-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CiJX6iIhVt4OHD4/w+xR/AlGXeeegdJPfSI7BlNj+I6rYtdJrNODWl43YlXPJ1F8 MuTnPpqm2fsm3i1XiZUfbQ== 0001032210-01-000369.txt : 20010307 0001032210-01-000369.hdr.sgml : 20010307 ACCESSION NUMBER: 0001032210-01-000369 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010302 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMMUNEX CORP /DE/ CENTRAL INDEX KEY: 0000719529 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 510346580 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-12406 FILM NUMBER: 1561395 BUSINESS ADDRESS: STREET 1: 51 UNIVERSITY ST CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 2065870430 MAIL ADDRESS: STREET 1: 51 UNIVERSITY STREET CITY: SEATLE STATE: WA ZIP: 98101 8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 March 2, 2001 ------------------------- Date of Report (Date of earliest event reported) IMMUNEX CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Washington 0-12406 51-0346580 - ---------------------------- ------------------------ -------------------- (State or Other Jurisdiction (Commission File No.) (IRS Employer of Incorporation) Identification No.) 51 University Street, Seattle, Washington 98101 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (206) 587-0430 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) None - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events On March 2, 2001, Immunex entered into a seven and one-half year lease to fund the initial phase of its new research and technology center, known as the Helix Project. The lease will be classified as an operating lease for financial reporting purposes. The project will be constructed on 29 acres of land in Seattle, Washington, which is owned by Immunex and is ground leased to the lessor for the term of the lease. Upon completion, the project will consist of facilities totaling approximately 1.1 million gross square feet. The terms of the lease provide for 30 months in which to construct the project. The lessor will lease the completed project to Immunex for a minimum of five years. The funds used by the lessor for construction of the project will come from the sale of commercial paper and/or from borrowings from a syndicate of commercial banks, and will not exceed $750 million. Payments under the lease are based on commercial paper rates and/or a spread over the London Interbank Offered Rate applied to the outstanding borrowed funds for construction of the project. Immunex has the ability to purchase the project at any time prior to the expiration of the lease for the then-remaining lease balance, and may, at its option, remarket the project prior to the end of the lease. The then-remaining lease balance would be equal to the outstanding amount of the lessor's financing of project costs. Upon the occurrence of particular events, Immunex may be required to purchase the project from the lessor for the then-remaining lease balance. Immunex has guaranteed a portion of the payment and performance of the lessor under its borrowing of the construction costs with respect to the project. Under the terms of the financing, Immunex will be required to post, as collateral for Immunex's obligations under the guarantee, investment securities worth 102% (up to $765 million) of funds borrowed by the lessor. The investment securities are restricted as to their withdrawal and will be classified as non- current restricted cash on Immunex's balance sheet until such assets are available to be released from the collateral. This summary is qualified in its entirety by reference to exhibits filed with this current report. Item 7. Financial Statements and Exhibits (c) Exhibits 10.1 Lease, dated as of March 2, 2001, by and between Immunex Real Estate Trust 2001 as Lessor and Immunex Corporation as Lessee. 10.2 Guarantee, dated as of March 2, 2001, by and among Immunex Corporation, Immunex Manufacturing Corporation, Immunex Real Estate Trust 2001, Immunex Funding Corp. and various financial institutions. 10.3 Agency Agreement, dated as of March 2, 2001, by and between Immunex Real Estate Trust 2001 and Immunex Corporation. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. IMMUNEX CORPORATION Dated: March 2, 2001 By /s/ Barry G. Pea -------------------------------- Name: Barry G. Pea Its: Senior Vice President, General Counsel and Secretary EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 10.1 Lease, dated as of March 2, 2001, by and between Immunex Real Estate Trust 2001 as Lessor and Immunex Corporation as Lessee. 10.2 Guarantee, dated as of March 2, 2001, by and among Immunex Corporation, Immunex Manufacturing Corporation, Immunex Real Estate Trust 2001, Immunex Funding Corp. and various financial institutions. 10.3 Agency Agreement, dated as of March 2, 2001, by and between Immunex Real Estate Trust 2001 and Immunex Corporation. EX-10.1 2 0002.txt LEASE DATED MARCH 2, 2001 EXHIBIT 10.1 ================================================================================ LEASE between IMMUNEX REAL ESTATE TRUST 2001, as Lessor, and IMMUNEX CORPORATION, as Lessee --------------------------- Dated as of March 2, 2001 --------------------------- ================================================================================ THIS LEASE IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE AGENT ("THE ADMINISTRATIVE AGENT"), UNDER THE SPC LOAN AGREEMENT, DATED AS OF MARCH 2, 2001 AMONG IMMUNEX REAL ESTATE TRUST 2001 AND IMMUNEX FUNDING CORP., AS AMENDED OR SUPPLEMENTED. THIS LEASE HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE OF THE STATE OF DELAWARE), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART CONTAINING THE RECEIPT THEREFORE EXECUTED BY THE ADMINISTRATIVE AGENT ON THE SIGNATURE PAGE HEREOF.
TABLE OF CONTENTS Page Section 1. DEFINITIONS, INTERPRETATIONS.................................................................. 1 1.1 Definitions; Interpretation.................................................................. 1 --------------------------- Section 2. PROPERTY AND TERM............................................................................. 1 2.1 Property..................................................................................... 1 -------- 2.2 Lease Term................................................................................... 1 ---------- 2.3 Title........................................................................................ 1 ----- Section 3. RENT.......................................................................................... 2 3.1 Rent......................................................................................... 2 ---- 3.2 Supplemental Rent............................................................................ 2 ----------------- Section 4. UTILITY CHARGES............................................................................... 3 4.1 Utility Charges.............................................................................. 3 --------------- Section 5. QUIET ENJOYMENT............................................................................... 3 5.1 Quiet Enjoyment.............................................................................. 3 --------------- Section 6. NET LEASE..................................................................................... 3 6.1 Net Lease; No Setoff; Etc.................................................................... 3 ------------------------- 6.2 No Termination or Abatement.................................................................. 4 --------------------------- Section 7. OWNERSHIP OF PROPERTY......................................................................... 5 7.1 Ownership of the Property.................................................................... 5 ------------------------- Section 8. CONDITION OF PROPERTY......................................................................... 6 8.1 Condition of the Property.................................................................... 6 ------------------------- 8.2 Possession and Use of the Property........................................................... 6 ---------------------------------- Section 9. COMPLIANCE.................................................................................... 7 9.1 Compliance with Legal Requirements and Insurance Requirements................................ 7 ------------------------------------------------------------- 9.2 Environmental Matters........................................................................ 7 --------------------- Section 10. MAINTENANCE AND REPAIR....................................................................... 8
i 10.1 Maintenance and Repair; Return................................................................... 8 ------------------------------ 10.2 Return Requirements.............................................................................. 8 ------------------- 10.3 Right of Inspection.............................................................................. 10 ------------------- 10.4 Environmental Inspection......................................................................... 10 ------------------------ Section 11. MODIFICATIONS.................................................................................... 10 11.1 Modifications, Substitutions and Replacements.................................................... 10 --------------------------------------------- Section 12. TITLE............................................................................................ 12 12.1 Warranty of Title................................................................................ 12 ----------------- 12.2 Grants and Releases of Easements................................................................. 12 -------------------------------- Section 13. PERMITTED CONTESTS............................................................................... 13 13.1 Permitted Contests Other Than in Respect of Impositions.......................................... 13 ------------------------------------------------------- 13.2 Permitted Contests in Respect of Certain Taxes................................................... 14 ---------------------------------------------- Section 14. INSURANCE........................................................................................ 14 14.1 Public Liability and Workers' Compensation Insurance............................................. 14 ---------------------------------------------------- 14.2 Hazard and Other Insurance....................................................................... 14 -------------------------- 14.3 Coverage......................................................................................... 15 -------- Section 15. CONDEMNATION AND CASUALTY........................................................................ 16 15.1 Casualty and Condemnation........................................................................ 16 ------------------------- Section 16. LEASE TERMINATION................................................................................ 18 16.1 Termination upon Certain Events.................................................................. 18 ------------------------------- 16.2 Procedures....................................................................................... 18 ---------- Section 17. DEFAULT.......................................................................................... 19 17.1 Lease Events of Default.......................................................................... 19 ----------------------- 17.2 Final Payment.................................................................................... 21 ------------- 17.3 Lease Remedies................................................................................... 21 -------------- 17.4 Waiver of Certain Rights......................................................................... 23 ------------------------ 17.5 Assignment of Rights Under Contracts............................................................. 23 ------------------------------------ 17.6 Remedies Cumulative.............................................................................. 23 ------------------- 17.7 Lessee's Rights to Purchase...................................................................... 24 --------------------------- Section 18. LESSOR'S RIGHT TO CURE........................................................................... 24
ii 18.1 Lessor's Right to Cure Lessee's Lease Defaults.................................................. 24 ---------------------------------------------- Section 19. LEASE TERMINATION............................................................................... 24 19.1 Exercise of Options............................................................................. 24 ------------------- Section 20. PURCHASE OPTION................................................................................. 25 20.1 Purchase Option................................................................................. 25 --------------- 20.2 Maturity Date Purchase Option................................................................... 26 ----------------------------- 20.3 Parcel Purchase Option.......................................................................... 26 ---------------------- 20.4 Unimproved Land Parcel Release.................................................................. 28 ------------------------------ Section 21. SALE OF PROPERTY................................................................................ 30 21.1 Sale Procedure.................................................................................. 30 -------------- 21.2 Application of Proceeds of Sale................................................................. 31 ------------------------------- 21.3 Indemnity for Excessive Wear.................................................................... 31 ---------------------------- 21.4 Appraisal Procedure............................................................................. 31 ------------------- 21.5 Certain Obligations Continue.................................................................... 31 ---------------------------- Section 22. HOLDING OVER.................................................................................... 32 22.1 Holding Over.................................................................................... 32 ------------ Section 23. RISK OF LOSS.................................................................................... 32 23.1 Risk of Loss.................................................................................... 32 ------------ Section 24. SUBLETTING AND ASSIGNMENT....................................................................... 32 24.1 Assignment...................................................................................... 32 ---------- 24.2 Subleases....................................................................................... 32 --------- Section 25. ESTOPPEL CERTIFICATES........................................................................... 33 25.1 Estoppel Certificates........................................................................... 33 --------------------- Section 26. NO WAIVER....................................................................................... 33 26.1 No Waiver....................................................................................... 33 --------- Section 27. ACCEPTANCE OF SURRENDER......................................................................... 33 27.1 Acceptance of Surrender......................................................................... 33 ----------------------- Section 28. NO MERGER OF TITLE.............................................................................. 34
iii 28.1 No Merger of Title.............................................................................. 34 ------------------ Section 29. NOTICES......................................................................................... 34 29.1 Notices......................................................................................... 34 ------- Section 30. MISCELLANEOUS................................................................................... 34 30.1 Miscellaneous................................................................................... 34 ------------- 30.2 Amendments and Modifications.................................................................... 34 ---------------------------- 30.3 Successors and Assigns.......................................................................... 35 ---------------------- 30.4 Counterparts.................................................................................... 35 ------------ 30.5 GOVERNING LAW................................................................................... 35 30.6 Limitations on Recourse......................................................................... 35 ----------------------- 30.7 Memorandum of Lease............................................................................. 35 ------------------- 30.8 Priority........................................................................................ 35 -------- 30.9 Ground Lease.................................................................................... 35 ------------ 30.10 Construction Period Limitation.................................................................. 36 ------------------------------ 30.11 Usury Savings Provision......................................................................... 36 ----------------------- 30.12 Liability of Wilmington Trust Company........................................................... 37 ------------------------------------- Schedule I Release Parcels
iv LEASE (this "Lease"), dated as of March 2, 2001 between IMMUNEX REAL ----- ESTATE TRUST 2001, a Delaware business trust, having its principal office c/o Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890, as lessor (the "Lessor"), and IMMUNEX CORPORATION, a Washington corporation, ------ having its principal office at 51 University Street, Seattle, Washington 98101, as lessee (the "Lessee"). ------ In consideration of the mutual agreements herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. DEFINITIONS, INTERPRETATIONS 1.1 Definitions; Interpretation. Capitalized terms used and not ------------------------------- defined herein shall have the meanings assigned thereto in Annex A to the ------- Participation Agreement, dated as of the date hereof, among Lessee, Immunex Funding Corp., as SPC, Wilmington Trust Company, not in its individual capacity except as set forth therein, but solely as Trustee, the Lessor, the financial institutions listed on Schedule II thereto as Investors, the financial institutions listed on Schedule I thereto as Banks, and The Chase Manhattan Bank, as Administrative Agent, Collateral Agent and Agent Bank; and the rules of interpretation set forth in Appendix A to the Participation Agreement shall apply to this Lease Agreement. Section 2. PROPERTY AND TERM 2.1 Property. Subject to the terms and conditions hereinafter set -------- forth, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Property. 2.2 Lease Term. (a) The Property is leased for the Basic Term, unless ---------- extended or earlier terminated in accordance with the provisions of this Lease. (b) Lessee may request, by written notice given to the Lessor at least fourteen (14) months prior to the Basic Term Expiration Date or the Renewal Term Expiration Date, as the case may be, an extension of this Lease for up to two (2) additional periods, of two (2) years (collectively, the "Extension Term"). -------------- If at least twelve (12) months prior to the Basic Term Expiration Date or Renewal Term Expiration Date, all the Participants agree in their sole discretion to any such Extension Term, the Lessor and the Lessee will undertake to enter into amendments and supplements to the Operative Agreements and such other agreements as the parties determine to be necessary and appropriate in connection therewith and if no such agreement is reached twelve (12) months prior to the applicable Expiration Date, this Lease shall terminate at the end of the Basic Term or the Extension Term, as the case may be. 2.3 Title. The Property is leased to Lessee without any ----- representation or warranty, express or implied, by Lessor and subject to the rights of parties in possession, the existing state of title (including, without limitation, the Permitted Exceptions) and all applicable Legal Requirements. Lessee shall in no event have any recourse against Lessor for any defect in Lessor's title to the Property. Section 3. RENT 3.1 Rent. (a) On each applicable Specified Payment Date occurring ---- after the Completion Date, but no later than commencing with the Outside Completion Date, Lessee shall pay the Basic Rent. (b) Basic Rent shall be due and payable in lawful money of the United States and shall be paid by wire transfer of immediately available funds on the due date therefor to such account or accounts at such bank or banks or to such other Person or in such other reasonable manner as Lessor shall from time to time direct. (c) Neither Lessee's inability or failure to take possession of all, or any portion, of the Property when delivered by Lessor, nor Lessor's inability or failure to deliver all or any portion of the Property to Lessee, whether or not attributable to any act or omission of Lessee or any act or omission of Lessor, or for any other reason whatsoever, shall delay or otherwise affect Lessee's obligation to pay Rent in accordance with the terms of this Lease. 3.2 Supplemental Rent. (a) Lessee shall pay to Lessor or the Person ----------------- entitled thereto any and all Supplemental Rent promptly as the same shall become due and payable, and if Lessee fails to pay any Supplemental Rent, Lessor shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Basic Rent. Lessee shall pay to Lessor as Supplemental Rent, among other things, on demand, to the extent permitted by applicable Legal Requirements, interest at the applicable Overdue Rate on any installment of Basic Rent not paid when due for the period for which the same shall be overdue and on any payment of Supplemental Rent not paid when due or demanded by Lessor for the period from the due date or the date of any such demand, as the case may be, until the same shall be paid. Supplemental Rent shall include all rents and the charges payable by Lessor under Ground Lease during the Term, including annual rent payments required under the Ground Lease. The expiration or other termination of Lessee's obligations to pay Basic Rent hereunder shall not limit or modify the obligations of Lessee with respect to Supplemental Rent; provided however if no Lease Default shall have occurred and be continuing and any prepaid Ground Lease rents paid by Lessee shall be credited against Lessee's payment obligations under the Operative Agreements to the extent that such prepaid Ground Lease rents are refunded to Lessor. Unless expressly provided otherwise in this Lease or any other Operative Agreement, in the event of any failure on the part of Lessee to pay and discharge any Supplemental Rent as and when due, Lessee shall also promptly pay and discharge any fine, penalty, interest or cost which may be assessed or added for nonpayment or late payment of such Supplemental Rent, all of which shall also constitute Supplemental Rent. During the Construction Period such charges shall be included in the Project Costs payable by Lessor, but only to the extent such charges, along with other Project Costs already incurred, are covered by the SPC Loan Commitment and the Investor Contribution Commitment. (b) Subject to the limitations set forth in the Agency Agreement during the Construction Period, Lessee may be obligated to make a payment of Supplemental Rent equal to the Maximum Residual Guarantee Amount in accordance with Section 21.1(c). 2 Section 4. UTILITY CHARGES 4.1 Utility Charges. Subject to Lessee's rights of permitted contest --------------- pursuant to Section 13.1, Lessee shall pay, or cause to be paid, all charges for electricity, power, gas, oil, water, telephone, sanitary sewer service and all other rents and utilities used in or on the Property during the Term. Lessee shall be entitled to receive any credit or refund with respect to any utility charge paid by Lessee and the amount of any credit or refund received by Lessor on account of any utility charges paid by Lessee, net of the costs and expenses incurred by Lessor in obtaining such credit or refund, shall be promptly paid over to Lessee. All charges for utilities imposed with respect to the Property for a billing period during which this Lease expires or terminates shall be adjusted and prorated on a daily basis between Lessor and Lessee, and each party shall pay or reimburse the other for each party's pro rata share thereof. During the Construction Period, the costs of all utility and other charges or expenses referenced in this Section 4.1 shall be paid by Lessor; provided, however, the -------- ------- Lessor shall pay such amounts described in this Section 4.1 only if funds are made available by SPC and the Investors in an amount sufficient to allow such payment. Section 5. QUIET ENJOYMENT 5.1 Quiet Enjoyment. So long as no Lease Event of Default shall have --------------- occurred and be continuing, Lessee shall peaceably and quietly have, hold and enjoy the Property for the Term, free of any claim or other action by Lessor or anyone rightfully claiming by, through or under Lessor. Section 6. NET LEASE 6.1 Net Lease; No Setoff; Etc. This Lease shall constitute a net ----------------------------- lease and, notwithstanding any other provision of this Lease, Lessee shall pay Basic Rent and Supplemental Rent without counterclaim, setoff, deduction or defense of any kind and without abatement, suspension, deferment, diminution or reduction of any kind, and Lessee's obligation to pay all such amounts is absolute and unconditional. The obligations and liabilities of Lessee hereunder shall in no way be released, discharged or otherwise affected for any reason, (except as expressly provided herein and by performance of the Lessee's obligations in connection therewith) including, without limitation, to the maximum extent permitted by law: (a) any defect in the condition, merchantability, design, construction, quality or fitness for use of any portion of the Property, or any failure of the Property to comply with all Legal Requirements, including any inability to occupy or use the Property by reason of such non-compliance; (b) any damage to, abandonment, loss, contamination of or Release from or destruction of or any requisition or taking of the Property or any part thereof, including eviction; (c) any restriction, prevention or curtailment of or interference with any use of the Property or any part thereof, including eviction; (d) any defect in title to or rights to the Property or any Lien on such title or rights or on the Property; (e) any change, waiver, extension, indulgence or other action or omission or breach in respect of any obligation or liability of or by a Participant; (f) any bankruptcy, insolvency, 3 reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to a Participant or any other Person, or any action taken with respect to this Lease by any trustee or receiver of a Participant or any other Person, or by any court, in any such proceeding; (g) any claim that Lessee has or might have against any Person, including, without limitation, a Participant; (h) any failure on the part of Lessor to perform or comply with any of the terms of this Lease, any other Operative Agreement or of any other agreement; (i) any invalidity or unenforceability or disaffirmance against or by Lessee of this Lease or any provision hereof or any of the other Operative Agreements or any provision of any thereof; (j) the impossibility of performance by Lessee, Lessor or both; (k) any action by any court, administrative agency or other Governmental Authority; (l) any restriction, prevention or curtailment of or any interference with the construction on or any use of the Property or any part thereof; or (m) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not Lessee shall have notice or knowledge of any of the foregoing. Notwithstanding the foregoing provisions, nothing contained in this Section 6.1 shall provide Lessor with any right to payment by Lessee under this Lease prior to the Completion Date which is contrary to Lessor's remedies under the Agency Agreement; it being the express intention of the parties hereto that Lessee's liability hereunder shall not exceed the liability of the Construction Agent under the Agency Agreement prior to the Completion Date. This Lease shall be noncancellable by Lessee for any reason whatsoever except as expressly provided herein, and Lessee, to the extent permitted by Legal Requirements, 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. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise, except as otherwise expressly provided herein, Lessee shall, unless prohibited by Legal Requirements, nonetheless pay to Lessor (or, in the case of Supplemental Rent, to whomever shall be entitled thereto) an amount equal to each Rent payment at the time and in the manner that such payment would have become due and payable under the terms of this Lease if it had not been terminated in whole or in part, and in such case, so long as such payments are made and no Lease Event of Default shall have occurred and be continuing, Lessor will deem this Lease to have remained in effect. Each payment of Rent made by Lessee hereunder shall be final and, absent manifest error in the computation of the amount thereof, Lessee shall not seek or have any right to recover all or any part of such payment from a Participant or any party to any agreements related thereto for any reason whatsoever. Lessee assumes the sole responsibility for the condition, use, operation, maintenance, and management of the Property and Lessor shall have no responsibility in respect thereof and shall have no liability for damage to the property of Lessee or any subtenant of Lessee on any account or for any reason whatsoever. 