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EXHIBIT 10(iii)
LEASE AGREEMENT
DATED AS OF DECEMBER 1, 1993 BETWEEN
REFIRST, INC. AND FIRST HAWAIIAN BANK
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LEASE AGREEMENT
between
REFIRST, INC.,
as Lessor
and
FIRST HAWAIIAN BANK,
as Lessee
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Dated as of December 1, 1993
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Premises:
First Hawaiian Center
Honolulu, Hawaii
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TABLE OF CONTENTS
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ARTICLE I
1.1 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE III
3.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Payment of Base Rent and Renewal Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 Additional Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.4 Construction Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.5 Payments at the Overdue Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.6 Performance on a Non-Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
4.1 General Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.3 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 Reports and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5 Utility Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.6 Income Inclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
5.1 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI
6.1 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 No Termination or Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Right of Offset Against Lessor Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII
7.1 Ownership of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII
8.1 Condition of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2 Possession and Use of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IX
9.1 Compliance with Legal Requirements and Insurance
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X
10.1 Maintenance and Repair; Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Environmental Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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ARTICLE XI
11.1 Modifications, Substitutions and Replacements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XII
12.1 Warranty of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.2 Grants and Releases of Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XIII
13.1 Permitted Contests Other than in Respect
of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.2 Contests of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XIV
14.1 Public Liability and Workers' Compensation
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.2 Hazard and Other Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.3 Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XV
15.1 Casualty and Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.2 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15.3 Notice of Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XVI
16.1 Termination Upon Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
16.2 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XVII
17.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
17.2 Surrender of Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
17.3 Reletting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
17.4 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
17.5 Acceleration of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
17.6 Final Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
17.7 Waiver of Certain Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
17.8 Assignment of Rights under Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
17.9 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XVIII
18.1 Lessor's Right to Cure Lessee's Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XIX
19.1 Provisions Relating to Lessee's Termination of
this Lease or Exercise of Purchase Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XX
20.1 Lessee's Purchase Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
20.2 Exercise of Purchase Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
20.3 Purchase Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
20.4 Transfer of the Property Upon Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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ARTICLE XXI
21.1 Extended Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
21.2 Permitted Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XXII
22.1 Residual Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE XXIII
23.1 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XXIV
24.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XXV
25.1 Indemnification by Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XXVI
26.1 Subletting and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
26.2 Attornment and Nondisturbance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
26.3 Subleases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XXVII
27.1 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XXVIII
28.1 Right to Inspect During any Extended Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
28.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XXIX
29.1 Acceptance of Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XXX
30.1 No Merger of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XXXI
31.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XXXII
32.1 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
32.2 Amendments and Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
32.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
32.4 Conclusive Reliance on Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
32.5 Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
32.6 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
32.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
32.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
32.9 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
32.10 Limitations on Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
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ARTICLE XXXIII
33.1 Ground Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SCHEDULES
Schedule A: Description of Land
Schedule B: Permitted Exceptions
Schedule C: Payment Dates and Lessor Base Rent
Schedule D: Default Amount and Termination Amount
Schedule E: Form of Non-disturbance and Attornment Agreement
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LEASE AGREEMENT (this "Lease"), dated as of December 1, 1993,
between REFIRST, INC., a Delaware corporation having its principal office at
1900 Indian Wood Circle, Maumee, Ohio 43537, as lessor, and FIRST HAWAIIAN
BANK, a Hawaii banking corporation having its principal office at 1132 Bishop
Street, Suite 2500, Honolulu, Hawaii 96813, as lessee.
W I T N E S S E T H :
A. WHEREAS, Lessor (such term, and all other capitalized terms not
defined in these Recitals or in Article I, are as defined in Article II) has,
pursuant to that certain Ground Lease, dated as of even date herewith (the
"Ground Lease"), between First Hawaiian Center Limited Partnership and FH
Center, Inc., collectively as ground lessors (collectively, the "Ground
Lessors"), and Lessor, as ground lessee, (i) ground leased from the Ground
Lessors those certain parcels comprising the Land, as described on Schedules
A-1 and A-2 hereto, and (ii) received from the Ground Lessors all of the Ground
Lessors' respective right, title and interest in and to the Appurtenant Rights
relating to the Land described on Schedule A;
B. WHEREAS, the Ground Lessors, Lessee and Lessor have executed and
delivered that certain Participation Agreement, dated as of November 19, 1993
(the "Participation Agreement"), among Lessor, Lessee, the Ground Lessors and
First Fidelity Bank, N.A., Pennsylvania, a national association (together with
any replacement trustee appointed pursuant to the terms of the Indenture, the
"Trustee"), pursuant to which, inter alia, (i) the Ground Lessors and Lessor
agreed to enter into the Ground Lease and (ii) Lessor and Lessee agreed to
enter into this Lease;
C. WHEREAS, pursuant to that certain Leased Improvements
Construction Agreement, dated as of even date herewith (the "Leased
Improvements Construction Agreement"), between Lessee and Lessor, Lessor has
agreed to cause to be demolished the Existing Improvements and to cause to be
constructed in their place the Building (as defined below);
D. WHEREAS, pursuant to that certain Construction Management,
Escrow and Development Agreement, dated as of even date herewith (the
"Construction Management Agreement"), among Lessor, Lessee and the Trustee,
Lessee has in turn agreed for the benefit of Lessor and the Trustee to cause to
be demolished the Existing Improvements and to cause to be constructed in their
place the Building and to fulfill all other obligations, if any, of Lessor
under the Leased Improvements Construction Agreement;
E. WHEREAS, pursuant to (i) that certain Construction Agreement,
dated November 2, 1993 (the "Construction Contract"), between Lessee and
Fletcher Pacific Construction Co., Ltd. (the "General Contractor"), as general
contractor, (ii) that certain
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Abatement and Demolition Agreement, dated June 3, 1993 (the "Demolition
Contract"), between Lessee and Cleveland Wrecking Company (the "Demolition
Contractor"), as demolition contractor, and (iii) that certain Development
Management Agreement, dated as of December 28, 1992 (the "Development
Agreement"), between Lessee and The Myers Corporation (the "Developer"), as
developer, Lessee has further provided for the demolition of the Existing
Improvements and construction of the Building in order to satisfy its
obligations under the Construction Management Agreement;
F. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires
to lease from Lessor, all of Lessor's right, title and interest in and to the
Land, the Improvements, the Appurtenant Rights and the Fixtures referred to
herein as the "Property", and defined more particularly in Section 1.1;
G. WHEREAS, in order to provide funds for the demolition of the
Existing Improvements and the construction of the Building, Lessor has issued
$161,990,000 of its 6.93% Class A Secured Notes Due 2003 (the "Class A Notes")
and $25,885,000 of its 6.98% Class B Secured Notes Due 2003 (the "Class B
Notes" and, together with the Class A Notes, the "Notes"), pursuant to that
certain Indenture, dated as of even date herewith (the "Indenture"), between
Lessor and the Trustee, as trustee for the benefit of the holders from time to
time of the Notes (collectively, the "Holders");
H. WHEREAS, Lessor's obligations under the Notes are secured by (i)
a Real Property Mortgage, Security Agreement and Financing Statement, dated as
of even date herewith (the "Mortgage"), made by Lessor and the Ground Lessors
in favor of the Trustee for the benefit of the Holders, on the Property, and
(ii) an Assignment of Leases and Rents, dated as of even date herewith (the
"Assignment of Lease"), made by Lessor in favor of the Trustee for the benefit
of the Holders, and with respect to which Lessee has executed and delivered
Lessee's Consent (the "Consent to Assignment"), dated as of even date herewith;
and
I. WHEREAS, this Lease is to be subordinated to the Mortgage but
only during the Preliminary Term pursuant to that certain Subordination,
Non-Disturbance and Attornment Agreement, dated as of even date herewith (the
"Non-Disturbance Agreement"), among the Trustee, Lessee and Lessor, and shall
at all times after the Primary Term Commencement Date, subject to the terms of
the Non-Disturbance Agreement, be superior to the Mortgage.
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
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ARTICLE I
1.1 Property. Subject to the terms and conditions hereinafter set
forth, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the following (collectively, the "Property"):
(a) all of Lessor's right, title and interest in and to the parcels
of land described on Schedules A-1 and A-2 hereto (the "Land") pursuant
to the terms and provisions of the Ground Lease;
(b) all of Lessor's right, title and interest in and to the
Improvements;
(c) all of Lessor's right, title and interest in and to all
easements, rights and appurtenances relating to the Land or the
Improvements (collectively, the "Appurtenant Rights"); and
(d) all of Lessor's right, title and interest in and to all
fixtures to the Improvements, including all components thereof, located
in or on the Improvements, together with all replacements,
modifications, alterations and additions thereto (collectively, the
"Fixtures").
1.2 Term. The Property is leased for the Preliminary Term, the
Primary Term and any Extended Term, if applicable.
1.3 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 now or hereafter in effect. To obtain assurance as to the title
to the Property as between Lessee and Lessor, Lessee is relying solely upon a
policy of title insurance. Lessee shall in no event have any recourse against
Lessor for any defect in title to the Property.
ARTICLE II
2.1 Definitions. As used in this Lease, terms defined in the
caption or in the Recitals shall have the meanings set forth therein, and the
following terms shall have the following meanings:
Additional Charges. As defined in Section 3.3.
Administrative Agent. As defined in the Participation Agreement.
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Affiliate. When used with respect to any Person (as hereinafter
defined), shall mean any other Person who, directly or indirectly,
controls, is controlled by or is under common control with such Person.
For the purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person.
After Tax Basis. With respect to any payment to be received, the
amount of such payment increased so that, after deduction of the amount
of all taxes required to be paid by the recipient (less any tax savings
realized and the present value of any tax savings projected to be
realized by the recipient as a result of the payment of the indemnified
amount) with respect to the receipt by the recipient of such amounts,
such increased payment (as so reduced) is equal to the payment
otherwise required to be made.
Appraiser's Certificate. A certificate of an independent Person who
is either (a) a licensed real estate broker which does not have a
direct financial interest in the sublease in question or (b) a member
of the Appraisal Institute, in each case having at least five years'
experience in the downtown Honolulu commercial office market, stating
that the rents payable under any sublease represent the fair rental
value for the space sublet thereunder and that the other terms of such
sublease, taken together with all of the terms of such sublease, are
commercially reasonable.
Appurtenant Rights. As defined in Section 1.1(c).
Assignment of Lease. As defined in Recital H.
Base Rent. As defined in Section 3.1(a).
Beneficial Owner. As defined in the Participation Agreement.
Building. As defined in the Construction Management Agreement.
Business Day. Each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which national and/or state banks in the City of
Philadelphia, Pennsylvania, or the City and County of Honolulu, Hawaii,
are generally authorized or obligated, by law or executive order, to
close.
Casualty. As defined in Section 15.1(a)(i).
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CERCLA. The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. # # 9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986.
Certifying Party. As defined in Section 27.1.
Class A Base Rent. As defined in Section 3.1(a).
Class A Notes. The Class A Notes described in Recital G.
Class A Office Building. An office building generally consistent
with other "Class A" office facilities located in the downtown Honolulu
office market.
Class B Base Rent. As defined in Section 3.1(a).
Class B Notes. The Class B Notes described in Recital G.
Closing Expenses. All of those costs and expenses which are
required to be paid by Lessee and referred to in Section 9.1 through
9.4 of the Participation Agreement.
Closing Tax Opinion. As defined in Section 4.4(a).
Code. The Internal Revenue Code of 1986, as amended from time to
time, or any successor statute thereto.
Condemnation. As defined in Section 15.1(a)(ii).
Consent to Assignment. As defined in Recital H.
Construction Account. As defined in the Construction Management
Agreement.
Construction Contract. As defined in Recital E.
Construction Management Agreement. As defined in Recital D.
Debt Overdue Rate. 8.94%, but in no event shall such rate exceed
the maximum rate permitted by law.
Default. An Event of Default or an event, condition or failure
which, with the giving of notice or the lapse of time or both, would
become an Event of Default.
Default Amount. For any Payment Date occurring during the Primary
Term, the amount set forth on Schedule D with respect to such Payment
Date.
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Demolition Contract. As defined in Recital E.
Demolition Contractor. As defined in Recital E.
Developer. As defined in Recital E.
Development Agreement. As defined in Recital E.
Election Notice. As defined in Section 20.2.
Environmental Law. Whenever enacted or promulgated, any federal,
state, county or local law, statute, ordinance, rule, regulation,
license, permit, authorization, approval, covenant, criteria,
guideline, administrative or court order, judgment, decree, injunction,
code or requirement or any agreement with a Governmental Authority:
(x) relating to pollution (or the cleanup, removal,
remediation or encapsulation thereof, or any other response
thereto), or the regulation or protection of human health, safety or
the environment, including air, water vapor, surface water,
groundwater, drinking water, land (including surface or subsurface),
plant, aquatic and animal life, or
(y) concerning exposure to, or the use, containment, storage,
recycling, treatment, generation, discharge, emission, Release or
threatened Release, transportation, processing, handling, labeling,
containment, production, disposal or remediation of any Hazardous
Substance, Hazardous Condition or Hazardous Activity,
in each case as amended and as now or hereafter in effect, and any
common law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations
for injuries (whether personal or property) or damages due to or
threatened as a result of the presence of, exposure to, or ingestion
of, any Hazardous Substance, whether such common law or equitable
doctrine is now or hereafter recognized or developed. Applicable laws
include, but are not limited to, CERCLA; the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. # 6901 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. # 1251 et seq.; the Clean Air Act, 42
U.S.C ## 7401 et seq.; the National Environmental Policy Act, 42 U.S.C.
# 4321; the Refuse Act, 33 U.S.C. ## 401 et seq.; the Hazardous
Materials Transportation Act of 1975, 49 U.S.C. ## 1801-1812; the
Toxic Substances Control Act, 15 U.S.C. ## 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ## 136 et seq.;
the Safe Drinking Water Act, 42 U.S.C. ## 300 f et seq.; and the
Occupational
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Safety and Health Act of 1970, each as amended and as now or hereafter
in effect, and their state and local counterparts or equivalents,
including the Hawaii Hazardous Waste Law, Haw. Rev. Stat. Ch. 342 J,
and any regulations promulgated thereunder.
Environmental Violation. Any activity, occurrence or condition that
violates or threatens to violate or results in or threatens to result
in non-compliance with any Environmental Law.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended from time to time.
Escrowee. The Trustee, any subsequent trustee appointed in
accordance with Sections 608 and 609 of the Indenture and acting as
trustee on behalf of the Holders or, if no mortgage then encumbers the
Property, a bank or trust company experienced in administering
construction loans and having a combined capital and surplus of at
least $50,000,000 as selected by Lessee in its sole discretion,
reasonably exercised.
Event of Default. As defined in Section 17.1.
Excepted Liens. Any Liens on the Property which may arise as a
result of a judgment rendered by a court of competent jurisdiction in
favor of Lessee against Lessor resulting from a breach by Lessor of any
of the provisions of the Operative Agreements; provided that Lessee
agrees in writing with the Trustee that (i) such Liens will be
subordinate to the Lien of the Mortgage and (ii) it will not take any
action to foreclose, execute, garnish, levy, attach or otherwise
enforce the Lien of such judgment until all obligations of Lessor under
the Notes, the Indenture, the Mortgage and each of the other Operative
Agreements have been paid in full, other than to garnish, levy, attach
or offset with respect to amounts payable to Lessor solely on account
of Lessor Base Rent.
Existing Improvements. As defined in the Participation Agreement.
Expiration Date. As defined in Section 20.2.
Extended Term. As defined in Section 21.1(b).
Extension Notice. As defined in Section 21.1(b).
Facility. A facility used for the treatment, storage or disposal of
Hazardous Substances.
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Final Substantial Completion Date. The date on which both the
Substantial Completion Date for Core and Shell and each Substantial
Completion Date for Lessee Installations have occurred.
Fixtures. As defined in Section 1.1(d).
General Contractor. As defined in Recital E.
Governmental Authority. Any federal, state, county, regional,
municipal or other governmental or regulatory authority, agency, board,
body, commission, instrumentality, court or quasi-governmental
authority.
Ground Lease. As defined in Recital A.
Ground Lessors. As defined in Recital A.
Guarantee. As defined in the Participation Agreement.
Hawaii General Excise Tax. The tax imposed pursuant to Chapter 237,
Hawaii Revised Statutes (or any corresponding provisions of any
successor Hawaii tax statute) and any related surtaxes and surcharges,
and any of the foregoing imposed by or on behalf of the State of Hawaii
or any political subdivision or taxing authority thereof.
Hawaii Taxpayer. As defined in the Participation Agreement.
Hazardous Activity. Any activity, process, procedure or undertaking
that directly or indirectly (i) produces, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause
or result in) the Release of any Hazardous Substance into the
environment (including air, water vapor, surface water, groundwater,
drinking water, land (including surface or subsurface), plant, aquatic
and animal life); (iii) involves the containment or storage of any
Hazardous Substance; or (iv) would be regulated as hazardous waste
treatment, storage or disposal within the meaning of any Environmental
Law.
Hazardous Condition. Any condition that violates or threatens to
violate, or that results in or threatens non- compliance with, any
Environmental Law.
Hazardous Substance. Any of the following: (i) any petroleum or
petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (ii) any
substance, material, product, derivative, compound or mixture, mineral,
chemical, waste, gas, medical waste, or pollutant, in each case whether
naturally occurring, man-made or the by-product of
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any process, that is toxic, harmful, hazardous or acutely hazardous to
the environment or human health or safety; or (iii) any substance,
material, product, derivative, compound or mixture, mineral, chemical,
waste, gas, medical waste or pollutant that would support the assertion
of any claim under any Environmental Law, whether or not defined as
hazardous as such under any Environmental Law.
