentence, an amount equal to the Lease Balance.
Upon Lessor's receipt of the Lease Balance on such date, Lessor shall cause
Lessor's interest in the Leased Property to be conveyed to Lessee in accordance
with and subject to the provisions of SECTION 15.5 "Purchase Procedure" hereof;
PROVIDED, HOWEVER, that (A) such conveyance shall be by special warranty deed,
but free and clear of Lessor's Liens and the lien of the Loan Documents, (B)
such conveyance shall be subject to all rights of the condemning authority, (C)
Lessor shall have no obligation to remove title defects other than Lessor Liens
and the lien of the Mortgage and (D) Lessee's ability to obtain a title
insurance policy shall not affect Lessee's obligation to purchase Lessor's
interest in the Leased Property. Upon completion of such purchase, but not
prior thereto, this Lease and all obligations hereunder shall terminate, subject
to the provisions of SECTION 18.17 hereof. Upon the consummation of the
purchase of the Leased Property pursuant to this Section, all Awards received by
Lessor, after deducting any reasonable and documented costs incurred by Lessor
in collecting such Awards (PROVIDED that the contractual fee arrangement, if
other than on an hourly basis, between Lessor and its counsel shall be subject
to Lessee's approval, not to be unreasonably withheld), received or payable on
account of an Event of Taking during the Lease Term shall be paid to Lessor so
long as the Loans shall remain unpaid in full and the Lessor shall apply the sum
to pay interest on and principal of the Notes. Once the Loans are
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paid in full, such amounts shall be paid to the Lessee, and all rights of
Lessor in Awards not then received shall be assigned to Lessee by Lessor. If
no Event of Default has occurred and is then continuing, Lessee shall have the
right to negotiate with the condemning authority and receive all Awards,
subject to the terms of this Lease.
SECTION 11.3 CASUALTY. If a Casualty shall occur, Lessee shall rebuild
and restore the Leased Property, will complete the same prior to the Lease
Termination Date; PROVIDED, HOWEVER, that such restoration and rebuilding will
be performed, and the Improvements, as applicable, will be restored and rebuilt,
in accordance with the Plans and Specifications as in existence on the date on
which the certificate of occupancy for the Improvements was issued, as such
Plans and Specifications may have been modified in respect of Alterations
completed prior to the occurrence of such Casualty pursuant to SECTION 7.2 or as
may be required by law, with such additional modifications to such Plans and
Specifications as Lessor shall consent to in writing, which consent shall not be
unreasonably held or delayed.
SECTION 11.4 CONDEMNATION. If a Condemnation shall occur, Lessee shall
rebuild and restore the Leased Property to the extent practicable, will complete
the same prior to the Lease Termination Date, PROVIDED, HOWEVER, that within
sixty (60) days after Lessee's receipt of any Awards with respect to such
Condemnation, Lessee shall pay to the Lender, which amounts shall be applied to
the Lease Balance, (a) the portion, if any, of such Awards which are identified,
by the condemner, as being allocable to the Land or (b) if no such
identification is made by the condemner, the portion, if any, of such Awards
which are, in Lessee's good-faith and reasonable judgment, allocable to the
Land; and PROVIDED, FURTHER, that such restoration and rebuilding will be
performed, and the Improvements, as applicable, will be restored and rebuilt, in
accordance with the Plans and Specifications as in existence on the date on
which the certificate of occupancy for the Improvements, as applicable, was
issued, as such Plans and Specifications may have been modified in respect of
Alterations completed prior to the occurrence of such Casualty pursuant to
SECTION 7.2 or modified to adjust for a Casualty of the Leased Property pursuant
to SECTION 11.3 or such additional modifications as may be required by
Applicable Law, with such additional modifications to such Plans and
Specifications as Lessor shall consent to in writing, which consent shall not be
unreasonably withheld or delayed.
SECTION 11.5 VERIFICATION OF RESTORATION AND REBUILDING. Lessee will
promptly notify Lender and Lessor of the completion of the restoration or
rebuilding of the Improvements, as applicable, after a Casualty or Condemnation.
After completion of such restoration and rebuilding and in order to verify
Lessee's compliance with the foregoing SECTIONS 11.3 and 11.4, Lessor, the
Lender and their authorized representatives may, upon three (3) Business Days'
notice to Lessee during normal business hours, inspect the Leased Property and
the completion of the restoration and rebuilding of the Improvements, as
applicable. All reasonable and documented out-of-pocket costs of such
inspection incurred by Lessor and the Lender will be paid by Lessee promptly
after written request. No such inspection shall unreasonably interfere with
Lessee's operations or the operations of any other occupant of the Leased
Property. None of the inspecting parties shall have any duty to make any such
inspection or inquiry and none
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of the inspecting parties shall incur any liability or obligation by reason of
not making any such inspection or inquiry. None of the inspecting parties
shall incur any liability or obligation by reason of making any such
inspection or inquiry unless and to the extent such inspecting party causes
damage to the Leased Property or any property of Lessee or any other Person
during the course of such inspection.
SECTION 11.6 APPLICATION OF PAYMENTS.
(a) All proceeds (except for payments under insurance policies maintained
other than pursuant to ARTICLE IX of this Lease) received at any time by Lessor,
Lessee or the Lender from any Governmental Authority or other Person with
respect to any Condemnation or Casualty to the Leased Property or any part
thereof or with respect to an Event of Loss or an Event of Taking, plus the
amount of any payment that would have been due from an insurer but for Lessee's
self-insurance or deductibles ("LOSS PROCEEDS"), shall (except to the extent
SECTION 11.9 applies) be applied as follows:
(i) In the event Lessee purchases the Leased Property pursuant to
SECTION 11.1 or SECTION 11.2, such Loss Proceeds shall be applied as set
forth in SECTION 11.1 or SECTION 11.2, as the case may be;
(ii) In the event of a Casualty at such time when no Event of Default
has occurred and is continuing and Lessee is obligated to repair and
rebuild the Leased Property pursuant to SECTION 11.3, Lessee may, in good
faith and subsequent to the date of such Casualty, certify to Lender and to
the applicable insurer that no Event of Default has occurred, in which
event the applicable insurer shall pay the Loss Proceeds to Lessee, and, if
requested by Lessee, Lender and Lessor shall so direct the insurer; and
(iii) In the event of a Condemnation at such time when no Event of
Default has occurred and is continuing and Lessee is obligated to repair
and rebuild the Leased Property pursuant to SECTION 11.4, Lessor and Lender
(if required) shall upon Lessee's request assign to Lessee, Lessor's and
Lender's (if applicable) interest in any applicable Awards except for
Awards (or portions thereof) described in SECTION 11.4 (a) or (b); and
(iv) As provided in SECTION 11.8 if such Section is applicable.
(b) After the completion of the repair and/or rebuilding pursuant to this
Article, all sums being held by the Lender pursuant to SECTION 9.4 hereof shall
be disbursed to the Lessee. During any period of repair or rebuilding pursuant
to this Article, this Lease will remain in full force and effect and Basic Rent
shall continue to accrue and be payable without abatement or reduction;
PROVIDED, HOWEVER, that any rent loss payments received by the Lender or the
Lessor shall be credited against the Lessee's obligation to pay Rent. Lessee
shall maintain records setting forth information relating to the receipt and
application of payments in accordance with
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this Section. Such records shall be kept on file by Lessee at its offices and
shall be made available to Lessor and the Lender upon request.
SECTION 11.7 PROSECUTION OF AWARDS.