6.2 No Termination or Abatement. Lessee shall remain obligated under --------------------------- this Lease in accordance with its terms and shall not take any action to terminate, rescind or avoid this Lease, notwithstanding any action for bankruptcy, insolvency, reorganization, liquidation, dissolution, or other proceeding affecting Lessor, or any action with respect to this Lease which may be taken by any trustee, receiver or liquidator of Lessor or by any court with respect to Lessor, except as otherwise expressly provided herein. Lessee hereby waives all right (i) to terminate or surrender this Lease, (except as otherwise expressly provided herein or under the applicable terms of any other Operative Agreement), or (ii) to avail itself of any abatement, suspension, deferment, reduction, setoff, counterclaim or defense with respect to any Rent 4 (except as otherwise expressly provided herein or under the applicable terms of any other Operative Agreement). Lessee shall remain obligated under this Lease in accordance with its terms and Lessee hereby waives any and all rights now or hereafter conferred by statute or otherwise to modify or to avoid strict compliance with its obligations under this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound by all of the terms and conditions contained in this Lease. Section 7. OWNERSHIP OF PROPERTY 7.1 Ownership of the Property. (a) Lessor and Lessee intend that (i) ------------------------- for financial accounting purposes with respect to Lessee (A) this Lease will be treated as an "operating lease" pursuant to Statement of Financial Accounting Standards (SFAS) No. 13, as amended, and all EITF pronouncements relating thereto, (B) Lessor will be treated as the owner and lessor of the Property and (C) Lessee will be treated as the lessee of the Property, but (ii) for federal, state and local income and sales taxes and all other purposes (A) this Lease will be treated as a financing arrangement, (B) SPC will be treated as a senior lender making loans to Lessee in an amount equal to the SPC Loans, which SPC Loans will be secured by the Property, (C) Lessor will be treated as a subordinated lender making a loan to Lessee in an amount equal to the Investor Contribution, which loan is secured by the Property, and (D) Lessee will be treated as the owner of the Property and will be entitled to all tax benefits ordinarily available to an owner of property like the Property for such tax purposes. (b) Lessor and Lessee further intend and agree that, for the purpose of securing Lessee's obligations for the repayment of the above-described loans, (i) this Lease shall also be deemed to be a security agreement and financing statement within the meaning of Article 9 of the Uniform Commercial Code and a real property mortgage or deed of trust, as applicable; (ii) the conveyance provided for in Section 2 shall be deemed a grant of a security interest in and a mortgage lien on the Lessee's right, title and interest in the Property (including the right to exercise all remedies as are contained in the Mortgage and Memorandum of Lease upon the occurrence of a Lease Event of Default) and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, investments, securities or other property, whether in the form of cash, investments, securities or other property, for the benefit of the Lessor to secure the Lessee's payment of all amounts owed by the Lessee under this Lease and the other Operative Agreements and Lessor holds title to the Property so as to create and grant a first lien and prior security interest in the Property (A) pursuant to this Lease for the benefit of the Administrative Agent under the Assignment of Lease, to secure to the Administrative Agent the obligations of the Lessee under the Lease and (B) pursuant to the Mortgage to secure to the Administrative Agent the obligations of the Lessor under the Mortgage and the Notes; (iii) the possession by Lessor or any of its agents of notes and such other items of property as constitute instruments, money, negotiable documents or chattel paper shall be deemed to be "possession by the secured party" for purposes of perfecting the security interest pursuant to Section 9-305 of the Uniform Commercial Code; and (iv) notifications to Persons holding such property, and acknowledgements, receipts or confirmations from financial intermediaries, bankers or agents (as applicable) of Lessee shall be deemed to have been given for the purpose of perfecting such security interest under applicable law. Lessor and Lessee shall, to the extent consistent with this 5 Lease, take such actions as may be necessary to ensure that, if this Lease were deemed to create a security interest in the Property in accordance with this Section, such security interest would be deemed to be a perfected security interest of first priority under applicable law and will be maintained as such throughout the Term. (c) Lessor and Lessee further intend and agree that in the event of any insolvency or receivership proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency laws or statute of the United States of America or any State or Commonwealth thereof affecting Lessee or Lessor, the transactions evidenced by this Lease shall be regarded as loans made by an unrelated third party lender to Lessee. SECTION 8. CONDITION OF PROPERTY 8.1 Condition of the Property. LESSEE ACKNOWLEDGES AND AGREES THAT IT ------------------------- IS RENTING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY LESSOR AND SUBJECT TO (A) THE EXISTING STATE OF TITLE (EXCLUDING LESSOR LIENS), (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW AND (D) VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE HEREOF. NO PARTICIPANT HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED, INCLUDING THE CONDITION OF ANY IMPROVEMENTS THEREON, THE SOIL CONDITION, OR ANY ENVIRONMENTAL VIOLATION OR HAZARDOUS CONDITION) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR LIENS), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND NO PARTICIPANT SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT. 8.2 Possession and Use of the Property. Prior the Completion Date, ---------------------------------- Lessee shall not be entitled to possession or control of the Property hereunder, and after the Completion Date, all uses permitted by law will be permitted under this Lease, including, without limitation, administration office uses, research and development laboratory facilities, and support facilities including a warehouse, central utility plant, cafeteria, auditorium, conference center, library and training center. Use of Hazardous Substances pursuant to such permitted uses of the Property in compliance with applicable laws shall not be limited by or subject to Lessor's prior approval. Lessee shall pay, or cause to be paid, all charges and costs required in connection with the use of the Property. Lessee shall repair and restore the Property to the condition in which the Property existed prior to damage arising from any waste of the Property or any part hereof subject to force majeure limitations during the Construction Period, as set forth in the Agency Agreement. At all times during the Term, Lessee will comply in all material respects with all obligations under, and 6 (to the extent no Lease Event of Default exists and provided that such exercise will not impair the value, utility or remaining useful life of such Property) shall be permitted to exercise all rights and remedies under, all operation and easement agreements and related or similar agreements applicable to such Property; provided that during the Construction Period, the costs of all operation and easement agreements obligations shall be paid by Lessor; provided, -------- however, the Lessor shall pay such amounts described in this Section 8.2 only if - ------- funds are made available by SPC and the Investors in an amount sufficient to allow such payment. SECTION 9. COMPLIANCE 9.1 Compliance with Legal Requirements and Insurance Requirements. ------------------------------------------------------------- Subject to the terms of Section 13 relating to permitted contests, Lessee, at its sole cost and expense, shall (a) comply in all material respects with all Legal Requirements (including all Environmental Laws) and Insurance Requirements relating to the Property, including the use, construction, operation, maintenance, repair and restoration thereof, whether or not compliance therewith shall require structural or extraordinary changes in the Improvements or interfere with the use and enjoyment of the Property, and (b) procure, maintain and comply in all material respects with all licenses, permits, orders, approvals, consents and other authorizations required for the construction, renovation, use, maintenance and operation of the Property and for the use, operation, maintenance, repair and restoration of the Improvements. During the Construction Period, the costs of all Legal Requirements and Insurance Requirements and other costs, charges or expenses referenced in this Section 9.1 shall be paid by Lessor; provided, however, the Lessor shall pay such amounts -------- ------- described in this Section 9.1 only if funds are made available by SPC and the Investors in an amount sufficient to allow such payment. Lessor agrees to take such actions as may be reasonably requested by Lessee in connection with the compliance by Lessee of its obligations under this Section 9 in accordance with Section 12.2. 9.2 Environmental Matters. (a) Promptly upon Lessee's actual --------------------- knowledge of the presence of Hazardous Substances in any portion of the Property in concentrations and conditions that constitute an Environmental Violation, Lessee shall notify Lessor in writing of such condition. In the event of such Environmental Violation, Lessee shall, not later than thirty (30) days after Lessee has actual knowledge of such Environmental Violation, either deliver to Lessor and the Administrative Agent an Officer's Certificate and a Termination Notice with respect to the Property pursuant to Section 16.1, if applicable, or, at Lessee's sole cost and expense, promptly and diligently undertake any response, clean up, remedial or other action necessary to remove, cleanup or remediate the Environmental Violation in accordance with the terms of Section 9.1. If Lessee does not deliver a Termination Notice with respect to the Property pursuant to Section 16.1, Lessee shall, upon completion of remedial action by Lessee, cause to be prepared by an environmental consultant reasonably acceptable to Lessor a report describing the Environmental Violation and the actions taken by Lessee (or its agents) in response to such Environmental Violation, and a statement by the consultant that such Environmental Violation has been remedied in full compliance with applicable Environmental Laws. Notwithstanding the foregoing, Lessee shall be deemed to be in compliance with all Environmental Laws for purposes of this Lease notwithstanding any Environmental Violation if (i) Lessee is in material compliance with all contingency plans established by the Environmental 7 Engineer and (ii) the severity of such Environmental Violation is less than federal, state and local standards requiring remediation or removal or that would otherwise reasonably be expected to result in material liability under Environment Laws, or, if such standards are exceeded or such material liability could reasonably be expected, remediation or removal is proceeding in accordance with all applicable Environmental Laws, and (i) can, in the reasonable judgment of the Lessor, be completed prior to the commencement of the Marketing Period, and (ii) would not result in a Material Adverse Effect on the Lessee. (b) Lessee shall comply with all contingency plans established from time to time by the Environmental Engineer. (c) Lessee shall provide to Lessor, within five (5) Business Days of receipt, copies of all written communications with any Governmental Authority relating to any Environmental Violation in connection with the Property. Lessee shall also promptly provide such detailed reports of any such Environmental Claims as reasonably may be requested by Lessor and the Administrative Agent. SECTION 10. MAINTENANCE AND REPAIR 10.1 Maintenance and Repair; Return. (a) From and after the Completion ------------------------------ Date, Lessee, at its sole cost and expense, shall maintain the Property in good condition (ordinary wear and tear excepted) and make all necessary repairs thereto, of every kind and nature whatsoever, whether interior or exterior, ordinary or extraordinary, structural or nonstructural or foreseen or unforeseen, in each case as required by all Legal Requirements and Insurance Requirements and on a basis reasonably consistent with the operation and maintenance of commercial properties comparable in type and location to the Property subject, however, to the provisions of Section 15 with respect to Condemnation and Casualty. (b) Lessor shall under no circumstances be required to build any Improvements on the Property, make any repairs, replacements, alterations or renewals of any nature or description to the Property, make any expenditure whatsoever in connection with this Lease or maintain the Property in any way. Lessor shall not be required to maintain, repair or rebuild all or any part of the Property, and Lessee waives the right to (i) require Lessor to maintain, repair, or rebuild all or any part of the Property, or (ii) make repairs at the expense of Lessor pursuant to any Legal Requirement, Insurance Requirement, contract, agreement, covenants, condition or restriction at any time in effect. 10.2 Return Requirements. Lessee shall, upon the expiration or ------------------- earlier termination of the Term with respect to the Property, vacate, surrender and transfer the Property to Lessor, at Lessee's own expense, free and clear of all Liens other than Permitted Liens and Lessor Liens, in as good condition as they were on the Completion Date, ordinary wear and tear excepted, and in compliance with all Legal Requirements and the other requirements of this Lease (and in any event without (x) any asbestos installed or maintained in any part of the Property, (y) any polychlorinated biphenyls (PCBs) in, on or used, stored or located at the Property, and (z) any other Hazardous Substances in violation of any Environmental Laws). 8 Lessee shall provide, or cause to be provided or accomplished, at the sole cost and expense of Lessee, to or for the benefit of Lessor or a purchaser, at least thirty (30) days prior to the expiration or earlier termination of the Term with respect to the Property, each of the following: (i) an endorsement to the title policy issued for the Property showing (A) record title of the Lessor in the leasehold or fee estate, as the case may be, subject to no Liens other than Permitted Liens described in clauses (i) and (viii) of the definition of Permitted Liens, Liens described in clause (ii) of the definition of Permitted Exceptions, and Lessor Liens and (B) the Mortgage as a valid and perfected first lien; (ii) an environmental assessment for the Property satisfying the requirements set forth in Section 10.4 below; (iii) an assignment (to the extent assignable) of all of the Lessee's right, title and interest in and to each agreement executed by Lessee in connection with the construction, renovation, development, use, maintenance or operation of the Property (including all warranty, performance, service and indemnity provisions); (iv) copies of all Plans and Specifications relating to the design, construction, renovation or development of the Property; (v) an assignment (to the extent assignable) of all permits, licenses, approvals and other authorizations from all Governmental Authorities in connection with the construction, operation and use of the Property; (vi) copies of all non-proprietary books and records kept by or for Lessee in the ordinary course of operating and maintaining the Property, and in the event that Completion shall not have occurred, or the applicable Modification, renovation or repair shall have not been properly completed or the applicable Modification, renovation or repair has been completed, all Budgets and construction schedules, with respect to the construction, renovation, maintenance, repair, generic operation or use (as opposed to Lessee's particular business operations) of the Property; (vii) in the event that Completion shall not have occurred, (x) evidence satisfactory to Lessor that all building materials purchased or contracted for purchase which have not been incorporated into the Improvements at the Property are (A) owned by Lessor free from any Liens other than Permitted Liens and Lessor Liens, (B) secured, segregated and identifiable (and if stored off-site, the location of such place of storage) and (C) to the extent title to such materials has transferred to Lessee, insured under policies in amounts and by insurers reasonably satisfactory to Lessor; (y) evidence satisfactory to Lessor that adequate provision has been made for the protection of materials stored on-site and for the protection of the Improvements, to the extent then constructed, against deterioration and against other loss or damage or theft, and (z) an agreement, in form and substance reasonably satisfactory to Lessor, from all material contractors, construction managers, architects, engineers and other designee professionals that each will continue to perform under their respective contracts for the benefit of Lessor or its assignee; and (viii) an estoppel certificate in form and substance reasonably acceptable to Lessor from the ground lessor of the Ground Lease regarding factual matters relating to the Ground Lease. Lessee shall cooperate with any independent purchaser of the Property in order to facilitate the ownership and maintenance of the Property by such purchaser of the Property after such expiration or earlier termination of the Term, including providing all non-proprietary books, reports and records regarding the maintenance, repair and ownership of the Property and all data and technical information relating thereto, granting or assigning all licenses necessary for the operation and maintenance of the Property and cooperating in seeking and obtaining all necessary licenses, permits and approvals of Governmental Authorities. Lessee shall have also paid the total cost for the completion (or renewal and restoration of the Improvements following such removal) of all Modifications commenced prior to such expiration or earlier termination of the Term. The obligation of Lessee under this Section 10.2 shall survive the expiration or termination of this Lease. 9 10.3 Right of Inspection. Lessor may, at reasonable times and with ------------------- reasonable prior notice, enter upon, inspect and examine at its own cost and expense (unless from and after the Completion Date a Lease Event of Default exists, in which case the out-of-pocket costs and expenses of Lessor shall be paid by Lessee), the Property. Lessee shall furnish to Lessor statements, no more than once per year, upon reasonable advance request by Lessor in writing, accurate in all material respects, regarding the condition and state of repair of the Property. Lessor shall have no duty to make any such inspection or inquiry and shall not incur any liability or obligation by reason of not making any such inspection or inquiry. Lessor and/or its agents or employees performing such inspections or inquiries permitted under this Section 10.3 shall execute confidentiality agreements with respect to their access to and inspections of certain agreed upon sensitive areas of the Project, but without limiting the Lessor's rights after a Lease Event of Default. 10.4 Environmental Inspection. Not more than twelve (12) months prior ------------------------ to the Maturity Date (unless Lessee has previously irrevocably exercised the Maturity Date Purchase Option), and not less than thirty (30) Business Days prior to surrender of possession of the Property, Lessor shall, at Lessee's sole cost and expense (unless such surrender of possession arises from a Construction Risk Event, in which case the limitations of Section 5.4(a) of the Agency Agreement shall be applicable to such costs and expenses), obtain a report by an environmental consultant selected by Lessor certifying that the Property or any portion thereof (i) does not contain Hazardous Substances under circumstances or in concentrations that could result in a violation of or liability under any Environmental Law and (ii) is in compliance with all Environmental Laws. If such is not the case on either such date, then Lessee shall be deemed to have irrevocably exercised the Maturity Date Purchase Option pursuant to Section 20.2 unless Lessee remedies such Environmental Violation at Lessee's expense, by restoring the Property to a condition that is in compliance with all applicable Environmental Laws and in a condition that would not otherwise reasonably be expected to result in material liability under Environmental Laws, prior to the commencement of the Marketing Period. Lessor and/or its agents or employees performing such inspections or inquiries permitted under this Section 10.4 shall execute confidentiality agreements (with reasonable terms and scope) with respect to their access to and inspections of certain agreed upon sensitive areas of the Property, but without limiting the Lessor's rights after an Event of Default hereunder. SECTION 11. MODIFICATIONS 11.1 Modifications, Substitutions and Replacements. (a) So long as no --------------------------------------------- Lease Event of Default has occurred and is continuing, Lessee, at its sole cost and expense, may at any time and from time to time make alterations, renovations, improvements and additions to the Property or any part thereof (collectively, "Modifications"); provided, that: (i) except for any Modification ------------- -------- required to be made pursuant to a Legal Requirement or an Insurance Requirement, no Modification, individually, or when aggregated with any (A) other Modification or (B) grant, dedication, transfer or release pursuant to Section 12.2, shall impair the value of the Property or the utility or useful life of the Property from that which existed immediately prior to such Modification; (ii) the Modification shall be performed expeditiously and in a good and workmanlike manner; (iii) Lessee shall comply with all Legal Requirements (including all 10 Environmental Laws) and Insurance Requirements applicable to the Modification, including the obtaining of all permits and certificates of occupancy, and the structural integrity of the Property shall not be adversely affected; (iv) Lessee shall maintain or cause to be maintained builders' risk insurance at all times when a Modification is in progress; (v) subject to the terms of Section 13 relating to permitted contests, Lessee shall pay all costs and expenses and discharge any Liens arising with respect to the Modification; (vi) such Modifications shall comply with Sections 8.2 and 10.1 and shall not change the primary character of the Property or diminish the utility or the Fair Market Sales Value of the Property unless such Modification is a Required Modification; and (vii) no Improvements shall be demolished, except to the extent such demolition does not impair the value, utility or useful life of the Property from that which existed prior to the Modification. All Modifications shall remain part of the realty and shall be subject to this Lease, and title thereto shall immediately vest in Lessor, except Modifications that (x) can be readily removed without impairing the value, utility or remaining useful life of the Property, (y) are not Required Modifications and (z) were not financed by Lessor, may be removed from the Property at any time during the Term and thirty (30) days thereafter provided no Lease Event of Default has occurred and is then continuing. So long as no Lease Event of Default has occurred and is then continuing, Lessee may place upon the Property any inventory, trade fixtures, machinery, equipment or other property belonging to Lessee or third parties and may remove the same at any time during the term of this Lease; provided that -------- such inventory, trade fixtures, machinery, equipment or other property, or their respective operations, can be removed without causing material damage to or diminution in the value of the Property. The Lessor acknowledges Lessee's right, subject to Section 10 of the Guarantee, to finance and to secure under the Uniform Commercial Code, inventory, furnishings, furniture, equipment, machinery, leasehold improvements and other personal property located at the Property, other than the Equipment and modifications required to be titled in the name of Lessor and excluding in all cases fixtures, and Lessor agrees, at Lessee's cost and expenses, to execute Lessor waiver forms, releases of Lessor Liens and other similar documentation (in form and substance reasonably satisfactory to Lessor and the Administrative Agent) in favor or any purchase money seller, lessor or lender who has financed or may finance in the future such items, with respect to such separately-financed items only. (b) Following the Completion Date, Lessee shall notify Lessor of the undertaking of any Modifications to the Property the cost of which is anticipated to exceed $5,000,000. Prior to undertaking any such Modifications, Lessee shall deliver to Lessor (i) a brief narrative of the work to be done and a copy of the plans and specifications relating to such work; and (ii) an Officer's Certificate stating that such work when completed will not impair the value, utility or remaining life of the Property. Lessor, by itself or its agents, shall have the right, but not the obligation, from time to time to inspect such Modifications in accordance with Section 10.3 to ensure that the same is completed consistent with the plans and specifications. (c) Lessee shall not be permitted to exercise the Lessee's rights under Section 21 if any material Modifications cannot be completed by the commencement of the Marketing Period. (d) The construction process provided for in the Agency Agreement is acknowledged by Lessor to be consistent with, and in compliance with, the terms and provisions of this Section 11. 11 SECTION 12. TITLE 12.1 Warranty of Title. (a) Lessee agrees that, except as otherwise ----------------- provided herein and subject to the terms of Section 13 relating to permitted contests, Lessee shall (subject to the limitations of Section 5.4(a) of the Agency Agreement which shall apply to Lessee's liability under this Section 12.1 during the Construction Period) not directly or indirectly create or allow to remain, and shall promptly discharge at its sole cost and expense, any Lien, defect, attachment, levy, title retention agreement or claim upon the Property or any Modifications or any Lien, attachment, levy or claim with respect to the Rent or with respect to any amounts held by the Administrative Agent pursuant to the SPC Loan Agreement, other than Lessor Liens or Permitted Liens. Lessee shall promptly notify Lessor in the event it receives knowledge that a Lien (other than a Lessor Liens or Permitted Lien) exists with respect to the Property. (b) Nothing contained in this Lease shall be construed as constituting the consent or request of Lessor, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Property or any part thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN AND TO THE PROPERTY. 