Holders. As defined in Recital G, together with any holder of a
Renewal Note.
H.15. "Statistical Release H.15(519), Selected Interest Rates", as
published by the Board of Governors of the Federal Reserve System, or
any successor publication.
Impositions. Except to the extent described in the following
sentence, any and all liabilities, losses, expenses and costs of any
kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings ("Taxes") (including (i) real and personal
property taxes, including personal property taxes on any property
covered by this Lease that is classified by Governmental Authorities as
personal property, and real estate or ad valorem taxes in the nature of
property taxes; (ii) sales taxes, use taxes and other similar taxes
(including rent taxes and intangibles taxes); (iii) the Hawaii General
Excise Tax and any other excise taxes; (iv) real estate transfer taxes,
conveyance taxes, stamp taxes and documentary recording taxes and fees;
(v) taxes that are or are in the nature of franchise, income, value
added, privilege and doing business taxes, license and registration
fees; and (vi) assessments on the Property, including all assessments
for public improvements or benefits, whether or not such improvements
are commenced or completed within the Term), and in each case all
interest, additions to tax and penalties thereon, which at any time
prior to, during or with respect to the Term or in respect of any
period for which Lessee shall be obligated to pay Additional Charges,
may be levied, assessed or imposed by any Federal, state, city, county
or local authority upon or with respect to (a) the Property or any part
thereof or interest therein; (b) the financing, refinancing,
demolition, construction, substitution, subleasing, assignment,
control, condition, occupancy, servicing, maintenance, repair,
ownership, possession, activity conducted on, delivery, insuring, use,
operation, improvement, transfer of title, return or other disposition
of the Property or any part thereof or interest therein; (c) the Notes
or other indebtedness with respect to the Property or any part thereof
or interest therein; (d) the rentals, receipts or earnings arising from
the Property or any part thereof or interest therein; (e) the Operative
Agreements or any payment made or accrued pursuant thereto; (f) the
income or other proceeds received with respect to
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the Property or any part thereof or interest therein upon the sale or
disposition thereof; (g) any contract (including the Construction
Management Agreement) relating to the demolition, construction,
acquisition or delivery of the Existing Improvements or the Property or
any part thereof or interest therein; (h) the issuance of the Notes; or
(i) otherwise in connection with the transactions contemplated by the
Operative Agreements.
The term "Imposition" shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on Lessor or the Trustee by the
United States federal government that are based on or measured by
the net income (including taxes based on capital gains and minimum
taxes) of such Person; provided that this clause (i) shall not be
interpreted to prevent a payment from being made on an After Tax
Basis if such payment is otherwise required to be so made;
(ii) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, transfer or property taxes and
other than the Hawaii General Excise Tax) that are imposed by any
state or local jurisdiction or taxing authority within any state or
local jurisdiction and that are based upon or measured by the gross
or net income or gross or net receipts (including any minimum taxes,
withholding taxes or taxes on or measured by capital, net worth,
excess profits or items of tax preference or taxes that are capital
stock, franchise or doing business taxes) except that this clause
(ii) shall not apply to any such taxes imposed on Lessor (or its
Affiliates, to the extent such tax is imposed upon the Affiliate as
a result of either (x) the filing of any return on any form of
combined basis or (y) any theory of secondary liability) by the
State of Hawaii (or any local taxing authority thereof or therein)
or any jurisdiction into which any of the Property is moved, except
in the case of net income taxes imposed by the State of Hawaii to
the extent such taxes for such year (but not the amount of any
interest, penalties or additions to tax) exceed $80,000 for any
calendar year; provided that this clause (ii) shall not be
interpreted to prevent a payment from being made on an After Tax
Basis if such payment is otherwise required to be so made;
(iii) any Tax or imposition to the extent, but only to such
extent, it relates to any act, event or omission that occurs after
the termination of this
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Lease (but not any tax or imposition that relates to any period
prior to the termination of this Lease);
(iv) any Tax or imposition for so long as, but only for so long
as, it is being contested in accordance with the provisions of
Article XIII;
(v) any interest or penalties imposed on Lessor as a result
of the failure of Lessor to file any return or report timely and in
the form prescribed by law or to pay any Tax or imposition, except
to the extent such failure is a result of a breach by Lessee of its
obligations under Article IV; provided that this clause (v) shall
not apply (x) if such interest or penalties arise as a result of a
position taken (or requested to be taken) by Lessee in a contest
controlled by Lessee under Article XIII or (y) to any such interest
or penalties that result from Lessor's complying with the reporting
procedures set forth in Section 4.4(a);
(vi) any Taxes or impositions imposed on Lessor that are a
result of Lessor not being considered a "United States person" as
defined in Section 7701(a)(30) of the Code;
(vii) any Taxes or impositions that are enacted or adopted by
their express terms as a substitute for any tax that would not have
been indemnified against pursuant to the terms of this Lease;
(viii) any Taxes which are imposed as a result of a breach of a
covenant or representation by Lessor in any Operative Agreement
(unless caused by Lessee's breach of its representations, warranties
and covenants) or as a result of the gross negligence or wilful
misconduct of Lessor itself (as opposed to gross negligence or
willful misconduct imputed to Lessor) or any of its Affiliates, but
not Taxes imposed as a result of ordinary negligence of Lessor or
any of its Affiliates;
(ix) any Taxes or impositions to the extent that such taxes are
actually reimbursed to Lessor by another Person other than an
Affiliate of Lessor;
(x) any Taxes or impositions imposed upon Lessor with respect
to any voluntary transfer, sale, financing or other voluntary
disposition (other than a transfer contemplated and permitted by the
Operative Agreements, including any transfer in connection with (1)
the exercise by Lessee of its Purchase Option, (2) the occurrence of
an Event of Default under this Lease or an Indenture Event of
Default, or (3) a Casualty or Condemnation affecting the Property)
of any interest in
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the Property or any interest in, or created pursuant to, the
Operative Agreements or any voluntary transfer of any interest in
Lessor (other than in accordance with the terms of the Guarantee and
other than in connection with the existence of an Event of Default
or an Indenture Event of Default) or any involuntary transfer of any
of the foregoing interests resulting from the bankruptcy or
insolvency of Lessor (other than in connection with the existence of
an Event of Default or an Indenture Event of Default);
(xi) any gift or inheritance Taxes;
(xii) any Taxes or impositions, to the extent Lessor or its
Affiliates actually receives a credit (or otherwise has a reduction
in a liability for taxes) in respect thereof against taxes that are
not indemnified hereunder (but only to the extent such credit is not
taken into account in calculating the indemnity payment on an After
Tax Basis);
(xiii) any Tax or imposition to the extent that such Tax or
imposition is imposed on the Lessor or any of its Affiliates in
respect of a transaction or business in the jurisdiction imposing
such Tax other than the transactions arising out of the Operative
Agreements; or
(xiv) any Tax or imposition imposed on a direct or indirect
transferee, successor or assign of Lessor to the extent of the
excess of such Taxes over the amount of such taxes that would have
been imposed had there not been a transfer by the original Lessor of
an interest arising under the Operative Agreements; provided that
there shall not be excluded under this clause (xiv) any such Tax or
imposition if such direct or indirect transferee, successor or
assign of Lessor acquired its interest as a result of a transfer in
connection with an Event of Default or an Indenture Event of
Default; provided, further, that there shall not be excluded under
this clause (xiv) any amount necessary to make any payment on an
After Tax Basis.
Any Tax or imposition excluded from the defined term "Imposition" in
any one of the foregoing clauses (i) through (xiv) shall not be
construed as constituting an Imposition by any provision of any other
of the aforementioned clauses.
Impositions Indemnitee. As defined in Section 13.2(a).
Improvements. As defined in the Mortgage.
Indemnified Parties. As defined in Section 25.1.
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Independent Investment Banker. As defined in the Construction
Management Agreement.
Indenture. As defined in Recital G.
Indenture Event of Default. Any event or condition defined as an
"Event of Default" in Section 501(a) of the Indenture.
Insurance Requirements. All terms and conditions of any insurance
policy required by this Lease to be maintained by Lessee and all
requirements of the issuer of any such policy.
Land. As defined in Section 1.1(a).
Lease. This Lease Agreement.
Leased Improvements Construction Agreement. As defined in Recital C.
Legal Requirements. All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting the Property, the Existing
Improvements, the Improvements or the demolition, construction, use or
alteration thereof, whether now or hereafter enacted and in force,
including any that require repairs, modifications or alterations in or
to the Property or in any way limit the use and enjoyment thereof
(including all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. # 12101 et. seq. and any other
similar federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental
requirements (including all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments which are either of record
or known to Lessee (other than those hereafter created by Lessor
without the consent of Lessee) affecting the Property, the Appurtenant
Rights and any easements, licenses or other agreements entered into
pursuant to Section 12.2.
Lessee. First Hawaiian Bank, and its successors and assigns
expressly permitted hereunder.
Lessee's Hawaii Tax Counsel. As defined in Section 4.4(a).
Lessor. REFIRST, Inc., and its successors and assigns expressly
permitted hereunder.
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Lessor Base Rent. As defined in Section 3.1(a).
Lessor Contribution. As defined in the Participation Agreement.
Lessor Make-Whole Premium. The amount, determined by an Independent
Investment Banker as of the third Business Day prior to the day the
payment is required to be made to Lessor, which equals the excess, if
any, of (i) the sum of the present values of all remaining scheduled
payments due to Lessor prior to December 1, 2003, if any, and all
remaining scheduled payments of Lessor Base Rent as of the day payment
is required to be made to Lessor, discounted semi-annually on each
payment date at a rate equal to the Treasury Yield, based on a 360-day
year of twelve 30-day months, over (ii) the Lessor Contribution.
Lessor Return Payment. An amount, as of the date of calculation,
sufficient to provide Lessor with a pre-tax internal rate of return of
11.68%, and as adjusted during any Renewal Term in accordance with
Section 21.1, on the Lessor Contribution from December 1, 1993 to the
date of payment, which if calculated as of the expiration date of the
Primary Term will be $6,219,053.52.
Lessor's Hawaii Tax Counsel. As defined in Section 4.4(a).
Lessor's Margin. If thirty (30) days prior to the commencement of
the first Extended Term the rating on the Class A Notes from S&P and
Moody's is at least "A-" and "A3", respectively, then Lessor's Margin
shall be an amount sufficient (i) to return the balance of the Lessor
Contribution ratably over ten (10) years in equal installments on each
six-month anniversary of the commencement of the first Extended Term,
and (ii) to provide an annualized return on the outstanding balance of
the Lessor Contribution equal to 6.85% plus the yield on the ten-year
Constant Maturity Treasury as shown in H.15; otherwise, Lessor's Margin
shall be an amount sufficient (x) to return the balance of the Lessor
Contribution over five (5) years and (y) to provide an annualized
return on the outstanding balance of the Lessor Contribution equal to
6.85% plus the yield on the five-year Constant Maturity Treasury as
shown in H.15. Lessor's Margin shall be determined as of the
commencement of the first Extended Term and such return to be provided
ratably in equal installments on each six-month anniversary of the
commencement of the first Extended Term.
Lessor Overdue Rate. 13.68%, but in no event shall such rate exceed
the maximum rate permitted by law.
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Lien. As defined in the Indenture.
Make-Whole Premium. As defined in the Indenture.
Maximum Residual Guarantee Amount. An amount equal to $161,990,000,
subject to reduction as provided in Section 21.2(a)(v).
Modifications. As defined in Section 11.1.
Moody's. As defined in the Participation Agreement.
Mortgage. As defined in Recital H.
Net Proceeds. All amounts paid in connection with any Casualty or
Condemnation, and all interest earned thereon, less the expense of
claiming and collecting such amounts, including all costs and expenses
in connection therewith for which the Trustee, Lessor or the Holders
are entitled to be reimbursed pursuant to this Lease.
Non-Disturbance Agreement. As defined in Recital I.
Notes. As defined in Recital G, together with any Renewal Notes.
Officer's Certificate. A certificate of Lessee signed by any
individual holding the office of vice president or higher, which
certificate shall certify as true and correct the subject matter being
certified to in the certificate.
Operative Agreements. As defined in the Participation Agreement.
Outstanding. As defined in the Indenture.
Participation Agreement. As defined in Recital B.
Payment Date. As set forth on Schedule C or, during any Extended
Term, as determined in accordance with Section 21.1.
Permitted Exceptions. The following:
(a) those easements, rights-of-way, servitudes, reservations,
rights, restrictions, liens, encumbrances, adverse claims and other
defects and irregularities in title set forth on Schedule B hereto;
(b) the right reserved to or vested in any municipality or public
authority to condemn, appropriate, recapture or designate a purchaser
of the Property;
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(c) (i) any Liens for taxes, assessments and other governmental
charges and any Liens in favor of mechanics, materialmen and laborers
for work or services performed or materials furnished in connection
with the Property, provided that the terms of Section 12.1(a)(iv) or
Article XIII dealing with any such tax, assessment, other governmental
charge or Lien shall have been complied with by Lessee or (ii) any
Liens for taxes, assessments or other governmental charges which are
not yet due and payable;
(d) the rights of Lessee hereunder and of Lessor under the Ground
Lease;
(e) the Lien of the Mortgage and any rights granted thereby;
(f) the Assignment of Lease;
(g) any non-disturbance and attornment agreements entered into with
any sublessee in accordance with the terms of Article XXVI and any
subleases which are entitled to the benefits of such non-disturbance
and attornment agreements; and
(h) any Excepted Liens.
Permitted Refinancing. As defined in Section 21.2(a).
Person. An individual, corporation, partnership, trust,
association, Governmental Authority or other entity.
Plans and Specifications. As defined in the Construction Management
Agreement.
Post Completion Escrow. As defined in Section 15.1(a).
Preliminary Term. The term commencing on the date hereof and
expiring on the Final Substantial Completion Date.
Primary Term. The term commencing on the Final Substantial
Completion Date and expiring on December 1, 2003.
Project Contracts. As defined in the Construction Management
Agreement.
Property. As defined in Section 1.1.
Purchase Option. As defined in Section 20.1.
Purchase Option Price. As defined in Section 20.3.
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Reasonable Basis. Reasonable Basis for a position shall exist if
tax counsel may properly advise reporting such position on a tax return
in accordance with formal opinion 85-352 issued by the Standing
Committee on Ethics and Professional Responsibility of the American Bar
Association.
Release. Any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
Renewal Notes. Any note or notes issued by Lessor in connection
with any Permitted Refinancing.
Renewal Rent. As defined in Section 3.1(b).
Rent. Collectively, the Base Rent or the Renewal Rent, as
applicable, and the Additional Charges.
Rent Commencement Date. June 1, 1997.
Requesting Party. As defined in Section 27.1.
Residual Guarantee Amount. An amount equal to the excess, if any,
of (i) the Purchase Option Price over (ii) the sale proceeds actually
received, or deemed to have been received, by Lessor from a sale of the
Property (net of any reasonable brokerage commissions and any other
sales expenses).
S&P. As defined in the Participation Agreement.
Significant Casualty. As defined in Section 15.1(f).
Significant Condemnation. As defined in Section 15.1(f).
Substantial Completion Date for Core and Shell. As defined in the
Construction Management Agreement.
Substantial Completion Date for Lessee Installations. As defined in
the Construction Management Agreement.
Taxes. As defined in the definition of Impositions.
Term. Collectively, the Preliminary Term, the Primary Term, and, if
exercised, any Extended Term or Extended Terms.
Termination Amount. As of any Payment Date, the amount set forth in
Schedule D with respect to such Payment Date.
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Termination Date. As defined in Section 16.2(a).
Termination Notice. As defined in Section 16.1(a).
Title Defects. As defined in Section 12.1(a).
Total Condemnation. As defined in Section 15.1(f).
Trustee. As defined in Recital B.
Withheld Amounts. As defined in Section 3.1(a).
2.2 Other Definitional Provisions. (a) Words and phrases used in
the singular shall be deemed to include the plural and vice versa, and nouns
and pronouns used in any particular gender shall be deemed to include any other
gender, as the context may permit.
(b) Unless otherwise specified, all references herein to designated
"Articles", "Sections", "Schedules" and other subdivisions shall be to the
designated Articles, Sections, Schedules and other subdivisions of this Lease.
(c) The words "including" and "include", and words of similar
import, shall be deemed to be followed by "without limitation".
(d) The words "herein", "hereof" and "hereunder", and words of
similar import, shall refer to this Lease as a whole and not to any particular
Article, Section, Schedule or other subdivision of this Lease.
ARTICLE III
3.1 Rent. (a) From and after the Rent Commencement Date, Lessee
shall pay to Lessor on each Payment Date, by delivering not later than 12:00
noon New York City time (to such account or accounts at such bank or banks or
to such other Person or in such other manner as Lessor shall from time to time
direct in writing), a net rental (the "Base Rent") equal to the sum of (i)
interest due on such date to the Holders of the Class A Notes ("Class A Base
Rent"), (ii) interest due on such date to the Holders of the Class B Notes
("Class B Base Rent") and (iii) all amounts due on such date to Lessor as set
forth in Schedule C attached hereto (such amounts, the "Lessor Base Rent").