(a) If, during the continuance of any Event of Default, any Condemnation
shall occur, Lessee shall give to Lessor and the Lender promptly, but in any
event within sixty (60) days after the occurrence of such Condemnation, written
notice of such occurrence and the date thereof, generally describing the nature
and extent of such Condemnation. With respect to any Event of Taking or any
Condemnation, Lessee shall control the negotiations with the relevant
Governmental Authority as to any proceeding in respect of which Awards are
required, under SECTION 11.6, to be assigned or released to Lessee; PROVIDED,
HOWEVER, that if Event of Default shall have occurred and be continuing Lessor
shall control such negotiations. Lessee hereby irrevocably assigns, transfers
and sets over to Lessor all rights of Lessee to any Award made during the
continuance of an Event of Default on account of any Event of Taking or any
Condemnation and, if there will not be separate Awards to the Lessor and the
Lessee on account of such Event of Taking or Condemnation, irrevocably
authorizes and empowers Lessor during the continuance of an Event of Default,
with full power of substitution in the name of Lessee or otherwise (but without
limiting the obligations of Lessee under this Article), to file and prosecute
what would otherwise be Lessee's claim for any such Award and, in the case of
Lessor, to collect, receipt for and retain the same; PROVIDED, HOWEVER, that in
any event Lessor may participate in any such negotiations, and no settlement
will be made without Lessor's prior consent, not to be unreasonably withheld or
delayed.
(b) Notwithstanding the foregoing, Lessee may prosecute, and Lessor shall
have no interest in, any claim with respect to Lessee's trade fixtures, other
personal property and equipment and Lessee's relocation expenses and any other
relocation benefits available to the Lessee under applicable law.
SECTION 11.8 APPLICATION OF CERTAIN PAYMENTS NOT RELATING TO AN EVENT OF
TAKING. In case of a requisition for temporary use of all or a portion of the
Leased Property which is not an Event of Taking, this Lease shall remain in full
force and effect, without any abatement or reduction of Basic Rent, and the
Awards for the Leased Property shall, unless an Event of Default has occurred
and is continuing, be paid to Lessee. Any amounts received by Lessor after an
Event of Default shall be applied to amounts due and owing under this Lease.
SECTION 11.9 OTHER DISPOSITIONS. Notwithstanding the foregoing
provisions of this Article, so long as an Event of Default shall have occurred
and be continuing, any amount that would otherwise be payable to or for the
account of, or that would otherwise be retained by, Lessee pursuant to this
Article shall be paid to Lessor and applied to amounts then due under the Loan
Documents and any excess shall be held by Lessor as security for the obligations
of Lessee under this Lease and, at such time thereafter as no Event of Default
shall be continuing,
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such amount shall be paid promptly to Lessee to the extent not previously
applied by Lessor in accordance with the terms of this Lease or the other
Operative Documents.
SECTION 11.10 NO RENT ABATEMENT. Rent shall not ▇▇▇▇▇ hereunder by reason
of any Casualty, any Event of Loss, any Event of Taking or any Condemnation of
the Leased Property, and Lessee shall continue to perform and fulfill all of
Lessee's obligations, covenants and agreements hereunder notwithstanding such
Casualty, Event of Loss, Event of Taking or Condemnation until the Lease
Termination Date. The foregoing notwithstanding, if and to the extent that,
pursuant to the provisions of this Lease and the other Operative Documents, Loss
Proceeds or Awards are paid over to and permanently retained by the Lender or
Lessor in accordance with the Operative Documents, Lessee shall receive as a
credit against its obligation to pay Basic Rent or, as applicable, the Lease
Balance, in the amount of any such Loss Proceeds or Awards.
ARTICLE XII
INTEREST CONVEYED TO LESSEE
If a bankruptcy court or other court of competent jurisdiction determines
that the transaction represented by this Lease will not be enforced as a true
lease, or will be treated as a financing or other transaction, then in such
event it is the intention of the parties hereto that (i) this Lease be treated
as a deed of trust and security agreement, or similar security document
encumbering the Leased Property, (ii) Lessor shall have, as a result of such
determination, all of the rights, powers and remedies of a beneficiary under a
deed of trust available under Applicable Law to take possession of and sell upon
the occurrence and continuation of an Event of Default (whether by foreclosure
or otherwise) the Leased Property, (iii) the effective date of such deed of
trust and security agreement shall be the effective date of this Lease, (iv) the
recording of this Lease, the Memorandum of Lease, or any other instrument
referencing this provision shall be deemed to be the recording of such deed of
trust and security agreement and (v) that the obligations secured by such deed
of trust and security agreement shall include the payment of the Loans, the
Notes and all Basic Rent and Supplemental Rent hereunder and all other
obligations of and amounts due from Lessee hereunder and under the Operative
Documents but without duplication.
ARTICLE XIII
EVENTS OF DEFAULT
The following events shall constitute Events of Default (whether any such
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
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(a) Lessee shall fail to make any payment of Rent when due hereunder and,
except with respect to the Rent due on the Scheduled Termination Date (as to
which no grace period shall apply), such failure shall continue unremedied for a
period of five (5) Business Days or more;
(b) Lessee shall fail to pay the Loans, the Contribution or the entire
Lease Balance when due pursuant to SECTIONS 11.1, 11.2, 15.1 or 15.2 hereof, or
fail to pay the Recourse Deficiency Amount when required pursuant to ARTICLE XV
hereof;
(c) Lessee shall fail to maintain insurance as required by ARTICLE IX
hereof, which failure shall continue unremedied for a period of five (5)
Business Days or more after notice from Lessor or Lender;
(d) The occurrence of any breach of the covenants in SECTION 5.3, SECTION
5.4 or SECTION 5.5 of the Participation Agreement (after the expiration of any
applicable cure or notice periods);
(e) In the event the Lender exercises its right to apply all or a portion
of the principal amount of the Certificate of Deposit in satisfaction of the
obligations secured thereby (other than for payment of all or any portion of the
principal of the Loans), the Lessee shall fail to pledge an additional
certificate of deposit, in the principal amount equal to the amount so applied,
within five days after the Lender's demand therefor;
(f) [Omitted];
(g) The filing by Lessee of any petition for dissolution or liquidation of
Lessee, or the commencement by Lessee of a voluntary case under any applicable
bankruptcy, insolvency or other similar law for the relief of debtors, foreign
or domestic, now or hereafter in effect, or Lessee shall have consented to the
entry of an order for relief in an involuntary case under any such law, or the
appointment of or taking possession by a receiver, custodian or trustee (or
other similar official) for Lessee or any substantial part of its property, or a
general assignment by Lessee for the benefit of its creditors, or Lessee shall
have taken any corporate action in furtherance of any of the foregoing; or the
filing against Lessee of an involuntary petition in bankruptcy which results in
an order for relief being entered or, notwithstanding that an order for relief
has not been entered, the petition is not dismissed within one hundred twenty
(120) days of the date of the filing of the petition, or the filing under any
law relating to bankruptcy, insolvency or relief of debtors of any petition
against Lessee which either (i) results in a finding or adjudication of
insolvency of Lessee or (ii) is not dismissed within one hundred twenty (120)
days of the date of the filing of such petition;
(h) A "default", "event of default" or other similar occurrence shall have
occurred and be continuing (after the expiration of any applicable cure or
notice periods) under any other loan agreement, credit agreement, revolving
credit agreement, mortgage, security agreement,
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lease agreement, participation agreement or other agreement between Lessee,
or any Affiliate of Lessee, and any Person, evidencing or securing any Debt
of Lessee or such Affiliate exceeding $500,000;
(i) Any representation or warranty by Lessee in any Operative Document or
in any certificate or document delivered to Lessor pursuant to any Operative
Document shall have been incorrect in any material respect when made and has
resulted in a Material Adverse Effect on Lessor and such Material Adverse Effect
shall not have been cured within 10 days of Lessee's receipt of written notice
thereof from Lessor or the Lender on behalf of Lessor;
(j) [omitted];
(k) The occurrence of any breach of Lessee's covenant in ARTICLE X hereof;
or
(l) Lessee shall fail in any material respect to timely perform or observe
any covenant, condition or agreement (not included in CLAUSE (a), (b), (c), (d),
(e), (g), (h), (i) or (k) of this Article) to be performed or observed by it
hereunder or under the other Operative Documents and such failure shall continue
for a period of 30 days after the Lessee's receipt of written notice thereof
from Lessor or Lender (PROVIDED, HOWEVER, if such failure is other than the
payment of money and is of such nature that it can be corrected but not within
the applicable period, then that failure shall not constitute an Event of
Default so long as Lessee institutes curative action within the applicable
period and diligently pursues that action to completion, but in no event for a
period longer than ninety days).