12.2 Grants and Releases of Easements. Provided that no Lease Event -------------------------------- of Default shall have occurred and be continuing and subject to the provisions of Sections 8, 9, 10 and 11, Lessor hereby consents to the following actions by Lessee, in the name and stead of Lessor, but at Lessee's sole cost and expense: (a) the granting (prior to the Lien of the Mortgage) of easements, licenses, rights-of-way and other rights and privileges in the nature of easements reasonably necessary or desirable for the construction, use, repair, renovation or maintenance of the Property as herein provided; (b) the release (free and clear of the Lien of the Mortgage) of existing easements or other rights in the nature of easements which are for the benefit of the Property; (c) the dedication or transfer (prior to the Lien of the Mortgage) of unimproved portions of the Property for road, highway or other public purposes; (d) the execution of petitions to have the Property annexed to any municipal corporation or utility district; and (e) the execution of amendments to any covenants and restrictions affecting the Property; provided, that in each case Lessee shall -------- have delivered to Lessor an Officer's Certificate stating that: (i) such grant, release, dedication or transfer does not impair the value or utility or remaining useful life of the Property, (ii) such grant, release, dedication or transfer is necessary in connection with the construction, use, maintenance, alteration, renovation or improvement of the Property, (iii) Lessee shall remain obligated under this Lease and under any instrument executed by Lessee consenting to the assignment of Lessor's interest in this Lease as security for indebtedness, in each such case in accordance with their terms, as though such grant, release, dedication or transfer, had not been effected and (iv) Lessee shall pay and perform any obligations of Lessor under such grant, release, dedication or transfer; provided that during the Construction Period, the costs of such obligations shall be paid by Lessor; provided, however, the Lessor shall -------- ------- pay such amounts described in this Section 12.2 only if funds are made available 12 by SPC and the Investors in an amount sufficient to allow such payment. Additionally, subject to compliance with the other provisions of this Section 12.2, Lessee shall have the right, as long as Lessee is in not in default under any of the Operative Agreements, to take the following actions in the name and stead of the Lessor, (i) execute and deliver to any entity any instrument appropriate to confirm or effect such rights granted to Lessee hereunder, and (ii) execute and deliver to any entity such other documents or materials in connection with the acquisition, development, construction, testing or operation of any portion of the Property, including without limitation reciprocal easement agreements, construction contracts, operating agreements, development agreements, plats, replats or subdivision documents; provided, that each such agreement shall be on commercially reasonable terms so as not to diminish the fair market value of any portion of the Property. The Lessor shall, upon Lessee's reasonable request and expense, promptly execute and deliver any instrument necessary or appropriate to confirm any such grant, release, dedication or transfer or to enable Lessee to comply with any Insurance Requirements or Legal Requirements; provided all such agreements shall be without recourse to the Lessor, except that with respect to contracts with governmental authorities, recourse may be had to the Property if so required. Without limiting the effectiveness of the foregoing, provided that no Lease Event of Default shall have occurred and be continuing, Lessor shall, upon the request of Lessee, and at Lessee's sole cost and expense, execute and deliver such reasonable applications, modifications, addendums, documents, petitions, and authorizations (including the obtaining of a Washington State Tax Identification number if required to support Lessee's sales tax deferral), and to appear before such public authorities, in each case as may in the reasonable and good-faith opinion of Lessee be necessary or appropriate for the purpose of obtaining a High Technology Sales and Use Tax Deferral from the State of Washington on construction of the Improvements; provided all such agreements shall be without recourse to the Lessor. The initial application for such deferral will be submitted immediately following the effective date of this Lease . Lessor hereby appoints Lessee to represent Lessor's interest before the Washington State Department of Revenue as part of the audit at the end of the Construction Period. The benefit of the High Technology Sales and Use Tax Deferral shall accrue entirely to the Lessee. SECTION 13. PERMITTED CONTESTS 13.1 Permitted Contests Other Than in Respect of Impositions. Except ------------------------------------------------------- to the extent otherwise provided for in Section 12.2 of the Participation Agreement, Lessee, on its own or on Lessor's behalf but at Lessee's sole cost and expense, may contest, by appropriate administrative or judicial proceedings conducted in good faith and with due diligence, the amount, validity or application, in whole or in part, of any Legal Requirement, or utility charges payable pursuant to Section 4.1 or any Lien, attachment, levy, encumbrance or encroachment, and Lessor agrees not to pay, settle or otherwise compromise any such item, provided that (a) the commencement and continuation of such proceedings shall suspend the collection thereof from, and suspend the enforcement thereof against the Property and the Participants; (b) there shall be no substantial risk of the imposition of a Lien (other than a Permitted Lien) on the Property and no part of the Property nor any Rent would be in any danger of being sold, forfeited, lost or deferred; (c) at no time during the permitted contest shall there be a risk of the imposition of criminal liability or civil liability on any Participant for failure to comply therewith; and (d) in the event that, at any time, there shall be a material risk of extending the application of such item 13 beyond the earlier of the Maturity Date and the Expiration Date, then Lessee shall deliver to Lessor an Officer's Certificate certifying as to the matters set forth in clauses (a), (b) and (c) of this Section 13.1; and (e) provided, -------- that during the Construction Period, the cost of such permitted contests shall be paid by Lessor; provided, further, the Lessor shall pay such amounts -------- ------- described in this Section 13.1 only if funds are made available by SPC and the Investors in an amount sufficient to allow such payment. Lessor, at Lessee's sole cost and expense, shall execute and deliver to Lessee such authorizations and other documents as may reasonably be required in connection with any such contest and, if reasonably requested by Lessee, shall join as a party therein at Lessee's sole cost and expense. 13.2 Permitted Contests in Respect of Certain Taxes. Throughout the --------------------------------------------------- Term, as long as no Lease Default shall then exist, Lessor shall permit Lessee, or Lessee's designated agents, to represent Lessor's interest before the County Assessors office to determine the true and fair value, for property tax purposes, of all real and personal property related to the Land and the Project. The benefit of reduced real or personal property taxes shall accrue to the Lessee. SECTION 14. INSURANCE 14.1 Public Liability and Workers' Compensation Insurance. During the ---------------------------------------------------- Term, Lessee shall procure and carry, at Lessee's sole cost and expense, commercial general liability insurance for claims for injuries or death sustained by persons or damage to property while on the Property. Such insurance shall be on terms and in amounts that are no less favorable than insurance maintained by owners of similar properties, that are in accordance with normal industry practice. The policy shall be endorsed to name the Participants as additional insureds. The policy shall also specifically provide that the policy shall be considered primary insurance which shall apply to any loss or claim before any contribution by any insurance which a Participant may have in force. Lessee shall, in the operation of the Property, comply with the applicable workers' compensation laws and protect Lessor against any liability under such laws. 14.2 Hazard and Other Insurance. (a) During the Term, Lessee shall -------------------------- keep the Property insured against loss or damage on an All Risk basis including Earthquake and Ordinance or Law (including, during the Construction Period only, the peril of collapse) on terms and in amounts that are no less favorable than insurance maintained by owners of similar properties in the Seattle, Washington area, that are in accordance with normal industry practice (including, without limitation, with respect to deductions or self-insurance retentions), and, are in amounts equal to the actual replacement cost of the Improvements. So long as no Lease Event of Default exists, any loss payable under the insurance policy required by this Section will be paid to and adjusted solely by Lessee, subject to Section 15. (b) If at any time during the Term the area in which the Property is located is designated a "flood-prone" area pursuant to the Flood Disaster Protection Act of 1973 or any amendments or supplements thereto, then Lessee shall comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as may be amended. In addition, Lessee will fully comply with the requirements of the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as each may be amended from time to time, 14 and with any other Legal Requirement, concerning flood insurance to the extent that it applies to the Property. 14.3 Coverage. (a) Lessee shall furnish Lessor with certificates -------- showing the insurance required under Sections 14.1 and 14.2 to be in effect and naming the Participants (other than the Banks) as an additional insured with respect to liability insurance and showing the mortgagee endorsement required by Section 14.3(c). All such insurance shall be at the cost and expense of Lessee. Such certificates shall include a provision in which the insurer agrees to provide thirty (30) days' advance written notice by the insurer to Lessor and the Administrative Agent in the event of cancellation or modification of such insurance that could be adverse to the interests of a Participant. If a Lease Event of Default has occurred and is continuing and Lessor so requests, Lessee shall deliver to Lessor certified copies of all insurance policies required by this Lease. (b) Lessee agrees that the insurance policy or policies required by this Lease shall include an appropriate clause pursuant to which such policy shall provide that it will not be invalidated should Lessee waive, in writing, prior to a loss, any or all rights of recovery against any party for losses covered by such policy. Lessee hereby waives any and all such rights against a Participant to the extent of payments made under such policies. (c) All insurance policies required by Section 14.2 shall include a "New York" or comparable standard form non-contributing mortgagee loss payable endorsement in favor of the Administrative Agent. (d) Neither Lessor nor Lessee shall carry separate insurance concurrent in kind or form or contributing in the event of loss with any insurance required under this Lease except that Lessor may carry separate liability insurance so long as (i) Lessee's insurance is designated as primary and in no event excess or contributory to any insurance Lessor may have in force which would apply to a loss covered under Lessee's policy and (ii) each such insurance policy will not cause Lessee's insurance required under this Lease to be subject to a coinsurance exception of any kind. (e) Lessee shall pay as they become due all premiums for the insurance required by this Lease, shall renew or replace each policy prior to the expiration date thereof and shall promptly deliver to Lessor and the Administrative Agent certificates for renewal and replacement policies; provided, that during the Construction Period, the cost of such insurance shall - -------- be paid by Lessor; provided, further, the Lessor shall pay such amounts -------- ------- described in this Section 14.3(e) only if funds are made available by SPC and the Investors in an amount sufficient to allow such payment. Notwithstanding the foregoing, during the Construction Period, the Construction Agent shall cause the insurance coverages referenced in Sections 14.1 and 14.2 to be procured. (f) Lessee may maintain insurance required by this Lease by means of one or more blanket insurance policies maintained by Lessee; provided, however, -------- ------- that (A) any such policy shall specify, or Lessee shall furnish to Lessor a written statement from the insurer so specifying, the maximum amount of the total insurance afforded by such blanket policy that is allocated to the Property and any sublimits in such blanket policy applicable to the Property, (B) each such 15 blanket policy shall include an endorsement providing that, in the event of a loss resulting from an insured peril, insurance proceeds shall be allocated to the Property in an amount equal to the coverages required to be maintained by Lessee as provided above and (C) the protection afforded under any such blanket policy shall be no less than that which would have been afforded under a separate policy or policies relating only to the Property. SECTION 15. CONDEMNATION AND CASUALTY 15.1 Casualty and Condemnation. (a) Subject to the provisions of this ------------------------- Section 15 and Section 16 (in the event Lessee delivers, or is obligated to deliver, a Termination Notice), and prior to the occurrence and continuation of a Lease Default, Lessee shall be entitled to receive (and Lessor hereby irrevocably assigns to Lessee all of Lessor's right, title and interest in) any award, compensation or insurance proceeds to which Lessee or Lessor may become entitled by reason of their respective interests in the Property (i) if all or a portion of the Property is damaged or destroyed in whole or in part by a Casualty or (ii) if the use, access, occupancy, easement rights or title to the Property or any part thereof is the subject of a Condemnation; provided, -------- however, if a Lease Default shall have occurred and be continuing such award, - ------- compensation or insurance proceeds shall be paid directly to Lessor or, if received by Lessee, shall be held in trust for Lessor, and shall be paid over by Lessee to Lessor, and provided further that in the event of any Casualty or -------- ------- Condemnation, the estimated cost of restoration of which is in excess of $20,000,000, any such award, compensation or insurance proceeds shall be paid directly to Lessor, or if received by Lessee, shall be held in trust for Lessor and shall be paid over by Lessee to Lessor to be held and applied by Lessor toward payment of the cost of restoration in accordance with Section 15.1(e), or, if applicable, in accordance with Section 16. (b) So long as no Lease Default has occurred and is continuing, Lessee may appear in any proceeding or action to negotiate, prosecute, adjust or appeal any claim for any award, compensation or insurance payment on account of any such Casualty or Condemnation and shall pay all expenses thereof; provided -------- that if the estimated cost of restoration of the Property or the payment on account of such title defect is in excess of $20,000,000, then Lessor shall be entitled to participate in any such proceeding or action. At Lessee's reasonable request, and at Lessee's sole cost and expense, Lessor and the Administrative Agent shall participate in any such proceeding, action, negotiation, prosecution or adjustment. Lessor and Lessee agree that this Lease shall control the rights of Lessor and Lessee in and to any such award, compensation or insurance payment. (c) If Lessor or Lessee shall receive notice of a Casualty or a possible Condemnation of the Property or any interest therein, Lessor or Lessee, as the case may be, shall give notice thereof to the other and to the Administrative Agent promptly after the receipt of such notice. (d) In the event of a Casualty or receipt of notice by Lessee or Lessor of a Condemnation, Lessee shall, not later than thirty (30) days after such occurrence, deliver to Lessor and the Administrative Agent an Officer's Certificate stating that either (i) (x) such Casualty is not a Significant Casualty or (y) such Condemnation is neither a Total Condemnation nor a Significant Condemnation and that this Lease shall remain in full force and effect with 16 respect to the Property and, at Lessee's sole cost and expense, Lessee shall promptly and diligently restore the Property in accordance with the terms of Section 15.1(e) or (ii) this Lease shall terminate with respect to the Property in accordance with Section 16.1. (e) Subject to the provisions of Section 6 of the Agency Agreement, if pursuant to this Section 15.1, this Lease shall continue in full force and effect following a Casualty or Condemnation, Lessee shall, at its sole cost and expense, promptly and diligently repair any damage to the Property caused by such Casualty or Condemnation in conformity with the requirements of Sections 10.1 and 11.1 using the as-built plans and specifications for the Property (as modified to give effect to any subsequent Modifications, any Condemnation affecting the Property and all applicable Legal Requirements) so as to restore the Property to the same condition, operation, function and value as existed immediately prior to such Casualty or Condemnation. In such event, title to the Property shall remain with Lessor. To the extent that Lessor receives any Net Proceeds of insurance or Condemnation awards covering the cost of such repairs, Lessor shall make disbursements from time to time of any award, compensation or insurance proceeds held by it to Lessee for application to the cost of restoration subject to the satisfaction of the following conditions: (i) Lessor shall have received a fully executed counterpart of a Requisition requesting funds in an amount not exceeding the cost of work completed or incurred since the last disbursement, together with reasonably satisfactory evidence of the stage of completion and of performance of the work in a good and workman-like manner and in accordance with the as-built plans and specifications, (ii) at the time of any such disbursement, no Lease Default shall have occurred and be continuing, and no mechanic's or materialmen's liens shall have been filed and remain undischarged, except those discharged by the disbursement of the requested funds or bonded, (iii) Lessor shall be reasonably satisfied that sufficient funds are available to complete such restoration and (iv) title to the Property shall conform to the representation set forth in Section 7.3(bb) of the Participation Agreement. Provided no Lease Event of Default shall have occurred and be continuing, any award, compensation or insurance proceeds remaining after restoration of the Property as herein provided shall be paid to Lessee. (f) Subject to the provisions of Section 6 of the Agency Agreement, in no event shall a Casualty or Condemnation with respect to which this Lease remains in full force and effect under this Section 15.1 affect Lessee's obligations to pay Rent pursuant to Section 3.1. (g) Notwithstanding anything to the contrary set forth in Section 15.1(a) or Section 15.1(e), if following the Construction Period a Casualty occurs with respect to the Property or Lessee receives notice of a Condemnation with respect to the Property, and following such Casualty or Condemnation, the Property cannot reasonably be restored on or before the date which is twelve (12) months prior to the Maturity Date to substantially the same condition as existed immediately prior to such Casualty or Condemnation or before such day the Property is not in fact so restored, then Lessee shall exercise its Purchase Option with respect to the Property on the next Specified Payment Date or irrevocably agree in writing to exercise the Maturity Date Purchase Option with respect to the Property, and in either such event such remaining Casualty or Condemnation proceeds shall be paid to the Administrative Agent, which shall pay such funds to Lessee upon the closing of the purchase of the Property. 17 (h) Notwithstanding anything to the contrary contained herein, the provision of Section 6 of the Agency Agreement shall govern Lessee's and Lessor's respective obligations relating to Casualty or Condemnation during the Construction Period, and to the extent the provisions of Section 6 of the Agency Agreement and this Section 15 are in conflict, the applicable provisions of the Agency Agreement shall prevail. SECTION 16. LEASE TERMINATION 16.1 Termination upon Certain Events. (a) If Lessor or Lessee shall ------------------------------- have received notice of a Total Condemnation after the Completion Date, then Lessee shall be obligated, within thirty (30) days after Lessee receives notice thereof, to deliver a written notice in the form described in Section 16.2(a) (a "Termination Notice") of the termination of this Lease. ------------------ (b) In the event Lessee or Lessor shall have received notice of a Condemnation, Casualty or Environmental Violation, the Lessee shall be required to deliver an Officer's Certificate stating the following: (i) if a Condemnation occurs, the Officer's Certificate shall state whether or not such Condemnation is a Significant Condemnation; or (ii) if a Casualty occurs, the Officer's Certificate shall state whether or not such Casualty is a Significant Casualty; or (iii) if an Environmental Violation occurs or is discovered, the Officer's Certificate shall state whether or not, in the reasonable, good-faith judgment of Lessee, the cost to remediate the same will exceed $2,500,000. If Lessee confirms the occurrence of a Significant Condemnation, Significant Casualty or an Environmental Violation involving remediation costs in excess of $2,500,000, then, Lessee shall, simultaneously with the delivery of the Officer's Certificate pursuant to the preceding clause (i), (ii) or (iii), deliver a Termination Notice. 16.2 Procedures. (a) A Termination Notice shall contain: (i) notice ---------------- of termination of this Lease on a date not more than sixty (60) days after the Lessor's receipt of such Termination Notice (the "Termination Date"); (ii) a ---------------- binding and irrevocable agreement of Lessee (A) to pay or cause to be paid (1) if the termination of this Lease occurs prior to the Completion Date, the amounts for which the Construction Agent is liable under Section 5.4(a) of the Agency Agreement, or (2) if the termination of this Lease occurs on or after the Completion Date, the Termination Value and purchase the Property on the Termination Date, and (B) in the event that clause (A)(1) above applies and Purchaser does not elect to purchase the Property, to comply with the provisions of Section 10.2 hereof, and (iii) the Officer's Certificate described in Section 16.1(b), if applicable. (b) On the Termination Date, Lessee shall pay to Lessor the amounts required above, plus all amounts owing in respect of all Basic Rent and the Supplemental Rent theretofore accruing and unless Lessee does not elect to purchase the Property under Section 5.4(a) of the Agency Agreement, Lessor shall convey the Property to Lessee (or Lessee's designee) all in accordance with Section 19.1 and any Net Proceeds of any Condemnation award (including Net Proceeds theretofore received by Lessor and not applied to the payment of Termination Value) shall be credited against Lessee's payment obligations hereunder. 18 SECTION 17. DEFAULT 17.1 Lease Events of Default. If any one or more of the following ----------------------- events (each a "Lease Event of Default") shall occur: ---------------------- (a) Lessee shall fail to make payment of (i) any Basic Rent or any Supplemental Rent representing amounts owed under the SPC Loan Agreement or the other Operative Agreements within two (2) Business Days after the same has become due and payable or (ii) any Maximum Residual Guarantee Amount, Purchase Option Price or Termination Value after the same has become due and payable; or (b) Lessee shall fail to make payment of any other Supplemental Rent due and payable within five (5) Business Days after receipt of notice thereof; or (c) During the Construction Period, Lessee shall fail to maintain insurance as required by Section 14 and following the Construction Period, Lessee shall fail to maintain insurance as required by Section 14 and such failure shall continue unremedied for a period of ten (10) days after an officer of Lessee becomes aware of such failure; or (d) Lessee shall fail to observe or perform any term, covenant or condition of Lessee under this Lease, the Participation Agreement, the Guarantee or any other Operative Agreement to which it is a party (other than those set forth in Section 10.2, 17.1(a), (b), (c) or (m) hereof, Section 21.1 hereof, and other than Section 2, Section 9.4, and Section 10 of the Guarantee) or any representation or warranty by Lessee, set forth in this Lease, the Guarantee or in any other Operative Agreement or in any document entered into in connection herewith or therewith or in any document, certificate or financial or other statement delivered in connection herewith or therewith shall be false or inaccurate in any material way and the circumstances rendering such representation or warranty or statement incorrect shall not be remediable or, if such representation or warranty or statement is remediable and the Lessee is proceeding diligently so to remedy, shall continue unremedied for thirty (30) days after the date on which written notice is delivered by the Lessor to the Lessee specifying such circumstances and demanding that they be remedied; provided, however, that if such default is of a nature that is not capable of - -------- ------- being cured within such thirty (30) day period, and the Lessee promptly commences appropriate steps to cure such default within such thirty (30) day period and continues to pursue such cure with diligence and good faith thereafter, unless the Agent shall determine that such delay could reasonably be expected to have a Material Adverse Effect, such thirty (30) day period shall be extended for such additional time as is reasonable under the circumstances, not to exceed ninety (90) days; or (e) an Agency Agreement Event of Default shall have occurred and be continuing; or (f) Lessee or any Guarantor shall (i) admit in writing its inability to pay its debts generally as they become due, (ii) file a petition under the United States bankruptcy laws or any other applicable insolvency law or statute of the United States of America or any State or Commonwealth thereof, (iii) make a general assignment for the benefit of its creditors, (iv) consent to the appointment of a receiver of itself or the whole or any substantial part of its property, (v) fail to cause the discharge of any custodian, trustee or receiver appointed for Lessee 19 or the whole or a substantial part of its property within ninety (90) days after such appointment, or (vi) file a petition or answer seeking or consenting to reorganization under the United States bankruptcy laws or any other applicable insolvency law or statute of the United States of America or any State or Commonwealth thereof; or (g) insolvency proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency law or statute of the United States of America or any State or Commonwealth thereof shall be filed against Lessee or any Guarantor and not dismissed or discharged within ninety (90) days from the date of its filing, or a court of competent jurisdiction shall enter an order or decree appointing, without its consent of, a receiver of Lessee or the whole or a substantial part of its property, and such order or decree shall not be vacated or set aside within ninety (90) days from the date of the entry thereof; or (h) any Security Document shall cease to be in full force and effect, or shall cease to give the Administrative Agent the Liens, rights, powers and privileges purported to be created thereby, in favor of the Administrative Agent on behalf of SPC, superior to and prior to the rights of all third Persons and subject to no other Liens (except in each case to the extent expressly permitted herein or in the other Operative Agreements) and (i) if such loss of priority or security cannot be readily cured by a replacement or modification thereto, and (ii) such loss of priority or security is not covered by title insurance; (i) the Guarantee or any material provision thereof shall cease to be in full force and effect or Guarantor shall deny or disaffirm its obligations under the Guarantee or Guarantor shall fail to observe or perform any term, covenant or condition set forth in Section 2, Section 9.4, and Section 10 of the Guarantee; or (j) Lessee or any Subsidiary of Lessee shall engage in any "Prohibited Transaction" involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Single Employer Plan or any Lien in favor of the PBGC or a Single Employer Plan shall arise on the assets of the Lessee or any Subsidiary, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of Lessor, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Lessee or any Subsidiary shall, or in the reasonable opinion of Lessor is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or (k) a SPC Loan Agreement Event of Default shall have occurred and be continuing as a result of any act or omission of Lessee; or (l) Lessee shall default in its obligations under Section 10.2 or 21.1; 20 (m) Lessee shall fail to deposit additional collateral as required under Section 6.1 of the Cash Collateral Agreement within three (3) Business Days after receipt of notice of such failure; then, in any such event, Lessor may, in addition to the other rights and remedies provided for in this Section 17 and in Section 18.1, terminate this Lease by giving Lessee five (5) days notice of such termination, and this Lease shall terminate. Lessee shall, to the fullest extent permitted by law, pay as Supplemental Rent all costs and expenses incurred by or on behalf of Lessor, including fees and expenses of counsel, as a result of any Lease Event of Default hereunder. 17.2 Final Payment. If a Lease Event of Default shall have occurred ------------- and be continuing, subject to Section 5.4(a) of the Agency Agreement on or after the Completion Date, Lessor shall have the right to recover, by demand to Lessee and at Lessor's election, and Lessee shall pay to Lessor, as and for a final payment, but exclusive of the indemnities payable under Section 12 of the Participation Agreement, and in lieu of all damages beyond the date of such demand the sum of (a) the Termination Value, plus (b) all other amounts owing in respect of Rent and Supplemental Rent theretofore accruing under this Lease; provided, however, if an Event of Default has occurred pursuant to Section - -------- 17.1(f) or (g), such final payment shall be immediately due and payable without demand or notice. Upon payment of the amount specified pursuant to the first sentence of this Section 17.2, Lessee shall be entitled to receive from Lessor, at Lessee's request, an assignment of Lessor's right, title and interest in the Property, in each case in recordable form and otherwise in conformity with local custom and free and clear of the Lien of this Lease. The Property shall be quitclaimed to Lessee (or Lessee's designee) "AS IS" and in its then present physical condition. If any statute or rule of law shall limit the amount of such final payment to less than the amount agreed upon, Lessor shall be entitled to the maximum amount allowable under such statute or rule of law. It is the intent of the Lessor and the Lessee that the payment required to be made pursuant to this Section together with the payment of the Maximum Residual Guarantee Amount shall be treated as an obligation on the part of the Lessee to repay a loan obligation to SPC and the Lessor in such amounts; provided, that Lessee shall -------- not be entitled to receive an assignment of Lessor's interest under the Ground Lease unless Lessee shall have paid in full the Termination Value. 