Lessee shall have no obligation to pay any amounts hereunder on account of Base
Rent prior to the Rent Commencement Date. Notwithstanding anything to the
contrary contained herein, Lessee acknowledges and agrees that it shall at all
times make payments on each Payment Date to the Trustee such that the Trustee
receives an amount equal to the Class A Base Rent and Class B Base Rent due on
such Payment Date, except to the extent Lessee
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is required by Hawaii state taxing authorities to pay any amounts on account of
Hawaii state taxes due and payable by a Holder or Beneficial Owner which is a
Hawaii Taxpayer (any such amounts, "Withheld Amounts"). Lessee will provide to
the affected Holder or Beneficial Owner, Lessor and the Trustee, upon request,
such information as any such party shall reasonably require to substantiate the
withholding of any Withheld Amounts. Lessee has consented to Lessor's
assignment of its rights to receive rents hereunder pursuant to the Assignment
of Lease and acknowledges that the respective rights of the Persons entitled to
receive amounts calculated by reference to Class A Base Rent, Class B Base Rent
and Lessor Base Rent are as set forth in the Indenture. Notwithstanding the
provisions of the Indenture and the Assignment of Lease, Lessee shall insure
that Lessor will receive the Lessor Base Rent by 3:00 p.m., New York City time,
on each Payment Date.
(b) During each Extended Term, if any, on each Payment Date Lessee
shall pay to Lessor, by delivering not later than 3:00 p.m. New York City time
(to such account or accounts at such bank or banks or to such other Person or
in such other manner as Lessor shall from time to time direct in writing), a
net rental (the "Renewal Rent") in an amount calculated in the manner described
in Article XXI. Lessee shall insure that Lessor will receive the portion of
the Renewal Rent payable solely to Lessor by 3:00 p.m., New York City time, on
each Payment Date.
(c) The Base Rent and Renewal Rent shall be due and payable on the
applicable Payment Date, in lawful money of the United States and shall be made
by wire transfer of immediately available funds.
(d) 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 on
or before the Rent Commencement Date, 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
commencing on the Rent Commencement Date.
3.2 Payment of Base Rent and Renewal Rent. The Base Rent and
Renewal Rent shall be paid absolutely net to Lessor, so that this Lease shall
yield to Lessor the full amount thereof, without setoff, deduction or
reduction.
3.3 Additional Charges. During the Term, in addition to any Base
Rent and Renewal Rent payable under this Lease, Lessee shall pay and discharge,
at the times specified in this Lease, all other amounts, liabilities,
obligations and Impositions which Lessee assumes or agrees to pay under this
Lease or under the other Operative Agreements to or for the benefit of Lessor,
including those obligations provided for in
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Section 18.1. Lessee shall also pay, before the due date thereof, the costs
and expenses incurred in the performance of Lessor's obligations under (a) the
following sections of the Indenture: Section 102 (Compliance Certificate and
Opinions); Section 401 (Satisfaction and Discharge of Indenture); Section 503
(Collection of Indebtedness and Suits for Enforcement by Trustee)(but only to
the extent Lessor is obligated to pay any further amount to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and only
to the extent such obligations arise as a result of the occurrence of an Event
of Default or an event of default under the Construction Management Agreement);
Section 606 (Compensation and Reimbursement); Section 907 (Recording); Section
914 (Further Instruments); Section 915 (Right of the Trustee to Prevent or
Remedy Default); Section 916 (Right of the Trustee to Participate in Action
Affecting Security); and Section 917 (Trustee's Expenses for Protection of
Security) (unless caused by a default by Lessor of its obligations contained in
any of the Operative Agreements which does not result from the default by
Lessee of its obligations under any of such documents); (b) Sections 403
(unless caused by a default by Lessor of its obligations contained in any of
the Operative Agreements which does not result from the default by Lessee of
its obligations under any of such documents) of the Mortgage; and Section 501
of the Mortgage; and (c) Section 15 of the Assignment of Lease. Unless
expressly provided otherwise in this Lease, in the event of any failure on the
part of Lessee to pay and discharge any of such items, 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 items pursuant to the
terms of the Indenture or otherwise. All of the items referred to above in the
first three sentences of this Section 3.3 are referred to hereinafter
collectively as the "Additional Charges". Base Rent, Renewal Rent and
Additional Charges all constitute rent, and Lessor shall have all legal,
equitable and contractual rights, powers and remedies provided either in this
Lease, by statute or otherwise in the case of nonpayment of the Additional
Charges as in the case of nonpayment of the Base Rent or Renewal Rent.
3.4 Construction Management Agreement. (a) Pursuant to the terms
and conditions of the Construction Management Agreement, Lessee shall cause the
Improvements to be constructed in the manner more fully described therein.
(b) Notwithstanding any covenants contained in this Lease to the
contrary, all of Lessee's obligations with respect to Additional Charges, and
any other costs or expenses required to be paid by Lessee pursuant to the terms
of this Lease shall first be paid from the Construction Account to the extent
funds in the Construction Account are available for payment of such obligation,
cost or expense pursuant to Article IV of the Construction Management
Agreement. Nothing contained in the
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preceding sentence shall be construed or interpreted to limit or impair the
obligation of Lessee to pay Rent hereunder.
3.5 Payments at the Overdue Rate. (a) Lessee shall pay to Lessor
interest at the Debt Overdue Rate on any portion of Class A Base Rent and the
Class B Base Rent or any portion of the Additional Charges, the Default Amount,
the Residual Guarantee Amount, the Termination Amount, the Purchase Option
Price or the Make-Whole Premium that is required to be paid to the Trustee and
applied to the payment of principal, premium (if any) and interest due under
the Notes or to the payment of any other amount due to the Trustee hereunder,
under the Indenture or under any other Operative Agreement, in each case not
paid when due from the due date to the date of actual payment; provided, that
the Debt Overdue Rate shall not apply to an overdue payment to the extent that
the application of the Debt Overdue Rate would render unenforceable the payment
of Make-Whole Premium due hereunder (but only if such payment of Make-Whole
Premium would otherwise exceed the payment resulting from such application of
the Debt Overdue Rate).
(b) Lessee shall pay to Lessor interest at the Lessor Overdue Rate
on any portion of Lessor Base Rent or any portion of the Additional Charges,
the Default Amount, the Residual Guarantee Amount, Termination Amount, the
Purchase Option Price or the Lessor Make-Whole Premium that is required to be
paid to the Trustee on account of the Lessor Contribution, in each case not
paid when due from the due date to the date of actual payment.
3.6 Performance on a Non-Business Day. If any payment or
performance is required hereunder on a day that is not a Business Day, then
such payment or performance shall be due on the next succeeding Business Day.
ARTICLE IV
4.1 General Taxes. Lessee shall pay and assume liability for, and
does hereby agree to indemnify, protect and defend the Property, Lessor (and
any Affiliate, successor, transferee and assignee (to the extent permitted
under Sections 7(a) through (f) of the Guarantee and Sections 701 and 921(b) of
the Indenture)) and the Trustee (exclusively with respect to the Trustee's own
Impositions, but not with respect to Impositions payable by the Holders which
shall be governed exclusively by the provisions of Section 14.12 of the
Participation Agreement), and hold them harmless against, all Impositions on an
After Tax Basis. Lessor agrees and agrees to cause the Guarantor to use
good-faith efforts (but not including increasing its liability for Taxes not
indemnifiable hereunder) to minimize the amount of Taxes indemnifiable by
Lessee during any taxable year; provided that this sentence shall not be
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construed to limit or impair any right of Lessor set forth in the Operative
Agreements. Lessor further agrees, and agrees to cause the Guarantor, to
comply with recommendations made by Lessee regarding techniques to minimize
Taxes indemnifiable hereunder, provided that (i) Lessee agrees to make payments
to (or otherwise indemnify) Lessor and the Guarantor against any cost or
expense arising from instituting Lessee's recommendations and (ii) Lessor
determines in its sole discretion that such recommendations will not have an
adverse impact on Lessor or its Affiliates.
4.2 Refunds. Provided that no payment or bankruptcy Default or any
Event of Default has occurred and is continuing, if Lessor or the Trustee, as
the case may be, obtains a refund or a reduction in a liability (but only if
such reduction relates to a Tax not otherwise indemnifiable hereunder and has
not been taken into account in determining the amount of a payment on an After
Tax Basis) as a result of any Imposition paid or reimbursed by Lessee (in whole
or in part), Lessor or the Trustee, as the case may be, shall promptly pay to
Lessee the lesser of (x) the amount of such refund or reduction in liability
and (y) the amount previously so paid or advanced by Lessee, in each case net
of reasonable expenses not already paid or reimbursed by Lessee.
4.3 Payments. (a) Subject to the terms of Section 13.2, Lessee
shall pay or cause to be paid all Impositions directly to the taxing
authorities where feasible and otherwise to Lessor or the Trustee, as
appropriate, and Lessee shall at its own expense, upon Lessor's reasonable
request, furnish to Lessor copies of official receipts or other satisfactory
proof evidencing such payment.
(b) In the case of Impositions for which no contest is conducted
pursuant to Section 13.2 and which Lessee pays directly to the taxing
authorities, Lessee shall pay such Impositions prior to the latest time
permitted by the relevant taxing authority for timely payment. In the case of
Impositions for which Lessee reimburses Lessor or the Trustee, Lessee shall do
so within twenty (20) days after receipt by Lessee of demand by such Person
describing in reasonable detail the nature of the Imposition and the basis for
the demand (including the computation of the amount payable), but in no event
shall Lessee be required to pay such reimbursement prior to thirty (30) days
before the latest time permitted by the relevant taxing authority for timely
payment. In the case of Impositions for which a contest is conducted pursuant
to Section 13.2, Lessee shall pay such Impositions or reimburse Lessor or the
Trustee, as the case may be, for such Impositions, to the extent not previously
paid or reimbursed pursuant to Section 4.1, prior to the latest time permitted
by the relevant taxing authority for timely payment after conclusion of all
contests under Section 13.2.
(c) Impositions imposed with respect to the Property for a billing
period during which this Lease expires or
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terminates (unless Lessee has exercised the Renewal Option or the Purchase
Option) shall be adjusted and prorated on a daily basis between Lessee and
Lessor, whether or not such Imposition is imposed before or after such
expiration or termination and each party shall pay or reimburse the other for
each party's pro rata share thereof.
(d) At Lessee's request, the amount of any indemnification payment
by Lessee pursuant to Section 4.1 shall be verified and certified by an
independent public accounting firm mutually acceptable to Lessee, Lessor or the
Trustee, as the case may be. The fees and expenses of such independent public
accounting firm shall be paid by Lessee unless such verification shall result
in an adjustment in Lessee's favor of 5% or more of the payment as computed by
the indemnitee, in which case such fee shall be paid by the indemnitee.
4.4 Reports and Returns. (a) Lessor shall only file any reports
and tax returns required in Hawaii to the extent required by, and in a manner
consistent with, the opinion rendered on the Closing Date of Lessor's special
Hawaii tax counsel (the "Closing Tax Opinion"). Lessor may seek a new opinion
from Carlsmith Ball Wichman Murray Case Mukai & Ichiki or other Hawaii tax
counsel selected by Lessor and reasonably acceptable to Lessee ("Lessor's
Hawaii Tax Counsel"), if Lessor believes, in its reasonable opinion, that as a
result of (i) a change in law (including any administrative or judicial
pronouncement), (ii) the institution or increase of activities in Hawaii by
Lessor or any Affiliate thereof, (iii) the registration by Lessor as a foreign
corporation in the State of Hawaii (to the extent permitted by Section 14.8(a)
of the Participation Agreement), (iv) the Trustee's failure to comply with its
representation and covenant set forth in Sections 7.5(h) and 14.8(b) of the
Participation Agreement, (v) Lessor's knowledge that Lessee is claiming rent
deductions for Hawaii income tax purposes in respect of amounts paid by Lessee
under this Lease (in a manner inconsistent with the intention of the parties as
set forth in Section 7.1) or (vi) an audit of Lessor which results in the
payment of any Hawaii tax by Lessor, the validity or applicability of the
Closing Tax Opinion (or any subsequent opinion then in effect pursuant to this
Section 4.4) would be affected. Lessor's Hawaii Tax Counsel shall be requested
to opine that any reports and tax returns required to be filed in Hawaii should
be filed to the extent required by, and in a manner consistent with, the
positions expressed in the Closing Tax Opinion (or any subsequent opinion then
in effect pursuant to this Section 4.4) unless there is no Reasonable Basis to
assert such positions. Prior to rendering an opinion that is inconsistent with
the Closing Tax Opinion (or any subsequent opinion then in effect pursuant to
this Section 4.4), Lessor's Hawaii Tax Counsel shall consult with a law firm
designated by Lessee as to whether any changes to the filing of such reports or
tax returns is warranted. If Lessor's Hawaii Tax Counsel cannot
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render an opinion that is consistent with the Closing Tax Opinion (or any
subsequent opinion then in effect pursuant to this Section 4.4), Lessor shall
so notify Lessee and Lessee may request, within 30 days of such notice, that an
opinion be rendered by Cades Schutte Fleming & Wright or other Hawaii tax
counsel selected by Lessee and reasonably acceptable to Lessor ("Lessee's
Hawaii Tax Counsel"). Lessor agrees to fully cooperate (subject to receipt of
appropriate confidentiality undertakings by such counsel) with Lessee's Hawaii
Tax Counsel in order that Lessee's Hawaii Tax Counsel will be able to deliver
such opinion. If Lessee requests that Lessee's Hawaii Tax Counsel render an
opinion, no opinion shall be rendered by Lessor's Hawaii Tax Counsel. If
Lessee does not request that Lessee's Hawaii Tax Counsel render an opinion,
then Lessor's Hawaii Tax Counsel shall render an opinion. After completion of
the procedure described in this Section 4.4(a), Lessor shall only file any and
all reports and tax returns to the extent required by, and in the manner
consistent with, such new opinion, whether issued by Lessor's Hawaii Tax
Counsel or Lessee's Hawaii Tax Counsel. Lessee shall bear all reasonable costs
and expenses in connection with the issuing of any such opinions.
(b) Lessee shall be responsible for preparing and filing any real
and personal property or ad valorem tax returns in respect of the Property. In
case any other report or tax return shall be required to be made with respect
to any obligations of Lessee under or arising out of Section 4.1 and of which
Lessee has knowledge or should have knowledge, Lessee, at its sole cost and
expense, shall notify Lessor and/or the Trustee, as appropriate, of such
requirement and (except if Lessor or the Trustee, as the case may be, notifies
Lessee that such Person intends to file such report or return) (a) to the
extent required or permitted by and consistent with applicable laws and
regulations, make and file in its own name such return, statement or report;
and (b) in the case of any other such return, statement or report required to
be made in the name of Lessor or the Trustee, advise Lessor or the Trustee of
such fact and prepare such return, statement or report for filing by Lessor or
the Trustee or, where such return, statement or report shall be required to
reflect items in addition to any obligations of Lessee under or arising out of
Section 4.1, provide Lessor or the Trustee at Lessee's expense with information
sufficient to permit such return, statement or report to be properly made with
respect to any obligations of Lessee under or arising out of Section 4.1.
Lessor and the Trustee shall, upon Lessee's request and at Lessee's expense,
provide any data maintained by Lessor or the Trustee (and not otherwise within
the control of Lessee) with respect to the Property which Lessee may reasonably
require to prepare any required tax returns or reports.
4.5 Utility Charges. 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
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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.
4.6 Income Inclusions. If as a result of the payment or
reimbursement by Lessee of any expenses of Lessor or the payment of any Closing
Expenses incurred in connection with the transactions contemplated by the
Operative Agreements or as a result of earnings generated on amounts on deposit
in the Construction Account, Lessor or any of its Affiliates shall suffer a net
increase in any federal, state or local income tax liability, Lessee shall
indemnify Lessor (without duplication of any indemnification required by
Section 4.1) on an After Tax Basis for the amount of such increase. The
calculation of any such net increase shall take into account any current or
future tax savings realized or reasonably expected to be realized by Lessor or
such Affiliate in respect thereof, as well as any interest, penalties and
additions to tax payable by Lessor or such Affiliate in respect thereof.
4.7 Withholding Taxes. As between Lessee and Lessor, Lessee shall
be responsible for, and Lessee shall indemnify and hold harmless Lessor
(without duplication of any indemnification required by Section 4.1) on an
After Tax Basis against, any obligation for United States withholding taxes
imposed in respect of the interest payable on the Notes to the extent, but only
to the extent, Lessor has actually paid funds to a taxing authority with
respect to such withholding taxes (and, if Lessor receives a demand for such
payment from any taxing authority, Lessee shall discharge such demand on behalf
of Lessor).
ARTICLE V
5.1 Quiet Enjoyment. Subject to the rights of Lessor contained in
Sections 17.2 and 17.3, Lessee shall peaceably and quietly have, hold and enjoy
the Property for the Term, subject to the terms of this Lease, free of any
claim or other action by Lessor or anyone rightfully claiming by, through or
under Lessor (other than Lessee) with respect to any matters arising from and
after the date hereof. Without the prior written consent of Lessee (such
consent not to be unreasonably withheld), Lessor shall not create or consent to
any Lien, encumbrance, defect, attachment, title retention agreement or claim
upon the Property (other than the Permitted Exceptions) or any Modifications
and
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Lessor shall not take any affirmative act constituting an Environmental
Violation. No failure by Lessor to comply with any of the foregoing covenants
shall give Lessee any right to cancel or terminate this Lease or abate, reduce
or make a deduction from or offset against the Rent or any other sum payable
under this Lease, or to fail to perform any other obligation of Lessee
hereunder, but such failure shall give rise to a separate claim by Lessee which
it may assert in any legal proceeding; provided, however, the sole recourse
against such claim shall be exclusively to the Lessor Base Rent or such
portions of the Renewal Rent as are not required to be applied to the payment
of principal and interest due under the Notes, as applicable.