ARTICLE XIV
ENFORCEMENT
SECTION 14.1 REMEDIES. Upon the occurrence of any Event of Default and
at any time thereafter, Lessor may, so long as such Event of Default is
continuing, do one or more of the following as Lessor in its sole discretion
shall determine, without limiting any other right or remedy Lessor may have on
account of such Event of Default (including, without limitation, the obligation
of Lessee to purchase the Leased Property as set forth in SECTIONS 15.2 and
15.3):
(a) Lessor may, by notice to Lessee, rescind or terminate this Lease as of
the date specified in such notice; PROVIDED, HOWEVER, that (i) no reletting,
reentry or taking of possession of the Leased Property by Lessor will be
construed as an election on Lessor's part to terminate this Lease unless written
notice of such intention is given to Lessee, (ii) notwithstanding any reletting,
reentry or taking of possession, Lessor may at any time thereafter elect to
terminate this Lease for a continuing Event of Default, (iii) Lessor shall be
under no obligation whatsoever to mitigate its damages hereunder but shall be
entitled to maintain an action for the payment in full of all amounts due
hereunder (including but not limited to payment of the Recourse Deficiency
Amount, but subject to the terms and provisions of this SECTION 14.1), except as
may
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be required by Applicable Law and (iv) no act or thing done by Lessor or any
of its agents, representatives or employees and no agreement accepting a
surrender of the Leased Property shall be valid unless the same be made in
writing and executed by Lessor.
(b) Lessor may (i) demand that Lessee, and Lessee shall upon the written
demand of Lessor, return the Leased Property promptly to Lessor in the manner
and condition required by, and otherwise in accordance with all of the
provisions of, ARTICLES VII and XV hereof as if the Leased Property were being
returned at the end of the Lease Term, and Lessor shall not be liable for the
reimbursement of Lessee for any costs and expenses incurred by Lessee in
connection therewith and (ii) without prejudice to any other remedy which Lessor
may have for possession of the Leased Property, and to the extent and in the
manner permitted by Applicable Law, enter upon the Leased Property and take
immediate possession of (to the exclusion of Lessee) the Leased Property or any
part thereof and expel or remove Lessee and any other Person who may be
occupying the Leased Property, by summary proceedings or otherwise, all without
liability to 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 Lessor's other damages, Lessee shall be
responsible for the reasonable and documented costs and expenses of reletting,
including brokers fees and the reasonable and documented costs of any
alterations or repairs made by Lessor.
(c) The Lessor may (i) by or through the Trustee named in the Memorandum
of Lease and as provided therein or otherwise, sell all or any part of the
Leased Property at public or private sale in accordance with Chapter 51 of the
Texas Property Code, as the Lessor may determine, free and clear of any rights
of the Lessee and without any duty to account to the Lessee with respect to such
action or inaction or any proceeds with respect thereto (except to the extent
required by clause (ii) of this subsection if the Lessor shall elect to exercise
its rights thereunder) in which event the Lessee's obligation to pay Basic Rent
hereunder for periods commencing after the date of such sale shall be terminated
or proportionately reduced, as the case may be and (ii) if the Lessor shall so
elect, demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor, on the date of such sale, subject to the provisions of Chapter 51 of the
Texas Property Code, 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 on or after the Rent Payment Date coinciding with such date of sale
(or, if the sale date is not a Rent Payment Date, the Rent Payment Date next
preceding the date of such sale)), an amount equal to (A) the excess, if any, of
(1) the sum of all Rent due and unpaid to and including such Rent Payment Date
plus an amount equal to the Lease Balance as of the date of sale (or, if the
Event of Default occurs prior to the Completion Date, the principal of and all
accrued and unpaid interest on the Notes) over (2) the net proceeds of such
sale, after deducting all costs and expenses incurred by the Lessor incident to
such sale, including, without limitation, all costs, expenses, fees, premiums
and taxes described in SECTION 15.5(b), plus (B) interest at the Overdue Rate on
the foregoing amount from such Rent Payment Date until the date of payment. The
Lessor and Lessee intend and agree that
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if the provisions of the second sentence of Article XII of this Lease become
applicable, the foregoing provisions of this SECTION 14.1(C) shall be deemed
to be a security agreement and a financing statement within the meaning of
Article 9 of the Uniform Commercial Code of the State of Texas, and a real
property deed of trust and that the power of sale hereinabove provided for
shall be deemed to be a grant by the Lessee to the Lessor of a mortgage lien
and security interest in and to all of the Lessee's right and interest in and
to the Leased Property and all of the proceeds of the conversion, voluntary or
involuntary, or the foregoing into cash, investments, securities, or other
property, and reference is hereby made to the Memorandum of Lease for
additional provisions concerning said security interest and power of sale.
(d) Lessor may, at its option, elect not to terminate the Lease, and
continue to collect all Basic Rent, Supplemental Rent and all other amounts due
Lessor (together with all costs of collection) and enforce Lessee's obligations
under this Lease as and when the same become due, or are to be performed, and at
the option of Lessor, upon any abandonment of the Leased Property by Lessee and
re-entry of same by Lessor, Lessor may, in its sole and absolute discretion,
elect not to terminate this Lease and may make such reasonable alterations and
necessary repairs in order to relet the Leased Property, and relet the Leased
Property or any part thereof for such term or terms (which may be for a long
term extending beyond the term of this Lease) and at such rental or rentals and
upon such other terms and conditions as Lessor in its reasonable discretion may
deem advisable. Upon each such reletting all rentals actually received by
Lessor from such reletting shall be applied to Lessee's obligations hereunder in
such order, proportion and priority as Lessor may elect in Lessor's sole and
absolute discretion, and if such rentals received from such reletting during any
Rent Period are less than the Rent to be paid during that Rent Period by Lessee
hereunder, Lessee shall pay any deficiency, as calculated by Lessor, to Lessor
on the Rent Payment Date in such Rent Period.
(e) If the Leased Property has not been sold, the Lessor may, whether or
not the Lessor shall have exercised or shall thereafter at any time exercise any
of its rights under paragraph (b), (c) or (d) of this Section with respect to
the Leased Property, demand, by written notice to the Lessee specifying a date
(the "FINAL RENT PAYMENT DATE") not earlier than ten (10) days after the date of
such notice, that the Lessee purchase, on the Final Rent Payment Date, the
Leased Property in accordance with the provisions of SECTIONS 15.2, 15.4 and
15.5; PROVIDED, HOWEVER, that (i) such purchase shall occur on the date set
forth in such notice, notwithstanding the provision in SECTION 15.3 calling for
such purchase to occur on the Lease Termination Date and (ii) the Lessor's
obligations under SECTION 15.5(a) shall be limited to delivery of a deed without
warranty and ▇▇▇▇ of sale without warranty of the Leased Property, without
recourse or warranty, but free and clear of the Lessor's Liens.
(f) To the extent not inconsistent with SUBSECTION (e), Lessor may
exercise any other right or remedy that may be available to it under Applicable
Law, or proceed by appropriate court action (legal or equitable) to enforce the
terms hereof or to recover damages for the breach hereof. Separate suits may be
brought to collect any such damages for any Rent Period(s), and such suits shall
not in any manner prejudice Lessor's right to collect any such damages for any
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subsequent Rent Period(s), or Lessor may defer any such suit until after the
expiration of the Lease Term, in which event such suit shall be deemed not to
have accrued until the expiration of the Lease Term.