17.3 Lease Remedies. Lessor and Lessee intend that for commercial law -------------- and bankruptcy law purposes, this Lease will be treated as a financing arrangement, as set forth in Section 7. If, as a result of applicable state law, which cannot be waived, this Lease is deemed to be a lease of the Property, rather than a financing arrangement, and Lessor is unable to enforce the remedies set forth in Section 17.2, the following remedies shall be available to Lessor: (a) Surrender of Possession. If a Lease Event of Default shall have ----------------------- occurred and be continuing, and whether or not this Lease shall have been terminated pursuant to Section 17.1, Lessee shall, upon thirty (30) days written notice, surrender to Lessor possession of the Property and Lessee shall quit the same. Lessor may enter upon and repossess the Property by such means as are available at law or in equity, and may remove Lessee and all other Persons and any and all personal property and Lessee's equipment and personalty and severable Modifications from the Property. Lessor shall have no liability by reason of any such entry, repossession or removal performed in accordance with applicable law. 21 (b) Reletting. If a Lease Event of Default shall have occurred and be --------- continuing, and whether or not this Lease shall have been terminated pursuant to Section 17.1, Lessor may, but shall be under no obligation to, relet all, or any portion, of the Property, for the account of Lessee or otherwise, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such conditions (which may include concessions or free rent) and for such purposes as Lessor may determine, and Lessor may collect, receive and retain the rents resulting from such reletting. Lessor shall not be liable to Lessee for any failure to relet the Property or for any failure to collect any rent due upon such reletting. (c) Damages. None of (i) the termination of this Lease pursuant to Section ------- 17.1; (ii) the repossession of the Property; or (iii) except to the extent required by applicable law, the failure of Lessor to relet all, or any portion, of the Property, the reletting of all or any portion thereof, nor the failure of Lessor to collect or receive any rentals due upon any such reletting shall relieve Lessee of its liability and obligations hereunder, all of which shall survive any such termination, repossession or reletting. If, after the Completion Date, any Lease Event of Default shall have occurred and be continuing and notwithstanding any termination of this Lease pursuant to Section 17.1, Lessee shall forthwith pay to Lessor all Basic Rent and other sums due and payable hereunder to and including the date of such termination. Thereafter, on the days on which the Basic Rent or Supplemental Rent, as applicable, are payable under this Lease or would have been payable under this Lease if the same had not been terminated pursuant to Section 17.1 and until the end of the Term or what would have been the Term in the absence of such termination, Lessee shall pay Lessor, as current liquidated damages (it being agreed that it would be impossible accurately to determine actual damages) an amount equal to the Basic Rent and Supplemental Rent that are payable under this Lease or would have been payable by Lessee hereunder if this Lease had not been terminated pursuant to Section 17.1, less the net proceeds, if any, which are actually received by Lessor with respect to the period in question of any reletting of the Property or any portion thereof; provided that Lessee's obligation to make payments of -------- Basic Rent and Supplemental Rent under this Section 17.3 shall continue only so long as Lessor shall not have received the amounts specified in Section 17.2. In calculating the amount of such net proceeds from reletting, there shall be deducted (without duplication) all of Lessor's, the Administrative Agent's and SPC's expenses in connection therewith, including repossession costs, brokerage commissions, fees and expenses for counsel and any necessary repair or reasonable alteration costs and expenses incurred in preparation for such reletting. To the extent Lessor receives any damages pursuant to this Section 17.3, such amounts shall be regarded as amounts paid on account of Rent. (d) Acceleration of Rent. If, after the Completion Date, a Lease Event of -------------------- Default shall have occurred and be continuing, and this Lease shall not have been terminated pursuant to Section 17.1, and whether or not Lessor shall have collected any current liquidated damages pursuant to Section 17.3(c), Lessor may upon written notice to Lessee accelerate all payments of Basic Rent due hereunder and, upon such acceleration, Lessee shall immediately pay Lessor, as and for final liquidated damages and in lieu of all current liquidated damages on account of such Lease Event of Default beyond the date of such acceleration (it being agreed that it would be impossible accurately to determine actual damages) an amount equal to the sum of (a) all Basic Rent (assuming interest at a rate per annum equal to the Overdue Rate), as applicable, due from 22 the date of such acceleration until the end of the Term, plus (b) the Maximum ---- Residual Guarantee Amount that would be payable under Section 21.1(c) assuming the proceeds of the sale pursuant to such Section 21.1(c) are equal to zero, which sum is then discounted to present value at a rate equal to the rate then being paid on United States treasury securities with maturities corresponding to the then remaining Term; provided that Lessee's obligation to make payments of -------- Basic Rent and Supplemental Rent under this Section 17.3 shall continue only so long as Lessor shall not have received the amounts specified in Section 17.2. Following payment of such amount by Lessee, Lessee will be permitted to stay in possession of the Property for the remainder of the Term, subject to the terms and conditions of this Lease, including the obligation to pay Supplemental Rent, provided that no further Lease Event of Default shall occur and be continuing, following which Lessor shall have all the rights and remedies set forth in this Section 17 (but not including those set forth in this Section 17.3). If any statute or rule of law shall limit the amount of such final liquidated damages to less than the amount agreed upon, Lessor shall be entitled to the maximum amount allowable under such statute or rule of law. 17.4 Waiver of Certain Rights. If this Lease shall be terminated ------------------------ pursuant to Section 17.1, Lessee waives, to the fullest extent permitted by law, (a) any notice of re-entry or the institution of legal proceedings to obtain re-entry or possession; (b) any right of redemption, re-entry or repossession; (c) the benefit of any laws now or hereafter in force exempting property from liability for rent or for debt; and (d) any other rights which might otherwise limit or modify any of Lessor's rights or remedies under this Section 17. Notwithstanding the foregoing, if pursuant to the exercise by the Lessor of its remedies pursuant to Section 17.1, the Termination Value and all other amounts due and owing from the Lessee under this Lease and the other Operative Documents have been paid in full, then the Lessor shall remit to the Lessee any excess amounts received by the Lessor. The obligation to deliver such excess to the Lessee shall survive this Lease. 17.5 Assignment of Rights Under Contracts. If a Lease Event of ------------------------------------ Default shall have occurred and be continuing, and whether or not this Lease shall have been terminated pursuant to Section 17.1, Lessee shall upon Lessor's demand immediately assign, transfer and set over to Lessor all of Lessee's right, title and interest in and to each agreement executed by Lessee in connection with the construction, renovation, development, non-proprietary use or operation of the Property (including all right, title and interest of Lessee with respect to all warranty, performance, service and indemnity provisions), as and to the extent that the same relate to the construction, renovation, and non-proprietary operation of the Property. 17.6 Remedies Cumulative. The remedies herein provided shall be ------------------- cumulative and in addition to (and not in limitation of) any other remedies available at law, equity or otherwise including, without limitation, any mortgage foreclosure remedies contained in the Memorandum of Lease. Lessor shall be entitled to enforce payment of the indebtedness and performance of the obligations secured hereby and to exercise all rights and powers under this instrument or under any of the other Operative Agreements or other agreement or any laws now or hereafter in force, notwithstanding some or all of the obligation secured hereby may now or hereafter be otherwise secured, whether by mortgage, security agreement, pledge, lien, assignment or otherwise. Neither the acceptance of this instrument nor its enforcement, shall prejudice or in any manner affect Lessor's right to realize upon or enforce any other security now 23 or hereafter held by Lessor, it being agreed that Lessor shall be entitled to enforce this instrument and any other security now or hereafter held by Lessor in such order and manner as Lessor may determine in its absolute discretion. No remedy herein conferred upon or reserved to Lessor is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy give hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Operative Agreements to Lessor or to which it may otherwise be entitled may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Lessor. In no event shall Lessor, in the exercise of the remedies provided in this instrument, be deemed a "mortgagee in possession," and Lessor shall not in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies. 17.7 Lessee's Rights to Purchase. If a Lease Event of Default has --------------------------- occurred and is continuing and whether or not this Lease has been terminated in accordance with Section 17.1, Lessor agrees that for thirty (30) days after the declaration of the occurrence of a Lease Event of Default, Lessor shall forebear from exercising the remedies set forth in clauses (b or (d) of this Section 17.3 during which time Lessee may tender to the Lessor in immediately available funds the Termination Value, upon the receipt of which Lessor shall transfer the Property to the Lessee or its designee in accordance with Section 20.1 hereof. The terms of this Section 17.7 shall survive the termination of this Lease. SECTION 18. LESSOR'S RIGHT TO CURE 18.1 Lessor's Right to Cure Lessee's Lease Defaults. Lessor, without ---------------------------------------------- waiving or releasing any obligation or Lease Event of Default, may (but shall be under no obligation to) remedy any Lease Event of Default for the account and at the sole cost and expense of Lessee (subject to the limitations on Lessee's remedies during the Construction Period as set forth in Section 5.4 of the Agency Agreement), including the failure by Lessee to maintain any insurance required by Section 14, and may, to the fullest extent permitted by law, and notwithstanding any right of quiet enjoyment in favor of Lessee, enter upon the Property for such purpose and take all such action thereon as may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Lessee. All out-of-pocket costs and expenses so incurred (including the fees and expenses of counsel), together with interest thereon at the Overdue Rate from the date on which such sums or expenses are paid by Lessor, shall be paid by Lessee to Lessor on demand as Supplemental Rent. SECTION 19. LEASE TERMINATION 19.1 Exercise of Options. (a) Upon compliance with the provisions of ------------------- Section 16.2(b), 20.1, 20.2, 20.3 or 20.4 and the tender of the amounts required thereunder, as applicable: (i) Lessor shall execute and deliver to Lessee (or to Lessee's designee) at Lessee's cost and expense an assignment of all or a portion, as applicable, of Lessor's leasehold and fee interests in the Property, in recordable form and otherwise in 24 conformity with local custom and free and clear of the Lien of the applicable Mortgage and any Lessor Liens; and (ii) The Property shall be conveyed to Lessee "AS IS" and in then present physical condition. (b) Upon compliance with the provisions of Section 20.5 and the tender of the amounts required thereunder: (i) Lessor shall cause the Investors to execute and deliver to Lessee (or to Lessee's designee) at Lessee's cost and expense an assignment of all of the Investors' beneficiary interest in the Lessor and all of the Investors' Certificates (collectively, the "Beneficiary Interest") in conformity with local custom, with title to the Property free and clear of the Lien of the applicable Mortgage and any Lessor Liens; and (ii) The Beneficiary Interest shall be conveyed to Lessee "AS IS." (c) After Lessee has irrevocably exercised its right to purchase the Property, a Purchase Parcel, the Release Parcel or the Beneficiary Interest, provided (i) no Lease Default or Lease Event of Default has occurred and is then continuing (other than a Lease Default or Event of Default which will be cured by such purchase), and (ii) Lessee is not released with respect to its obligations relating to such purchase, then Lessee, effective as of the closing of the sale of the Property, the Purchase Parcel, the Release Parcel or the Beneficiary Interest, as the case may be, may assign to a third party the right to take title to the Property, the Purchase Parcel, the Release Parcel or the Beneficiary Interest, as the case may be. SECTION 20. PURCHASE OPTION 20.1 Purchase Option. Lessee shall have the option (exercisable by --------------- giving Lessor irrevocable written notice (the "Purchase Notice") of Lessee's --------------- election, which election shall be irrevocable if not terminated by Lessee at least ten (10) days prior to the date specified in such Purchase Notice, to exercise such option not less than ten (10) days prior to the date of purchase pursuant to such option) to purchase the Property on the date specified in such Purchase Notice, which closing date must occur prior to the date which is twelve (12) months prior to the Maturity Date, at a price equal to the Termination Value (the "Purchase Option Price") (which the parties do not intend to be a --------------------- "bargain" purchase price). If Lessee exercises its option to purchase the Properties pursuant to this Section 20.1 (the "Purchase Option"), Lessor shall --------------- quitclaim to Lessee or Lessee's designee all of Lessor's leasehold and fee interest in and to the Property as of the date specified in the Purchase Notice upon receipt of the Purchase Option Price and all Rent and other amounts then due and payable under this Lease and any other Operative Agreement, in accordance with Section 19.1. Lessee may designate, in the Purchase Notice, the transferee or transferees 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 or transferees shall not cause Lessee to be released, fully or partially, from any of its obligations 25 under this Lease, including, without limitation, the obligation to pay to Lessor the Purchase Option Price on the date specified in the Purchase Notice. The Lessee shall have the right to elect by written notice to the Lessor and the Lender to have all or part of the Purchase Option Price paid by liquidation of the Collateral. 20.2 Maturity Date Purchase Option. Not less than twelve (12) months ----------------------------- prior to the Maturity Date, Lessee may give Lessor irrevocable written notice (the "Maturity Date Election Notice") that Lessee does not intend to exercise ----------------------------- its Maturity Date Purchase Option. If Lessee does not give a Maturity Date Election Notice on or before the date twelve (12) months prior to the Maturity Date, then Lessee shall be deemed to have irrevocably exercised the Maturity Date Purchase Option. If Lessee does timely give a Maturity Date Election Notice, Lessee shall be obligated to remarket the Property pursuant to Section 21. If Lessee is deemed to have exercised the Maturity Date Purchase Option, then on the Maturity Date (or such earlier date as is specified by Lessee in a written notice delivered at least sixty (60) days prior to such earlier date) Lessee shall pay to Lessor an amount equal to the Termination Value for the Property or the Beneficiary Interest, as Lessee may elect in its sole discretion (which the parties do not intend to be a "bargain" purchase price) and, upon receipt of such amount plus all Rent and other amounts then due and payable under this Lease and any other Operative Agreement, Lessor shall transfer to Lessee or Lessee's designee all of Lessor's right, title and interest in and to the Property in accordance with Section 19.1(a) or all of the Investors' right, title and interest in and to the Certificates and the Beneficiary Interest in accordance with Section 19.1(b), as applicable. Failure by Lessee to elect the Maturity Date Purchase Option with respect to the Property or the Beneficiary Interest shall be deemed Lessee's election to acquire Lessor's right, title and interest in and to the Property in accordance with Section 19.1(a). 20.3 Parcel Purchase Option. (a) On not less than thirty (30) days ---------------------- prior written notice (the "Purchase Parcel Notice"), Lessee may request, which ---------------------- request shall be irrevocable ten (10) days prior to Scheduled Closing Date, that Lessor consent to the purchase by Lessee, or its designee, of a parcel of the Land with the Improvements located thereon (a "Purchase Parcel"), which notice --------------- shall specify the date of the closing for the sale of the Purchase Parcel (the "Purchase Parcel Closing Date"). ---------------------------- (b) The Lessor shall consent to Lessee's purchase of a Purchase Parcel provided the following terms and conditions are met: (i) no Lease Default or Lease Event of Default shall have occurred and be continuing; (ii) the Purchase Parcel shall (x) be a separate lot from the Land for tax purposes and properly subdivided pursuant to all Legal Requirements (with evidence thereof being delivered to Lessor) and (y) constitute one or more separate buildings on one or more such separate tax lots; (iii) the remainder of the Land (and Improvements thereon) after the conveyance of the Purchase Parcel shall (x) have adequate and legal access for vehicular and pedestrian ingress and egress and for all necessary utilities, including water, sewer, electricity and gas, and to the extent necessary, reciprocal easement agreements in form 26 and substance reasonably acceptable to the Lessor, (y) not be configured in a manner that would adversely effect its Fair Market Sales Value, and (z) otherwise be in compliance with all Legal Requirements; and (iv) subject to Section 20.3(d), the Fair Market Sales Value of the portion of the Property not purchased, as determined by the Appraisal referred to in Section 20.3(d), after the conveyance of the Purchase Parcel, shall not be less than the Termination Value as reduced by the Purchase Parcel Price; and (v) such purchase shall not occur during the Marketing Period. (c) With the Purchase Parcel Notice, the Lessee shall provide Lessor with the information which the Lessor shall reasonably require to determine that Lessee is in compliance with all conditions required by Section 20.3(a) and (b) as of the date of conveyance of the Purchase Parcel. (d) The purchase parcel price for the Purchase Parcel (the "Purchase -------- Parcel Price") shall be equal to the Fair Market Sales Value of the Purchase - ------------ Parcel (the "Base Price") as determined by an Appraisal (which shall be ---------- acceptable to the Lessor and which shall be done by a third party appraiser selected by the Lessor and reasonably acceptable to Lessee) of the Purchase Parcel dated within thirty (30) days of the Purchase Parcel Closing Date; provided that if the Fair Market Sales Value of the remainder of the Property (exclusive of the Purchase Parcel) as determined by a separate Appraisal (which shall be acceptable to the Lessor and which shall be done by a third party appraiser selected by the Lessor and reasonably acceptable to Lessee) of such remaining Property dated within thirty (30) days of the Purchase Parcel Closing Date is less than the Termination Value (after giving effect to a payment in an amount equal to the Base Price for the Purchase Parcel), the amount of such deficiency shall be added to the Base Price and shall be the Purchase Parcel Price for such Purchase Parcel. Upon receipt by Lessor of the Purchase Parcel Price for any Purchase Parcel, the same shall be paid to the Administrative Agent for application pursuant to Section 13.3 of the Participation Agreement. (e) On the Purchase Parcel Closing Date, upon receipt of the Purchase Parcel Price, the Lessor shall convey the Purchase Parcel to the Lessee pursuant to the provisions of Section 19.1 hereof. (f) All costs and expenses relating to the purchase of the Purchase Parcel and Lessee's obligations hereunder shall be paid for by Lessee and Lessor shall not be responsible for any Transaction Expenses relating to the Purchase Parcel. If Lessee exercises its option pursuant to this Section 20.3 then, upon Lessor's receipt of the Purchase Parcel Price and all Rent and other amounts then due and payable under this Lease and any other Operative Agreement in connection therewith, Lessor shall quitclaim to Lessee or its designee all of Lessor's right, title and interest in and to the applicable portion of the Property in accordance with Section 19, such transfer to be effective as of the date specified in the Purchase Notice. 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 or 27 transferees 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 or transferees shall not cause Lessee to be released, fully or partially, from any of its obligations under this Lease, including, without limitation, the obligation to pay to Lessor the Purchase Price. In the event that a Purchase Parcel is conveyed to a designee of Lessee or is sold to a third party within one hundred eighty (180) days of the applicable Purchase Parcel Closing Date, any consideration paid by such designee to Lessee, or the net proceeds of such sale (the sales price less than usual and customary closing costs and brokerage commissions) in excess of the Purchase Parcel Price, as applicable, shall be considered to be included in and as part of the Purchase Parcel Price, unless such inclusion would result in this Lease not being classified as an operating lease pursuant to the Statement of Financial Accounting Standards No. 13, in which event, such excess proceeds shall be deposited in, and become part of the, Collateral Account under the Cash Collateral Agreement (unless Lessee exercises the Maturity Date Purchase Option at such time in which case such excess funds shall be paid to Lessee). 20.4 Unimproved Land Parcel Release. (a) On not less than thirty (30) ------------------------------ days prior written notice (the "Release Notice"), Lessee may request, which -------------- request shall be irrevocable, that Lessor release to Lessee one or more of the Parcels of land described on Schedule I attached hereto (the "Release Parcel") ---------- -------------- by an amendment to the Ground Lease and a partial satisfaction of the Mortgage with respect to the applicable Release Parcel, which notice shall specify the date of the closing for the release (the "Release Parcel Closing Date"). --------------------------- (b) The Lessor will consent to the release to Lessee of the Release Parcel provided that (i) no Lease Default or Event of Default shall have occurred and be continuing or shall result from the release of the Release Parcel; (ii) the Release Parcel is not improved with any structural improvements which are designated as commercial office buildings and laboratory facilities on the Plans and Specifications, which improvements may include any stand-alone parking structures or infrastructure improvements such as roads, curbing, utility and access easements, and planting and landscaping; (iii) if any Improvements permitted under clause (ii) above have been constructed on the Release Parcel with funds advanced by Lessor pursuant to the Agency Agreement, (A) Lessee shall reimburse Lessor for the Project Costs associated with any such Improvements as a condition to the release of the Release Parcel, which funds shall be paid by Lessor to the Administrative Agent for application in accordance with Section 13.3(b) of the Participation Agreement, (B) such Improvements shall not be necessary or integral to the use, occupancy or operation of any portion of the Property unless Lessee has provided Lessor with easements or similar rights encumbering the Release Parcel for the benefit of the Property, in form reasonably satisfactory to Lessor, providing for the use of or access to such Improvements in a manner and to such extent as necessary to maintain the Fair Market Sales Value of the remaining Property equal to or greater than the then Termination Value, and (C) the Project Costs associated with such Improvements for all Release Parcels in the aggregate shall not exceed sixteen million dollars ($16,000,000); and (iv) the Property shall have insurable access rights to public roadways, contiguity among all remaining Release Parcels and the Property shall exist, and the Property shall be in compliance with all Legal Requirements, Permits and other Governmental Actions following such release. 28 (c) On the Release Parcel Closing Date, the Lessor shall by amendment to the Ground Lease release the Release Parcel from the Ground Lease and satisfy the Mortgage with respect to the Release Parcel. All costs and expenses relating to the release of the Release Parcel and Lessee's obligations hereunder shall be paid for by Lessee, and Lessor shall not be responsible for any Transaction Expenses relating to the Release Parcel. 20.5 Beneficiary Interest Purchase Option. (a) In lieu of exercising ------------------------------------ Lessee's Purchase Option with respect to the entire remaining Property, as provided in Section 20.1, Lessee shall have the option (exercisable by giving Lessor irrevocable written notice (the "BI Purchase Notice") at Lessee's ------------------ election, which election shall be irrevocable if not terminated by Lessee at least ten (10) days prior to the date specified in such BI Purchase Notice, to exercise such option not less than ten (10) days prior to the date of purchase pursuant to such option) to purchase the Investors' entire right, title and interest in the Certificates and the Beneficiary Interest on the date specified in such BI Purchase Notice (the "BI Purchase Closing Date"), which closing date ------------------------ must occur prior to the date which is twelve (12) months prior to the Maturity Date, at a price equal to the Termination Value (the "BI Purchase Option Price") ------------------------ (which the parties do not intend to be a "bargain" purchase price). If Lessee exercises its option to purchase the Investors' Beneficiary Interest pursuant to this Section 20.5 (the "BI Purchase Option"), the Investors shall assign to ------------------ Lessee or Lessee's designee all of the Investors' Beneficiary Interest and shall convey to Lessee or Lessee's designee their entire right, title and interest in the Certificates as of the date specified in the BI Purchase Notice upon receipt of the BI Purchase Option Price and all Rent and other amounts then due and payable under this Lease and any other Operative Agreement, in accordance with Section 19.1. Lessee may designate, in the Purchase Notice, the transferee or transferees of the Beneficiary Interest to whom the assignment and conveyance shall be made (if other than to Lessee), in which case such assignment and conveyance shall (subject to the terms and conditions set forth herein) be made to such designee; provided, however, that such designation of a transferee or transferees shall not cause Lessee to be released, fully or partially, from any of its obligations under this Lease, including, without limitation, the obligation to pay to Lessor the BI Purchase Option Price on the date specified in the BI Purchase Notice. The Lessee shall have the right to elect by written notice to the Lessor and the Banks to have all or part of the BI Purchase Option Price paid by liquidation of the Collateral. (b) Upon payment of the BI Purchase Option Price in full on the BI Purchase Closing Date as provided herein, Lessor shall cause SPC to release the Mortgage on the Property, effective as of the BI Purchase Closing Date, and shall cause the Property to be otherwise free of any other Lessor Liens on the BI Purchase Closing Date. (c) Notwithstanding anything to the contrary contained in the Operative Agreements, Lessee shall indemnify and hold harmless the Indemnified Parties for any loss, cost, expense, Taxes, or withholding imposed upon or incurred by Lessor or any Investor in connection with the transfer of any Beneficiary Interest pursuant to Section 20.5 of this Lease that would not otherwise have been imposed or payable by such party if the Property were conveyed in accordance with Section 20.1 hereof. 29 SECTION 21. SALE OF PROPERTY 21.1 Sale Procedure. (a) With respect to the Property, unless Lessee -------------- shall have elected to purchase the Property or the Beneficiary Interest and has paid the Purchase Option Price or the BI Purchase Option Price with respect thereto, or otherwise terminated this Lease with respect thereto and paid the Termination Value, Lessee shall (i) pay to Lessor the Maximum Residual Guarantee Amount as provided for in Section 21.1(c), and (ii) sell the Property, as a whole, to a third party for cash in accordance with Section 21.1(b). (b) During the Marketing Period, Lessee, as nonexclusive broker for Lessor, shall use its best efforts to obtain bids for the cash purchase of the Property for the highest price available in the relevant market, shall notify Lessor promptly of the name and address of each prospective purchaser and the cash price which each prospective purchaser shall have offered to pay for the Property and shall provide Lessor with such additional information about the bids and the bid solicitation procedure as Lessor may request from time to time. Lessor may reject any and all bids and may assume sole responsibility for obtaining bids by giving Lessee written notice to that effect; provided, -------- however, that notwithstanding the foregoing, Lessor may not reject a bid if such - ------- bid, together with any amounts to be paid pursuant to Section 21.3, is greater than or equal to the sum of the Limited Deficiency Amount and all costs and expenses referred to in Section 21.2(i) and is a bona fide offer by a third party purchaser who is not an Affiliate of Lessee. If the price which a prospective purchaser shall have offered to pay for the Property is less than the sum of the Limited Deficiency Amount and all costs and expenses referred to in Section 21.2(i), Lessor may elect to retain the Property by giving Lessee at least ten (10) days' prior written notice of Lessor's election to retain the Property, and upon receipt of such notice, Lessee shall surrender the Property to Lessor pursuant to Section 10.2. Unless Lessor shall have elected to retain the Property pursuant to the preceding sentence, Lessor shall sell the Property free of any Lessor Liens attributable to it, without recourse or warranty, for cash to the purchaser identified by Lessee or Lessor, as the case may be; provided, however, Lessee shall make such representations and warranties to such purchaser as are customary for properties of similar size and use in Seattle, Washington. Lessee shall surrender the Property so sold to each purchaser in the condition specified in Section 10.2; provided that any amounts reasonably expended by Lessee in complying with such conditions shall be a part of (and limited by) the Maximum Residual Guarantee Amount. (c) On the date during the Marketing Period on which the Property is sold pursuant to Section 21.1(b), and on the Maturity Date if the Property remains unsold, Lessee shall pay to Lessor the Maximum Residual Guarantee Amount, provided, that, notwithstanding the foregoing, if (i) the Lessor rejects a bid for the purchase of the Property pursuant to section 21.1(b) above and as a result thereof the Property is not sold on or before the Maturity Date, and (ii) there exists Construction Period Force Majeure Event Losses at such time, then on the Maturity Date Lessee shall pay to Lessor an amount equal to (A) the Maximum Residual Guarantee Amount, less (B) the amount of such Construction ---- Period Force Majeure Event Losses. 