ARTICLE VI
6.1 Net Lease. Subject to the terms of Section 7.1 (without
limiting the obligations of Lessee under this Section 6.1 or Section 6.2), it
is the intention of the parties that this Lease shall be treated as a triple
net lease. Any present or future law to the contrary notwithstanding, this
Lease shall not terminate, nor shall Lessee be entitled to any abatement,
suspension, deferment, reduction, setoff, counterclaim, or defense with respect
to the Rent, nor shall the obligations of Lessee hereunder be affected (except
as expressly herein permitted and by performance of the obligations in
connection therewith) by reason of: (i) any damage to or destruction of the
Property or any part thereof; (ii) any taking of the Property or any part
thereof or interest therein by Condemnation or otherwise; (iii) any
prohibition, limitation, restriction or prevention of Lessee's use, occupancy
or enjoyment of the Property or any part thereof, or any interference with such
use, occupancy or enjoyment by any Person or for any other reason; (iv) any
title defect or encumbrance or any matter affecting title to the Property; (v)
any eviction by paramount title or otherwise; (vi) any default by Lessor
hereunder; (vii) any delayed delivery of the Property; (viii) any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution or other
proceeding relating to or affecting Lessor; (ix) the impossibility or
illegality of performance by Lessor, Lessee or both; (x) any action of any
Governmental Authority; (xi) Lessee's acquisition of ownership of all or part
of the Property; (xii) any breach of warranty or misrepresentation; (xiii) any
defect in the condition, quality or fitness for use of the Property or any part
thereof; or (xiv) any other cause or circumstances whether similar or
dissimilar to the foregoing and whether or not Lessee shall have notice or
knowledge of any of the foregoing. The parties intend that the obligations of
Lessee hereunder shall be covenants and agreements that are separate and
independent from any obligations of Lessor hereunder and shall continue
unaffected unless such obligations shall have been modified or terminated in
accordance with an express provision of this Lease.
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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. Lessee hereby waives all right (i) to terminate or
surrender this Lease or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
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.
6.3 Right of Offset Against Lessor Base Rent. Notwithstanding
anything to the contrary contained in this Lease, in the event that Lessee
shall have paid any amounts for the purpose of (a) discharging any Lien on the
Property or (b) preventing any Lien on the Property from attaching, in each
case only to the extent caused solely by a breach by Lessor of its obligations
under an Operative Agreement (but only if Lessee has given Lessor notice of
such Lien and Lessor has had a reasonable opportunity to discharge the Lien or
prevent if from attaching), then Lessee shall have the right to offset against
amounts owed to Lessor solely on account of Lessor Base Rent, or such portions
of the Renewal Rent as are not required to be applied to the payment of
principal and interest due under the Notes, in an amount sufficient to
reimburse Lessee for such payments plus interest on such amount at the Lessor
Overdue Rate to the date of actual payment, but in no event shall the Base Rent
paid on any Payment Date be less than the sum of the Class A Base Rent and the
Class B Base Rent. Further, notwithstanding anything to the contrary contained
in this Lease, in the event that Lessee shall have obtained a judgment against
Lessor in any court of competent jurisdiction and such judgment remains
unsatisfied for a period of thirty (30) days, then Lessee shall have the right
to offset against amounts owed to Lessor solely on account of Lessor Base Rent,
or such portions of the Renewal Rent as are not required to be applied to the
payment of principal and interest due under the Notes, in an amount sufficient
to pay such judgment plus interest on such amount at the Lessor Overdue Rate to
the date of actual payment, but in no event shall the Base Rent paid on any
Payment Date be less than the sum of the Class A Base Rent and the Class B Base
Rent.
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ARTICLE VII
7.1 Ownership of the Property. (a) Lessor and Lessee intend that
(i) for financial accounting and regulatory accounting purposes only, (A) this
Lease will be treated as an "operating lease" pursuant to Statement of
Financial Accounting Standards No. 13, as amended, (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, (ii) for federal income tax purposes (A) this Lease
will be treated as a financing arrangement, (B) Lessor will be treated as a
subordinated lender making a loan to Lessee in an amount equal to the Lessor
Contribution, which loan is secured by the Property and (C) 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, and (iii) for all other purposes, (A) this Lease will be treated as a
financing arrangement, (B) Lessor will be treated as a lender making loans to
Lessee in amounts equal to the principal amount of the Class A Notes, the
principal amount of the Class B Notes and the Lessor Contribution, which loans
are secured by the Property, and (C) Lessee will be treated as the owner of the
Property.
(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 within the meaning of Articles 8 and 9 of the Uniform Commercial Code
as in effect in New York and Hawaii and a real property mortgage within the
meaning of Section 506-1(a) of the Hawaii Revised Statutes, as amended, and
also a security agreement and financing statement within the meaning of the
Hawaii Uniform Commercial Code and for purposes of all applicable laws of the
State of Hawaii; (ii) the conveyance provided for in Article I shall be deemed
to be a grant by Lessee to Lessor of a mortgage lien and security interest in
all of Lessee's right, title and interest in and to the Property 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; (iii) the possession by Lessor or
its agent 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 as in effect in New York and
Hawaii; 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 Lease, take such
actions as may be necessary to ensure that, if this Lease were deemed to
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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.
ARTICLE VIII
8.1 Condition of the Property. LESSEE 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, (B) THE RIGHTS OF ANY PARTIES
IN POSSESSION THEREOF, (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. NEITHER LESSOR NOR THE TRUSTEE NOR ANY HOLDER
HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR
COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY
WHATSOEVER AS TO THE TITLE, 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 NEITHER LESSOR NOR THE
TRUSTEE NOR ANY HOLDER 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. The Property shall be used
in a manner consistent with the Construction Management Agreement and, after
the Final Substantial Completion Date, as a Class A Office Building including,
without limitation, retail and commercial uses consistent with other Class A
Office Buildings of similar design, construction and quality (including a
parking garage and related automobile servicing); provided that such retail and
commercial uses do not increase the liability, directly or indirectly, of
Lessor or adversely affect the value of the Property. Lessee shall pay, or
cause to be paid, all charges and costs required in connection with the use of
the Property as contemplated by this Lease and the Construction Management
Agreement, including, without limitation, all charges and costs in connection
with providing the Property with security, maintenance, cleaning and parking
garage services. Subject to Lessee's right to make Modifications to the
Property in accordance with Article XI, Lessee shall not commit or permit any
waste of the Property or any part thereof.
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ARTICLE IX
9.1 Compliance with Legal Requirements and Insurance Requirements.
Subject to the terms of Article XIII relating to permitted contests, Lessee, at
its sole cost and expense, shall (a) comply 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 with
all licenses, permits, orders, approvals, consents and other authorizations
required for the construction, use, maintenance and operation of the Property
and for the use, operation, maintenance, repair and restoration of the
Improvements.
ARTICLE X
10.1 Maintenance and Repair; Return. (a) Lessee, at its sole cost
and expense, shall maintain the Property 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 consistent with the operation and maintenance of
Class A Office Buildings comparable in type and location to the Property
subject, however, to the provisions of Article XV 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,
except in accordance with and to the extent provided in the Leased Improvements
Construction Agreement. 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 the Ground Lease, any
Legal Requirement, contract, agreement, covenants, condition or restriction at
any time in effect.
(c) Lessee shall, upon the expiration or earlier termination of
this Lease with respect to the Property, vacate and surrender the Property to
Lessor in its then-current, "AS IS" condition, subject to Lessee's obligations
under Sections 9.1, 10.1(a), 10.2, 11.1 and 12.1.
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10.2 Environmental Inspection. Upon surrender of possession of the
Property, or not more than 120 days nor less than 30 days prior to the
Expiration Date, Lessee shall, at its sole cost and expense, provide to Lessor
a report by an environmental consultant selected by Lessee and satisfactory to
Lessor certifying that Hazardous Substances have not at any time been
generated, used, treated or stored on, transported to or from, Released at, on
or from or deposited at or on the Property, and no portion of the Property has
been used for such purposes other than (i) as necessary to use, operate,
maintain, repair and restore the Property in accordance with this Lease and
(ii) in full compliance with all Environmental Laws. If such is not the case,
the report shall set forth a remedial response plan relating to the Property
(which remedial response plan, if required by any Environmental Law or
Governmental Authority, shall be approved by the appropriate Governmental
Authority). Such remedial response plan shall include, but shall not be
limited to, plans for full response, remediation, removal, or other corrective
action, and the protection, or mitigative action associated with the
protection, of natural resources including wildlife, aquatic species, and
vegetation associated with the Property, as required by all applicable
Environmental Laws. If such report includes a remedial response plan, Lessee
shall promptly deposit funds in escrow sufficient to ensure the full execution
of such plan.
ARTICLE XI
11.1 Modifications, Substitutions and Replacements. (a) So long as
no 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 and
substitutions and replacements therefor (collectively, "Modifications");
provided, that: (i) except for any Modification required to be made pursuant to
a Legal Requirement or an Insurance Requirement, no Modification shall cause a
reduction in the value of the Property from that which existed immediately
prior to such Modification and Lessee shall deliver an Officer's Certificate to
such effect; (ii) the Modification shall be done expeditiously and in a good
and workmanlike manner, using materials appropriate for a Class A Office
Building; (iii) Lessee shall comply with all Legal Requirements (including all
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) to
the extent required by Section 14.2(b), Lessee shall maintain builders' risk
insurance at all times when a Modification is in progress; (v) subject to the
terms of Article XIII relating to permitted contests, Lessee shall pay all
costs and expenses and discharge any Liens arising with respect to the
Modification; (vi) such
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Modifications shall not change the primary character of the Property as a Class
A Office Building; and (vii) no Improvements shall be demolished (except
improvements made by subtenants pursuant to the terms of their subleases and
the demolition contemplated by the Demolition Contract and the Construction
Management Agreement), unless Lessee shall have first provided Lessor and the
Trustee with appropriate financial and other assurances as to the rebuilding of
such Improvements. All Modifications shall remain part of the realty and shall
be subject to this Lease, and any such Modifications shall be subject to the
Lien of the Mortgage. So long as no Event of Default has occurred and is
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, subject,
however, to the terms of Section 10.1(a); provided that such inventory, trade
fixtures, machinery, equipment or other property do not cause a reduction in
the value of the Property.
(b) Following the Final Substantial Completion Date, and other than
with respect to work performed under Project Contracts (subject to the
provisions of the Construction Management Agreement), Lessee shall notify
Lessor and the Trustee of the undertaking of any construction, repairs or
alterations to the Property the cost of which is anticipated to exceed FIVE
MILLION DOLLARS ($5,000,000) without regard to tenant installation and related
costs. Prior to undertaking any such construction, repairs or alterations,
Lessee shall deliver to Lessor and the Trustee (i) a brief narrative of the
work to be done and a copy of the plans and specifications relating to such
work; (ii) a letter from a member of the Appraisal Institute, having at least
five years' experience in the downtown Honolulu commercial office market,
stating (without regard to the value of the underlying leases and subleases
affecting the Property) that such work when completed will not impair the value
of the Property; and (iii) an Officer's Certificate stating that such work when
completed will not impair the value of the Property. Lessor, by itself or its
agents, shall have the right, but not the obligation, from time to time to
inspect such construction to ensure that the same is completed consistent with
such approved plans and specifications.
(c) The demolition and construction provided for in the
Construction Management Agreement and the Project Contracts are acknowledged by
Lessor and the Trustee to be consistent with and in compliance with the terms
and provisions of this Article XI.
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ARTICLE XII
12.1 Warranty of Title. (a) Lessee agrees that except as otherwise
provided herein and subject to the terms of Article XIII relating to permitted
contests, Lessee shall not directly or indirectly create or allow to remain,
and shall promptly discharge at its sole cost and expense, any Lien, defect,
attachment, levy, title retention agreement or claim upon the Property or any
Modifications or any Lien, attachment, levy or claim with respect to the Rent
or with respect to any amounts held by the Trustee pursuant to the Indenture
(such matters, excepting those referred to in clauses (i) through (v) below,
being collectively referred to as "Title Defects"), other than:
(i) Permitted Exceptions (other than clause (c) thereof, which
shall be governed by clauses (ii), (iii) and (iv) of this Section
12.1(a));
(ii) such encumbrances as are created by Lessor (as opposed to any
Affiliate of Lessor) without the consent of Lessee, except for Liens
with respect to Impositions and except for any Liens arising from
nonpayment of any taxes or impositions that do not constitute
Impositions pursuant to clauses (ii) through (xiv) of the last sentence
of the definition of "Impositions" in Section 2.1;
(iii) Liens for Impositions or for sums resulting from
noncompliance with Legal Requirements which are not yet due and payable
or are due and payable subsequently without the addition of any fine or
penalty;
(iv) Liens of mechanics, laborers, materialmen, suppliers or
vendors for sums either disputed or not yet due, provided that, subject
to Lessee's right otherwise to proceed in accordance with Article XIII
relating to permitted contests, such Liens shall be discharged, by
bonding or otherwise, within thirty (30) days after receipt of notice
that the same have attached to the Property; and
(v) subleases with respect to the Property permitted by the terms
of Article XXVI.
Lessee shall notify Lessor in the event it receives actual knowledge that a
Title Defect has occurred 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
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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.
(c) Notwithstanding anything to the contrary in this Lease, Lessee
may in the name of Lessor and at Lessee's sole cost and expense enforce any
rights Lessor may have with respect to any Title Defects.
12.2 Grants and Releases of Easements. Provided that no Default of
the type described in Section 17.1(e) or Section 17.1(f) shall have occurred
and be continuing and subject to the provisions of Articles VIII, IX, X and XI
hereof, Lessor hereby consents in each instance 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 use, repair, or maintenance of the
Property as herein provided, whether or not such grants are reciprocal to
Lessee; (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,
however, in each case Lessee shall have delivered to Lessor an Officer's
Certificate stating that (i) such grant, release, dedication or transfer does
not materially impair the use of the Property or materially reduce its value,
(ii) such grant, release, dedication or transfer is reasonably necessary in
connection with the use, maintenance, alteration 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, including the Consent to
Assignment, 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. Without limiting the effectiveness of the foregoing,
provided that no Default of the type described in Section 17.1(e) or Section
17.1(f) shall have occurred and be continuing, Lessor shall, upon the request
of Lessee, and at Lessee's sole cost and expense, execute and deliver any
instruments necessary or appropriate to confirm any such grant, release,
dedication or transfer to any Person permitted under this Section 12.2.
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ARTICLE XIII
13.1 Permitted Contests Other than in Respect of Impositions.
Except to the extent otherwise provided for in Article XXV, 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, Insurance Requirement, or utility charges payable
pursuant to Section 4.5 or any Lien, attachment, levy, encumbrance or
encroachment, including those of the type described in Article XII, in any case
other than in respect of Impositions, 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, Lessor, the Trustee and
the Holders; (b) there shall be no risk of the imposition of a material Lien
(other than Permitted Exceptions) 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 material civil liability on Lessor, the
Trustee or any Holder for failure to comply therewith; and (d) in the event
that, at any time, (i)(x) prior to the Final Substantial Completion Date, any
such contest shall involve a sum of money that is then due and payable or a
potential loss (which shall include, for purposes of this Section 13.1, any
potential fines or similar charges for failure to comply with a Legal
Requirement) in excess of the sum of TEN MILLION DOLLARS ($10,000,000) plus any
security theretofore provided to and then held by Lessor pursuant to this
Article XIII, or all of such contests at any one time pending shall involve a
sum of money that is then due and payable or a potential loss in excess of the
sum of FIFTEEN MILLION DOLLARS ($15,000,000) plus any security theretofore
provided to and then held by Lessor pursuant to this Article XIII, or (y) on or
after the Final Substantial Completion Date, all such contests at any one time
pending shall involve a sum of money that is then due and payable or a
potential loss (which shall include, for purposes of this Section 13.1, any
potential fines or similar charges for failure to comply with a Legal
Requirement) in excess of the sum of TEN MILLION DOLLARS ($10,000,000) plus any
security theretofore provided to and then held by Lessor pursuant to this
Article XIII; or (ii) there shall be a material risk of extending the
application of such item beyond the end of the then current Primary Term or
Extended Term, as the case may be, then Lessee shall (A) 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 (B) provide such security as may be
reasonably requested by Lessor to ensure the ultimate payment of the contest in
question and prevent any sale or forfeiture of the affected Property. Lessor,
at Lessee's
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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 Contests of Impositions. (a) If a written claim is made
against any party entitled to indemnification by Lessee under Section 4.1, 4.6
or 4.7 or Section 14.11 of the Participation Agreement (each such party, an
"Impositions Indemnitee") or if any proceeding shall be commenced against any
such Impositions Indemnitee (including a written notice of such proceeding),
for any Impositions, such Impositions Indemnitee shall promptly notify Lessee
in writing and shall not take any action with respect to such claim or
proceeding without the consent of Lessee for thirty (30) days after the receipt
of such notice by Lessee; provided, however, that, in the case of any such
claim or proceeding, if action shall be required by law or regulation to be
taken prior to the end of such 30-day period, such Impositions Indemnitee
shall, in such notice to Lessee, so inform Lessee, and no action shall be taken
with respect to such claim or proceeding without the consent of Lessee before
the end of such shorter period; provided, further, that the failure of such
Impositions Indemnitee to give the notices referred to in this sentence shall
not diminish Lessee's obligation hereunder except to the extent such failure
precludes Lessee from contesting all or part of such claim.