(g) Lessor may retain and apply against Lessor's damages all sums which
Lessor would, absent such Event of Default, be required to pay, or turn over, to
Lessee pursuant to the terms of this Lease (subject to Lessor's obligation in
the Operative Documents to pay such amounts to Lender).
SECTION 14.2 REMEDIES CUMULATIVE; NO WAIVER; CONSENTS. To the extent
permitted by, and subject to the mandatory requirements of, Applicable Law
(subject in all events to SECTION 14.1(e) hereof), each and every right, power
and remedy herein specifically given to Lessor or otherwise in this Lease shall
be cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by Lessor, and the exercise or the
beginning of the exercise of any power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any right, power
or remedy. No delay or omission by Lessor in the exercise of any right, power
or remedy or in the pursuit of any remedy shall impair any such right, power or
remedy or be construed to be a waiver of any default on the part of Lessee or to
be an acquiescence therein. Lessor's consent to any request made by Lessee
shall not be deemed to constitute or preclude the necessity for obtaining
Lessor's consent, in the future, to all similar requests. No express or implied
waiver by Lessor of any Event of Default shall in any way be, or be construed to
be, a waiver of any future Event of Default. To the extent permitted by
Applicable Law (including, without limitation, Texas Property Code, Chapter 51,
as amended), Lessee hereby waives any rights now or hereafter conferred by
statute or otherwise that may require Lessor to sell, lease or otherwise use the
Leased Property or part thereof in mitigation of Lessor's damages upon the
occurrence of an Event of Default or that may otherwise limit or modify any of
Lessor's rights or remedies under this Article.
ARTICLE XV
SALE, RETURN OR PURCHASE OF LEASED PROPERTY
SECTION 15.1 LESSEE'S OPTION TO PURCHASE. Subject to the terms and
conditions and provisions set forth in this Article, Lessee shall have the
option (the "PURCHASE OPTION"), exercisable at any time during the Lease Term on
or prior to the tenth Business Day next preceding the Lease Termination Date, to
purchase from Lessor, Lessor's entire interest in all, but not less than all, of
any Property at the purchase price equal to the Purchase Option Price for such
Property. Such option must be exercised by written notice to the Lessor and the
Lender, which exercise shall be irrevocable, and such notice shall specify the
closing date for Lessee's purchase of such Property, which date shall be (i) not
less than ten (10) Business Days
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or more than 180 calendar days following the Lessor's receipt of such notice
and (ii) in any event not later the Lease Termination Date. If the Purchase
Option is exercised pursuant to the foregoing, then, subject to the provisions
set forth in this Article, on such closing date, Lessor shall convey to
Lessee, and Lessee shall purchase from Lessor, Lessor's interest in all, but
not less than all, of such Property. If Lessee fails to exercise the Purchase
Option in a timely manner, then the Purchase Option shall thereupon
automatically terminate without any further action of Lessor, and the Purchase
Option shall thereafter be of no force or effect. The Purchase Option granted
to Lessee pursuant to this Section is exclusive of the purchase option
provided to Lessee pursuant to SECTION 14.1(e).
SECTION 15.2 PURCHASE OBLIGATION. Unless (i) the Lessee and the Lessor
shall have extended the Lease Term pursuant to a supplement to this Lease
containing conditions and terms mutually agreeable to the Lessee and the Lessor
and approved by the Lender, (ii) Lessee shall have properly exercised the
Purchase Option and purchased all of the Leased Property pursuant thereto, (iii)
Lessee shall have properly exercised the Remarketing Option and shall have
fulfilled the conditions of SECTION 15.6 hereof and Lessor shall have sold its
entire interest in the Leased Property pursuant thereto or (iv) Lessee shall
have properly exercised the Remarketing Option and shall have fulfilled the
conditions of SECTION 15.6 hereof but the Lessor shall have rejected such sale
pursuant to SECTION 15.6(xi) and Lessee shall then have timely fulfilled all of
its obligations under SECTION 15.7 and 15.8 hereof, THEN, subject to the terms,
conditions and provisions set forth in this Article, Lessee shall purchase from
Lessor, and Lessor shall convey to Lessee, on the Lease Termination Date
Lessor's entire interest in all, but not less than all, of the Leased Property.
Lessee may designate, in a notice given to Lessor not less than ten (10)
Business Days prior to the closing of such purchase (time being of the essence),
the transferee to whom the conveyance shall be made (if other than to 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 shall not cause Lessee to be released, fully or partially, from
any of its obligations under this Lease.
SECTION 15.3 ACCELERATION OF PURCHASE OBLIGATION. Lessee shall be
obligated to purchase Lessor's entire interest in all, but not less than all, of
the Leased Property immediately, automatically and without notice upon the
occurrence of any Event of Default specified in CLAUSE (g) of ARTICLE XIII;
PROVIDED, HOWEVER, that (without affecting any of Lessee's obligations under
SECTION 15.5 or otherwise) Lessor's obligations under SECTION 15.5 (a) shall be
limited to delivery of a quit claim deed of the Leased Property.
SECTION 15.4 DETERMINATION OF PURCHASE PRICE. Upon the purchase by
Lessee of the Leased Property pursuant to SECTIONS 15.2 or 15.3, the purchase
price therefor shall be an amount equal to the Lease Balance as of the closing
date therefor.
SECTION 15.5 PURCHASE PROCEDURE.
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(a) If Lessee shall purchase Lessor's interest in the Leased Property
pursuant to any provision of this Lease (other than as provided in SECTION
15.3), (i) Lessee shall accept from Lessor, and Lessor shall convey to Lessee,
such Leased Property by one or more duly executed and acknowledged special
warranty deeds of such Leased Property in recordable form, (ii) upon the date
fixed for any purchase of Lessor's interest in such Leased Property hereunder,
Lessee shall pay to the order of Lessor the Lease Balance by wire transfer of
federal funds and (iii) Lessor shall convey to Lessee Lessor's entire interest
in all of the Leased Property via the special warranty deed or deeds described
above and Lessor will execute and deliver to Lessee such other documents as may
be legally required in order to effect such conveyance, and such other documents
as may be required by any escrow agent in order to close escrow in connection
with such conveyance and issue to Lessee an Owner's Policy of Title Insurance in
the form promulgated by the Texas Department of Insurance subject only to (A)
the exceptions set forth on Schedule B of the Title Policy for each Property
other than the Mortgage and the Assignment of Lease and Rents, (B) such
exceptions created or caused by Lessee, or otherwise resulting from any act or
failure to act by Lessee, or consented to by Lessee and (C) taxes and
assessments not yet due and payable.
(b) In the event that Lessee exercises the Remarketing Option pursuant to
SECTION 15.6 and fulfills all of the conditions set forth in CLAUSES (i) through
(xiii) thereof, and if Lessor does not reject the purchase offer for the Leased
Property as provided in SECTION 15.6 (xi), then upon payment of the purchase
price and the satisfaction by such purchaser of all of the applicable closing
conditions, Lessor shall convey to such purchaser Lessor's interest in the
Leased Property by a duly executed special warranty deed or deeds in recordable
form, and Lessor will execute and deliver to such purchaser (or the Lessee, as
appropriate) such other documents as may be legally required in order to effect
such conveyance, and such other documents as may be required by such purchaser's
title insurance company in order to issue to such purchaser an Owner's Policy of
Title Insurance in the form promulgated by the Texas Department of Insurance
subject only to (i) the exceptions set forth on Schedule B of the Title Policy,
other than the Mortgage and the Assignment of Lease and Rents, (ii) such
exceptions created or caused by Lessee, or otherwise resulting from any act or
failure to act by the Lessee, or consented to by the Lessee and (iii) taxes and
assessments not yet due and payable.