21.2 Application of Proceeds of Sale. Lessor shall apply the proceeds ------------------------------- of sale of the Property in the following order of priority: 30 (i) FIRST, to pay or to reimburse Lessor for the payment of all ----- reasonable costs and expenses incurred by Lessor in connection with the sale; and (ii) SECOND, the balance shall be paid to the Administrative Agent to ------ be applied pursuant to the provisions of Section 13.5 of the Participation Agreement. 21.3 Indemnity for Excessive Wear. If the proceeds of the sale ---------------------------- described in Section 21.1(b) with respect to the Property, less all expenses incurred by Lessor in connection with such sale, shall be less than the Limited Deficiency Amount for the Property at the time of such sale and if it shall have been determined (pursuant to the Appraisal Procedure) that the Fair Market Sales Value of the Property shall have been impaired by greater than expected wear and tear during the Term, Lessee shall pay to Lessor within ten (10) days after receipt of Lessor's written statement (i) the amount of such excess wear and tear determined by the Appraisal Procedure or (ii) the amount of the Net Sale Proceeds Shortfall, whichever amount is less. 21.4 Appraisal Procedure. For determining the Fair Market Sales Value ------------------- of the Property or any other amount which may, pursuant to any provision of any Operative Agreement, be determined by an appraisal procedure, Lessor and Lessee shall use the following procedure (the "Appraisal Procedure"). Lessor and Lessee ------------------- shall endeavor to reach a mutual agreement as to such amount for a period of ten (10) days from commencement of the Appraisal Procedure, and if they cannot agree within ten (10) days, then two qualified appraisers, one chosen by Lessee and one chosen by Lessor, shall mutually agree thereupon, but if either party shall fail to choose an appraiser within twenty (20) days after notice from the other party of the selection of its appraiser, then the appraisal by such appointed appraiser shall be binding on Lessee and Lessor. If the two appraisers cannot agree within twenty (20) days after both shall have been appointed, then a third appraiser shall be selected by the two appraisers or, failing agreement as to such third appraiser within thirty (30) days after both shall have been appointed, by the American Arbitration Association. The decisions of the three appraisers shall be given within twenty (20) days of the appointment of the third appraiser and the decision of the appraiser most different from the average of the other two shall be discarded and such average shall be binding on Lessor and Lessee; provided that if the highest appraisal and the lowest -------- appraisal are equidistant from the third appraisal, the third appraisal shall be binding on Lessor and Lessee. The fees and expenses of all of the appraisers shall be paid by the Lessee, provided that any such amounts expended by Lessee shall be part of (and limited by) the Maximum Residual Guarantee Amount. 21.5 Certain Obligations Continue. During the Marketing Period, the ---------------------------- obligation of Lessee to pay Rent with respect to the Property (including the installment of Basic Rent due on the Maturity Date) shall continue undiminished until payment in full to Lessor of the sale proceeds, the Maximum Residual Guarantee Amount, if any, the amount due under Section 21.3, if any, and all other amounts due to Lessor with respect to the Property. Lessor shall have the right, but shall be under no duty, to solicit bids, to inquire into the efforts of Lessee to obtain bids or otherwise to take action in connection with any such sale, other than as expressly provided in this Section 21. 31 SECTION 22. HOLDING OVER 22.1 Holding Over. If Lessee shall for any reason remain in possession ------------ of the Property after the expiration or earlier termination of this Lease (unless the Property is conveyed to Lessee), such possession shall be as a tenancy at sufferance during which time Lessee shall continue to pay Supplemental Rent that would be payable by Lessee hereunder were the Lease then in full force and effect with respect to the Property and Lessee shall continue to pay Basic Rent at an annual rate equal to the rate payable hereunder immediately preceding such expiration or earlier termination; provided, however, -------- ------- that from and after the sixtieth (60th) day Lessee shall remain in possession of the Property after such expiration or earlier termination, Lessee shall pay Basic Rent at an annual rate equal to two hundred percent (200%) of the Basic Rent payable hereunder immediately preceding such expiration or earlier termination. Such Basic Rent shall be payable from time to time upon demand by Lessor. During any period of tenancy at sufferance, Lessee shall, subject to the second preceding sentence, be obligated to perform and observe all of the terms, covenants and conditions of this Lease, but shall have no rights hereunder other than the right, to the extent given by law to tenants at sufferance, to continue its occupancy and use of the Property. Nothing contained in this Section 22 shall constitute the consent, express or implied, of Lessor to the holding over of Lessee after the expiration or earlier termination of this Lease as to the Property and nothing contained herein shall be read or construed as preventing Lessor from maintaining a suit for possession of the Property or exercising any other remedy available to Lessor at law or in equity. SECTION 23. RISK OF LOSS 23.1 Risk of Loss. Subject to the limitations of the Agency Agreement, ------------ the risk of loss of or decrease in the enjoyment and beneficial use of the Property as a result of the damage or destruction thereof by fire, the elements, casualties, thefts, riots, wars or otherwise is assumed by Lessee, and Lessor shall in no event be answerable or accountable therefor. SECTION 24. SUBLETTING AND ASSIGNMENT 24.1 Assignment. Lessee may not assign this Lease or any of its rights ---------- or obligations hereunder in whole or in part. Notwithstanding the foregoing, Lessee may, so long as no Lease Default has occurred and is continuing, upon prior written notice to Lessor, assign this Lease and all of the Lessee's rights and obligations thereunder to an Affiliate of Lessee pursuant to an assignment and assumption agreement and such other documentation, including opinions of counsel, all in form and substance reasonably satisfactory to Lessor. No such assignment shall in any way discharge or diminish any of Lessee's obligations to Lessor hereunder and Lessee shall remain directly and primarily liable under this Lease as to the Property. 24.2 Subleases. Lessee may, without the consent of Lessor, sublease --------- the Property or a portion thereof to any Person. No sublease or other relinquishment of possession of the Property shall in any way discharge or diminish any of Lessee's obligations to Lessor 32 hereunder and Lessee shall remain directly and primarily liable under this Lease as to the Property, or any portion thereof, so sublet. Any sublease of the Property shall be made subject to and subordinate to this Lease and to the rights of Lessor hereunder, shall expire prior to the expiration of the Term and shall expressly provide for the surrender of the Property after a Lease Event of Default hereunder. Promptly following the execution and delivery of any sublease permitted by this Section 24, Lessee shall deliver a copy of such executed sublease to Lessor and the Administrative Agent. SECTION 25. ESTOPPEL CERTIFICATES 25.1 Estoppel Certificates. At any time and from time to time upon not --------------------- less than twenty (20) days' prior request by Lessor, the Lessee shall furnish to the Lessor a certificate signed by an individual having the office of vice president or higher of Lessee certifying that this Lease is in full force and effect (or that this Lease is in full force and effect as modified and setting forth the modifications); the dates to which the Basic Rent and Supplemental Rent have been paid; to the best knowledge of the signer of such certificate, whether or not the Lessor is in default under any of its obligations hereunder (and, if so, the nature of such alleged default); and such other factual matters under this Lease as the Lessor may reasonably request. Any such certificate furnished pursuant to this Section 25 may be relied upon by the Lessor, and any existing or prospective mortgagee, purchaser or lender, and any accountant or auditor, of, from or to the Lessor (or any Affiliate thereof). SECTION 26. NO WAIVER 26.1 No Waiver. No failure by Lessor or Lessee to insist upon the --------- strict performance of any term hereof or to exercise any right, power or remedy upon a default hereunder, and no acceptance of full or partial payment of Rent during the continuance of any such default, shall constitute a waiver of any such default or of any such term. To the fullest extent permitted by law, no waiver of any default shall affect or alter this Lease, and this Lease shall continue in full force and effect with respect to any other then existing or subsequent default. SECTION 27. ACCEPTANCE OF SURRENDER 27.1 Acceptance of Surrender. (a) As of the Expiration Date, if any ----------------------- Default shall have occurred and be continuing under the Lease, then Lessee shall be deemed to have irrevocably exercised the Maturity Date Purchase Option pursuant to Section 20.2. (b) Except as otherwise expressly provided in this Lease, no surrender to Lessor of this Lease or of all or any portion of the Property or of any interest therein shall be valid or effective unless agreed to and accepted in writing by Lessor and, prior to the payment or performance of all obligations under the Operative Agreements, the Administrative Agent, and 33 no act by Lessor or the Administrative Agent or any representative or agent of Lessor or the Administrative Agent, other than a written acceptance, shall constitute an acceptance of any such surrender. SECTION 28. NO MERGER OF TITLE 28.1 No Merger of Title. There shall be no merger of this Lease or of ------------------ the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly, in whole or in part, (a) this Lease or the leasehold estate created hereby or any interest in this Lease or such leasehold estate, (b) the Ground Lease or the leasehold estate created thereby or any interest in the Ground Lease or such leasehold estate, (c) the fee estate in the Property, except as may expressly be stated in a written instrument duly executed and delivered by the appropriate Person, or (d) a beneficial interest in Lessor. SECTION 29. NOTICES 29.1 Notices. Unless otherwise specifically provided herein, all ------- notices, consents, directions, approvals, instructions, requests and other communications required or permitted by the terms hereof to be given to any Person to be effective shall be given pursuant to the provisions of Section 14.3 of the Participation Agreement SECTION 30. MISCELLANEOUS 30.1 Miscellaneous. Anything contained in this Lease to the contrary ------------- notwithstanding, all claims against and liabilities of Lessee or Lessor arising from events commencing prior to the expiration or earlier termination of this Lease shall survive such expiration or earlier termination. If any term or provision of this Lease or any application thereof shall be declared invalid or unenforceable, the remainder of this Lease and any other application of such term or provision shall not be affected thereby. If any right or option of Lessee provided in this Lease, including any right or option described in Section 15, 16, 22 or 21, would, in the absence of the limitation imposed by this sentence, be invalid or unenforceable as being in violation of the rule against perpetuities or any other rule of law relating to the vesting of an interest in or the suspension of the power of alienation of property, then such right or option shall be exercisable only during the period which shall end twenty-one (21) years after the date of death of the last survivor of the descendants of Franklin D. Roosevelt, the former President of the United States, Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the founder of the Standard Oil Company, known to be alive on the date of the execution and delivery of this Lease. 30.2 Amendments and Modifications. Neither this Lease nor any ---------------------------- provision hereof may be amended, waived, discharged or terminated except by an instrument in writing signed by Lessor and Lessee and executed in accordance with Section 14.5 of the Participation Agreement. 34 30.3 Successors and Assigns. All the terms and provisions of this ---------------------- Lease shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 30.4 Counterparts. This Lease may be executed in any number of ------------ counterparts, each of which shall be an original, but all of which shall together constitute one and the same instrument. 30.5 GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN ALL ------------- RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION, PERFECTION AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS AND THE EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF WASHINGTON. 30.6 Limitations on Recourse. Except as expressly set forth in the ----------------------- Operative Agreements, Lessee agrees to look solely to Lessor's estate and interest in the Property, the proceeds of sale thereof, any insurance proceeds or any other award or any third party proceeds received by Lessor in connection with the Property for the collection of any judgment requiring the payment of money by Lessor in the event of liability by Lessor, and no other property or assets of Lessor, the Trust Company, member, partner or other owner of an interest, direct or indirect, in Lessor, or any director, officer, shareholder, employee, beneficiary, Affiliate of any of the foregoing shall be subject to levy, execution or other enforcement procedure for the satisfaction of Lessee's remedies under or with respect to this Lease, the relationship of Lessor and Lessee hereunder or Lessee's use of the Property or any other liability of Lessor to Lessee provided that nothing in this Section shall be construed to -------- impair or limit the rights of Lessee against the Investors under the Operative Agreements to which the Investors and Lessee are each a party. Nothing in this Section shall be interpreted so as to limit the terms of Section 6.1 or 6.2. 30.7 Memorandum of Lease. This Lease shall not be recorded, but Lessor ------------------- and Lessee shall, on the Closing Date, execute and deliver a memorandum of this Lease (a "Memorandum of Lease") substantially in the form and substance as ------------------- agreed to by Lessor and Lessee and otherwise in form suitable for recording under the laws of the State of Washington, which memorandum shall be recorded the cost of which shall be included in the Project Costs payable pursuant to the Agency Agreement. 30.8 Priority. On and prior to the Maturity Date and so long as no -------- Lease Event of Default has occurred and is continuing, the Mortgage shall be subject and subordinate to this Lease and following the Maturity Date or if a Lease Event of Default shall have occurred and is continuing, the Mortgage, at the sole election of the Administrative Agent, shall be senior to this Lease without any further act by any Person. 30.9 Ground Lease. During the Term, Lessee shall observe and perform ------------ all of the obligations of Lessor under the Ground Lease (including the payment of all rent and other amounts thereunder which shall be paid when due under the Ground Lease as Supplemental 35 Rent) and, in connection therewith, shall, prior to the occurrence and continuation of a Lease Event of Default, have the benefit of all of Lessor's rights as lessee under the Ground Lease. 30.10 Construction Period Limitation. Notwithstanding any provisions ------------------------------ in this Lease to the contrary, upon the occurrence of a Default by the Lessee during the Construction Period, the Lessee shall not have any greater obligations hereunder with respect to the Property than the Construction Agent has with respect to the Property under the Agency Agreement. 30.11 Usury Savings Provision. IT IS THE INTENT OF THE PARTIES HERETO ----------------------- TO CONFORM TO AND CONTRACT IN STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN EFFECT. TO THE EXTENT ANY RENT OR PAYMENTS HEREUNDER ARE HEREINAFTER CHARACTERIZED BY ANY COURT OF COMPETENT JURISDICTION AS THE REPAYMENT OF PRINCIPAL AND INTEREST THEREON, THIS SECTION 30.11 SHALL APPLY. ANY SUCH RENT OR PAYMENTS SO CHARACTERIZED AS INTEREST MAY BE REFERRED TO HEREIN AS "INTEREST." ALL AGREEMENTS AMONG THE PARTIES HERETO ARE HEREBY LIMITED BY THE PROVISIONS OF THIS PARAGRAPH WHICH SHALL OVERRIDE AND CONTROL ALL SUCH AGREEMENTS, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER WRITTEN OR ORAL. IN NO WAY, NOR IN ANY EVENT OR CONTINGENCY (INCLUDING WITHOUT LIMITATION PREPAYMENT OR ACCELERATION OF THE MATURITY OF ANY OBLIGATION), SHALL ANY INTEREST TAKEN, RESERVED, CONTRACTED FOR, CHARGED, OR RECEIVED UNDER THIS LEASE OR OTHERWISE, EXCEED THE MAXIMUM NONUSURIOUS AMOUNT PERMISSIBLE UNDER APPLICABLE LAW. IF, FROM ANY POSSIBLE CONSTRUCTION OF ANY OF THE OPERATIVE AGREEMENTS OR ANY OTHER DOCUMENT OR AGREEMENT, INTEREST WOULD OTHERWISE BE PAYABLE IN EXCESS OF THE MAXIMUM NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION SHALL BE SUBJECT TO THE PROVISIONS OF THIS PARAGRAPH AND SUCH AMOUNTS UNDER SUCH DOCUMENTS OR AGREEMENTS SHALL BE AUTOMATICALLY REDUCED TO THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED UNDER APPLICABLE LAW, WITHOUT THE NECESSITY OF EXECUTION OF ANY AMENDMENT OR NEW DOCUMENT OR AGREEMENT. IF LESSOR SHALL EVER RECEIVE ANYTHING OF VALUE WHICH IS CHARACTERIZED AS INTEREST WITH RESPECT TO THE OBLIGATIONS OWED HEREUNDER OR UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM THIS PROVISION, BE IN EXCESS OF THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE REDUCTION OF THE COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE PAYMENT OF INTEREST, OR REFUNDED TO LESSEE OR ANY OTHER PAYOR THEREOF, IF AND TO THE EXTENT SUCH AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY AMOUNTS EVIDENCED BY ANY OF THE OPERATIVE AGREEMENTS DOES NOT INCLUDE THE RIGHT TO RECEIVE ANY INTEREST WHICH HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH DEMAND, AND LESSOR DOES NOT INTEND TO CHARGE OR RECEIVE ANY UNEARNED INTEREST 36 IN THE EVENT OF SUCH DEMAND. ALL INTEREST PAID OR AGREED TO BE PAID TO LESSOR SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE FULL STATED TERM (INCLUDING WITHOUT LIMITATION ANY RENEWAL OR EXTENSION) OF THIS LEASE SO THAT THE AMOUNT OF INTEREST ON ACCOUNT OF SUCH PAYMENTS DOES NOT EXCEED THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED BY APPLICABLE LAW. 30.12 Liability of Wilmington Trust Company. It is expressly ------------------------------------- understood and agreed by the parties hereto that (i) except as specifically provided for in this Lease, this Lease is executed and delivered by Wilmington Trust Company not individually or personally but solely as trustee of the Trust, in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements herein made on the part of Lessee or Wilmington Trust Company, as the case may be, is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose of binding only the Lessee, (iii) except as specifically provided for in this Lease nothing herein contained shall be construed as creating any liability on Wilmington Trust Company, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (iv) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of any party hereto, or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by Lessee under this Lease; provided, however, the foregoing shall not limit Wilmington Trust Company's liability for its own gross negligence or willful misconduct. 37 IN WITNESS WHEREOF, the parties have caused this Lease be duly executed and delivered as of the date first above written. IMMUNEX CORPORATION By: /s/ David A. Mann ------------------------------------ Name: David A. Mann Title: Executive Vice President, Chief Financial Officer and Treasurer IMMUNEX REAL ESTATE TRUST 2001 By: WILMINGTON TRUST COMPANY, not individually solely as Trustee By: /s/ Patricia Evans --------------------------------- Name: Patricia Evans Title: Senior Financial Services Officer 38 EX-10.2 3 0003.txt GUARANTEE DATED MARCH 2, 2001 EXHIBIT 10.2 GUARANTEE GUARANTEE dated as of March 2, 2001 (this "Guarantee") made by IMMUNEX --------- CORPORATION, a Washington corporation ("Immunex") and IMMUNEX MANUFACTURING ------- CORPORATION, a Washington corporation (together with Immunex, individually and collectively, the "Guarantor"), in favor of Immunex Real Estate Trust 2001 (the --------- "Lessor"), Immunex Funding Corp., a Delaware corporation ("SPC"), the Investors, ------ --- and Chase Manhattan Bank, as Administrative Agent for SPC (the Lessor, the Investors, SPC, Chase Manhattan Bank, as Administrative Agent for SPC, and their respective successors and assigns, collectively known as the "Beneficiaries"). ------------- Preliminary Statement --------------------- Pursuant to the SPC Loan Agreement, SPC has agreed to make loans (the "SPC --- Loans") to the Lessor upon the terms and conditions set forth therein, to be - ----- evidenced by notes issued by the Lessor under the SPC Loan Agreement. The Lessor has entered into the SPC Loan Agreement for the purpose of facilitating the financing, with the proceeds of the SPC Loans, of the acquisition of a leasehold interest in the Land and the construction of Improvements thereon, which Land and Improvements shall, in turn, be leased to the Lessee. The SPC Loans will be made from time to time at the request of the Construction Agent in consideration for the agreement of the Construction Agent, for the benefit of the Lessor, to perform its obligations under the Agency Agreement. It is a condition precedent to the obligation of SPC to make its SPC Loans to the Lessor under the SPC Loan Agreement and for the Investors to make their Contributions under the Participation Agreement that the Guarantor shall have executed and delivered this Guarantee for the ratable benefit of the Beneficiaries. The Guarantor wishes to induce (i) SPC to make the SPC Loans and enter into the SPC Loan Agreement and the other Operative Agreements to which it is a party and (ii) the Investors to make the Investor Contributions and enter into the Participation Agreement (referred to below) and the other Operative Agreements to which they are party. NOW, THEREFORE, in consideration of the premises contained herein and to induce (i) SPC to make the SPC Loans and enter into the SPC Loan Agreement and the other Operative Agreements to which it is a party and (ii) the Investors to make the Investor Contributions and enter into the Participation Agreement and the other Operative Agreements to which they are a party, the Guarantor hereby agrees for the ratable benefit of the Beneficiaries as follows: 1. Defined Terms. (a) Capitalized terms not otherwise defined herein shall ------------- have the meanings set forth on Annex A to the Participation Agreement dated as of the date hereof among Immunex, Immunex Funding Corp., as SPC, The Chase Manhattan Bank, as Administrative Agent, as Collateral Agent and as Agent Bank, Immunex Real Estate Trust 2001, the Investors party thereto, the Banks party thereto, and Wilmington Trust Company. (b) As used herein, the following terms shall have the following meanings: "Contribution Obligations" means the collective reference to the ------------------------ outstanding amount of the Investor Contributions and the Investor Yield with respect thereto and all rights of the Investors to receive distributions under the Trust Agreement and any of the other Operative Agreements. "Guaranteed Obligations" means the collective reference to (i) the ---------------------- Note Obligations and (ii) the Contribution Obligations and, with respect to each such obligation, interest accruing thereon at the applicable rate provided in the Operative Agreements after maturity and interest accruing at the then applicable rate provided in the Operative Agreements after the filing of any petition in bankruptcy, or the commencement of an insolvency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and whether such obligations are direct or indirect, absolute or contingent, due or to become due, or now existing or hereinafter incurred, which may arise, under, out of or in connection with any of the Operative Agreements, any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, Investor Contributions or Investor Yield, reimbursement obligations, fees, indemnities, costs, expenses, or payment obligations (including, without limitation, all fees and disbursements of counsel to any of the Beneficiaries). "Note Obligations" means the collective reference to the unpaid ---------------- principal of and interest on the SPC Loans and the SPC Notes and all other payment obligations and liabilities of the Lessor to the Administrative Agent and SPC under the SPC Notes, the SPC Loan Agreement and any of the other Operative Agreements. 2. Guarantee. (a) Subject to the provisions of paragraph 2(b) and (c), the --------- Guarantor hereby unconditionally and irrevocably guarantees to the Beneficiaries and their respective successors, endorsees, transferees and assigns the prompt and complete payment when due (whether at the stated maturity, by acceleration or otherwise) of the Guaranteed Obligations. (b) Anything to the contrary notwithstanding, (i) if (A) a Construction Risk Event has occurred, (B) no other Lease Event of Default has occurred and is continuing at such time, and (C) the Construction Agent performs its obligations under Section 5.4(a) of the Agency Agreement, then the obligations of the Guarantor hereunder shall be limited to the Guaranteed Obligations in the amount of the Non-Completion Amount and all other amounts owing by Lessee or Construction Agent under Section 5.4(a) of the Agency Agreement, and (ii)(A) if no Lease Event of Default, or on the Maturity Date, no Lease Default has occurred and is continuing, the obligations of the Guarantor hereunder shall be limited to the unpaid principal of and interest on the Tranche A SPC Notes and (B) if any (x) Lease Event of Default or (y) on the 2 Maturity Date, any Lease Default has occurred and is continuing, the Guarantor shall be liable for the Guaranteed Obligations. (c) Without affecting any of the Construction Agent's obligations under Section 5.4(a) of the Agency Agreement and the Guarantor's obligations hereunder with respect thereto, anything else herein to the contrary notwithstanding, during the Construction Period the Lessee shall not be liable for any Note Obligations hereunder. (d) The Guarantor further agrees to pay any and all expenses (including, without limitation, fees and disbursements of counsel) which may be paid or incurred by the Administrative Agent, Collateral Agent or any Beneficiary in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Guaranteed Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor under this Guarantee. This Guarantee shall remain in full force and effect until the Guaranteed Obligations and all amounts owing hereunder are paid in full, notwithstanding that from time to time prior thereto the Lessor may be free from any Guaranteed Obligations. (e) The Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of the Guarantor hereunder without impairing this Guarantee or affecting the rights and remedies of Collateral Agent or any Beneficiary hereunder with respect to the amount of the liability of Guarantor. (f) No payment or payments made by the Lessor, any Guarantor or any other Person or received or collected by Collateral Agent or any Beneficiary from the Lessor, a Guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall, notwithstanding any such payment or payments remain liable for the Guaranteed Obligations up to the maximum liability of such Guarantor as set forth in this Section 2 until the Guaranteed Obligations and all amounts owing hereunder are paid in full. (g) The Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to anything in this Guarantee (including this Section 2) or in any other Operative Agreement to the contrary notwithstanding, any payment made by the Lessee, Construction Agent or the Guarantor to the Lessor in accordance with the Operative Agreements shall satisfy and discharge the obligations of the Guarantor hereunder to the extent of such payment; and Guarantor shall have no obligation or liability to the Collateral Agent or any Beneficiary on account of its liability hereunder, it will notify Collateral Agent in writing that such payment is made under this Guarantee for such purpose. (h) The obligations of each entity comprising Guarantor hereunder shall be joint and several. 