(b) If, within thirty (30) days of receipt of such notice from the
Impositions Indemnitee (or such shorter period as the Impositions Indemnitee
has notified Lessee is required by law or regulation for the Impositions
Indemnitee to commence such contest), Lessee shall request in writing that such
Impositions Indemnitee contest such Imposition, the Impositions Indemnitee
shall, at the expense of Lessee, in good faith conduct and control such contest
(including, without limitation, by pursuit of appeals) relating to the
validity, applicability or amount of such Impositions (provided, however, that
(x) if such contest can be pursued independently from any other proceeding
involving a tax liability of such Impositions Indemnitee, the Impositions
Indemnitee, at Lessee's request, shall allow Lessee to conduct and control such
contest and (y) in the case of any contest, the Impositions Indemnitee may
request Lessee to conduct and control such contest) by, in the sole discretion
of the Person conducting and controlling such contest, (1) resisting payment
thereof, (2) not paying the same except under protest, if protest is necessary
and proper, (3) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings, or (4)
taking such other action as is reasonably requested by Lessee from time to
time.
(c) The party controlling any contest shall consult in good faith
with the non-controlling party and shall keep the non-
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controlling party reasonably informed as to the conduct of such contest;
provided that all decisions ultimately shall be made in the sole discretion of
the controlling party. The parties agree that an Impositions Indemnitee may at
any time decline to take further action with respect to the contest of any
Imposition and may settle such contest if such Impositions Indemnitee shall
waive its rights to any indemnity from Lessee that otherwise would be payable
in respect of such claim (and any future claim by any taxing authority with
respect to other taxable periods that are based, in whole or in part, upon the
resolution of such claim) and shall pay to Lessee any amount previously paid or
advanced by Lessee pursuant to this Section 13.2 or Section 4.1, 4.6 or 4.7 by
way of indemnification or advance for the payment of an Imposition.
(d) Notwithstanding the foregoing provisions of this Section 13.2,
an Impositions Indemnitee shall not be required to take any action and Lessee
shall not be permitted to contest any Impositions in its own name or that of
the Impositions Indemnitee unless (i) Lessee shall have agreed to pay and shall
pay to such Impositions Indemnitee on demand and on an After Tax Basis all
reasonable costs, losses and expenses that such Impositions Indemnitee actually
incurs in connection with contesting such Impositions, including, without
limitation, all reasonable legal, accounting and investigatory fees and
disbursements, (ii) in the case of a claim that must be pursued in the name of
an Impositions Indemnitee (or an Affiliate thereof), the amount of the
potential indemnity (taking into account all similar or logically related
claims that have been or could be raised in any audit involving such
Impositions Indemnitee for which Lessee may be liable to pay an indemnity under
this Section 13.2 or Section 4.1, 4.6 or 4.7) exceeds $50,000, (iii) the
Impositions Indemnitee shall have reasonably determined that the action to be
taken will not result in any material danger of sale, forfeiture or loss of the
Property, or any part thereof or interest therein, will not interfere with the
payment of Rent, and will not result in risk of criminal liability, (iv) if
such contest shall involve the payment of the Imposition prior to the contest,
Lessee shall provide to the Impositions Indemnitee an interest-free advance in
an amount equal to the Imposition that the Impositions Indemnitee is required
to pay (with no additional net after-tax cost to such Impositions Indemnitee),
(v) in the case of a claim that must be pursued in the name of an Impositions
Indemnitee (or an Affiliate thereof), Lessee shall have provided to such
Impositions Indemnitee an opinion of independent tax counsel selected by the
Impositions Indemnitee and reasonably satisfactory to Lessee stating that a
reasonable basis exists to contest such claim (or, in the case of an appeal of
an adverse determination, an opinion of such counsel to the effect that there
is substantial authority for the position asserted in such appeal) and (vi) no
Event of Default hereunder shall have occurred and be continuing. In no event
shall an Impositions Indemnitee be required to appeal an adverse judicial
determination to the United States Supreme
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Court. In addition, an Impositions Indemnitee shall not be required to contest
any claim in its name (or that of an Affiliate) if the subject matter thereof
shall be of a continuing nature and shall have previously been decided
adversely by a court of competent jurisdiction pursuant to the contest
provisions of this Section 13.2, unless there shall have been a change in law
(or interpretation thereof) and the Impositions Indemnitee shall have received,
at Lessee's expense, an opinion of independent tax counsel selected by the
Impositions Indemnitee and reasonably acceptable to Lessee stating that as a
result of such change in law (or interpretation thereof), it is more likely
than not that the Impositions Indemnitee will prevail in such contest.
ARTICLE XIV
14.1 Public Liability and Workers' Compensation Insurance. During
the Preliminary Term, the Primary Term and any Extended 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 and such other public liability
coverages as are ordinarily procured by Persons who own or operate similar
Class A Office Buildings; provided, however, Lessor shall have the right from
time to time to require such higher limits as may be reasonable and customary
for properties of the type comparable to the Property. The commercial general
liability insurance policy shall include coverage for premises and operations,
independent contractors, products and completed operations, blanket contractual
liability, personal and advertising injury, liquor liability (but only during
the Primary Term and any Extended Term), employees as additional insureds and
severability of interest. The combined single limit of liability for bodily
injury and property damage shall be at least $1,000,000 per occurrence,
$2,000,000 general aggregate and $2,000,000 products -- completed operations
aggregate. The limit for personal injury shall be at least $1,000,000 per
person/organization subject to $2,000,000 general aggregate with umbrella
(excess liability) coverage of $50,000,000. The policy shall either
exclusively cover the Property or be endorsed to state that the general
aggregate of the primary policy applies exclusively to the Property. The
policy shall be endorsed to name Lessor, the Trustee and the Ground Lessors 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 Lessor, the Trustee or the
Ground Lessors may have in force. The insurance required to be obtained
pursuant to this Section may have a deductible or self-insured retention
provided that such deductible or self-insured retention shall not exceed
$2,000,000, if (i) during the Primary Term, the rating of the Class A Notes
from S&P or Moody's is lower than "A" or "A1", respectively, and
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(ii) during any Extended Term, Lessee's certificate of deposit rating from S&P
or Moody's is lower than "A-1" or "P-1", respectively. 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 Primary Term or
any Extended Term, Lessee shall keep, or cause to keep, the Improvements,
Fixtures and boiler and machinery, and personal property on the Property owned
by Lessee, continuously insured against loss or damage by fire and all other
risks covered by an I.S.O., standard "broad" causes of loss form as filed with
the Hawaii Insurance Commissioner or equivalent coverage (however, Lessee will
not be required to maintain insurance covering the perils of wind if at any
time such coverage is not maintained with respect to similar properties or is
prohibitively expensive) in amounts equal to actual replacement cost (but in no
event less than the outstanding principal balance of the Class B Notes, if such
amount is greater than actual replacement cost) so long as the rating of the
Class A Notes from S&P or Moody's is "A" or "A1" or higher, respectively, and
otherwise in an amount at least equal to the Termination Amount (if such amount
is greater than actual replacement cost and is commercially obtainable), but in
either case, in no event less than the amount customarily maintained for
properties similar to the Property. The insurance coverage required to be
obtained pursuant to the immediately preceding sentence may have a deductible
or self-insured retention, provided that (i) such deductible or self-insured
retention shall not exceed $2,000,000 and, in the case of windstorm coverage,
may exceed $2,000,000 but shall not exceed 5% of total insured values, if (x)
during the Primary Term, the rating of the Class A Notes from S&P or Moody's is
lower than "A" or "A1", respectively, or (y) during any Extended Term, Lessee's
certificate of deposit rating from S&P or Moody's is lower than "A-1" or "P-1",
respectively, and (ii) such deductible or retention shall not result in the
limitation of coverage by reason of any co-insurance clause or rule applicable
with respect to such coverage. Such policies shall contain an "agreed amount"
endorsement and shall not contain any "causation" exclusion which would have
the effect of deleting the coverage for fire damage. So long as no Event of
Default exists, any loss payable under the insurance policy required by this
Section will be paid to and adjusted solely by Lessee; provided, however, that
any loss, the estimated cost of restoration of which is in excess of FIVE
MILLION DOLLARS ($5,000,000), shall be subject to the final approval of Lessor,
and the proceeds of insurance on account of such a loss shall be delivered to
Escrowee for deposit and shall be disbursed in accordance with Article XV. If,
notwithstanding such provision, any such insurance proceeds are paid to Lessor,
the Trustee or Lessee rather than to Escrowee, Lessor, the Trustee and Lessee,
as the case may be, hereby agree to transfer any such payment to Escrowee.
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(b) During the Primary Term or any Extended Term and during any
period in which Modifications costing in excess of FIVE MILLION DOLLARS
($5,000,000) at the Property are being undertaken, Lessee shall obtain or cause
the contractor performing such Modifications to obtain builder's risk, general
liability, worker's compensation and automobile liability insurance with
respect to the Improvements. Further, Lessee shall cause the contractor which
is performing such Modifications to procure and maintain at all times a
performance and payment bond issued by an appropriate surety company, in light
of customary local standards, guaranteeing the faithful performance and payment
of the obligations arising under the contract relating to such Modifications or
the payment of an amount equal to the contract sum; provided if during the
Primary Term and any Extended Term Modifications costing in excess of TWENTY
MILLION DOLLARS ($20,000,000) at the Property are being undertaken, such
performance and payment bond shall be issued by a surety company meeting the
requirements of Section 2.4(c) of the Construction Management Agreement.
(c) 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. 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, and
with any other Legal Requirement, concerning flood insurance to the extent that
it may apply to the Property.
(d) During the Primary Term or any Extended Term, Lessee shall
obtain and maintain for the Property a Difference-in- Conditions policy which
includes at a minimum the perils of collapse, earthquake, volcanic activity and
flood (unless in each case such coverage is at any time generally not
maintained with respect to similar properties or is prohibitively expensive).
The policy may be written on a loss limit basis and shall be for an amount not
less than TWENTY-FIVE MILLION DOLLARS ($25,000,000) which amount shall be
determined in accordance with periodic maximum probable loss studies.
(e) During the Primary Term or any Extended Term, Lessee shall
maintain such other insurance on or in connection with the Property as Lessor
may reasonably require, which at the time is commonly obtained in connection
with properties similar to the Property.
14.3 Coverage. (a) All of the insurance coverages described in
Sections 14.1 and 14.2 shall be with insurance companies that may lawfully
conduct an insurance business in the State of Hawaii and that have a "Best's"
rating of not less than
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A-/X. If the Best's rating system is changed or terminated, the above stated
rating of A-/X shall be adjusted to a comparable rating, as established by an
Officer's Certificate of Lessee. Further, in the event that the rating of the
Notes from S&P or Moody's is at any time less than "BBB" or "Baa2",
respectively, then Lessee will be required to either (i) maintain the property
insurance covering the Property with an insurer which has, or whose parent
corporation has, a "claims paying ability" rating from S&P and Moody's of at
least "BBB" and "Baa2", respectively, or (ii) provide additional credit support
for the obligations of the insurer which provides the property insurance for
the Property in order to ensure that such obligations are equivalent to the
obligations of an entity whose "claims paying ability" ratings from S&P and
Moody's are at least "BBB" and "Baa2", respectively.
(b) Lessee shall furnish Lessor with certificates showing the
insurance required under Sections 14.1 and 14.2 to be in effect and naming
Lessor and each of the Ground Lessors as additional insureds and showing the
mortgagee endorsement required by Section 14.3(d). All such insurance shall
be at the cost and expense of Lessee. Such certificates shall include a
provision for thirty (30) days' advance written notice by the insurer to Lessor
and the Trustee in the event of cancellation of such insurance. If an Event of
Default has occurred and is continuing and Lessor so requests, Lessee shall
deliver to Lessor copies of all insurance policies required by Sections 14.1
and 14.2.
(c) Lessee agrees that the insurance policy or policies required by
Sections 14.2(a), 14.2(c), 14.2(d) and, with respect to property insurance,
Section 14.2(b), 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 the Ground Lessors, Lessor and the Trustee to the extent of payments
made under such policies.
(d) All insurance policies required by Section 14.2 shall include a
"New York" or standard form mortgagee endorsement in favor of the Trustee.
(e) 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 Article XIV except that Lessee and 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 Article XIV to be subject to a co-insurance exception of
any kind.
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(f) Lessee shall pay as they become due all premiums for the
insurance required by Section 14.1 and Section 14.2, shall renew or replace
each policy prior to the expiration date thereof and shall promptly deliver to
Lessor and the Trustee certificates for renewal and replacement policies.
(g) Anything in this Section 14.3 to the contrary notwithstanding,
any insurance which Lessee is required to obtain pursuant to Sections 14.1 and
14.2 may be carried under "blanket" and umbrella policies governing other
properties and liabilities of Lessee, provided that if during any year there
are claims under any umbrella policy covering the Property in an aggregate
amount of $25,000,000 or more, Lessee will reinstate the coverage under such
umbrella policy for the remainder of the year to the amount of $50,000,000.
(h) So long as the insurance required by Section 14.2 is carried
under a "blanket" insurance policy, Lessee shall provide Lessor annually with an
Officer's Certificate containing an estimate of the replacement cost and
insurable value of the Improvements, Fixtures, the personal property on the
Property owned by Lessee and all other property covered by such "blanket"
insurance policy. Should Lessee elect to cover the Improvements under a
specific policy rather than a "blanket" policy, it shall have the amount of the
replacement cost of the property covered by such specific policy determined at
least once every three years by an independent qualified appraiser or such
other person reasonably satisfactory to Lessor, and shall deliver to Lessor and
the Trustee such determination promptly upon receipt.
(i) LESSEE IS HEREBY NOTIFIED THAT LESSEE MAY ACQUIRE INSURANCE
RELATED TO THIS LEASE FROM AN INSURER OR AGENT OF ITS CHOICE, SUBJECT ONLY TO
THE STANDARDS STATED HEREIN. This Section 14.3(i) is intended to comply with
the requirements of Section 431:13-104, Hawaii Revised Statutes, to the extent
applicable, and shall be construed in a manner consistent therewith.
ARTICLE XV
15.1 Casualty and Condemnation. (a) From and after the Substantial
Completion Date for Core and Shell and subject to the provisions of this
Article XV and Article XVI (in the event Lessee delivers, or is obligated to
deliver, a Termination Notice) and subject at all times to the provisions of
Section 15.1(i), and prior to the occurrence and continuation of an Event of
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 fire
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or other casualty (a "Casualty") or (ii) if the use, access, occupancy,
easement rights or title to the Property or any part thereof is wholly or
partially (temporarily or permanently) taken or sold in, by or on account of
any actual or threatened eminent domain proceeding or other taking of action by
any Person having the power of eminent domain, including an action by a
Governmental Authority to change the grade of, or widen the streets adjacent
to, the Property or alter the pedestrian or vehicular traffic flow to the
Property so as to result in a change in access to the Property, or by or on
account of an eviction by paramount title or any transfer made in lieu of any
such proceeding or action (in each instance, a "Condemnation"); provided,
however, if an Event of 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 held in accordance with the terms of paragraph (b)
below; provided further, however, in the event of any Casualty or Condemnation,
the estimated cost of restoration of which is in excess of FIVE MILLION DOLLARS
($5,000,000), any such award, compensation or insurance proceeds shall be
delivered in escrow (the "Post Completion Escrow") to the Escrowee, and any
such award, compensation or insurance proceeds received by Escrowee shall be
applied by Escrowee (1) first, to reimburse Lessor, the Trustee and the Holders
for any expenses (including, without limitation, any reasonable attorneys' and
consultants' fees and expenses) incurred by any of the foregoing in connection
with the collection of any such award, compensation or insurance proceeds, or
the determination of the amount of the loss, and, except as provided to the
contrary below, (2) second, to Lessee to pay the cost of the restoration of the
Property pursuant to the terms of an escrow agreement which shall be entered
into by Lessee and Escrowee and which shall contain the provisions of Sections
11.1, 15.1(c) and 15.1(g) herein as well as the terms set forth in this Section
15.1(a), and (3) the balance, if any, shall be paid as provided in the last
sentence of Section 15.1(g). If, notwithstanding such provision, any such
award, compensation or insurance proceeds are paid to Lessor, the Trustee or
Lessee rather than to Escrowee, Lessor, the Trustee and Lessee, as the case may
be, hereby agree to transfer any such payment to Escrowee. All amounts held by
Lessor hereunder on account of any award, compensation or insurance proceeds
either paid directly to Lessor or turned over to Lessor shall be held as
security for the performance of Lessee's obligations hereunder. Funds
deposited in the Post Completion Escrow shall be invested at the written
direction of Lessee, and all interest earned thereon shall be the property of
Lessee and added to the sums deposited in the Post Completion Escrow.