(c) Lessee shall, at Lessee's sole cost and expense, obtain all required
governmental and regulatory approval and consents and shall make such filings as
required by Applicable Law. In the event that Lessor is required by Applicable
Law to take any action in connection with such purchase and sale, Lessee shall
pay all costs incurred by Lessor in connection therewith. In addition, all
charges incident to such conveyance, including, without limitation, Lessee's
attorneys' fees, Lessor's reasonable attorneys' fees, commissions, Lessee's and
Lessor's escrow fees, recording fees, title insurance premiums and all
applicable documentary transfer or other transfer taxes and other taxes required
to be paid in order to record the transfer documents that might be imposed by
reason of such conveyance and the delivery of such deed shall be borne entirely
and paid by Lessee.
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(d) Upon expiration or termination of this Lease resulting in conveyance
of Lessor's interest in the title to the Leased Property to Lessee, there shall
be no apportionment of taxes, insurance, utility charges or other charges
payable with respect to the Leased Property, all of such taxes, insurance,
utility or other charges due and payable with respect to the Leased Property
prior to termination being payable by Lessee hereunder and all due after such
time being payable by Lessee as the then owner of the Leased Property.
SECTION 15.6 OPTION TO REMARKET. Subject to the fulfillment of each of
the conditions set forth in this Section, Lessee shall have the option (the
"Remarketing Option") to market all, but not less than all, of the Leased
Property and to procure a purchaser therefor. Lessee's effective exercise and
consummation of the Remarketing Option shall be subject to the due and timely
fulfillment of each of the following provisions, the failure of any of which
shall render the Remarketing Option and Lessee's exercise thereof null and void,
in which event, Lessee shall remain obligated to perform all of its obligations
under SECTION 15.2 ("Purchase Obligation"):
(i) Not earlier than six months before the Scheduled Termination
Date, Lessee shall give to Lessor written notice of Lessee's exercise of
the Remarketing Option, which exercise shall be irrevocable unless
otherwise agreed in writing by the Lender.
(ii) Not later than thirty (30) Business Days prior to the Scheduled
Termination Date, Lessee shall deliver to Lessor an environmental
assessment of the Leased Property dated not later than forty-five (45) days
prior to the Scheduled Termination Date. Such environmental assessment
shall be prepared by ATC Associates Inc, or other environmental consultant
selected by Lessee and reasonably acceptable to Lessor and the Lender,
shall be in form, detail and substance reasonably acceptable to Lessor and
the Lender, and shall otherwise indicate the environmental condition of the
Leased Property to be the same as described in the Environmental Audit
delivered pursuant to SECTION 3.2 of the Participation Agreement.
(iii) On the date of Lessee's notice to Lessor of Lessee's
exercise of the Remarketing Option, no Event of Default shall exist, and
thereafter, no Event of Default shall exist under this Lease.
(iv) Lessee shall have completed all Alterations, restoration and
rebuilding of the Leased Property pursuant to SECTIONS 7.2, 11.3 and 11.4
(as the case may be) and shall have fulfilled all of the conditions and
requirements in connection therewith pursuant to said Sections, in each
case by the date on which Lessor receives Lessee's notice of Lessee's
exercise of the Remarketing Option (time being of the essence), regardless
of whether the same shall be within Lessee's control.
(v) Once Lessee has exercised the Remarketing Option as provided in
CLAUSE (i) hereof, Lessee shall, as nonexclusive agent for Lessor, use
commercially reasonable
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efforts to sell Lessor's interest in the Leased Property and will attempt
to obtain the highest purchase price therefor. Lessee will be responsible
for hiring brokers and making the Leased Property available for
inspection by prospective purchasers. Lessee shall promptly provide any
maintenance records relating to the Leased Property to Lessor and any
potential purchaser thereof upon request, and shall otherwise do all
things necessary to sell and deliver possession of the Leased Property to
the purchaser thereof. All such marketing of the Leased Property shall
be at Lessee's sole expense. Lessee shall allow Lessor, the Lender and
any potential qualified purchaser access to the Leased Property for the
purpose of inspecting the same.
(vi) Lessee shall submit all bids to Lessor and the Lender and Lessor
and the Lender will have the right to review the same and the right to
submit any one or more bids. All bids shall be on an "all-cash" basis (at
least up to the Lease Balance amount). Lessee shall procure bids from one
or more bona fide prospective purchasers of the Leased Property and shall
deliver to Lessor and the Lender not less than ninety (90) days prior to
the Lease Termination Date a binding written irrevocable offer by such
purchaser offering (subject to customary conditions which do not violate
the provisions of CLAUSE viii, below) the highest "all-cash" bid to
purchase the Leased Property. Such purchaser shall not be Lessee or any
Subsidiary or Affiliate of Lessee. The written offer must specify the
Lease Termination Date as the closing date.
(vii) On the Lease Termination Date, Lessee shall surrender the
Leased Property in accordance with SECTION 15.8 hereof.
(viii) In connection with any such sale of the Leased Property,
Lessee may provide to the purchaser any such customary "seller's"
indemnities, representations and warranties regarding title, absence of
Liens (except Lessor's Liens) and the condition of the Leased Property,
including, without limitation, an environmental indemnity, as Lessee may
determine to provide in the exercise of its business judgment and sole
discretion, PROVIDED, HOWEVER, that no such indemnities, representations or
warranties shall be binding on Lessor, nor shall they create liabilities,
charges, offsets or Claims, contingent or otherwise, which could diminish,
offset or impose a lien upon the amount of the cash proceeds payable to
Lessor under such purchase offer, nor shall Lessor be under any obligation
to join in or become obligated for the same, except that Lessor shall
fulfill all of the requirements set forth in CLAUSE (b) of SECTION 15.5,
and such requirements are incorporated herein by reference. As to Lessor,
any such sale shall be made on an "as is, with all faults" basis without
representation or warranty by Lessor other than the absence of Lessor's
Liens.
(ix) Lessor shall pay from the sale proceeds, all prorations, credits,
costs and expenses of the sale of the Leased Property, including without
limitation the cost of all title insurance, surveys, environmental reports,
appraisals, transfer taxes, Lessor's
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reasonable attorneys' fees, commissions, escrow fees, recording fees, and
all applicable documentary and other transfer taxes.
(x) Lessee shall pay to the Lender on the Lease Termination Date (or
to such other Person as Lessor shall notify Lessee in writing or, in the
case of Supplemental Rent, to the Person entitled thereto) an amount equal
to the Recourse Deficiency Amount in the type of funds specified in SECTION
4.3 hereof.
(xi) If the aggregate selling price (net of closing costs and
prorations and other amounts payable by Lessor under clause (ix) above, as
reasonably estimated by Lessor) for the Leased Property plus the Recourse
Deficiency Amount is less than the Lease Balance, then Lessor may, by
notice to Lessee and in Lessor's sole and absolute discretion, reject such
offer to purchase, in which event the parties will proceed according to the
provisions of SECTION 15.7 "Rejection of Sale" hereof.
(xii) If Lessor does not reject such purchase offer as provided
above, the closing of such purchase of the Leased Property by such
purchaser must occur on the Lease Termination Date, contemporaneously with
Lessee's surrender of the Leased Property in accordance with SECTION 15.8
hereof.
(xiii) If Lessor does not reject the purchase offer as provided
above, then the purchase shall be consummated on the Lease Termination Date
and the gross proceeds of the sale (i.e., without deduction for any
marketing, closing or other costs, prorations or commissions) shall be paid
directly to Lessor; provided, however, that if the sum of the gross
proceeds from such sale plus the Recourse Deficiency Amount exceeds the
Lease Balance, as of such date, then the excess shall be paid to Lessee on
the Lease Termination Date.