3. Right of Set-off. In addition to any rights now or hereafter granted ---------------- under applicable law or otherwise, and to the extent not prohibited by applicable law, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of 3 Default, Collateral Agent and each Beneficiary is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to the Lessor, the Guarantor or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by Collateral Agent or such Beneficiary (including, without limitation, by branches and agencies of Collateral Agent or such Beneficiary wherever located) to or for the credit or the account of the Guarantor against and on account of the obligations and liabilities of the Guarantor hereunder (subject to the limitations herein), and all other claims of any nature or description arising out of or connected with this Guarantee or any other Operative Agreement, provided that all notices and cure periods have been provided to Lessor as required under the applicable Operative Agreement(s), but irrespective of whether Collateral Agent or such Beneficiary shall have made any demand hereunder and although said obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Collateral Agent and each Beneficiary agrees promptly to notify Guarantor after any such set off and application made by Collateral Agent or such Beneficiary; provided that failure to give such notice shall not affect the validity of such set-off and application. 4. No Subrogation. Notwithstanding any payment or payments made by -------------- the Guarantor hereunder or any set-off or application of funds of the Guarantor by any Beneficiary, the Guarantor shall not be entitled to exercise or enforce any subrogation rights of Collateral Agent or any Beneficiary against the Lessor or any other Person or any collateral security or guarantee or right of offset held by Collateral Agent or any Beneficiary for the payment of the Guaranteed Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from the Lessor or any other Person in respect of payments made by the Guarantor hereunder, until all amounts owing to Collateral Agent and the Beneficiaries by the Lessor on account of the Guaranteed Obligations and all amounts owing hereunder are paid in full. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Guaranteed Obligations and all amounts owing hereunder shall not have been paid in full, such amount shall be held by the Guarantor in trust for Collateral Agent and the Beneficiaries, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to Collateral Agent in the exact form received by the Guarantor (duly indorsed by the Guarantor to Collateral Agent, if required), to be applied against the Guaranteed Obligations, whether matured or unmatured, in such order as set forth in Section 13 of the Participation Agreement. 5. Amendments, etc. with respect to the Guaranteed Obligations; ----------------------------------------------------------- Waiver of Rights. The Guarantor shall remain obligated hereunder notwithstanding - ---------------- that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment of any of the Guaranteed Obligations made by Collateral Agent or any Beneficiary may be rescinded by such party and any of the Guaranteed Obligations continued, and the Guaranteed Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time in accordance with the respective terms thereof, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by Collateral Agent or any Beneficiary, and the SPC Loan Agreement, the Participation Agreement and the other Operative Agreements may be amended, modified, supplemented or terminated, in whole or in part, from time to time, and any collateral security, guarantee or right 4 of offset at any time held by Collateral Agent or any Beneficiary for the payment of the Guaranteed Obligations may be sold, exchanged, waived, surrendered or released. Neither Collateral Agent nor any Beneficiary shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Guaranteed Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, Collateral Agent or any Beneficiary may, but shall be under no obligation to, make a similar demand on the Lessor or any other guarantor, and any failure by Collateral Agent or any Beneficiary to make any such demand or to collect any payments from the Lessor or any other guarantor or any release of the Lessor or such other guarantor shall not relieve the Guarantor from its obligations under this Guarantee, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of Collateral Agent or any Beneficiary against the Guarantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 6. Guarantee Absolute and Unconditional. The Guarantor waives any and ------------------------------------ all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by Collateral Agent or any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Lessor and the Guarantor, on the one hand, and Collateral Agent and the Beneficiaries, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Lessor or the Guarantor with respect to the Guaranteed Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee and surety of payment without regard to (a) the validity, regularity or enforceability of the SPC Loan Agreement or any other Operative Agreement, any of the Guaranteed Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Collateral Agent or any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Lessor or the Guarantor against Collateral Agent or any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Lessor or the Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Lessor for the Guaranteed Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, Collateral Agent and any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Lessor or any other Person or against any collateral security or guarantee for the Guaranteed Obligations or any right of offset with respect thereto, and any failure by Collateral Agent or any Beneficiary to pursue such other rights or remedies or to collect any payments from the Lessor or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Lessor or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Collateral Agent and the Beneficiaries against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and 5 shall inure to the benefit of Collateral Agent and the Beneficiaries, and their respective successors, indorsees, transferees and assigns, until all the Guaranteed Obligations and the obligations of the Guarantor under this Guarantee shall have been satisfied by payment in full, notwithstanding that from time to time during the term of the SPC Loan Agreement, Lease and other Operative Agreements the Lessor may be free from any Guaranteed Obligations. 7. Reinstatement. This Guarantee shall continue to be effective, or ------------- be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by Collateral Agent or any Beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Lessor or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Lessor or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 8. Payments. The Guarantor hereby guarantees that payments hereunder -------- will be paid to Collateral Agent without set-off or counterclaim in Dollars at the office of Collateral Agent located at 450 West 33rd Street, New York, New York 10001. If demand is made for payment under this Guarantee at or prior to 11:00 a.m. Eastern Standard Time on a Business Day, payment shall be due hereunder on or before the close of such Business Day; otherwise, payment shall be due before the close of the next succeeding Business Day after such demand is made. 9. Affirmative Covenants of the Guarantor. Guarantor hereby covenants -------------------------------------- and agrees that so long as this Guarantee is in effect and until the SPC Loan Commitments and the Investor Contribution Commitments have terminated and the Guaranteed Obligations and all amounts owing hereunder are paid in full the Guarantor will: 9.1 Financial Statements. Furnish to the Collateral Agent: -------------------------- (a) as soon as available for distribution to shareholders and creditors generally, but in any event within 120 days after the end of each fiscal year of Immunex, a copy of the consolidated balance sheet of Immunex and its consolidated Subsidiaries, as of the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by Ernst & Young or other independent certified public accountants of nationally recognized standing and reasonably acceptable to the Collateral Agent; (b) as soon as available for distribution to shareholders and creditors generally, but in any event within 90 days after the end of each fiscal year of Immunex, a copy of the unaudited consolidated balance sheet of Immunex and its consolidated Subsidiaries, as at the end of such year, and the related unaudited consolidated statements of income and retained earnings and of cash flows for such year, in each case setting forth in comparative form the figures for the corresponding 6 period of the previous year and the figures for such period as shown on the budgets of Immunex for such year; and (c) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of Immunex, the unaudited consolidated balance sheet of Immunex and its consolidated Subsidiaries, as at the end of such quarter, and the related unaudited consolidated statements of income and retained earnings and of cash flows of Immunex and its consolidated Subsidiaries, for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the corresponding period of the previous fiscal year, certified by a Responsible Officer of Immunex as being fairly stated in all material respects when considered in relation to the consolidated financial statements of Immunex and its consolidated Subsidiaries, (subject to normal year-end audit adjustments), and in each case setting forth in comparative form the figures for such periods as shown on the budgets of such Person for such year; and (d) as soon as available, copies of its Current SEC Reports, if any; all such financial statements to be complete and correct in all material respects and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 9.2 Certificates; Other Information. Furnish to the Collateral ------------------------------------- Agent: (a) concurrently with the delivery of the financial statements referred to in Section 9.1(a), or as a component thereof, a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in Sections 9.1(a) and 9.1(c), a certificate of a Responsible Officer of Immunex stating that, to the best of such Responsible Officer's knowledge, Guarantor during such period has observed or performed all of its covenants and other agreements, and satisfied every material condition, contained in this Guarantee and the other Operative Agreements to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate; (c) (i) within five days after the same are sent, copies of all financial statements and reports which Immunex, if at such time any class of Immunex's securities are held by the public, sends to its stockholders generally, or, if otherwise, such financial statements and reports as are made generally available to the public, and (ii) within five days after the same are filed, copies of all financial statements and 7 reports which Immunex may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; (d) promptly, such additional financial and other information as the Beneficiaries or the Collateral Agent may from time to time reasonably request. 9.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or -------------------------- before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of Guarantor or any Subsidiary of Guarantor, as the case may be. 9.4 Conduct of Business and Maintenance of Existence. Continue to ---------------------------------------------------- engage in business in the same general type of industry or industries in which its business is now conducted by it, and, in conjunction therewith, in any industry or industries complementary thereto as reasonably determined by Immunex, and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except as otherwise permitted pursuant to Section 9.5, provided, that Immunex may re-incorporate under the laws of the State of Delaware in accordance with applicable Legal Requirements and upon thirty (30) days prior written notice to Collateral Agent; comply with all Contractual Obligations and Legal Requirements except to the extent that failure to comply therewith would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 9.5 Maintenance of Property; Insurance. Guarantor will, and will -------------------------------------- cause each of its consolidated Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, casualty, condemnation and ordinary wear and tear excepted, and promptly repair or replace such property following any damage thereto, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. 9.6 Inspection of Property; Books and Records; Discussions. Keep ---------------------------------------------------------- proper books of records and account in which full, true and correct entries in conformity with GAAP and all Legal Requirements shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of Collateral Agent to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired in accordance with Section 10.3 of the Lease, and to discuss the business, operations, properties and financial and other condition of Guarantor and Subsidiaries of Guarantor with officers and employees of Guarantor and Subsidiaries of Guarantor and with its independent certified public accountants; provided, however, that no such visit, inspection or examination or discussion shall unreasonably disrupt or interfere with normal operations of Guarantor or any of its Subsidiaries and any such representatives of the Beneficiaries and the Collateral Agent shall be accompanied by a Responsible Officer of Guarantor. No failure to comply with any request for the exercise of rights hereunder shall be 8 cause for any Event of Default unless such request is submitted in writing to Guarantor with reference to this Section 9.6. 9.7 Notices. Promptly give notice to the Beneficiaries and the ------------- Collateral Agent of: (a) the occurrence of any Default or Event of Default of which Guarantor has actual knowledge; (b) any (i) default or event of default by Guarantor or any of its Subsidiaries under or with respect to any of their respective Contractual Obligations in any respect which, if not cured, would reasonably be expected to have a Material Adverse Effect, or to Guarantor's knowledge any default or event of default by any third party under or with respect to any Contractual Obligation of said third party with Guarantor or any of its Subsidiaries in a respect which, if not cured, would reasonably be expected to have a Material Adverse Effect or (ii) litigation, investigation or proceeding of which Guarantor has actual knowledge which may exist at any time between Guarantor or any Subsidiary of Guarantor and any Governmental Authority, which in either case, if not cured or if adversely determined, as the case may be, would reasonably be expected to have a Material Adverse Effect; (c) any litigation or proceeding affecting Guarantor or any Subsidiary of Guarantor of which Guarantor has actual knowledge in which the amount involved is reasonably anticipated by Guarantor to exceed $15,000,000 or more and not covered by insurance or in which injunctive or similar relief is sought and which if adversely determined would reasonably be expected to have a Material Adverse Effect; (d) the following events, as soon as possible and in any event within 30 days after Guarantor has actual knowledge thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, or any withdrawal from, or the termination, Reorganization or Insolvency of any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or Guarantor, any Commonly Controlled Entity with respect to the termination of any Single Employer Plan; and (e) (i) a development or event which has had or would reasonably be expected to result in the Fixed Charge Ratio being less than 1.0 to 1, or (ii) any action by the Food and Drug Administration ("FDA") --- which causes Immunex to operate under a consent decree, or (iii) any action by the FDA which causes Immunex to cease production of Enbrel. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action Guarantor proposes to take with respect thereto. 9 9.8 Environmental Laws. (a) Comply in all material respects with, and ---------------------- undertake all reasonable efforts to ensure compliance by all tenants and subtenants, if any, with, all Environmental Laws and obtain and comply in all material respects with and maintain, and undertake all reasonable efforts to ensure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, registrations or permits required by Environmental Laws, and upon discovery of any non-compliance or suspected non-compliance, undertake all reasonable efforts to attain material compliance; (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities respecting Environmental Laws, except to the extent that the failure to so conduct, complete or take such actions, or to comply with such orders and directives, would not in the aggregate reasonably be expected to have a Material Adverse Effect; (c) Defend, indemnify and hold harmless the Lessor, the Beneficiaries and the Collateral, and their respective employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the violation of or noncompliance with any Environmental Laws applicable to the real property owned or operated by Guarantor or any Subsidiary of Guarantor, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney's and consultant's fees, investigation and laboratory fees, court costs and litigation expenses, except to the extent that any of the foregoing arise out of the gross negligence or willful misconduct of the party seeking indemnification therefore; and (d) Maintain a program to identify and promote substantial compliance with and to minimize prudently any liabilities or potential liabilities under any Environmental Law that may affect Guarantor or any of its Subsidiaries. 9.9 Subsequent Guarantees. Immunex shall cause each Subsidiary of ------------------------- Immunex for which the aggregate value of all assets owned by such Subsidiary is or becomes greater than the lesser of (x) five percent (5%) of Total Assets as of the last day of the immediately preceding fiscal quarter of Immunex, (y) five percent (5%) of Total Revenues for the twelve (12) month period ended on the immediately preceding fiscal quarter, and (z) five percent (5%) of EBITDA (without giving effect to this sentence) for the twelve (12) month period ended on the immediately preceding fiscal quarter, to execute an amendment to this Guarantee, whereby such Subsidiary becomes a party hereto promptly after the later of (i) the date on which such Subsidiary becomes a Subsidiary of Immunex and (ii) the date on which such Subsidiary's assets attain an aggregate value in excess of the lesser of (x) five percent (5%) of Total Assets as of the last day of the immediately preceding fiscal quarter of Immunex, (y) five percent (5%) of Total Revenues for the twelve (12) month period ended on the immediately preceding fiscal quarter, and (z) five percent (5%) of EBITDA (without giving effect to this sentence) for the twelve (12) month period ended on the immediately preceding fiscal quarter; provided, that each Person required to -------- ---- become a party hereto by this Section 9.9 which becomes a Subsidiary of Immunex after the date hereof shall only be required to become a party to the extent not prohibited by such Person's existing contractual obligations in the event that such contractual obligations existed at 10 the time such Person became a Subsidiary and were not created in anticipation thereof. If at any time after such Person becomes a Subsidiary of Immunex any such contractual prohibition ceases to exist, then such Subsidiary shall be required to become a party to this Guarantee as provided above in this Section 9.9. 10. Negative Covenants. Immunex hereby agrees that so long as this ------------------ Guarantee is in effect and until the SPC Loan Commitments and the Investor Contribution Commitments have terminated and the Guaranteed Obligations and all amounts owing hereunder are paid in full, Immunex shall not, directly or indirectly: 10.1 Financial Condition Covenants. ----------------------------------- (a) Leverage Ratio. Permit the Leverage Ratio at any time to be -------------- greater than 2.0 to 1.0. (b) Fixed Charge Ratio. Permit the Fixed Charge Ratio for the four ------------------ (4) consecutive fiscal quarters of Immunex ending with any fiscal quarter set forth below to be less than the ratio set forth opposite such fiscal quarter:
Four Fiscal Quarters Fixed Charge Ratio -------------------- ------------------ Ended ----- -------------------------------- ---------------------------- December 31, 2001 1.75 to 1.0 -------------------------------- ---------------------------- December 31, 2002 1.75 to 1.0 -------------------------------- ---------------------------- December 31, 2003 2.0 to 1.0 -------------------------------- ---------------------------- December 31, 2004 2.0 to 1.0 -------------------------------- ---------------------------- December 31, 2005 3.0 to 1.0 -------------------------------- ---------------------------- December 31, 2006 3.0 to 1.0 -------------------------------- ---------------------------- December 31, 2007 3.0 to 1.0 -------------------------------- ---------------------------- December 31, 2008 3.0 to 1.0 -------------------------------- ----------------------------
10.2 Limitation on Liens. Create, incur, assume or suffer to exist any ------------------------ Lien upon any of its property, assets or revenues (other than the Property), whether now owned or hereafter acquired, except for Permitted Encumbrances and the following: (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of Immunex or any Subsidiary of Immunex, as the case may be, in conformity with GAAP; 11 (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings; (c) Liens of any of the types referred to in clause (b) above that have been bonded for not less than the full amount in dispute (or as to which other security arrangements satisfactory to the Agent have been made), which bonding (or arrangements) shall comply with applicable Legal Requirements, and shall have effectively stayed any execution or enforcement of such Liens; (d) Liens arising out of judgments or awards with respect to which appeals or other proceedings for review are being prosecuted in good faith and for the payment of which adequate reserves have been provided as required by GAAP or other appropriate provisions have been made, so long as such proceedings have the effect of staying the execution of such judgments or awards; (e) Liens in favor of municipalities to the extent agreed to by the Lessor or permitted under the Participation Agreement or other Operative Agreements; (f) rights of any sublessee or assignee under a sublease or an assignment expressly permitted by the terms of the Lease for no longer than the duration of the Lease; (g) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self insurance arrangements; (h) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (i) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of Immunex or any of its Subsidiaries; (j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods so long as such Liens attach only to the imported goods; (k) Liens now or hereafter granted in favor of the Administrative Agent, SPC, the Collateral Agent or other Person pursuant to the Operative Agreements; and 12 (l) Liens not otherwise permitted in clauses (a)-(k) above securing Indebtedness not exceeding, when taken together with the aggregate value of the assets which are subject to arrangements with any Person where Immunex or any of the Subsidiaries of Immunex is the lessee of real or personal property which has been or is to be sold or transferred by Immunex or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of Immunex or such Subsidiary, thirty-five percent (35%) of Total Assets. 10.3 Limitations on Fundamental Changes. Enter into any merger, --------------------------------------- consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, except: (a) any Subsidiary of Immunex may take any of the foregoing actions; provided, that, after giving pro form effect to such action, Guarantor -------- shall be in compliance with all covenants hereunder; (b) Guarantor may be merged or consolidated with or into any other Person, provided, that Guarantor shall be the continuing or surviving -------- corporation and after giving pro form effect to such merger or consolidation, Guarantor shall be in compliance with all covenants hereunder; and (c) pursuant to the Operative Agreements. 10.4 Limitation on Sale or Lease of Assets. Convey, sell, lease, ------------------------------------------ assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, except: (a) obsolete or worn out property disposed of in the ordinary course of business; (b) the sale of inventory in the ordinary course of business; (c) the sale by Immunex or its Subsidiaries of those lines of business identified on Schedule 10.4(c); ---------------- (d) the sale or discount without recourse of defaulted accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof; (e) as permitted by Section 10.3; (f) the lease by a Subsidiary as lessor of real estate properties to Immunex or any Subsidiary of Immunex for use by Immunex or such Subsidiary as the site of its offices and facilities; (g) pursuant to the Operative Agreements; and 13 (h) the conveyance, sale, lease, assignment, transfer or other disposal of property, business or assets of Immunex and its Subsidiaries which are not material to a principal business of Immunex, provided such sale could not reasonably be expected to have a Material Adverse Effect. 10.5 Limitation on Dividends. Declare or pay any dividend (other than ---------------------------- dividends payable solely in common stock of such Person) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of such Person or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Immunex or any Subsidiary of Immunex, except that if no Default or Event of Default exists or would reasonably be expected to be caused thereby (i) Subsidiaries of Guarantor may declare and pay dividends to Guarantor and other shareholders of such Subsidiaries, and (ii) during any fiscal year of Immunex following the Closing Date, Immunex shall be permitted to declare cash dividends or repurchase its Capital, provided that after giving pro forma effect to the any such declarations, payments or repurchases, Guarantor shall be in compliance with all other covenants hereunder. 10.6 Nature of Business. Engage in any principal business other than ----------------------- business in the same general type of industry or industries in which its business is now conducted, or in conjunction therewith, in any industry or industries complementary thereto as reasonably determined by Immunex. 10.7 Change in Control. Permit or otherwise allow either (i) a ---------------------- "person" or a "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act) other than American Home Products Corporation, a Delaware corporation (or its affiliates or successors) to become the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act) of more than 50% of the then outstanding voting stock of Immunex, or (ii) a majority of the Board of Directors of Immunex to consist of individuals who are not Continuing Directors; "Continuing Director" means, as of any date of determination, (x) an ------------------- individual who on the date two (2) years prior to such determination date was a member of Immunex's Board of Directors, or (y) any new director whose election or nomination for election by Immunex's shareholders, was approved by a vote of at least a majority of the directors then still in office who either were directors on the date two (2) years prior to such determination date or whose election, or nomination for election, was previously so approved. 11. Notices. All notices, requests and demands to or upon Collateral ------- Agent, any Beneficiary or the Guarantor to be effective shall be in writing (including by telecopy) by United States certified or registered mail (postage prepaid), by nationally recognized courier service, by hand or by telecopy with confirming notice and any such notice shall become effective upon receipt and shall be directed to any Beneficiary or Guarantor, as the case may be, at each of their respective addresses or transmission numbers for notices provided in Section 14.3 of the Participation Agreement. Each Beneficiary and the Guarantor may change its address and transmission numbers for notices by notice in the manner provided in Section 14.3 of the Participation Agreement. 14 12. Severability. Any provision of this Guarantee that is prohibited ------------ or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Integration. This Guarantee and other applicable Operative ----------- Agreements represent the agreement of the Guarantor with respect to the subject matter hereof and there are no promises or representations by Collateral Agent or any Beneficiary relative to the subject matter hereof not reflected herein. 14. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None ----------------------------------------------------- of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except as provided in Section 14.5 of the Participation Agreement. (b) Neither Collateral Agent nor any Beneficiary shall, by any act (except by a written instrument pursuant to Section 14(a) hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Collateral Agent or any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Collateral Agent or any Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that Collateral Agent or such Beneficiary would otherwise have on any future occasion. (c) The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 15. Section Headings. The section headings used in this Guarantee are ---------------- for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 16. Successors and Assigns. This Guarantee shall be binding upon the ---------------------- successors and assigns of the Guarantor and shall inure to the benefit of Collateral Agent and the Beneficiaries and their successors and permitted assigns. 17. SUBMISSION TO JURISDICTION; WAIVERS. (a) THE GUARANTOR HEREBY ----------------------------------- IRREVOCABLY AND UNCONDITIONALLY: (i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ALL LEGAL ACTIONS OR PROCEEDINGS RELATING TO THIS GUARANTEE OR ANY OTHER OPERATIVE AGREEMENT TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE COURTS OF THE 15 UNITED STATES LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF; (ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURT, WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND WAIVES ANY OBJECTION THAT SUCH ACTION OR PROCEEDING IN ANY SUCH COURT WAS BROUGHT IN AN INCONVENIENT FORUM AND AGREES NOT TO PLEAD, CLAIM OR ASSERT THE SAME; (iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID TO, OR BY PERSONAL SERVICE AT, ITS ADDRESS SET FORTH HEREIN OR SUCH OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT HERETO, WHETHER OR NOT SUCH ADDRESS BE WITHIN THE JURISDICTION OF ANY SUCH COURT; (iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE AGENT (AND NOT OF THIS GUARANTOR) TO SUE IN ANY OTHER JURISDICTION; AND (v) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 17 ANY SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES. (b) THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 18. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED ------------- AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 19. Survival of Representations, Warranties, etc. All -------------------------------------------- representations, warranties, covenants and agreements made herein and in statements or certificates delivered pursuant hereto shall survive any investigation or inspection made by or on behalf of the Lessor and shall continue in full force and effect until all of the obligations of the Guarantor under this Guarantee shall be fully performed in accordance with the terms hereof, and until the payment in full of all sums payable by the Lessee under the Operative Agreements, and until performance in 16 full of all obligations of the Lessee in accordance with the terms and provisions of such agreements. 20. Third Party Beneficiaries. The Guarantor expressly acknowledges ------------------------- and agrees that each Indemnified Person shall be a third party beneficiary of this Guarantee. 21. Action by Administrative Agent. The Administrative Agent shall ------------------------------ only take action hereunder as directed by SPC. 17 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and year first above written. IMMUNEX CORPORATION By: /s/ David A. Mann ------------------------------- Name: David A. Mann Title: Executive Vice President, Chief Financial Officer and Treasurer IMMUNEX MANUFACTURING CORPORATION By: /s/ David A. Mann ------------------------------- Name: David A. Mann Title: Treasurer 18 EX-10.3 4 0004.txt AGENCY AGREEMENT DATED MARCH 2, 2001 EXHIBIT 10.3 AGENCY AGREEMENT AGENCY AGREEMENT, dated as of March 2, 2001 (this "Agreement"), between --------- IMMUNEX REAL ESTATE TRUST 2001, a Delaware business trust (the "Lessor"), and ------ IMMUNEX CORPORATION, a Washington corporation (the "Construction Agent"). ------------------ Preliminary Statement --------------------- A. The Lessor and Lessee are parties to the Lease, pursuant to which Lessee has agreed to lease the Property from the Lessor. B. The Lessor and Lessee are also parties to that certain Participation Agreement, dated as of the date hereof (as amended or otherwise modified from time to time, the "Participation Agreement"), among Immunex Corporation, Immunex ----------------------- Funding Corp., as SPC, Wilmington Trust Company, not in its individual capacity except as set forth therein, but solely as Trustee, the Lessor, the financial institutions listed on Schedule II thereto as Investors, the financial institutions listed on Schedule I thereto as Banks, The Chase Manhattan Bank, as Administrative Agent, Collateral Agent and Agent Bank. C. Subject to the terms and conditions hereof, (i) the Lessor desires to appoint the Construction Agent as its sole and exclusive agent in connection with the acquisition of the construction of the Improvements in accordance with the Plans and Specifications and (ii) the Construction Agent desires, for the benefit of the Lessor, to cause the construction of the Improvements in accordance with the Plans and Specifications as hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. Capitalized terms used and not defined herein shall have ----------------- the meanings assigned thereto in Annex A to the Participation Agreement; and the rules of interpretation set forth in Annex A to the Participation Agreement shall apply to this Agreement. SECTION 2. APPOINTMENT OF CONSTRUCTION AGENT 2.1 Appointment and Acceptance. Subject to the terms and conditions hereof ------------------------------ and of the Participation Agreement and Lease, the Lessor hereby irrevocably designates and appoints the Construction Agent as its exclusive agent in connection with construction of the Improvements in accordance with the Plans and Specifications. The Construction Agent hereby accepts the designation and appointment as construction agent and agrees to perform such functions and duties as set forth herein. 2.2 Term. This Agreement shall commence on the date hereof and shall -------- terminate with respect to the Property upon the earlier to occur of: (i) the Completion Date; (ii) the termination of this Agreement pursuant to Section 5 hereof and the satisfaction by the Construction Agent of all obligations hereunder; and (iii) the exercise by the Construction Agent of the Purchase Option set forth in Section 20.1 of the Lease; provided, however, that any termination of this Agreement shall not relieve the - -------- ------- Construction Agent for liability for breach hereof. 2.3 Scope of Authority. (a) The Lessor hereby expressly authorizes the ---------------------- Construction Agent to, and the Construction Agent shall, take all action necessary or desirable for the construction of the Improvements in accordance with the Plans and Specifications and the Budget and to fulfill all of the obligations of the Construction Agent, including, without limitation: (i) the right to approve payment of all invoices for services and materials related to the development, design, construction and equipping of the Improvements, and to submit Requisitions under the SPC Loan Agreement and the Participation Agreement and to receive the proceeds of Advances under the SPC Loan Agreement and to receive the same directly from the Administrative Agent provided, however, the Construction Agent shall not -------- ------- incur any expenses in excess of an amount equal to the sum of the SPC Loan Commitments plus the Investors Contribution Commitment without the express written consent of the Lessor; (ii) all design and supervisory functions relating to the construction of the Improvements and performing all engineering work related to the construction of the Improvements; (iii) negotiating and entering into all contracts or arrangements for the construction of the Improvements, development of infrastructure relating thereto, and the procurement of the equipment necessary to construct the Improvements on such terms and conditions as are customary and reasonable in light of local standards and practices; -2- (iv) obtaining all necessary permits, licenses, consents, approvals and other authorizations, including those required under applicable Environmental Laws, from all Governmental Authorities in connection with the development and construction of the Improvements substantially in accordance with the Plans and Specifications; (v) maintaining all books and records with respect to the construction, operation and management of the Property; (vi) contesting any mechanics' or materialmen's lien and prosecuting all other permitted contest rights of Lessee under Section 13.1 of the Lease during the Construction Period; (vii) performing those actions permitted to be performed by the Lessee under Section 12.2 of the Lease during the Construction Period; (viii) bringing or defending any claims or seeking resolution of any disputes arising from the Construction Agent's performance of the foregoing obligations; (ix) performing any other acts necessary in connection with construction and development of the Improvements in accordance with the Plans and Specifications; (x) submitting Requisitions to the Administrative Agent under the Participation Agreement and receiving the proceeds of Advances; and (xi) maintaining the insurance required pursuant to Section 6 hereof. (b) Neither the Construction Agent nor any of its Affiliates or agents shall, without the written consent of the Lessor, enter into any contract which would, directly or indirectly, impose any liability or obligation on the Lessor, any Bank or the Administrative Agent beyond the liability or obligations permitted under the Operative Agreements, and each such contract shall be non- recourse to Lessor, the Banks and the Administrative Agent in accordance with Section 30.6 of the Lease. (c) Subject to the terms and conditions of this Agreement, the Construction Agent shall have sole management and control over the construction means, methods, sequences and procedures with respect to the construction of the Improvements. 2.4 Delegation of Duties. The Construction Agent may execute any of its ------------------------- duties under this Agreement by or through agents, contractors, employees or attorneys-in-fact and may enter into agreements with architects and contractors for the purpose of so delegating such duties; provided that no such delegation shall limit or reduce in any way the Construction Agent's duties and obligations under this Agreement. 2.5 Covenants of the Construction Agent. The Construction Agent hereby ---------------------------------------- covenants and agrees that it will: -3- (a) cause construction of the Improvements to be prosecuted diligently and continuously in accordance with the Plans and Specifications and in compliance with all Legal Requirements and Insurance Requirements (except where the failure to comply with Legal Requirements and Insurance Requirements is not material); (b) cause the Completion Date to occur on or prior to the Outside Completion Date, free and clear (by removal or bonding) of Liens (other than Permitted Liens or Lessor Liens) or material claims for materials supplied or labor and services performed in connection with the construction of the Improvements; provided, that the failure to cause the Completion Date to occur -------- by the Outside Completion Date shall not be deemed a breach hereunder if such delay is caused by a Force Majeure Event and Completion is accomplished within three (3) months of the date otherwise applicable but for this proviso; provided, further, to the extent such failure to complete is caused by a Force - -------- ------- Majeure Event extending beyond such three (3) month period, the Construction Agent shall elect one of the Construction Agent Options set forth in Section 2.6 and, if such election is not made within ten (10) Business Days of the end of such three (3) month period, the Construction Agent shall be deemed to have elected to purchase the Property for the Termination Value in accordance with the provisions of Section 2.6; (c) notify the Lessor in writing not less than five (5) Business Days after the Responsible Officer of the Construction Agent believes in his or her reasonable judgment that the Completion of Construction will not occur on or prior to the Outside Completion Date; (d) promptly notify the Lessor and the Administrative Agent in writing of the occurrence of any Force Majeure Event and take all reasonable and practical steps to minimize the disruption of the construction process arising from Force Majeure Events; (e) comply in all respects with all Legal Requirements (including Environmental Laws) and Insurance Requirements required for the Construction of Improvements during the Construction Period; (f) procure, maintain and comply with all licenses, permits, orders, approvals, consents, and other authorizations required for the construction of the Improvements and provide information to the Lessor within a reasonable time after the Lessor's request for such information regarding the status of the foregoing; (g) subject to the limitations of Section 5.4(a) hereof and the receipt of sufficient funds in accordance with Section 4.1 hereof, pay and discharge any and all Project Costs, including, without limitation, the costs of, as applicable, constructing, equipping and furnishing the Improvements and payment of all real estate taxes, insurance premiums and other items payable prior to Completion, as the same become due and payable; (h) following the Completion Date use reasonable good-faith efforts to cause all outstanding punch list items with respect to the Improvements on the Property to be completed, but in any event within three (3) months following the Completion Date; and (i) comply fully and punctually with all of the material terms, covenants and conditions on its part to be complied with under the agreements entered into by Construction Agent pursuant to paragraph 2.3 (a) (iii) hereof. -4- 2.6 Options. (a) After the Construction Agent gains knowledge or a ----------- reasonable expectation that the costs for construction of the Improvements shall exceed the original Budget (or exceed the Budget as modified in accordance with the Operative Agreements) or that Completion shall not occur on or prior to the Outside Completion Date, the Construction Agent shall promptly (and in any event within five (5) Business Days of gaining such knowledge or expectation) notify the Administrative Agent in writing of the same. If at any time prior to the Outside Completion Date, the Lessor shall have (x) determined in its reasonable good faith judgment that (i) the sum of the available SPC Loan Commitment and the available Investor Contribution Commitment shall be less than the amounts necessary for Completion of the Improvements or (ii) Completion of the Improvements shall not occur on or prior to the Outside Completion Date, or (y) received any notice from the Construction Agent as referenced in the preceding provisions of this paragraph, then in any such case Lessor shall have the option to cease advancing Project Costs and/or replace the Construction Agent with a new construction agent selected by the Lessor to finalize the Completion of the Improvements. The cost and expense incurred to finalize the Completion of the Improvements as referenced in the preceding sentence shall be the responsibility of the Construction Agent and shall be payable by the Construction Agent on demand; provided, in no event shall the obligations of the Construction Agent for such costs and expenses exceed the amounts payable by the Construction Agent under Section 5.4(a); provided, further, amounts expended by the Lessor to finalize the Completion of the Improvements as referenced in the preceding sentence shall be added to the Project Cost. (b) The costs of Completion of the Improvements in excess of the original Budget (or the Budget as modified in accordance with the Operative Agreements) in each case as previously delivered to the Lessor shall not be the responsibility of the Construction Agent but instead shall be paid by Lessor, if the Lessor so elects, from Advances made by SPC and the Investors to the extent, but only to the extent, that (after taking into account such excess costs and any other items of excess cost which are then known to the Construction Agent or are reasonable for the Construction Agent to expect) the conditions precedent set forth in Section 6.3 of the Participation Agreement are satisfied. (c) Subject to SPC and the Investors not agreeing to continue making advances in accordance with the provisions of the next paragraph and in the event from time to time (i) the Construction Agent gains knowledge or a reasonable expectation that the costs of the Improvements shall exceed the original Budget (or exceed the Budget as modified in accordance with the Operative Agreements) or that Completion of the Improvements shall not occur on or prior to the Outside Completion Date, or (ii) the Lessor shall have determined in its reasonable good faith judgment that the sum of the available SPC Loan Commitment and the available Investor Contribution Commitment shall be less than the amounts necessary for Completion of the Improvements or that Completion of the Improvements shall not occur on or prior to the Outside Completion Date, the Construction Agent shall elect and comply (within ten (10) days of the Construction Agent gaining such knowledge or expectation or within ten (10) days of the Lessor making such determination and giving written notice of the same to the Construction Agent, as referenced in subsections (i) and (ii) above of this paragraph) with one of the options set forth in the following subsections (A) or (B) (collectively, the "Construction Agent Options"): (A) the -------------------------- Construction Agent shall pay to the Lessor, on a date designated by the Lessor, an aggregate amount equal to (x) the Termination Value, plus (y) any and all fees and expenses incurred by or on behalf of the Lessor in connection with the Property (including without limitation the transfer thereof) and on such date the Lessor shall transfer and convey to the Construction Agent all right, title and interest of the Lessor in and to the Property, or (B) the -5- Construction Agent shall pay to the Lessor, on a date designated by the Lessor, any and all amounts that are due hereunder or under any other Operative Agreement upon the occurrence of an Agency Agreement Event of Default, subject to the limitation provided for in Section 5.4(a), and on and after such date, the Construction Agent and the Lessee shall be irrevocably deemed, without any further action, to have relinquished, and shall relinquish in accordance with Section 10.2 of the Lease, all of its right, title and interest in and to all, but not less than all, the Property and to have transferred and conveyed all such right, title and interest to the Lessor, and the Construction Agent shall execute and deliver to the Lessor or its designee, at the cost and expense of the Construction Agent, each of the following: (w) special or limited warranty Deeds and other appropriate assignments conveying the Property to the Lessor or its designees free and clear of the Lien of the Lease, and the Lien of the Credit Documents; (x) a Bill of Sale conveying the Property (to the extent they consist of personal property) to the Lessor or its designee free and clear of the Lien of the Lease, and the Lien of the Credit Documents; and (y) any real estate tax affidavit or other document required by law to be executed and filed in order to record the applicable deed or other assignments. In connection with any transfer of the Improvements as referenced above in this Section 2.6(c) by the Lessor to the Construction Agent, the Lessor shall execute and deliver to the Construction Agent, at the cost and expense of the Construction Agent (subject to the limitations described in the next sentence), each of the following: (w) special or limited warranty deeds and other appropriate assignments conveying the Property to the Construction Agent free and clear of the Lien of the Lease, the Lien of the Credit Documents and any Lessor Liens; (x) a bill of sale conveying the Property (to the extent they consist of personal property) to the Construction Agent free and clear of the Lien of the Lease, the Lien of the Credit Documents and any Lessor Liens; and (y) any real estate tax affidavit or other document required by law to be executed and filed in order to record the applicable deed or other assignments. The Lessor shall elect whether the out-of-pocket fees and expenses associated with the transfer of the Property shall be paid by either (i) sales proceeds from the Property, (ii) the Lessor (but only to the extent amounts are available therefor with respect to the available SPC Loan Commitment and the available Investor Contribution Commitment or SPC and each Investor approves the necessary increases in the available SPC Loan Commitment and the available Investor Contribution Commitment to fund such fees and expenses), or (iii) the Construction Agent; provided, if the Construction Agent funds such fees and expenses (as referenced in subsection (iii)) then the amounts payable under clause (B) of the Construction Agent Options will be reduced accordingly. Amounts funded by SPC and the Investors with respect to the foregoing shall be added to the Project Costs. All of the foregoing documentation must be in form and substance reasonably satisfactory to the Lessor. Subject to the foregoing, the Property shall be conveyed to the Construction Agent "AS-IS", "WHERE-IS" and in its then present physical condition. (d) In the event the costs in excess of any original Budget previously delivered to the Administrative Agent for the Improvements are not funded by SPC and the Investors because (after taking into account such excess costs and any other items of excess cost which are then known to the Construction Agent or are reasonable for the Construction Agent to expect) the conditions precedent set forth in Section 6.3 of the Participation Agreement are not satisfied, then if, but only if, the Banks and all the Investors agree at such time, (a) such excess costs shall be funded and (b) the SPC Loan Commitment and the Investor Contribution Commitment shall be increased accordingly. -6- SECTION 3. THE IMPROVEMENTS 3.1 Amendments; Modifications. (a) The Construction Agent may at any time ------------------------- revise, amend or modify (i) the Plans and Specifications without the consent of the Lessor; provided that any such revision, amendment or modification to the Plans and Specifications does not (x) result in the Completion Date occurring after the Outside Completion Date and/or (y) result in the Project Costs subject to such amendment exceeding the sum of the then SPC Loan Commitments and the then Investor Contribution Commitments, and (ii) the Budget; provided that such revisions, amendments or modifications to the Budget do not result in any increase in the Project Costs greater than the sum of the then SPC Loan Commitments and the then Investor Contribution Commitments. (b) The Construction Agent agrees that it will not implement any revision, amendment or modification to the Plans and Specifications if the aggregate effect of such revision, amendment or modification would be to reduce the Fair Market Sales Value of the Property as set forth in the Appraisal of the Property, below the sum of the then outstanding SPC Loan and Investor Contribution when completed, unless such revision, amendment or modification is required by Legal Requirements or Insurance Requirements. SECTION 4. PAYMENT OF FUNDS 4.1 Right to Receive Construction Cost. (a) During the course of the ---------------------------------- construction of the Improvements, the Construction Agent may request that the Lessor advance funds for the payment of Project Costs, and the Lessor will comply with such request to the extent provided for under the Participation Agreement. The Construction Agent and the Lessor acknowledge and agree that the Lessee's right to request funds and the Lessor's obligation to advance funds for the payment of Project Costs is subject in all respects to the terms and conditions of the Participation Agreement and each of the other Operative Agreements. (b) The proceeds of any funds made available to the Lessor to pay Project Costs shall be made available to the Construction Agent or its designee in accordance with the Requisition relating thereto and the terms of the Participation Agreement. The Construction Agent will use such proceeds only to pay the Project Costs set forth in the Requisition relating to such funds. (c) Notwithstanding anything herein to the contrary, the Lessor shall not be required to make advances to pay or reimburse or compensate the Construction Agent with respect to or arising out of a Construction Period Force Majeure Event, including a Construction Period Force Majeure Event Loss. SECTION 5. EVENTS OF DEFAULT 5.1 Events of Default. If any one or more of the following events (each, as --------------------- used in this Agreement, an "Agency Agreement Event of Default") shall occur: --------------------------------- -7- (a) the Construction Agent fails to apply any funds paid by the Lessor to the Construction Agent for the construction of the Improvements to the payment of Project Costs; or (b) the Construction Commencement Date with respect to the Improvements does not occur within three (3) months of the Closing Date; provided, that the -------- failure to commence construction within such three (3) month period shall not be deemed a breach hereunder if such delay is caused by a Force Majeure Event and the Construction Commencement Date occurs within three (3) months of the date otherwise applicable but for this proviso; provided, further, to the extent such -------- ------- failure to commence construction of the Improvements is caused by a Force Majeure Event extending beyond such three (3) month period, the Construction Agent shall elect one of the Construction Agent Options set forth in Section 2.6 and, if such election is not made within ten (10) Business Days of the end of such three (3) month period, the Construction Agent shall be deemed to have elected to purchase all the Properties for the Termination Value in accordance with the provisions of Section 2.6; or (c) the Construction Agent shall fail to observe its covenants set forth in Section 6 hereof; or; (d) the Construction Agent shall fail to observe its covenants set forth in Section 2.5(b) hereof and such failure shall have continued for thirty (30) days after the date on which written notice thereof has been given to the Construction Agent by the Lessor; provided, however, that so long as the Construction Agent is making diligent efforts to cure such breach, the Construction Agent shall not be in default during such longer period as is reasonable for a curable breach which the Construction Agent is continuing in its diligent efforts to cure, provided that in no event shall such breach continue for a period in excess of an additional ninety (90) days; or (e) the Construction Agent shall fail to observe or perform any covenant (other than any covenant described in clause (a), (b), (c) or (d) above) made by it herein and such failure shall have continued for thirty (30) days after the date on which written notice thereof has been given to the Construction Agent by the Lessor; provided, however, that so long as the Construction Agent is making diligent efforts to cure such breach, the Construction Agent shall not be in default during such longer period as is reasonable for a curable breach which the Construction Agent is continuing in its diligent efforts to cure, provided that in no event shall such breach continue for a period in excess of an additional ninety (90) days; or (f) the Construction Agent shall (i) admit in writing its inability to pay its debts generally as they become due, (ii) file a petition under the United States bankruptcy laws or any other applicable insolvency law or statute of the United States of America or any State or Commonwealth thereof, (iii) make a general assignment for the benefit of its creditors, (iv) consent to the appointment of a receiver of itself or the whole or any substantial part of its property, (v) fail to cause the discharge of any custodian, trustee or receiver appointed for it or the whole or a substantial part of its property within sixty (60) days after such appointment, or (vi) file a petition or answer seeking or consenting to reorganization under the United States bankruptcy laws or any other applicable insolvency law or statute of the United States of America or any State or Commonwealth thereof; or (g) insolvency proceedings or a petition under the United States bankruptcy laws or any other applicable insolvency law or statute of the United States of America or any -8- State or Commonwealth thereof, (iii) make a general assignment for the benefit State or Commonwealth thereof shall be filed against the Construction Agent and not dismissed within sixty (60) days from the date of its filing (provided, that the Construction Agent hereby expressly authorizes the Lessor to appear in any court conducting any such proceeding during such sixty (60) day period to preserve, protect and defend their respective rights under the Operative Agreements), or a court of competent jurisdiction shall enter an order or decree appointing, without the consent of the Construction Agent, a receiver of the Construction Agent or the whole or a substantial part of any of their respective property, and such order or decree shall not be vacated or set aside within sixty (60) days from the date of the entry thereof; or (h) any representation or warranty made or deemed made by the Construction Agent herein or in the Participation Agreement or which is contained in any certificate or Requisition furnished at any time in connection with the construction of the Improvements shall prove to have been incorrect, false or misleading in any material respect on or as of the date made or deemed made; then, in any such event, and subject to Section 5.3(b), the Lessor may, in addition to the other rights and remedies provided for in this Article, terminate this Agreement by giving the Construction Agent five (5) days notice of such termination and upon the expiration of the time fixed in such notice, this Agreement shall terminate and all rights and obligations of the Construction Agent and the Lessor under this Agreement shall cease. Subject to the limitations of Section 5.4, the Construction Agent shall pay all costs and expenses incurred by or on behalf of the Lessor, including reasonable fees and expenses of counsel, and, upon demand, Termination Value, as a result of any Agency Agreement Event of Default. 5.2 Damages. The termination of this Agreement pursuant to Section 5.1 ----------- shall in no event relieve the Construction Agent of its liability and obligations hereunder, all of which shall survive any such termination. 