(b) Any provision of this Lease to the contrary notwithstanding,
Lessor shall not be obligated to deposit any award, compensation or insurance
proceeds payable on account of a Casualty and Condemnation and received by
Lessor with Escrowee in
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the Post Completion Escrow, including any rental insurance proceeds, and
Escrowee shall not make any amounts in the Post Completion Escrow available to
Lessee for restoration or otherwise in accordance with the terms and conditions
more particularly set forth herein if (i) an Event of Default has occurred and
is continuing or (ii) the estimated cost to restore is in excess of the Net
Proceeds available for such purpose and Lessee shall have failed to deposit
with Escrowee a sum (by way of cash, letter of credit, guaranty or other
similar liquid collateral reasonably satisfactory to Lessor and the Trustee)
equal to the amount by which the estimated cost to restore shall exceed the Net
Proceeds available for such purpose (and Lessee hereby covenants to make such
deposit). In the event Lessor is entitled to hold the Net Proceeds and elects
to do so, Lessor shall release the funds to Escrowee upon Lessor's acceptance
of a cure for any Event of Default (in the case of clause (i) above) or
Escrowee's receipt of the excess funds necessary to complete the restoration of
the Property (in the case of clause (ii) above).
(c) With respect to all amounts held in the Post Completion
Escrow, not more than once each month, Lessee shall submit to Escrowee for
payment a cost breakdown of work completed to date, together with a requisition
which shall be certified by Lessee and its architect and shall state that (i)
such work has been completed substantially in accordance with the plans and
specifications conforming to Section 15.1(g) and approved by Lessor (such
approval not to be unreasonably withheld or delayed), (ii) the requested amount
has been paid in full or has actually been incurred and is payable and a
requisition therefor has not previously been submitted or if submitted, the
requisitioned amount has not been paid in full to Lessee, and (iii) the then
estimated cost of completing the restoration does not exceed the amount that
Escrowee will hold pursuant to this Section 15.1 following the requested
payment to Lessee. Lessee shall be obligated to deposit additional amounts (in
cash or other forms described above in Section 15.1(b)) as shall be necessary
to complete construction, based on Lessee's then estimated cost of completion
and taking into account the remaining amount in the Post Completion Escrow.
Disbursements by Escrowee with respect to costs of restoration (x) shall be
subject to retainages equal to the amount actually withheld or to be withheld
by Lessee with respect to any payment made or to be made to any contractors,
laborers, subcontractors, mechanics, materialmen, vendors or any other Persons
with respect to such restoration; (y) shall be conditioned upon receipt by
Escrowee of such evidence of the absence of Liens as Lessor shall reasonably
require; and (z) may be conditioned upon such independent inspections by Lessor
or its agents of the restoration as Lessor may reasonably elect to make or
cause to be made at Lessee's expense.
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(d) 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. At Lessee's reasonable request, and at Lessee's sole cost
and expense, Lessor and the Trustee shall participate in any such proceeding,
action, negotiation, prosecution or adjustment. Lessor and Lessee agree that
from and after the Substantial Completion Date for Core and Shell this Lease
shall control the rights of Lessor and Lessee in and to any such award,
compensation or insurance payment, and any right under present or future law to
the contrary is hereby waived.
(e) 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
Trustee promptly after the receipt of such notice.
(f) In the event of a Casualty or receipt of notice by Lessee or
Lessor of a Condemnation after the Substantial Completion Date for Core and
Shell, Lessee shall, not later than forty-five (45) days after such occurrence
or such longer time as may reasonably be required (as specified by notice from
Lessee to Lessor from time to time delivered prior to the termination of such
forty-five (45) days, as the same may be extended) to determine the full extent
of loss, the probable expense and time of restoration and the probable amount
of the award or insurance payment, deliver to Lessor and the Trustee a notice
stating that either (i) this Lease shall remain in full force and effect 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(g) or (ii) this Lease
shall terminate in accordance with Section 16.1. However, this Lease shall
terminate under clause (ii) of the preceding sentence in the event of (1) a
Condemnation that either (I) involves a taking of Lessor's entire leasehold
title to the Land (a "Total Condemnation") or (II) in the reasonable, good
faith judgment of Lessee (as evidenced by an Officer's Certificate), either (x)
renders the Property unsuitable for continued use as a Class A Office Building
or (y) is such that restoration of the Property to substantially its condition
as existed immediately prior to such Condemnation would be impracticable or
impossible (either (x) or (y), a "Significant Condemnation") or (2) a Casualty
that in the reasonable, good faith judgment of Lessee (as evidenced by an
Officer's Certificate) either (I) renders the Property unsuitable for continued
use as a Class A Office Building or (II) is so substantial in nature such that
restoration of the Property to substantially its condition as existed
immediately prior to such Casualty would be impracticable or impossible (either
(I) or (II), a Significant Casualty"). Notwithstanding the foregoing, this
Lease shall not stay in full force and effect under the preceding clause (i)
unless Lessee shall deliver to Lessor and
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the Trustee an Officer's Certificate stating that either (x) such Condemnation
is neither a Total Condemnation nor a Significant Condemnation or (y) such
Casualty is not a Significant Casualty.
(g) If pursuant to Section 15.1(f)(i) this Lease shall continue in
full force and effect, 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 Section 11.1 using the
as-built plans and specifications for the Building (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. If the cost of such restoration shall exceed the Net Proceeds
with respect to such Casualty or Condemnation, the excess shall be paid by
Lessee. Any Net Proceeds remaining after final payment has been made for
restoration shall belong to Lessee.
(h) In no event shall a Casualty or Condemnation with respect to
which this Lease remains in full force and effect under Section 15.1(f)(i)
affect Lessee's obligations to pay Rent pursuant to Section 3.1.
(i) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(g), if during the Primary Term (i) a Casualty occurs or
Lessee receives notice of a Condemnation, (ii) the estimated cost of restoring
such Casualty or Condemnation is in excess of $1,000,000 and (iii) following
such Casualty or Condemnation, the Property cannot reasonably be restored on or
before the 540th day prior to the Expiration Date to the same condition as
existed immediately prior to such Casualty or Condemnation, then (x) any award,
compensation or insurance proceeds to which Lessor or Lessee may be entitled to
by reason of their respective interests in the Property on account of such
Casualty or Condemnation shall be paid to the Trustee, (y) if any such award,
compensation or insurance proceeds shall not in fact be paid to the Trustee on
or prior to the Expiration Date, then Lessee shall pay to the Trustee on the
Expiration Date an amount which in the reasonable good-faith judgment of Lessee
(as evidenced by an Officer's Certificate) is equal to the award, compensation
or insurance proceeds that will be payable in connection with such Casualty or
Condemnation and any such award, compensation or insurance proceeds actually
paid on or after such date shall be payable to Lessee, and (z) following any
such Casualty, Lessee shall also deliver to the Trustee the full amount of the
deductible or self-insured retention in effect with respect to the insurance
coverage required pursuant to Section 14.2. The amount set forth in the
preceding clause (z) shall be paid to the Trustee regardless of whether the
estimated cost of restoring the Casualty is in excess of $1,000,000. The
amounts referred to in the preceding clauses
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(x), (y) and (z) shall be applied by the Trustee at the expiration of the
Primary Term to the outstanding principal amount of, and accrued and unpaid
interest on, the Notes in accordance with the terms of the Indenture; provided,
however, that if Lessee at any time delivers to Lessor an Election Notice
pursuant to Section 20.2 or an Extension Notice pursuant to Section 21.1(b),
then such amounts shall be promptly paid or repaid, as the case may be, by the
Trustee to Lessee; provided, further that in the event Lessee delivers an
Extension Notice pursuant to Section 21.1(b), Lessee shall thereafter be
obligated to comply with the provisions of Sections 15.1(a) and (c) and to
repair and restore the Property pursuant to Section 15.1(g).
15.2 Environmental Matters. 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 forty-five (45) days
after Lessee has actual knowledge of such Environmental Violation or such
longer time as may reasonably be required (as specified by written notice from
Lessee to Lessor from time to time delivered prior to the termination of such
forty-five (45) days, as the same may be extended) to determine the full extent
of the Environmental Violation and the probable expense and time of remediation
and either deliver to Lessor and the Trustee an Officer's Certificate and a
Termination Notice pursuant to Section 16.1(b), 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 pursuant to Section 16.1(b), 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 the Environmental Violation has been remedied in full compliance with
applicable Environmental Law.
15.3 Notice of Environmental Matters. Promptly, but in any event
within five (5) Business Days from the date Lessee has actual knowledge
thereof, Lessee shall provide to Lessor written notice of any material pending
or threatened claim, action or proceeding involving any Environmental Law in
connection with the Property. All such notices shall describe in reasonable
detail the nature of the claim, action or proceeding and Lessee's proposed
response thereto. In addition, Lessee shall provide to Lessor, within five (5)
Business Days of receipt, copies of all material written communications with
any Governmental Authority relating to any Environmental Law in connection with
the Property. Lessee shall also promptly provide
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such detailed reports of any such material environmental claims as may
reasonably be requested by Lessor.
ARTICLE XVI
16.1 Termination Upon Certain Events. (a) If Lessor or Lessee
shall have received notice of a Total Condemnation of the Property on or after
the Substantial Completion Date for Core and Shell, 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) If either: (i) Lessee or Lessor shall have received notice of
a Condemnation of the Property on or after the Substantial Completion Date for
Core and Shell and Lessee shall have delivered to Lessor an Officer's
Certificate that such Condemnation is a Significant Condemnation in accordance
with Section 15.1(f); or (ii) a Casualty occurs on or after the Substantial
Completion Date for Core and Shell and Lessee shall have delivered to Lessor an
Officer's Certificate that such Casualty is a Significant Casualty in
accordance with Section 15.1(f); or (iii) an Environmental Violation occurs or
is discovered and Lessee shall have delivered to Lessor an Officer's
Certificate stating that, in the reasonable, good-faith judgment of Lessee, the
cost to remediate the same will exceed FIVE MILLION DOLLARS ($5,000,000); 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 the next Payment Date which occurs at least
thirty (30) days after Lessor's receipt of such Termination Notice (the
"Termination Date"); (ii) a binding and irrevocable agreement of Lessee to pay
the Termination Amount and purchase the Property on such Payment Date; and
(iii) the Officer's Certificate described in Section 16.1(b).
b. On the Termination Date, Lessee shall pay to Lessor the
Termination Amount, plus all amounts owing in respect of Rent (including
Additional Charges) theretofore accruing and Lessor shall convey the Property
or the remaining portion thereof, if any, to Lessee (or Lessee's designee) all
in accordance with Section 19.1, as well as any Net Proceeds with respect to
the Casualty or Condemnation giving rise to the termination of this Lease
theretofore received by Lessor.
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ARTICLE XVII
17.1 Events of Default. If any one or more of the following events
(each an "Event of Default") shall occur:
a. Lessee shall fail to make payment of any Base Rent or Renewal
Rent, as applicable, any Termination Amount, any Purchase Option Price,
any Residual Guarantee Amount or the Default Amount within five (5) days
after the same has become due and payable;
b. Lessee shall fail to make payment of any other Additional
Charges due and payable within fifteen (15) days after receipt of notice
thereof;
c. If the insurance policies required by Article XIV shall be
terminated or expire without replacement;
d. Lessee shall fail to observe or perform any term, covenant or
condition of this Lease, the Consent to Assignment, the Participation
Agreement or any other Operative Agreement to which it is a party other
than those set forth in Section 17.1(a), (b) or (c) hereof, or any
representation or warranty set forth in this Lease or in Section 7.2 of
the Participation Agreement as of the date hereof, or in Section 4.1(b)
of the Construction Management Agreement, shall be inaccurate in any way
materially adverse to Lessor, and such failure or misrepresentation or
breach of warranty shall remain uncured for a period of thirty (30) days
after receipt of written notice thereof; provided, however, no Event of
Default shall be deemed to occur if such failure, misrepresentation or
breach cannot reasonably be cured within such period, so long as Lessee
shall have promptly commenced the cure thereof, continues to act with
diligence to cure such failure, misrepresentation or breach and, with
respect to any failure, misrepresentation or breach contained in Sections
4.1, 10.2, 12.1, 12.2, 14.1, 14.2, 14.3, 15.2, 15.3, 25.1 and 26.2 hereof
and Sections 7.2(a), (b), (h), (l), (m), (o), (r), (t), (u), (v), 7.3(a),
(b), (f), (g), (i), 7.4(a), (b), (f), (g), (i), Section 8, Section 9,
Sections 14.1, 14.2, 14.3, 14.4, 14.5, 14.7 and 14.9 of the Participation
Agreement, in fact cures such failure, misrepresentation or breach within
180 days after receipt of notice thereof;
e. Lessee shall (i) admit in writing its inability to pay its debts
generally as they become due, (ii) file a petition under the United
States bankruptcy laws or any other applicable insolvency law or statute
of the United States of America or any State or Commonwealth thereof,
(iii) make a general assignment for the benefit of its creditors, (iv)
consent to the appointment of a receiver of itself or the whole or any
substantial part of its property,
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(v) fail to cause the discharge of any custodian, trustee or receiver
appointed for Lessee 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
f. 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 and not dismissed within ninety
(90) days from the date of its filing, or a court of competent
jurisdiction shall enter an order or decree appointing, without the
consent of Lessee, 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;
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee thirty (30) days notice of such termination and upon the
expiration of the time fixed in such notice, this Lease shall terminate,
subject to Lessee's rights under Section 17.6, and all rights of Lessee under
this Lease shall cease. Lessee shall, to the fullest extent permitted by law,
pay as Additional Charges all costs and expenses incurred by or on behalf of
Lessor, including fees and expenses of counsel, as a result of any Event of
Default hereunder.
17.2 Surrender of Possession. If an 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, subject, however, to the rights of any subtenants of Lessee to
whom Lessor has accorded nondisturbance rights pursuant to Section 26.2.
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.
17.3 Reletting. If an 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 (except to the extent required by
applicable law) shall be under no obligation to, relet the Property, for the
account of Lessee
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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.
17.4 Damages. Neither (a) the termination of this Lease as
to all or any part of the Property pursuant to Section 17.1; (b) the
repossession of all or any part of the Property; nor (c) except to the extent
required by applicable law, the failure of Lessor to relet all or any part 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 any 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 Rent and other sums due and payable hereunder to and including
the date of such termination. Thereafter, on the days on which the Base Rent
or Renewal 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 hereof 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 Base Rent or Renewal Rent, as
applicable, and Additional Charges 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 pursuant to the terms
of the Mortgage and Assignment of Lease of any reletting of the Property or any
portion thereof; provided that Lessee's obligation to make payments of Base
Rent and Renewal Rent under this Section 17.4 shall continue only so long as
Lessor shall not have received the amounts specified in Section 17.5 or Section
17.6. In calculating the amount of such net proceeds from reletting, there
shall be deducted all of Lessor's, the Trustee's and any Holder's expenses in
connection therewith, including repossession costs, brokerage commissions, fees
and expenses of counsel and any necessary repair or alteration costs and
expenses incurred in preparation for such reletting. To the extent Lessor
receives any damages pursuant to this Section 17.4, such amounts shall be
regarded as amounts paid on account of Rent.
17.5 Acceleration of Rent. In the event this Lease is deemed
to be a true lease of the Property by Lessor to Lessee and not a financing
arrangement, then to the extent permitted by
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applicable law, if an 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 17.4, Lessor may upon written notice to Lessee accelerate
all payments of Base Rent or Renewal 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 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 Base Rent or Renewal Rent, as applicable, due from the date of
such acceleration until the end of the Term, plus (b) the Residual Guarantee
Amount that would be payable under Section 22.1(d) assuming the proceeds of the
sale pursuant to such Section 22.1(d) are equal to zero, discounted to present
value at a rate equal to the lesser of (i) the rate then being paid on United
States treasury securities with maturities corresponding to the then remaining
Term or (ii) five percent (5%). 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,
provided that no further Event of Default shall occur and be continuing,
following which Lessor shall have all the rights and remedies set forth in this
Article XVII (but not including those set forth in this Section 17.5). 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. Notwithstanding the
foregoing, if Lessor has elected to seek damages under this Section 17.5,
Lessee may at any time after the occurrence and during the continuance of an
Event of Default elect to pay to Lessor the Default Amount in accordance with
the terms of Section 17.6 and receive an assignment of Lessor's right, title
and interest as lessee under the Ground Lease and Lessor's entire interest in
the Improvements, Fixtures and Modifications all in accordance with the terms
of Section 17.6.
17.6 Final Liquidated Damages. If an Event of Default shall
have occurred and be continuing, whether or not this Lease shall have been
terminated pursuant to Section 17.1 and whether or not Lessor shall have
collected any current liquidated damages pursuant to Section 17.4, 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 final liquidated damages, but exclusive
of the indemnities payable under Section 25.1, and in lieu of all current
liquidated damages beyond the date of such demand (it being agreed that it
would be impossible accurately to determine actual damages) the sum of (a) the
Default Amount specified for such Payment Date on Schedule D, plus (b) the
Make-Whole Premium payable by reason of the application of such portion of the
Default Amount as shall be required to be applied to the Notes upon
acceleration thereof, plus (c) all other amounts owing in
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respect of Rent and Additional Charges theretofore accruing under this Lease.
If after this Lease shall be terminated pursuant to Section 17.1, Lessor shall
not have elected to demand recovery of final liquidated damages pursuant to the
first sentence of this Section 17.6, Lessee may, at any time within one hundred
eighty (180) days after the earlier of (x) the date Lessor shall have commenced
appropriate proceedings to remove Lessee from occupancy of the Property or (y)
the date the Trustee shall have commenced appropriate proceedings to foreclose
the lien of the Mortgage (but in no event after the completion of such
foreclosure or the actual dispossession of the Lessee), pay the amount of final
liquidated damages required by the first sentence of this Section 17.6 plus the
Lessor Make-Whole Premium to Lessor. Upon payment of the amount specified
pursuant to the first or second sentence of this Section 17.6, Lessee shall be
entitled to receive from Lessor, at Lessee's request and cost, an assignment of
Lessor's right, title and interest as lessee under the Ground Lease and
Lessor's entire interest in the Improvements, Fixtures and Modifications, in
each case (i) with covenants against grantor's acts, (ii) in recordable form
and otherwise in conformity with local custom and (iii) free and clear of the
Lien of all mortgages (including the Mortgage and the Assignment of Lease) and
any defects, Liens or encumbrances that have been created by Lessor, other than
(x) those that Lessee is responsible hereunder to pay or discharge or those
created pursuant to Lessee's request made in accordance with Section 12.2 or
otherwise consented to by Lessee, and (y) ad valorem taxes and Impositions.