If one or more of the foregoing provisions shall not be fulfilled as of the
Lease Termination Date or if the Leased Property is not purchased as aforesaid
for any other reason whatsoever other than solely due to rejection by Lessor of
such sale pursuant to subsection (xi) above, then Lessor may, at Lessor's option
and in Lessor's sole discretion, (i) declare by written notice to Lessee the
Remarketing Option to be null and void (whether or not it has been theretofore
exercised by Lessee), in which event all of Lessee's rights under this Section
shall immediately terminate and Lessee shall be obligated to purchase the Leased
Property pursuant to SECTION 15.2 on the Lease Termination Date or (ii) permit
and require Lessee on behalf of Lessor to consummate the sale of the Leased
Property to such purchaser, in which event the gross proceeds shall be paid as
set forth in SECTION 15.6(xiii) above and all of Lessor's rights and remedies
set forth herein, in the other Operative Documents, at law or in equity or
otherwise shall be preserved as set forth in SECTION 14.2 hereof. If the
prospective purchaser breaches its offer to purchase, then Lessor may, in
Lessor's sole discretion, declare the Remarketing Option to be null and void, in
which event all of Lessee's rights under this Section shall immediately
terminate and Lessee shall be obligated to purchase the Leased Property pursuant
to SECTION 15.2. The Lessee shall have no
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right, power or authority to bind the Lessor in connection with any proposed
sale of the Leased Property.
SECTION 15.7 REJECTION OF SALE. (a) Notwithstanding anything contained
herein to the contrary, if Lessor rejects the purchase offer(s) for the Leased
Property as provided in SECTION 15.6(a)(xi) then (i) Lessee shall pay to the
Lender (or to such other person as Lessor shall direct) the Recourse Deficiency
Amount pursuant to SECTION 15.6(xi), (ii) Lessor shall retain title to the
Leased Property and (iii) in addition to Lessee's other obligations hereunder,
Lessee will reimburse Lessor within ten (10) Business Days after written
request, for all reasonable costs and expenses incurred by Lessor, during the
period ending on the first anniversary of the Remarketing Date in connection
with the marketing, sale, closing or transfer of such Series of Properties,
which obligation shall survive the Lease Termination Date and the termination or
expiration of this Lease with respect thereto.
(b) Following any rejection by the Lessor of the purchase offer(s)
for the Leased Property pursuant to the provisions of SECTION 15.6(xi), subject
to the condition that Lessee shall have:
(i) timely paid the Recourse Deficiency Amount to Lessor on or
before the Lease Termination Date,
(ii) duly and timely fulfilled each of the other provisions of
clauses (i) through (xiii) of SECTION 15.6 on or before the Lease
Termination Date, and
(iii) on and after the Lease Termination Date, timely fulfilled
each and every obligation of the Lessee under the Lease, the
Participation Agreement and the other Operative Documents on its part
to be performed, and no Event of Default shall have occurred,
THEN,
upon the subsequent sale of all, but not less than all, of the Leased Property
by Lessor to one or more third parties, Lessor shall pay to Lessee an amount
equal to the Lessor's gain (if any) on the sales, computed taking into account
Lessor's total investment in the Leased Property (including, without limitation,
the unpaid balance of the Loan, if any, and the unrecovered balance of the
Contribution).
SECTION 15.8 RETURN OF LEASED PROPERTY. If Lessor retains title to the
Leased Property pursuant to SECTION 15.7 hereof, then Lessee shall, on the Lease
Termination Date, and at its own expense, return possession of the Leased
Property to Lessor for retention by Lessor. If Lessee properly exercises the
Remarketing Option and fulfills all of the conditions of SECTION
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15.6 hereof and the Lessor does not reject such purchase offers pursuant to
SECTION 15.6(xi), then Lessee shall (unless by agreement with the purchaser
Lessee is to remain in possession of the Leased Property), on the Lease
Termination Date and at its own cost, transfer possession of the Leased
Property to the independent purchaser thereof, in each case by surrendering
the same into the possession of Lessor or such purchaser, as the case may be,
free and clear of all Liens other than Lessor Liens, Liens for Taxes not yet
payable and Liens described in clause (vi) of the definition of Permitted
Liens, in as good condition as it was on the Completion Date (as modified by
Alterations permitted by this Lease), ordinary wear and tear excepted, and in
compliance with Applicable Law. Lessee shall, on and within a reasonable
time before and after the Lease Termination Date, cooperate with Lessor and
the independent purchaser of the Leased Property in order to facilitate the
ownership and operation by such purchaser of the Leased Property after the
Lease Termination Date, which cooperation shall include the following, all of
which Lessee shall do on or before the Lease Termination Date or as soon
thereafter as is reasonably practicable: providing all books and records
regarding the maintenance and ownership of the Leased Property and all
know-how, data and technical information relating thereto to the extent in
Lessee's possession, providing a current copy of the Plans and Specifications
for the Leased Property, assigning all licenses necessary for the operation
and maintenance of the Leased Property to the extent Lessee has the legal
right to do so and cooperating in seeking and obtaining all necessary
Governmental Action relating to occupancy but not special use by the
purchaser thereof. Lessee shall have also paid the cost of all Alterations
with respect to the Leased Property commenced prior to the Lease Termination
Date. The obligation of Lessee under this Article shall survive the
expiration or termination of this Lease.
SECTION 15.9 EFFECT OF CONVEYANCE TO LESSEE. Upon conveyance of the
Leased Property after the exercise by Lessee of any of its rights to purchase
the Leased Property, including its rights under SECTION 14.1(e), or after
exercise of the Remarketing Option and the fulfillment of the applicable
conditions of CLAUSES (i) through (x) of SECTION 15.6, this Lease shall
automatically terminate unless Lessee otherwise elects in writing.
ARTICLE XVI
LESSEE'S EQUIPMENT
Except as expressly provided in this ARTICLE XVI, Lessor waives any
statutory and/or contractual lien on Lessee's personal property as security for
this Lease. After any repossession of the Leased Property (whether or not this
Lease has been terminated), Lessee, at its expense and so long as such removal
of such Alteration shall not result in a violation of Applicable Law, shall,
within a reasonable time after such repossession or within sixty (60) days after
Lessee's receipt of Lessor's written request (whichever shall first occur),
remove all of Lessee's trade fixtures, personal property and equipment from the
Leased Property (to the extent that the same can be readily removed from the
Leased Property without causing material damage to or materially impairing the
value of the Leased Property); PROVIDED, HOWEVER, that Lessee shall not remove,
and Lessor shall have a lien upon, any fixture, equipment or personal property
which
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constitutes part of the Leased Property. Any of Lessee's trade fixtures,
personal property and equipment not so removed by Lessee within such period
shall be considered abandoned by Lessee, and title thereto shall without
further act vest to Lessor, and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without notice to Lessee and without
obligation to account therefor and Lessee will pay Lessor, upon written
demand, all reasonable and documented costs and expenses incurred by Lessor
in removing, storing or disposing of the same and all costs and expenses
incurred by Lessor to repair any damage to the Leased Property caused by such
removal. Lessee will immediately repair at its expense all damage to the
Leased Property caused by any such removal (unless such removal is effected
by Lessor, in which event Lessee shall pay all reasonable costs and expenses
incurred by Lessor for such repairs). Lessor shall have no liability in
exercising Lessor's rights under this Article, nor shall Lessor be
responsible for any loss of or damage to Lessee's personal property and
equipment in connection therewith.
ARTICLE XVII
RIGHT TO PERFORM FOR LESSEE
If Lessee shall fail to perform or comply with any of its agreements
contained herein, and such failure to perform continues beyond any applicable
notice and cure periods, Lessor may, on thirty (30) days' prior notice (or such
lesser period afforded by Applicable Law or any third party, except that no
notice shall be required in the case of a default in the observance of the
obligations to maintain insurance pursuant to ARTICLE IX) to Lessee, perform or
comply with such agreement, and Lessor shall not thereby be deemed to have
waived any default caused by such failure, and the amount of such payment and
the amount of the expenses of Lessor (including reasonable attorney's fees and
expenses) incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, shall be deemed Supplemental
Rent, payable by Lessee to Lessor within ten (10) days' after written demand
therefor.