5.3 Remedies; Remedies Cumulative. --------------------------------- (a) Termination of Commitments, Acceleration, etc. Upon the occurrence and --------------------------------------------- continuance of any Agency Agreement Event of Default of the type described in Section 5.1(f) or Section 5.1(g), the Investor Contribution Commitments and the SPC Loan Commitments shall automatically terminate and the Construction Agent shall immediately become obligated to pay the then outstanding amount of the Termination Value, without presentment, demand, protest, notice of acceleration or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or any other Operative Document to the contrary notwithstanding. After the occurrence and continuance of any other Agency Agreement Event of Default, the Lessor may by written notice to the Construction Agent, immediately (x) terminate all Commitments, (y) terminate this Agreement (and upon the giving of such notice, this Agreement shall terminate and all rights of the Construction Agent and all obligations of the Lessor under this Agreement (as the case may be) shall cease) and/or (z) subject to the limitations imposed under Section 5.4, accelerate the amounts due and owing by the Construction Agent hereunder and, upon any such notice of acceleration, the Construction Agent shall, subject to the limitations imposed under Section 5.4, immediately become obligated to pay all such amounts. (b) If (x) a Fully Indemnifiable Event shall have occurred, (y) an Event of Default shall have occurred and be continuing and the occurrence of which is Within the Construction Agent's Control (whether or not constituting, or arising out of, a Fully -9- Indemnifiable Event), or (z) any Agency Agreement Event of Default described in Section 5.1(b) or 5.1(d) shall have occurred and be continuing and the occurrence of which is Within the Construction Agent's Control (whether or not constituting, or arising out of, a Fully Indemnifiable Event) and the Construction Agent and/or the Lessee shall have failed to relinquish all of its interest in the Property, convey possession thereof to the Lessor or its designee in compliance with Section 5.4(a) and/or shall have failed to comply with the indemnification obligations under Section 12 of the Participation Agreement, then, in each such case set forth in clauses (x), (y) and (z) above, the Lessor shall have all rights and remedies available under the Operative Agreements (including under Section 17.3 of the Lease) or available at law, equity or otherwise, including the right to declare the Termination Value due and owing. (c) No failure to exercise and no delay in exercising, on the part of the Lessor, any right, remedy, power or privilege under this Agreement or under any other Operative Agreement shall operate as a waiver thereof nor shall any single or partial exercise of any right, remedy, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in this Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 5.4 Limitation on Construction Agent's Recourse Liability. (a) --------------------------------------------------------- Notwithstanding anything contained herein or in any other Operative Agreement to the contrary, if (i) an Agency Agreement Event of Default described in Section 5.1(b) or 5.1(d) the occurrence of which is not Within the Construction Agent's Control and does not constitute, and is not the result of, a Fully Indemnifiable Event (a "Construction Risk Event") and (ii) no other Event of Default has ----------------------- occurred and is continuing (x) the occurrence of which is Within the Construction Agent's Control, or (y)which does not constitute, and is not the result of, a Fully Indemnifiable Event, then so long as the Construction Agent relinquishes all of its interest in the Property and conveys possession thereof to the Lessor or its designee in compliance with all Environmental Laws and the requirements of Section 10.1 and 10.2 of the Lease (other than any such requirement which requires completion of the Improvements), accompanied by an affidavit to the Lessor to such effect and appropriate statements of termination, the aggregate maximum recourse liability of the Construction Agent with respect to such default to the Lessor or any Person claiming by, through or under the Lessor under the Operative Agreements, shall be limited to the Non-Completion Amount. The Construction Agent nonetheless acknowledges and agrees that, subject to the provisions of Section 13.8(b) of the Participation Agreement, (i) the Lessor shall be entitled to recover from the Property (including through any reletting and/or sale of the Property or any portion thereof) the entire outstanding funded amount of the SPC Loans and Investor Contributions at the time of such Agency Agreement Event of Default, along with all accrued and unpaid interest on the outstanding amount of the SPC Loans, yield on the outstanding Investor Contributions and other amounts then due and owing to the Lessor under the Operative Agreements and all other costs and expenses of the Lessor incurred in connection with the Property (including without limitation, any costs incurred in connection with the construction of the Improvements and/or any reletting or sale of such Property or any portion thereof) from and after the date of such return, and (ii) the foregoing recourse limitations are exclusive of any amounts due and owing under Section 12 of the Participation Agreement. -10- (b) The proceeds received from any sale of the Property after the Construction Agent has relinquished its interest in the Property pursuant to Section 5.4(a) above shall be applied in accordance with Section 13.8 of the Participation Agreement. 5.5 Construction Agent's Right to Purchase. In the event that an Agency ------------------------------------------ Agreement Event of Default (other than an Agency Agreement Event of Default under Section 5.1(f) or Section 5.1(g)), shall have occurred and be continuing, the Construction Agent shall have the irrevocable option to purchase the Property for a price equal to the Termination Value as of the date of such purchase plus all other amounts due and owing hereunder, under the Participation Agreement and the other Operative Agreements, such purchase to be effected in accordance with the procedures set forth in Section 20 of the Lease; provided that the Construction Agent shall have given written notice whether or not it intends to do so within five (5) Business Days after the occurrence of such Agency Agreement Event of Default and provided, further, that the Construction Agent shall purchase the Property and pay all amounts due in connection therewith within twenty (20) days after the occurrence of such Agency Agreement Event of Default. If Lessor does not receive such a purchase notice within such five (5) day period, then the Construction Agent shall be deemed to have irrevocably elected to purchase the Property. The Construction Agent's purchase of the Property in accordance with this Section 5.5 shall be deemed to cure the applicable Agency Agreement Event of Default. SECTION 6. INSURANCE AND CONDEMNATION 6.1 Insurance. The Construction Agent shall procure and maintain in full ------------- force and effect or arrange to be procured and maintained in full force and effect insurance for the Improvements during the Construction Period in accordance with the following provisions: (a) Public Liability and Workers' Compensation Insurance. During the ---------------------------------------------------- Construction Period, the Construction Agent shall procure and carry or cause to be procured and carried, at the Construction Agent's sole cost and expense, commercial general liability insurance for the Construction Period risks arising from the acts, errors or omissions of the Construction Agent while located on, in possession of, or controlling or acting or failing to act with respect to the Land and Construction. In addition, during the Construction Period, the Construction Agent shall, in the construction of the Improvements on the Land and the operation of the Land, comply with all applicable workers' compensation laws. The Construction Agent acknowledges and agrees in this connection that the Property is in its control and possession during the Construction Period therefor, it is responsible as Construction Agent for the acts, errors or omissions of its contractors, subcontractors and agents and that it has assumed all liability arising from injury, damage or mishap to third Persons caused by the Construction Agent or any person or entity under its control. (b) Hazard and Other Insurance. During the Construction Period, the -------------------------- Construction Agent shall arrange, on behalf of the Lessor, to obtain from an insurance provider reasonably acceptable to the Lessor, and utilizing funds advanced by the Lessor and keep in force a policy or policies of Builder's Risk "All Risk" insurance with respect to the Land and Improvements insuring the Lessor's interest in the Land and Improvements including collapse coverage and fire insurance with extended coverage, written on a Standard Builder's Risk Completed Value Form (100% non-reporting), in an amount equal to 100% of the completed insurable replacement cost value of the Property. In addition, the Construction Agent shall -11- arrange, on behalf of the Lessor and utilizing funds provided by the Lessor, for the Lessor to obtain insurance from damage caused by collapse, flood or earthquake covering losses up to $750 million. All such policies shall be in form and substance reasonably satisfactory to the Lessor. The Lessor shall be the named the mortgagee and loss payee under such policies. The premiums for such coverage shall be paid with the proceeds of an advance of funds made by Lessor for the Project Costs. In addition, the reduction in any recovery pursuant to any deductible applicable to such policy shall be deemed a Project Cost paid with the proceeds of an advance made by Lessor therefor; and, provided, however that, unless the Lessor otherwise agrees, the deductible under the all risk insurance policy required pursuant to this clause (b) shall not exceed $100,000 per incident, loss or occurrence. (c) Deductibles. The insurance required to be obtained by the Construction ----------- Agent under Section 6.1(a) may be subject to such deductible amounts as is consistent with the Construction Agent's or its Affiliates practice for other properties similar to the Property owned or leased by the Construction Agent or the Affiliates of the Construction Agent, and may be carried under blanket policies maintained by or on behalf of the Construction Agent so long as such policies otherwise comply with the provisions of this Section 6.1. The all risk insurance required to be obtained by the Lessee pursuant to Section 6.1(b) shall contain no deductible amount in excess of $100,000 per incident, loss or occurrence unless the Lessor otherwise agrees. (d) Construction Manager. Should the Construction Agent decide to utilize -------------------- the services of a "Construction Manager or General Contractor", hereinafter called the Construction Manager, on the Project, then said Construction Manager shall procure and maintain, at its own expense, the following required insurance of the kinds and limits as stipulated hereunder: (1) Worker's Compensation and Employer's Liability Insurance in accordance with the applicable laws of the State in which the work is to be performed or of the State in which the Construction Manager is obligated to pay compensation to employees engaged in the performance of the work associated with this Project. The policy limit under the Employer's Liability Insurance section shall not be less than $1,000,000 (One Million Dollars) for any one accident. (2) Commercial General Liability Insurance covering the work, the performance of the work and everything incidental thereto, with limits of not less than $100,000,000 (One Hundred Million Dollars) per occurrence combined single limit, or in whatever higher amounts as may be required, and extended to cover: (a) Contractual Liability Insurance assumed by the Construction Manager under any Indemnification Agreement related to this Project, (b) if any of the work is subcontracted, Independent Contractors Liability Insurance providing coverage in connection with such portion of the work which may be subcontracted, (c) Broad Form Property Damage Liability Insurance, and (d) Personal Injury Liability Insurance. (3) Automobile Liability Insurance including coverage on owned, hired and non-owned automobiles and other vehicles, if used in connection with the performance of the work, with Bodily Injury and Property Damage limits of not less the $50,000,000 (Fifty Million Dollars) per occurrence combined single limit. -12- (e) Coverage. All insurance required to be carried or arranged for by the -------- Construction Agent or Construction Manager, accordingly, pursuant to the requirements of Section 6.1(a), 6.1(b) or 6.1(d) shall provide in the policy or by special endorsement that: (i) in the case of insurance required by Section 6.1(a), that the Participants (except for the Banks) are included as additional insureds; (ii) the insurer thereunder waives all rights of subrogation against the Lessor, and waives any right of set-off and counterclaim and any other right to deduction whether by attachment or otherwise; (iii) in case of insurance required by Section 6.1(d) such insurance shall be primary and shall apply to any loss or claim before any contribution of any other insurance carried by or on behalf of the Lessor or the Construction Agent; (iv) the respective interests of the Lessor or the Construction Agent, as the case may be, under all insurance policies required hereunder shall not be invalidated by any action or inaction of the Lessee or the Construction Agent or any other Person (other than, with respect to any such insured, such insured) and such insurance shall insure the Lessor's interests, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee, the Construction Agent or any other Person (other than, with respect to any such insured, such insured); (v) if the insurers cancel such insurance for any reason whatsoever or any materially adverse change is made in policy terms or conditions, or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to the Lessor for thirty (30) days after receipt by the Lessor of written notice from such insurers of such cancellation, change or lapse; and (vi) with respect to all liability insurance, in as much as the policies are written to cover more than one insured, all terms, conditions, insuring agreements and endorsements, with the exception of the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured. (f) Adjustment of Losses. Losses, if any, with respect to the Property under any damage policies required to be carried under Section 6.1(b) shall be adjusted with the insurance companies, including the filing of appropriate proceedings, as follows: (x) so long as no Agency Agreement Default shall have occurred and be continuing, and provided that the Construction Agent is required, or has agreed, to repair the damage, such losses shall be adjusted by the Construction Agent, and (y) if any Agency Agreement Default shall have occurred and be continuing, or if the Construction Agent is not required to, and has not agreed, to repair the damage, such losses shall be adjusted by the Lessor. The party which shall be entitled to adjust losses may appear in any proceeding or action to negotiate, prosecute, adjust or appeal any claim for any award, compensation or insurance payment on account of any Casualty and shall pay all expenses thereof. At such party's reasonable request, and at the Construction Agent's sole cost and expense with respect to disputes on insurance required under Section 6.1(a), the -13- Construction Agent, and the Lessor, as the case may be, shall participate in any such proceeding, action, negotiation, prosecution or adjustment. The parties hereto agree that this Agreement shall control the rights of the parties hereto in and to any such award, compensation or insurance payment relating to any Casualty affecting the Property during the Construction Period. (g) Application of Insurance Proceeds. All proceeds of insurance --------------------------------- maintained pursuant to Section 6.1(b) on account of any damage to or destruction of the Property during the Construction Period or any part thereof shall be paid over to the Lessor or as it may direct; provided that if no Agency Agreement Default shall have occurred such funds shall be held by the Lessor in a segregated account and, so long as the Construction Agent is diligently repairing the damage to the Property caused by the applicable Casualty, disbursed to the Construction Agent to effect the repair of the Property. (h) Title Insurance. Construction Agent shall cause the Title Company to --------------- issue the title insurance referred to in Section 6.3(d) of the Participation Agreement. (i) Additional Insurance. Any additional insurance obtained by the -------------------- Construction Agent or the Lessor shall provide that it shall not limit the insurance described in Sections 6.1(a) and 6.1(b) or increase the amount of any premium payable with respect to any such insurance. The proceeds of any additional insurance will be for the account of the party maintaining such additional insurance. (j) Insurance Report. On the commencement of construction of the ---------------- Improvements and annually thereafter, the Construction Agent shall provide the Lessor, promptly following Lessor's written request therefor, an insurance certificate certifying compliance with the insurance then required to be maintained by the Construction Agent pursuant to this Section 6.1, provided however, the Construction Agent shall provide the Lessor with written notice thirty (30) days prior to the expiration of any insurance policy required to be maintained pursuant to the terms of this Agreement. 6.2 Condemnation. ----------------- (a) Representation and Warranties of the Construction Agent with respect -------------------------------------------------------------------- to Condemnation. The Construction Agent hereby represents and warrants to the - --------------- Lessor (which representation and warranty shall be deemed to be repeated and be considered part of each Requisition) that to the actual knowledge of the Construction Agent there is no action being taken by any Person with respect to any actual, pending or threatened Condemnation affecting the Property. (b) Condemnation Occurrences. ------------------------ (i) Condemnation Proceedings. The Construction Agent hereby ------------------------ agrees that it shall, within five (5) Business Days after the date on which the Construction Agent shall have notice thereof, give notice to the Lessor of each action or proceeding by any Governmental Authority with respect to any actual, pending or threatened Condemnation during the Construction Period and whether or not as a result thereof Completion of the Improvements will be completed on or before the Outside Completion Date and is exercising a Construction Agent Option pursuant to Section 2.6(c). During the Construction Period, the Lessor shall be entitled, to the exclusion of the Construction Agent, to negotiate, -14- prosecute, adjust or appeal any claim for any award, compensation or insurance payment on account of any Condemnation having a material effect on the Property. The Lessor shall consult with the Construction Agent in connection with the foregoing, but the Construction Agent shall have no right to participate in any such negotiation, prosecution, adjustment or appeal unless the Lessor consents thereto in its sole discretion. During the Construction Period, the Construction Agent shall be entitled, with the approval of the Lessor, which shall not be unreasonably withheld, conditioned or delayed, to negotiate, prosecute, adjust or appeal any claim for any award, compensation or insurance payment on account of any Condemnation which does not have a material effect on the Property. (ii) Condemnation Awards. During the Construction Period, all ------------------- awards, compensation and insurance payments on account of any Condemnation affecting the Property shall be paid directly to the Lessor or, if received by the Construction Agent, shall be held in trust for the Lessor and shall promptly be paid over by the Construction Agent to the Lessor. In the event the Construction Agent elects to proceed under clause (A) of the definition of "Construction Agent Options" in Section 2.6(c), all such amounts paid to Lessor shall be paid to the Construction Agent upon Lessor receiving all amounts due under such clause (A), and if no Construction Agent Option shall have been exercised, and the Property suffering a Condemnation is in the reasonable judgment of the Lessor capable of being restored to a condition, functionally and economically, equivalent to that which existed prior to such Condemnation for a restoration cost equal to or less than the award or compensation received by the Lessor with respect to the Condemnation, then, so long as no Agency Agreement Default has occurred and is continuing and such restoration can be completed on or prior to the Outside Completion Date, then such award or compensation shall be made available to the Construction Agent to finance such restoration and the Construction Agent shall effect such restoration on or prior to the Outside Completion Date. To the extent the Lessor elects to retain such award or compensation and apply it to the Termination Value and such award or compensation exceeds the Termination Value, such amount shall be applied in accordance with Section 13.5(b) and 13.5(c) of the Participation Agreement. SECTION 7. LESSOR'S RIGHTS; CONSTRUCTION AGENT'S RIGHTS 7.1 Exercise of the Lessor's Rights. Subject to the terms of the Contract ----------------------------------- Assignment made by the Lessor in favor of the Administrative Agent, the Construction Agent hereby acknowledges and agrees that the rights and powers of the Lessor under this Agreement have been assigned to the Administrative Agent. 7.2 Lessor's Right to Cure Construction Agent's Defaults. Upon written -------------------------------------------------------- notice to the Construction Agent, except in emergencies, the Lessor, without waiving or releasing any obligation or Agency Agreement Event of Default, may (but shall be under no obligation to) remedy any Agency Agreement Event of Default hereunder for the account of and at the sole cost and expense of the Construction Agent, subject to the limitations on Construction Agent's liability to -15- Lessor set forth herein. All reasonable out of pocket costs and expenses so incurred (including reasonable fees and expenses of counsel), together with interest thereon at the Overdue Rate from the date on which such sums or expenses are paid by the Lessor, shall be paid by the Construction Agent to the Lessor on demand. 7.3 Subordination. (a) All liabilities and obligations of the Lessor ----------------- to the Construction Agent, whether secured or unsecured and whether or not evidenced by any instrument, now existing or subsequently created or incurred, are and shall be subordinate and junior in right of payment to the Secured Obligations. (b) The Construction Agent shall not sell, assign or otherwise transfer, in whole or in part, or create, incur or suffer to exist any security interest, Lien, charge or other encumbrance with respect to any indebtedness, liabilities or obligations of the Lessor to the Construction Agent or any instrument or document evidencing or securing the same unless, in any such case, the person or entity to whom such sale, assignment or transfer is made or the beneficiary of such security interest, Lien, charge or encumbrance acknowledges the foregoing subordination and agrees to be bound thereby. Notwithstanding the foregoing, the Lessor acknowledges Lessee's right to finance and to secure under the Uniform Commercial Code, inventory, furnishings, furniture, equipment, machinery, leasehold improvements and other personal property located at the Property, other than the Equipment, Modifications and other such items which are purchased with the proceeds of SPC Loans or Investor Contributions or which are otherwise required to be titled in the name of Lessor and excluding in all cases fixtures, and Lessor agrees, at Construction Agent's request and at Lessee's cost and expenses, to execute waiver forms, releases of Lessor Liens and other similar documentation (in form and substance reasonably satisfactory to Lessor and the Administrative Agent) in favor of any purchase money seller, lessor or lender who has financed or may finance in the future such items, with respect to such separately-financed items only. (c) Should any payment or distribution or security, or any proceeds thereof, be collected or received by the Construction Agent in respect of any indebtedness, liabilities or obligations of the Lessor to the Construction Agent, and such collection or receipt is not permitted under these subordination provisions of this Agreement, the Construction Agent shall immediately turn over such payment, distribution or security or proceeds to the Administrative Agent, in the form received, and, until so turned over, the same shall be held in trust by the Construction Agent as the property of the Lenders. (d) For purposes of this Agreement "subordinate and junior in right of payment" shall mean: no part of any subordinated indebtedness, liabilities or obligations shall have any claim to the assets of the Lessor on a parity with or prior to the claim of the Obligations or the principal amount of the Loans and other amounts due to the Administrative Agent, the Lenders and the Investor. Unless and until the Obligations shall have been fully paid and satisfied, the Construction Agent will not take, demand or receive, directly or indirectly, by set-off, redemption, purchase or in any manner, any payment or security for the whole or any part of any subordinated indebtedness, liabilities or obligations, and the Construction Agent will not accelerate the scheduled maturities of any amounts owing on account of such indebtedness, liabilities or obligations or demand payment thereof; provided that so long as no Default or Event of Default exists or would be in existence immediately after giving effect to such payment, the Construction Agent may receive currently scheduled payments on account of such indebtedness, liabilities and obligations. -16- 7.4 Right to Inspect. During the Construction Period, the Construction -------------------- Agent shall upon reasonable written notice from the Lessor, permit the Lessor, the Administrative Agent acting on behalf of the Banks, and their respective authorized representatives to inspect the Property in accordance with Section 10.3 of Lease subject to this Construction Agency Agreement and the books and records of the Construction Agent relating to the Property during normal business hours, provided that such inspections shall -------- be without notice in the event of an emergency. 7.5 Costs and Fees. Except for such obligations, duties and ------------------ requirements which are included as part of the Project Costs, all obligations, duties and requirements imposed upon or allocated to the Construction Agent shall be performed by the Construction Agent at the Construction's Agent's sole cost and expense. The Construction Agent will not be entitled to, and the Lessor shall have no obligation to pay, any agency fee, and the Construction Agent shall not be entitled to, and the Lessor shall have no obligation to make or pay, any reimbursement therefore, it being understood that this Agreement is being entered into as consideration for and as an inducement to the Lessor and the Construction Agent entering into the Lease and the other Operative Agreements. SECTION 8. MISCELLANEOUS 8.1 Notices. Unless otherwise specifically provided herein, all ----------- notices, consents, directions, approvals, instructions, requests and other communications required or permitted by the terms hereof to be given to any Person to be effective shall be given in writing and in the manner provided in, and the effectiveness thereof shall be governed by the provisions of Section 14.3 of the Participation Agreement. From time to time any party may designate a new address for purposes of notice hereunder by notice to each of the other parties hereto. 8.2 Successors and Assigns. This Agreement shall be binding upon and -------------------------- inure to the benefit of the Lessor, the Construction Agent and their respective successors and assigns. 8.3 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF ----------------- THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF WASHINGTON ARE REQUIRED TO APPLY WITH RESPECT TO THE PROPERTY AND ANY AGREEMENTS ENTERED INTO BY CONSTRUCTION AGENT IN SUCH STATE PURSUANT TO THE AUTHORITY GRANTED IN SECTION 2.3 HEREOF. 8.4 Amendments and Waivers. The Lessor and the Construction Agent may -------------------------- from time to time, enter into written amendments, supplements or modifications hereto. 8.5 Counterparts. This Agreement may be executed on any number of ---------------- separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. -17- 8.6 Severability. Any provision of this Agreement which is prohibited ---------------- or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 8.7 Headings and Table of Contents. The headings and table of contents ---------------------------------- contained in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 8.8 Duty to Notify. To the extent that Lessor, as the owner of record ------------------ of the Property, receives any written notice, directions, instructions, requests, demands or other communications from any third party or any Governmental Authority relating to Construction Agent's rights and obligations under this Agreement or the Lessee's rights and obligations under the Lease, Lessor agrees to provide Construction Agent with prompt written notice of such, including a true copy of all written materials received by Lessor relating thereto. 8.9 Liability of Wilmington Trust Company. It is expressly understood ----------------------------------------- and agreed by the parties hereto that (i) except as specifically provided for in this Agreement, this Agreement is executed and delivered by Wilmington Trust Company not individually or personally but solely as trustee of the Trust, in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements herein made on the part of Lessor or Wilmington Trust Company, as the case may be, is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose of binding only the Lessor, (iii) except as specifically provided for in this Agreement nothing herein contained shall be construed as creating any liability on Wilmington Trust Company, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (iv) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of any party hereto, or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by Lessor under this Agreement; provided, however, the foregoing shall not limit Wilmington Trust Company's liability for its own gross negligence or willful misconduct. -18- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. IMMUNEX CORPORATION By: /s/ David A. Mann ------------------------------------ Name: David A. Mann Title: Executive Vice President, Chief Financial Officer and Treasurer IMMUNEX REAL ESTATE TRUST 2001 By: Wilmington Trust Company, not in its individual capacity but solely as Trustee By: /s/ Patricia Evans --------------------------------- Name: Patricia Evans Title: Senior Financial Services Officer -19- -----END PRIVACY-ENHANCED MESSAGE-----