Lessee (or Lessee's designee) shall execute and deliver to Lessor an assumption
of all of Lessor's obligations under the Ground Lease. The Property shall be
conveyed 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 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;
provided, however, Lessee shall not be entitled to receive an assignment of
Lessor's interest under the Ground Lease or in the Improvements, Fixtures and
Modifications unless Lessee shall have paid in full the Default Amount, plus
the Make-Whole Premium as provided above.
17.7 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 Article XVII.
17.8 Assignment of Rights under Contracts. If an Event of
Default shall have occurred and be continuing, and whether or not this Lease
shall have been terminated pursuant to
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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 the
Construction Contract, the Demolition Contract, the Development Agreement, each
other Project Contract and all other agreements executed by Lessee in
connection with the construction, development, use or operation of the Property
(including, without limitation, 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 and operation of the
Property.
17.9 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, the
mortgage foreclosure remedies described in Chapter 667 of the Hawaii Revised
Statutes.
ARTICLE XVIII
18.1 Lessor's Right to Cure Lessee's Defaults. Lessor,
without waiving or releasing any obligation or Event of Default, may (but shall
be under no obligation to) remedy any Event of Default for the account and at
the sole cost and expense of Lessee, including the failure by Lessee to
maintain the insurance required by Article XIV, and may, to the fullest extent
permitted by law, and notwithstanding any right of quiet enjoyment in favor of
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 fees and expenses of counsel), together with interest thereon at the
Lessor Overdue Rate from the date on which such sums or expenses are paid by
Lessor, shall be paid by Lessee to Lessor on demand.
ARTICLE XIX
19.1 Provisions Relating to Lessee's Termination of this
Lease or Exercise of Purchase Option. In connection with any termination of
this Lease pursuant to the terms of Section 16.2, or in connection with
Lessee's exercise of its Purchase Option under Article XX, upon the Payment
Date on which this Lease is to terminate or upon the Expiration Date, as
applicable, and upon tender by Lessee (or Lessee's designee) of the amounts set
forth in Section 16.2(b) or Section 20.2, as applicable:
(a) Lessor shall execute and deliver to Lessee (or to Lessee's
designee) at Lessee's cost and expense an assignment of Lessor's
right, title and interest as lessee under the Ground Lease and
Lessor's entire interest in the
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Improvements, Fixtures and Modifications (which shall include an
assignment of all of Lessor's right, title and interest in and to any
Net Proceeds not previously received by Lessor), in each case (i) with
covenants against grantor's acts, (ii) in recordable form and
otherwise in conformity with local custom and (iii) free and clear of
the Lien of all mortgages (including the Mortgage and the Assignment
of Lease) and any defects, Liens or encumbrances that have been
created by Lessor, other than (x) those that Lessee is responsible
hereunder to pay or discharge or those created pursuant to Lessee's
request made in accordance with Section 12.2 or otherwise consented to
by Lessee, and (y) ad valorem taxes and Impositions; and
(b) Lessee (or Lessee's designee) shall execute and deliver to
Lessor an assumption of all of Lessor's obligations under the Ground
Lease. The Property shall be conveyed to Lessee (or Lessee's
designee) "AS IS" and in its then present physical condition.
ARTICLE XX
20.1 Lessee's Purchase Option. Lessor hereby grants to
Lessee, an exclusive and irrevocable option (the "Purchase Option") to purchase
Lessor's entire interest in the Property and Lessor's right, title and interest
hereunder in the manner set forth in this Article XX.
20.2 Exercise of Purchase Option. The Purchase Option may be
exercised by Lessee only by delivering to Lessor irrevocable written notice
(the "Election Notice") of Lessee's intention to exercise the Purchase Option
not later than 30 days prior to the scheduled expiration of the then current
Primary Term or Extended Term, as applicable (such scheduled expiration, the
"Expiration Date") (subject, nevertheless, to the terms of Section 21.2(c)).
In the event that Lessee delivers the Election Notice to Lessor in the manner
set forth in the preceding sentence or in the manner set forth in Section
21.2(c), then Lessee shall be obligated to pay to Lessor on the Expiration Date
an amount equal to the Purchase Option Price and all amounts then owing in
respect of Rent and Additional Charges.
20.3 Purchase Option Price. The purchase price (the
"Purchase Option Price") for the Property and Lessor's right, title and
interest therein shall be an amount equal to the excess, if any, of (a) the sum
of (1) the aggregate outstanding principal balance of the Notes as of the
Expiration Date, after applying thereto any payment of Base Rent or Renewal
Rent to be made on the Expiration Date in accordance with the terms of the
Indenture, plus (2) all accrued interest thereon, after applying thereto any
payment of Base Rent or Renewal Rent to be made on the Expiration Date in
accordance with the terms of the
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Indenture, plus (3) the Lessor Return Payment, over (b) the amount of any Net
Proceeds previously paid to Escrowee and not repaid or remitted to Lessee in
accordance with Article XV that are applied by Escrowee to reduce the
outstanding principal amount of the Notes on or prior to the Expiration Date.
20.4 Transfer of the Property Upon Exercise. In the event
the Purchase Option shall have been exercised, on the Expiration Date and upon
tender by Lessee of the Purchase Option Price and all amounts then owing in
respect of Rent and Additional Charges, the terms of Section 19.1 shall be
applicable.
ARTICLE XXI
21.1 Extended Terms. (a) Subject to the terms of Section
21.2, so long as no Event of Default is continuing, Lessor hereby grants to
Lessee one or more options to extend the Term of this Lease on the terms and
conditions set forth in this Section 21.1 and otherwise on all of the terms and
conditions of this Lease.
(b) Provided that Lessee has arranged a Permitted Refinancing
in accordance with the terms of Section 21.2, at the expiration of the Primary
Term and any Extended Term, Lessee shall have the right, upon irrevocable
written notice (an "Extension Notice") to Lessor given at any time during the
Term but not later than thirty (30) days prior to the Expiration Date to extend
this Lease for one or more successive terms, each such term to be not less than
two (2) years and expiring not later than the expiration of the Ground Lease
(any such term an "Extended Term"). The exact length of each Extended Term
shall be specified in the Extension Notice. The Renewal Rent for any Extended
Term in question shall be equal to an amount sufficient to pay interest and
principal, if any, due on any Renewal Notes during such Extended Term plus
Lessor's Margin.
(c) In connection with each renewal of the Term, the
Schedules hereto shall be amended as appropriate to (i) reflect the
determination of the Renewal Rent caused by such renewal and (ii) change the
Default Amount and the Termination Amount, if necessary. Unless otherwise
agreed upon by the parties, the Payment Dates during the Extended Term shall be
the dates upon which payments are required to be made under the applicable
Renewal Notes.
21.2 Permitted Refinancing. (a) In the event that Lessee
intends to exercise its rights to extend the Term and so notifies Lessor of
such intention, Lessee will use all reasonable, good-faith efforts to obtain as
soon as possible a mortgage loan secured by the Property, which loan shall (i)
fully fund no later than the Expiration Date, (ii) be in an amount
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equal to the outstanding principal balance of the Notes, plus, at Lessee's
election, the costs and expenses described in Section 21.2(b) and similar costs
and expenses incurred by Lessee, (iii) mature on the same date as the
expiration of the proposed Extended Term, (iv) be secured by a mortgage
containing provisions in respect of this Lease and Lessee's rights and
obligations hereunder substantially equivalent to those contained in the
Mortgage, subject, however, to the terms of this Section 21.2 and shall be
recourse only to Lessor's interest in the Property, (v) provide for either
interest-only coupon payments (i.e., no amortization of principal prior to
maturity) or amortization of principal on a thirty (30) year schedule and in
the latter event, the Maximum Residual Guarantee Amount shall be reduced by the
amount of principal so amortized. A loan meeting the requirements of the
foregoing clauses (i) through (v) is referred to herein as a "Permitted
Refinancing". In the event Lessee is able to obtain a Permitted Refinancing,
Lessor shall issue a Renewal Note or Renewal Notes and shall execute such other
documents and instruments as are necessary in order to effectuate such
Permitted Refinancing and to satisfy in full the outstanding principal balance
of the Notes.
(b) Except to the extent that the same are financed as a part
of the principal of the Permitted Refinancing, as described in Section
21.2(a)(ii), Lessee shall pay all out-of-pocket expenses incurred by Lessor or
the Trustee (including attorneys' fees and expenses), all premiums (if any) and
all costs and expenses of the new lender incurred in connection with any
Permitted Refinancing.
(c) Notwithstanding anything to the contrary contained
herein, if Lessee has delivered a notice pursuant to Section 22.1(b)(ii) and
neither Lessee nor Lessor is able to obtain a Permitted Refinancing in
accordance with this Section 21.2 at least thirty (30) days prior to the
Expiration Date, then Lessee shall be obligated to exercise its Purchase Option
in accordance with the terms of Article XX, in which event, Lessee shall be
deemed to have delivered a timely Election Notice for the purposes of Section
20.2.
ARTICLE XXII
22.1 Residual Guarantee. (a) On or before the date which is
eighteen (18) months prior to the Expiration Date, Lessee shall deliver to
Lessor a notice indicating whether Lessee intends to attempt to sell the
Property prior to the Expiration Date. Any notice delivered by Lessee to
Lessor pursuant to the terms of this Section 22.1(a) shall not be binding on
Lessee.
(b) On or before the date which is twelve (12) months prior
to the Expiration Date, Lessee shall deliver to Lessor a notice stating either
that:
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(i) Lessee intends to sell the Property and to pay the
Residual Guarantee Amount, if any, on the Expiration Date in
accordance with Section 22.1(d) or pay the Maximum Residual Guarantee
Amount on the Expiration Date in accordance with Section 22.1(e) (but
without limiting Lessee's rights pursuant to Article XXI and Article
XXII hereof); or
(ii) Lessee irrevocably agrees to elect either to exercise
the Purchase Option in accordance with Article XX or to extend the
Term in accordance with Article XXI.
Any notice delivered by Lessee to Lessor pursuant to the terms of this Section
22.1(b) shall be irrevocable and binding on Lessee.
(c) Notwithstanding anything to the contrary contained
herein, if Lessee does not intend to exercise the Purchase Option or elect to
extend the Term, then Lessee (as agent for Lessor) shall use all reasonable,
good-faith efforts to solicit bids with respect to the Property from unrelated
third parties, and Lessor's right, title and interest in the Property will be
sold by Lessor to the Person submitting the highest cash bid (net of any
brokerage commissions and any other sales expenses) as soon as is reasonably
practicable. Lessor shall have no liability or obligation with respect to any
purchase contract described in this Article XXII other than to transfer its
right, title and interest in the Property as contemplated hereby.
(d) In the event a sale of the Property is consummated, and
the proceeds thereof received, on or prior to the Expiration Date in accordance
with the terms of a contract entered into pursuant to Section 22.1(c), Lessee
shall promptly pay to Lessor (but in no event later than the Expiration Date)
the sum of (i) all such proceeds, plus (ii) the Residual Guarantee Amount, but
in no event shall such payment exceed the Maximum Residual Guarantee Amount,
plus (iii) all amounts owing in respect of Rent as of the Expiration Date.
(e) In the event a sale of the Property is not consummated,
or the proceeds thereof are not received by Lessor, on or prior to the
Expiration Date for any reason, Lessee shall on the Expiration Date pay to
Lessor (i) an amount equal to the Maximum Residual Guarantee Amount plus, (ii)
at Lessee's sole option, such additional amount as may be required to satisfy
in full the outstanding principal amount and accrued interest on the Notes. If
Lessee shall have made the payment described in clause (ii) of the first
sentence of this Section 22.1(e) and only in such event, then if a sale of the
Property to a third party is consummated within 48 months of the Expiration
Date, the net cash proceeds of such sale shall be paid by Lessor (x) first, to
reimburse Lessee for any amounts paid by Lessee pursuant to clause (ii) above,
plus interest on such amount at the Debt Overdue Rate until the date of actual
payment, (y) second, to
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Lessor on account of the Lessor Return Payment and (z) the balance, to Lessee.
(f) Notwithstanding anything to the contrary contained in
this Article XXII, in the event Lessee notifies Lessor in accordance with
Section 22.1(b)(i) that it will either pay the Residual Guarantee Amount, if
any, on the Expiration Date in accordance with Section 22.1(d) or pay the
Maximum Residual Guarantee Amount on the Expiration Date in accordance with
Section 22.1(e), Lessee may nevertheless exercise the Purchase Option so long
as it complies with the terms of Article XX or exercise the Renewal Option so
long as it complies with the terms of Article XXI.
ARTICLE XXIII
23.1 Holding Over. If Lessee shall for any reason remain in
possession of the Property after the expiration or earlier termination of this
Lease as to the Property (unless the Property is conveyed to Lessee), such
possession shall be as a tenancy at sufferance during which time Lessee shall
continue to pay Additional Charges 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 Base Rent or Renewal Rent at an annual rate equal
to the average rate of Base Rent or Renewal Rent payable hereunder during the
preceding Primary Term or Extended Term, as applicable; 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 Base
Rent or Renewal Rent at an annual rate equal to one hundred and ten percent
(110%) of the Base Rent or Renewal Rent payable hereunder immediately preceding
such expiration or earlier termination. Such Base Rent or Renewal Rent shall
be payable from time to time within ten (10) days after demand by Lessor, which
demands shall not be made by Lessor more often than monthly. 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, including Lessee's obligation to indemnify the
Indemnified Parties pursuant to Section 25.1 (notwithstanding anything therein
to the contrary), 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 and the rights of Lessee under Section 25.1 with respect to
indemnification. Nothing contained in this Article XXIII shall constitute the
consent, express or implied, of Lessor to the holding over of Lessee after the
expiration or earlier termination of this Lease (unless the Property is
conveyed to Lessee) 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.
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ARTICLE XXIV
24.1 Risk of Loss. During the Term, unless Lessee shall not
be in actual possession of the Property in question solely by reason of
Lessor's exercise of its remedies of dispossession under Article XVII, 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.
ARTICLE XXV
25.1 Indemnification by Lessee. a. Lessee shall indemnify
Lessor, the Administrative Agent, the Trustee and the Holders and any
affiliate, officer, director, employee, agent or shareholder of Lessor, the
Trustee or any Holder (the "Indemnified Parties"), on an After Tax Basis, from
and against all actions, causes of action, claims, lawsuits, administrative
proceedings, hearings, judgments, liabilities, awards, fines, penalties, costs,
fees (including legal, engineers', experts' and consulting fees and expenses),
damages (including natural resource damages), corrective action costs,
financial assurance costs, remediation activities, clean-up costs (including
investigation, monitoring, encapsulation, removal and response costs), Liens
(including any environmental Lien) and all other liabilities incurred by or
imposed on any of the Indemnified Parties, whenever incurred or imposed (but
excluding any liabilities for Impositions imposed by any taxing authority,
which liabilities are covered exclusively by Article IV hereof), arising out
of, imposed upon or incurred by or asserted against the Indemnified Parties by
reason of:
(i) any accident, injury to or death of natural persons or
loss of or damage to property occurring on or about the Property;
(ii) Lessor's ownership of the Property or any Modification;
(iii) the failure by Lessor to qualify as a foreign corporation
in the State of Hawaii;
(iv) any use, misuse, nonuse, condition, operation, possession,
leasing, subleasing, financing, refinancing, disposition, maintenance
or repair of the Property or of any Modification;
(v) the construction, design, purchase, acceptance,
rejection, modification, substitution or condition of the Property or
any Modification, including, without limitation,
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claims or penalties arising from any violation of law or liability in
tort (strict or otherwise);
(vi) entering into the Operative Agreements or any transaction
arising out of the Operative Agreements;
(vii) the breach by Lessee or either of the Ground Lessors of any
representations and warranties in, or the failure on the part of
Lessee or either of the Ground Lessors at any time to perform or
comply with any of the terms or conditions of, the Operative
Agreements to which any of them is a party;
(viii) the nonperformance of any of the terms of any subleases of
the Property to be performed by Lessee as the sublessor thereunder;
(ix) any contest referred to in Article XIII relating to the
Property;
(x) the existence or presence at, on, in or under the
Property of any Hazardous Substance or the Release of any Hazardous
Substance from, at, under or within the Property into the environment
(including air, water vapor, surface water, groundwater, drinking
water, land (including surface or subsurface), plant, aquatic and
animal life);
(xi) the disturbance, pollution, contamination or interference
with any wetland, body of water (whether surface or subsurface),
aquifer or watercourse due to any Hazardous Activity or the existence
or presence of a Hazardous Condition at the Property;
(xii) the occurrence at the Property of any Hazardous Activity
or Hazardous Condition;
(xiii) the transportation use, treatment, storage, disposition,
Release or disposal of any Hazardous Substance found in, on, under or
at the Property;
(xiv) any personal injury to or death of natural persons or
property damage resulting from any Hazardous Activity at the Property,
the existence of a Hazardous Condition at the Property or the Release
of any Hazardous Substance from, at, under or onto the Property;
(xv) any Environmental Violation or alleged violation of
Environmental Law at, on, in or under the Property or in connection
therewith; and
(xvi) the applications of Parts 4 and 5 of Subtitle B of Title I
of ERISA (including, without limitation, any penalties imposed under
Section 501(i) or (1) of ERISA) or
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any excise taxes, charges or penalties imposed under Section 4975 of
the Code, except as a result of the breach by Lessor or any Affiliate
of Lessor of ERISA or any rule or regulation promulgated thereunder
(other than a breach caused by or resulting from an act or omission of
Lessee, either of the Ground Lessors, the Trustee, the Holders or any
of their Affiliates);
except in each case, with respect to any Indemnified Party, to the extent such
liabilities, obligations, claims, damages, penalties, causes of action, costs
or expenses (1) are imposed upon or incurred by or asserted against such
Indemnified Party by reason of the matters described in clauses (i) through
(xvi) above that arise from events commencing solely and entirely after the
later of (x) the expiration or earlier termination of this Lease and (y)
Lessee's actual relinquishment of possession of the Property or (2) solely
result from the gross negligence or the willful misconduct of such Indemnified
Party (except, in the case of Lessor, for Lessor's failure to qualify as a
foreign corporation in the State of Hawaii) or (3) solely result from the
breach by such Indemnified Party of Section 905 or 921 of the Indenture or the
breach by such Indemnified Party of any other provisions of the Operative
Agreements after receipt of notice from Lessee of such breach and a reasonable
opportunity to cure such breach (but only to the extent such Indemnified Party
is not otherwise prevented from curing such breach). For purposes of the
foregoing sentence, it is further agreed by Lessee that the Release or presence
of any Hazardous Substances at, on, in or under the Property, or the presence
of a Hazardous Condition at, on, in or under the Property, that exists as of
(or at any time prior to) the later of the dates specified in clauses (x) and
(y) in the foregoing sentence shall be included in the entirety within the
scope of Lessee's obligations hereunder (even though the same may increase to
remedial levels or require any response or remedial action only subsequent to
such date).