ARTICLE XVIII
MISCELLANEOUS
SECTION 18.1 REPORTS. To the extent required under Applicable Law and to
the extent it is reasonably practical for Lessee to do so, Lessee shall prepare
and file in timely fashion, or, where such filing is required to be made by
Lessor or it is otherwise not reasonably practical for Lessee to make such
filing, Lessee shall prepare and deliver to Lessor (with a copy to the Lender)
within a reasonable time prior to the date for filing and Lessor shall file, any
material reports with respect to the condition or operation of the Leased
Property that shall be required to be filed with any Governmental Authority.
SECTION 18.2 BINDING EFFECT; SUCCESSORS AND ASSIGNS; SURVIVAL. The terms
and provisions of this Lease, and the respective rights and obligations
hereunder of Lessor and Lessee, shall be binding upon their respective
successors, legal representatives and assigns
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(including, in the case of Lessor, any Person to whom Lessor may transfer the
Leased Property or any interest therein in accordance with the provisions of
the Operative Documents), and inure to the benefit of their respective
permitted successors and assigns, and the rights hereunder of the Lender
shall inure (subject to such conditions as are contained herein) to the
benefit of the Lender's permitted successors and assigns.
SECTION 18.3 QUIET ENJOYMENT. Lessor covenants that, so long as no Event
of Default has occurred and is continuing, it will not interfere in Lessee's or
any of its sublessees' quiet enjoyment of the Leased Property in accordance with
this Lease during the Lease Term.
SECTION 18.4 NOTICES. Except for statutory notices required under
SECTION 14.1(c) (which shall be given as provided in the Texas Property Code),
unless otherwise specified herein, all notices, offers, acceptances, rejections,
consents, requests, demands or other communications to or upon the respective
parties hereto shall be in accordance with SECTION 8.2 of the Participation
Agreement.
SECTION 18.5 SEVERABILITY. Any provision of this Lease that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and Lessee shall remain
liable to perform its obligations hereunder except to the extent of such
unenforceability. To the extent permitted by Applicable Law, the parties hereby
waive any provision of law that renders any provision hereof prohibited or
unenforceable in any respect.
SECTION 18.6 AMENDMENT; COMPLETE AGREEMENTS. Neither this Lease nor any
of the terms hereof may be terminated, amended, supplemented, waived or modified
orally, or by other instrument in writing signed by Lessor and the Lessee in
accordance with the provisions of SECTION 8.4 of the Participation Agreement.
This Lease, together with the other Operative Documents, is intended by the
parties as a final expression of their lease agreement and as a complete and
exclusive statement of the terms thereof, all negotiations, considerations and
representations between the parties having been incorporated herein and therein.
No course of prior dealings between the parties or their officers, employees,
agents or Affiliates shall be relevant or admissible to supplement, explain, or
vary any of the terms of this Lease or any other Operative Document. Acceptance
of, or acquiescence in, a course of performance rendered under this or any prior
agreement between the parties or their Affiliates shall not be relevant or
admissible to determine the meaning of any of the terms of this Lease or any
other Operative Document. No representations, undertakings, or agreements have
been made or relied upon in the making of this Lease other than those
specifically set forth in the Operative Documents.
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SECTION 18.7 CONSTRUCTION. This Lease shall not be construed more
strictly against any one party, it being recognized that both of the parties
hereto have contributed substantially and materially to the preparation and
negotiation of this Lease.
SECTION 18.8 HEADINGS. The Table of Contents and headings of the various
Articles and Sections of this Lease are for convenience of reference only and
shall not modify, define or limit any of the terms or provisions hereof.
SECTION 18.9 COUNTERPARTS. This Lease may be executed in any number of
counterparts as may be convenient or necessary, and it shall not be necessary
that the signatures of all parties hereto or thereto be contained on any one
counterpart hereof or thereof. Additionally, the parties hereto agree that for
purposes of facilitating the execution of this lease, (a) the signature pages
taken from the separate individually executed counterparts of this lease may be
combined to form multiple fully executed counterparts and (b) a facsimile
transmission shall be deemed to be an original signature for all purposes. All
executed counterparts of this Lease shall be deemed to be originals, but all
such counterparts taken together or collectively, as the case may be, shall
constitute one and the same agreement.
SECTION 18.10 GOVERNING LAW. THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
EXCEPT, WITH RESPECT TO LEASED PROPERTY LOCATED IN ANY STATE OTHER THAN TEXAS,
FOR ISSUES WHICH ARE MANDATORILY SUBJECT TO THE LAWS OF THE STATE IN WHICH ANY
PART THE LEASED PROPERTY IS LOCATED, WHICH ISSUES SHALL BE INTERPRETED,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH SUCH
PART OF THE LEASED PROPERTY IS LOCATED.
SECTION 18.11 DISCHARGE OF LESSEE'S OBLIGATIONS BY ITS AFFILIATES. Lessor
agrees that performance of any of Lessee's obligations hereunder by one or more
of Lessee's Affiliates or one or more of Lessee's sublessees of the Leased
Property or any part thereof shall constitute performance by Lessee of such
obligations to the same extent and with the same effect hereunder as if such
obligations were performed by Lessee, but no such performance shall excuse
Lessee from any obligation not performed by it or on its behalf under the
Operative Documents.
SECTION 18.12 LIABILITY OF LESSOR LIMITED. Except as otherwise expressly
provided below in this Section, it is expressly understood and agreed by and
between Lessee, Lessor and their respective successors and assigns that nothing
herein contained shall be construed as creating any personal liability of Lessor
or any of its constituent members or other Affiliates, or JH Management
Corporation, or any of their respective incorporators, stockholders, officers,
directors, employees or agents, individually or personally, to perform any
covenant, either express or implied, contained herein, all such personal
liability, if any, being expressly waived by Lessee and by each and every Person
now or hereafter claiming by, through or under Lessee, and that, so far as
Lessor or any of its constituent members or other Affiliates,
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or JH Management Corporation, or any of their respective incorporators,
stockholders, officers, directors, employees or agents, individually or
personally, is concerned, Lessee and any Person claiming by, through or under
Lessee shall look solely to, and the liability of Lessor hereunder shall be
limited to, the right, title and interest of Lessor in the Leased Property,
any proceeds from Lessor's sale or encumbrance thereof, and any Awards or
Loss Proceeds (PROVIDED, HOWEVER, that Lessee shall not be entitled to any
double recovery) for the performance of any obligation under this Lease and
under the Operative Documents and the satisfaction of any liability arising
therefrom.
SECTION 18.13 ESTOPPEL CERTIFICATES. Each party hereto agrees that at any
time and from time to time during the Lease Term, it will promptly, but in no
event later than fifteen (15) days after request by the other party hereto,
execute, acknowledge and deliver to such other party or to the Lender, any
prospective purchaser (if such prospective purchaser has signed a commitment or
letter of intent to purchase the Leased Property or any part thereof), assignee
or mortgagee or third party designated by such other party, a certificate
stating (i) that this Lease is unmodified and in force and effect (or if there
have been modifications, that this Lease is in force and effect as modified, and
identifying the modification agreements), (ii) the date to which Basic Rent has
been paid, (iii) whether or not there is any existing default by Lessee in the
payment of Basic Rent or any Supplemental Rent, and whether or not there is any
other existing default by either party with respect to which a notice of default
has been served, and, if there is any such default, specifying the nature and
extent thereof, (iv) whether or not, to the knowledge of the signer, there are
any setoffs, defenses or counterclaims against enforcement of the obligations to
be performed hereunder existing in favor of the party executing such certificate
and (v) other matters concerning the status of this Lease and of any of the
Operative Documents to which the Lessee is a party that may be reasonably
requested; PROVIDED, HOWEVER, that no such certificate may be requested unless
the requesting party has a good faith reason for such request.