(b) The obligations of Lessee under this Section 25.1 shall
remain unaffected and continue in full force and effect irrespective of and
notwithstanding any action or failure to act or delay on the part of any of the
Indemnified Parties to enforce any rights or remedies against Lessee. Such
obligations shall remain unaffected irrespective of and notwithstanding any
default by any such party in performing any obligation or duty arising under or
out of any Operative Agreement or under this Section 25.1. No amendment,
increase in the interest rate or in the principal amount of any of the Notes
nor any other modification thereof shall act to (i) release Lessee from or (ii)
modify any of Lessee's obligations under this Section 25.1.
(c) The obligations of Lessee pursuant to this Section 25.1
shall survive (i) the expiration or earlier termination of this Lease; (ii) the
repayment of the Notes whether at maturity or earlier due to the acceleration
thereof and satisfaction
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thereof out of any collateral security or by reason of payment by any guarantor
thereof; (iii) the foreclosure of the Mortgage (or the conveyance of the
Property due to any deed in lieu of foreclosure); and (iv) each and every
conveyance of the Property after the date hereof.
(d) Any amounts which become payable by Lessee under this
Article XXV shall be paid promptly and, if such payment is not timely paid,
shall bear interest at the Lessor Overdue Rate from the date when due to the
date of payment. Promptly after receipt by an Indemnified Party of notice of
the commencement or assertion against it of any claim, action or proceeding,
such Indemnified Party shall, if a claim in respect thereof is to be made
against Lessee under this Section 25.1, notify Lessee thereof; but the omission
so to notify Lessee shall not relieve Lessee from any liability which it may
have to such Indemnified Party. Lessee, at its sole cost and expense, acting
through counsel reasonably acceptable to the Indemnified Party, may contest,
resist and defend any claim, action or proceeding with respect to which it
shall have received the notice described in the preceding sentence and may
compromise or otherwise dispose of the same as Lessee shall deem appropriate,
and, upon such assumption by Lessee of such contest and defense, Lessee shall
not be obligated to pay any attorneys' fees or other legal costs incurred by or
on behalf of the Indemnified Party; provided that Lessee may only assume
control of the defense of any such claim to the extent it has provided to such
Indemnified Party written acknowledgement that Lessee is obligated to indemnify
such Indemnified Party with respect to such claim under this Section 25.1; and
provided further that Lessee shall not be entitled to assume and control the
defense of any such contest, action, suit or proceeding if and to the extent
that, (A) in the reasonable opinion of such Indemnified Party, (x) such
contest, action, suit or proceeding involves the potential imposition of
criminal liability or material civil liability (whether or not indemnified
hereunder) on such Indemnified Party or (y) the control of such contest,
action, suit or proceeding would involve Lessee in a bona fide conflict of
interest, (B) an Event of Default has occurred and is continuing or (C) such
contest, action, suit or proceeding involves matters which extend beyond or are
unrelated to the transactions contemplated by the Operative Agreements and if
determined adversely could be materially detrimental to the interests of such
Indemnified Party notwithstanding indemnification by Lessee, in which case the
Indemnified Party will be entitled to assume and take control of the defense
thereof at Lessee's expense. The Indemnified Party may participate in a
reasonable manner at its own expense and with its own counsel in any proceeding
conducted by Lessee in accordance with the foregoing. Each Indemnified Party
shall, at Lessee's request, cooperate with Lessee, at no cost or expense to the
Indemnified Party, in the defense of any such claim, action or proceeding. If,
in the opinion of counsel to any Indemnified Party there are legal defenses
available to such Indemnified
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Party which are different from or in addition to those available to Lessee,
such Indemnified Party shall be permitted to participate in the defense of such
claim, action or proceeding with separate counsel and Lessee shall pay the fees
and expenses of such separate counsel.
ARTICLE XXVI
26.1 Subletting and Assignment. So long as no Event of
Default has occurred and is continuing, Lessee may, without the consent of
Lessor, the Trustee or any Holder, sublet all or any part of the Property or
assign all or any part of its interest under this Lease as to the Property.
Any sublease by Lessee executed during the Term shall by its terms be subject
and subordinate to this Lease and to the rights of Lessor hereunder. In the
event of any assignment or subletting, Lessee shall not be released from any of
its obligations hereunder and shall remain directly and primarily liable under
this Lease as to the Property, or portion thereof, so assigned or sublet.
Lessee shall have the absolute right, without the consent of Lessor, to
terminate any sublease of the Property, whether such sublease was entered into
prior to the date of this Lease or during the Term. Upon the occurrence and
during the continuance of an Event of Default, Lessor shall have the right to
receive all rents under any sublease directly from the sublessee and any rent
received by Lessee shall be deemed held in trust for Lessor and immediately
paid over by Lessee to Lessor.
26.2 Attornment and Nondisturbance. Lessee shall insert in
each sublease permitted under the terms of Section 26.1 and executed during the
Term provisions to the effect that (a) in the event this Lease shall terminate
before the expiration of such sublease, the sublessee thereunder shall attorn
to Lessor and waive any right such sublessee may have to terminate the sublease
or to surrender possession thereunder as a result of the termination of this
Lease; and (b) in the event the sublessee receives notice from Lessor stating
that there has occurred an Event of Default under this Lease, the sublessee
shall thereafter be obligated to pay all rentals accruing under such sublease
directly to Lessor or as Lessor may direct. Lessee shall deliver to Lessor and
the Trustee an Appraiser's Certificate contemporaneously with the execution and
delivery of any sublease of the Property during the Term with a Person
unaffiliated with Lessee (i) the term of which extends beyond the Primary Term
or (ii) the term of which does not extend beyond the Primary Term if such
sublease, when taken together with any other subleases with respect to which
Lessee has not delivered an Appraiser's Certificate, do not in the aggregate
demise more than 42,000 net leasable square feet of the Improvements; provided
that an Appraiser's Certificate shall not be required prior to the execution
and delivery of any sublease referred to in the appraisal of the Property dated
June 3, 1993 prepared by The
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Hallstrom Group, Inc. if such sublease is on rental rates and on substantially
identical other terms as referred to in such appraisal. Provided that Lessee
shall deliver to Lessor, contemporaneously with the execution and delivery of a
sublease of the Property with any Person unaffiliated with Lessee, an
Appraiser's Certificate, then Lessor and the Trustee shall enter into a
non-disturbance and attornment agreement substantially in the form of Schedule
E hereto. Lessor and the Trustee shall also enter into a non-disturbance and
attornment agreement in such form with respect to (i) each sublease referred to
in the appraisal of the Hallstrom Group, Inc. described above, if such sublease
is on rental rates and on substantially identical other terms as referred to in
such appraisal, without the delivery of an Appraiser's Certificate, or (ii) if
the sublease does not extend beyond the Primary Term and, when aggregated with
any other subleases with respect to which the Bank has not delivered an
Appraiser's Certificate pursuant to this clause (ii), does not in the aggregate
demise more than 42,000 net leasable square feet of the Improvements; provided
that Lessee agrees that each of the subleases referred to in the preceding
clause (ii), with respect to which Lessee requests a non-disturbance and
attornment agreement, will, in the reasonable good-faith judgement of Lessee,
provide for rents that represent the fair market value for the space sublet and
contain other terms which, when taken together with all of the term of the
sublease, are commercially reasonable.
26.3 Subleases. Promptly following the execution and
delivery of any sublease of the Improvements during the Term, Lessee shall
deliver a copy of such executed sublease to Lessor and the Trustee.
ARTICLE XXVII
27.1 Estoppel Certificates. At any time and from time to
time upon not less than twenty (20) days' prior request by Lessor or Lessee
(the "Requesting Party"), the other party (whichever party shall have received
such request, the "Certifying Party") shall furnish to the Requesting Party
(but in the case of Lessor, as Certifying Party, not more than four times per
year unless required to satisfy the requirements of any sublessees) a
certificate signed by an individual having the office of vice president or
higher in the Certifying Party certifying that this Lease is in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications); the dates to which the Base Rent or Renewal Rent and
Additional Charges have been paid; to the best knowledge of the signer of such
certificate, whether or not the Requesting Party is in default under any of its
obligations hereunder (and, if so, the nature of such alleged default); and
such other matters as the Requesting Party may reasonably request. Any such
certificate furnished pursuant to this Article
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XXVII may be relied upon by the Requesting Party, and any existing or
prospective mortgagee, purchaser or lender, and any accountant or auditor, of,
from or to the Requesting Party (or any Affiliate thereof).
ARTICLE XXVIII
28.1 Right to Inspect During any Extended Term. During any
Extended Term, Lessee shall upon reasonable notice from Lessor (except that no
notice shall be required if an Event of Default has occurred and is
continuing), permit Lessor and its authorized representatives to inspect the
Property, provided that such inspections shall not reasonably interfere with
Lessee's business operations at the Property and shall be made in compliance
with the terms of any subleases made with respect to the Property of which
Lessee shall have notified Lessor.
28.2 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.
ARTICLE XXIX
29.1 Acceptance of Surrender. No surrender to Lessor of this
Lease or of all or any portion of the Property or of any part of any thereof or
of any interest therein shall be valid or effective unless agreed to and
accepted in writing by Lessor and, so long as any Notes remain Outstanding, the
Trustee, and no act by Lessor or the Trustee or any representative or agent of
Lessor or the Trustee, other than a written acceptance, shall constitute an
acceptance of any such surrender.
ARTICLE XXX
30.1 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 fee estate in the Property, except
as may expressly be stated in a written instrument duly executed and delivered
by the appropriate Person or (c) the stock of Lessor.
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ARTICLE XXXI
31.1 Notices. All notices, demands, requests, consents,
approvals and other communications hereunder shall be in writing and delivered
personally or by a nationally recognized overnight courier service or mailed
(by registered or certified mail, return receipt requested, postage prepaid),
addressed to the respective parties, as follows:
If to Lessee:
First Hawaiian Bank
1132 Bishop Street
Suite 2500
Honolulu, Hawaii 98613
Attention: Howard H. Karr
If to Lessor:
REFIRST, Inc.
1900 Indian Wood Circle
Maumee, Ohio 43537
Attention: Vice President - First
Hawaiian Bank
Transaction
with a copy to:
REFIRST, Inc.
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
Attention: Mark A. Ferrucci
If to the Trustee:
First Fidelity Bank, N.A., Pennsylvania
123 South Broad Street
Philadelphia, Pennsylvania 19109
Attention: Corporate Trust Administration
or such additional parties and/or other address as such party may hereafter
designate (provided, however, in no event shall either party be obligated to
notify, in the aggregate, more than five (5) designees of the other party), and
shall be effective upon receipt or refusal thereof.
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ARTICLE XXXII
32.1 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 Articles XV, XVI, XX, XXI or XXII, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule of law relating to
the vesting of an interest in or the suspension of the power of alienation of
property, then such right or option shall be exercisable only during the period
which shall end twenty-one (21) years after the date of death of the last
survivor of the 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, acknowledgement and delivery of this Lease.
32.2 Amendments and Modifications. Neither this Lease nor
any provision hereof may be amended, waived, discharged or terminated except by
an instrument in writing in recordable form signed by Lessor and Lessee.
32.3 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.
32.4 Conclusive Reliance on Administrative Agent. Lessor
hereby acknowledges and agrees that each of Lessee, the Ground Lessors and the
Trustee may, in the absence of bad faith on their respective parts,
conclusively rely upon, and in all events shall be fully protected in relying
upon, any document, instrument, certificate, opinion or direction furnished to
any of them by the Administrative Agent and otherwise conforming to the
requirements of any applicable Operative Agreement, and Lessee, each of the
Ground Lessors and the Trustee may treat any such document, instrument,
certificate, opinion or direction as the document, instrument, certificate,
opinion or direction of Lessor.
32.5 Headings and Table of Contents. The headings and table
of contents in this Lease are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
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32.6 Schedules. Immediately following are Schedules A, B, C,
D and E referred to in this Lease, which Schedules are hereby incorporated by
reference herein.
32.7 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.
32.8 Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the State of Hawaii.
32.9 Memorandum of Lease. This Lease shall not be recorded
(except at Lessee's discretion), but Lessor and Lessee shall, concurrently
herewith, execute and deliver a short-form memorandum of this Lease, in form
suitable for recording under the laws of the State of Hawaii, which memorandum
shall be recorded at Lessee's sole cost and expense.
32.10 Limitations on Recourse. Notwithstanding anything
contained in this Lease to the contrary, Lessee agrees to look solely to
Lessor's estate and interest in 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 or any shareholder, owner or partner
(direct or indirect) in or of Lessor, or any director, officer, 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. Nothing in this Section shall be interpreted so as to limit
the terms of Sections 6.1 or 6.2.
ARTICLE XXXIII
33.1 Ground Lease. b. During the Term, Lessee shall observe
and perform all of the obligations of Lessor under the Ground Lease and, in
connection therewith, shall, prior to the occurrence and continuance of an
Event of Default, have the right to enforce Lessor's rights as lessee under the
Ground Lease.
(b) During the Term, Lessee shall have the right to take
enforcement actions against the Ground Lessors in Lessee's own name or, if
necessary, in the name of Lessor, and for that purpose and only to such extent,
prior to the occurrence and continuance of an Event of Default, all the rights
of Lessor under the Ground Lease are hereby conferred upon and assigned to
Lessee, and Lessee is hereby subrogated to such rights. Lessor agrees that it
will cooperate with Lessee, at Lessee's expense, in pursuit of any such claims
against the Ground Lessors.
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(c) During the Term, Lessor shall not enter into any
agreement to amend, waive or modify any of the terms, covenants or provisions
of the Ground Lease without the consent of Lessee.
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IN WITNESS WHEREOF, the parties have caused this Lease to be
duly executed and delivered as of the date first above written.
REFIRST, INC.,a Delaware
corporation
By: /s/ Paul J. Bishop
-------------------------------
Name: Paul J. Bishop
Title: President
FIRST HAWAIIAN BANK
By: /s/ Thomas P. Huber
-------------------------------
Name: Thomas P. Huber
Title: Senior Vice President
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EXHIBIT A OMITTED
79
SCHEDULE B OMITTED
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SCHEDULE C
Payment Dates and Lessor Base Rent
Lessor
Payment Date Base Rent
- ------------------ ----------
June 1, 1997 340,172.70
December 1, 1997 340,172.70
June 1, 1998 340,172.70
December 1, 1998 340,172.70
June 1, 1999 340,172.70
December 1, 1999 340,172.70
June 1, 2000 340,172.70
December 1, 2000 340,172.70
June 1, 2001 340,172.70
December 1, 2001 340,172.70
June 1, 2002 289,146.79
December 1, 2002 0.00
June 1, 2003 363,192.73
December 1, 2003 363,192.73
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SCHEDULE D
Default Amount and Termination Amount
Payment Date Amount
- ------------------ --------------
June 1, 1997 193,699,875.00
December 1, 1997 193,699,875.00
June 1, 1998 193,699,875.00
December 1, 1998 193,699,875.00
June 1, 1999 193,699,875.00
December 1, 1999 193,699,875.00
June 1, 2000 193,699,875.00
December 1, 2000 193,699,875.00
June 1, 2001 193,699,875.00
December 1, 2001 193,699,875.00
June 1, 2002 193,750,900.91
December 1, 2002 194,094,053.52
June 1, 2003 194,094,053.52
December 1, 2003 194,094,053.52
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SCHEDULE E OMITTED