SECTION 18.14 NO JOINT VENTURE. Any intention to create a joint venture
or partnership relation between Lessor and Lessee is hereby expressly
disclaimed.
SECTION 18.15 NO ACCORD AND SATISFACTION. The acceptance by Lessor of any
sums from Lessee (whether as Basic Rent or otherwise) in amounts which are less
than the amounts due and payable by Lessee hereunder is not intended, nor shall
any such acceptance be construed, to constitute an accord and satisfaction of
any dispute between Lessor and Lessee regarding sums due and payable by Lessee
hereunder, unless Lessor specifically deems it as such in writing.
SECTION 18.16 NO MERGER. In no event shall the leasehold interests,
estates or rights of Lessee hereunder merge with any interests, estates or
rights of Lessor in or to the Leased Property, it being understood that such
leasehold interests, estates and rights of Lessee hereunder shall be deemed to
be separate and distinct from Lessor's interests, estates and rights
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in or to the Leased Property, notwithstanding that any such interests,
estates or rights shall at any time or times be held by or vested in the same
person, corporation or other entity.
SECTION 18.17 SURVIVAL. The obligations of Lessee to be performed under
this Lease prior to the Lease Termination Date and the obligations of Lessee
pursuant to ARTICLES IV, XI, XII, XIV, SECTIONS 15.2, 15.3, 15.4, 15.5 and 15.8,
ARTICLES XVI, XVII, and SECTIONS 18.09 and 18.11 shall survive the expiration or
termination of this Lease. The extension of any applicable statute of
limitations by Lessor, Lessee, the Lender or any Indemnitee shall not affect
such survival.
SECTION 18.18 CHATTEL PAPER. To the extent that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code in any
applicable jurisdiction), no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the original counterpart by the
receipt of Lessor on its signature page.
SECTION 18.19 TIME OF ESSENCE. Time is of the essence of this Lease.
SECTION 18.20 RECORDATION OF LEASE. Lessee will, at its expense, cause
either the Lease or each Memorandum of Lease to be recorded in the proper office
or offices in the State and the municipality in which the Land is located.
SECTION 18.21 INVESTMENT OF SECURITY FUNDS. Any amounts not payable to
Lessee (which amounts shall be paid to or retained by Lessor), pursuant to any
provision of ARTICLE IX, XI or XV or this Section solely because an Event of
Default shall have occurred and be continuing, shall be held by the Lender, on
behalf of Lessee, as security for the obligations of Lessee under this Lease and
the Participation Agreement. At such time as no Event of Default shall be
continuing, such amounts, net of any amounts previously applied to Lessee's
obligations hereunder or under the Participation Agreement, shall be paid to
Lessee or such sublessee or transferee, as the case may be. Any such amounts
which are held by the Lender pending payment to Lessee or such sublessee or
transferee, as the case may be, shall until paid to Lessee or such sublessee or
transferee, as the case may be, as provided hereunder or, as long as the Loan
Agreement is in effect, until applied against Lessee's obligations herein and
under the Participation Agreement and distributed as provided in SECTION 3 of
the Loan Agreement or (after the Loan Agreement is no longer in effect) in
connection with any exercise of remedies hereunder, be invested by the Lender as
directed from time to time in writing by Lessee (PROVIDED, HOWEVER, if an Event
of Default has occurred and is continuing such investment will be directed by
Lessor in insured certificates of deposit of the Lender and its Affiliates up to
$100,000 or United States Treasury Obligations) and at the expense and risk of
Lessee, in investments reasonably approved by the Lender. Any gain (including
interest received) realized as the result of any such investment (net of any
fees, commissions and other expenses, if any, incurred in connection with such
investment) shall be applied in the same manner as the principal invested.
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SECTION 18.22 NO ILLEGAL INTEREST TO BE CHARGED. All agreements between
the Lessee and the Lessee under this Lease or the Participation Agreement are
expressly limited so that in no contingency or event whatsoever shall the amount
paid or agreed to be paid to the Lessor or its successors or assigns for the
use, forbearance or detention of the money to be advanced to the Lessee exceed
the highest rate permissible under law applicable thereto by a court of
competent jurisdiction. If, from any circumstances whatever, fulfillment of any
provisions of this Lease or any of the Operative Documents at the time
performance of such provision shall be due, shall involve payment of interest at
a rate that exceeds the highest lawful rate as so determined, then ipso facto
the obligation to be fulfilled shall be reduced to such highest lawful rate. If
from any circumstances whatsoever, the Lessor or its successors or assigns shall
ever receive interest, the amount of which would exceed such highest lawful
rate, the portion thereof that would be excessive interest shall be applied to
the reduction of the unpaid Scheduled Rent; provided, however, that nothing
contained herein, in the Participation Agreement, this Lease or any of the
Operative Documents shall be deemed to create a defense, contractual or
otherwise, to any sums due or to become due or coming due under this Lease, the
Participation Agreement or any of the Operative Documents where no such defense
exists at law, as for example, where corporations are barred from asserting the
defense of usury or in a case wherein no limit exists upon the rate of interest
that may be charged.
SECTION 18.23 SUBMISSION TO JURISDICTION; WAIVERS. Each party hereto
hereby irrevocably and unconditionally (i) submits for itself and its property
in any legal action or proceeding relating to this Lease or any other Operative
Document, or for recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of Texas,
the courts of the United States of America for the Eastern District of Texas and
appellate courts from any thereof, (ii) consents that any such action or
proceedings may be brought to such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same, (iii) agrees that service of process in
any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at its address set forth in SECTION 8.2 of the
Participation Agreement or such other address of which the other parties hereto
shall have been notified pursuant to said SECTION 8.2 and (iv) agrees that
nothing herein shall affect the right to effect service of process in any other
manner permitted by law. EACH PARTY, TO THE EXTENT PERMITTED BY LAW, HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG
OR BETWEEN THE PARTIES HERETO ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THE PARTIES IN CONNECTION WITH
THIS LEASE, ANY OTHER OPERATIVE DOCUMENT OR ANY OTHER DOCUMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS
WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE LESSOR'S
ABILITY TO PURSUE ANY REMEDIES CONTAINED IN THIS LEASE, THE OTHER OPERATIVE
DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT RELATED HERETO.
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[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Lease and
Development Agreement to be executed by their respective duly authorized
officers as of the day and year first above written.
ASSET XVII HOLDINGS COMPANY,
L.L.C., as Lessor
By: Asset Holdings Corporation I,
as Managing Member
By: /s/ Illegible
------------------------------
Name:
----------------------------
Title:
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STB SYSTEMS, INC., as Lessee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President
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APPENDIX I
TO
PARTICIPATION AGREEMENT, LEASE AND
DEVELOPMENT AGREEMENT AND LOAN AGREEMENT
DEFINITIONS AND INTERPRETATION
[See separate text]
APPENDIX II
DESCRIPTION OF LEASED PROPERTY
I. LAND: The real property described on Exhibit A hereto.
II. IMPROVEMENTS:
An office building containing approximately _______ square feet on the Land
and any and all buildings, structures, replacements, furnishings, fixtures,
fittings and other improvements and property of every kind and character
now or hereafter located or erected on the Land, together with all
buildings or construction materials, equipment, appliances, machinery,
plant equipment, fittings, apparatus, fixtures and other articles of any
kind or nature whatsoever now or hereafter found on, affixed to or attached
to the Land, including (without limitation) all motors, boilers, engines
and devices for the operation of pumps, and all heating, electrical,
lighting, power, plumbing, air conditioning, refrigeration and ventilation
equipment (but in all the above cases excluding trade fixtures and any
personal property owned by the Lessee).
APPENDIX III
SCHEDULED RENT
