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TABLE OF CONTENTS

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ARTICLE I	DEFINITIONS			1
SECTION 1.1.		Definitions; Interpretation		1
ARTICLE II	LEASE			1
SECTION 2.1.		Acceptance and Lease of Property		1
SECTION 2.2.		Acceptance Procedure		2
SECTION 2.3.		Lease Term		2
SECTION 2.4.		Title		2
ARTICLE III	PAYMENT OF RENT			2
SECTION 3.1.		Rent		2
SECTION 3.2.		Payment of Rent		2
SECTION 3.3.		Supplemental Rent		2
SECTION 3.4.		Method of Payment		3
ARTICLE IV	QUIET ENJOYMENT; RIGHT TO INSPECT			3
SECTION 4.1.		Quiet Enjoyment		3
SECTION 4.2.		Right to Inspect		3
ARTICLE V	NET LEASE, ETC			4
SECTION 5.1.		Net Lease		4
SECTION 5.2.		No Termination or Abatement		4
ARTICLE VI	ASSIGNMENT AND SUBLEASING BY LESSEE			5
SECTION 6.1.		General		5
SECTION 6.2.		Subletting		5
ARTICLE VII	LESSEE ACKNOWLEDGMENTS			6
SECTION 7.1.		Condition of the Property		6
SECTION 7.2.		Enforcement of Warranties; No Obligation of Lessor to Repair, etc		6
SECTION 7.3.		No Liability of Participants, etc		7
ARTICLE VIII	POSSESSION AND USE OF THE PROPERTY, ETC			7
SECTION 8.1.		Utility Charges		7
SECTION 8.2.		Possession, Use and Operation of the Property		7
SECTION 8.3.		Compliance with Applicable Laws and Insurance Requirements; Necessary Permits, etc		7
SECTION 8.4.		Non-discrimination Required by Ground Lease		8

 

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ARTICLE IX	MAINTENANCE AND REPAIR			8
SECTION 9.1.		Maintenance and Repair		8
ARTICLE X	MODIFICATIONS, ETC			8
SECTION 10.1.		Modifications		8
ARTICLE XI	DISCHARGE OF LIENS; CONDITION UPON RETURN			9
SECTION 11.1.		Lessee’s Obligation to Discharge Liens		9
SECTION 11.2.		Condition Upon Return to Lessor		9
ARTICLE XII	PERMITTED CONTESTS; GRANTS AND RELEASES OF EASEMENTS; GROUND LEASE PURCHASE OPTION			10
SECTION 12.1.		Permitted Contests in Respect of Applicable Law Other Than Impositions		10
SECTION 12.2.		Grants and Releases of Easements; Lessor’s Waivers		10
SECTION 12.3.		Purchase Option Under Ground Lease		11
ARTICLE XIII	INSURANCE			12
SECTION 13.1.		Required Insurance		12
SECTION 13.2.		Deductibles; Insurance Providers; Coverage and Endorsements; Confirmation of Insurance, etc		13
ARTICLE XIV	RISK OF LOSS; CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS			14
SECTION 14.1.		Risk of Loss		14
SECTION 14.2.		[Reserved]		15
SECTION 14.3.		Casualty or Condemnation during Lease Term		15
SECTION 14.4.		Environmental Matters		16
SECTION 14.5.		Notice of Environmental Matters		17
ARTICLE XV	TERMINATION OF LEASE			17
SECTION 15.1.		Partial Termination upon Certain Events		17
SECTION 15.2.		Termination Procedures		18
ARTICLE XVI	LEASE EVENTS OF DEFAULT			18
SECTION 16.1.		Lease Events of Default		18
SECTION 16.2.		Remedies		21
SECTION 16.3.		Excess Amounts		25
SECTION 16.4.		Waiver of Certain Rights		25

 

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ARTICLE XVII	LESSOR’S RIGHT TO CURE			25
SECTION 17.1.		The Lessor’s Right to Cure the Lessee’s Lease Defaults		25
ARTICLE XVIII	PURCHASE PROVISIONS			26
SECTION 18.1.		Purchase of the Property		26
SECTION 18.2.		Expiration Date Purchase of the Property		26
SECTION 18.3.		Acceleration of Purchase Obligation		27
SECTION 18.4.		Provisions Relating to the Exercise of Purchase Option or Purchase Obligation		27
ARTICLE XIX	EXTENSION OF EXPIRATION DATE			28
SECTION 19.1.		Extension of Expiration Date		28
ARTICLE XX	REMARKETING OPTION			28
SECTION 20.1.		Option to Remarket		28
SECTION 20.2.		Conveyance Upon Remarketing		30
SECTION 20.3.		Acceptance of Bids		31
SECTION 20.4.		Certain Obligations Continue		31
ARTICLE XXI	ESTOPPEL CERTIFICATES; ACCEPTANCE OF SURRENDER; NO MERGER OF TITLE			32
SECTION 21.1.		Estoppel Certificates		32
SECTION 21.2.		Acceptance of Surrender		32
SECTION 21.3.		No Merger of Title		32
ARTICLE XXII	GRANT OF LIEN; FORECLOSURE OF INTEREST; FURTHER ASSURANCES			32
SECTION 22.1.		Grant of Lien by Lessee; Foreclosure of Lessee’s Interest		32
SECTION 22.2.		Further Assurances		37
SECTION 22.3.		Security for Obligations		37
ARTICLE XXIII	INTENT OF THE PARTIES			38
SECTION 23.1.		Nature of Transaction		38
ARTICLE XXIV	MISCELLANEOUS			38
SECTION 24.1.		Survival; Severability; etc		38
SECTION 24.2.		Amendments and Modifications		39
SECTION 24.3.		No Waiver		39
SECTION 24.4.		Notices		39
SECTION 24.5.		Successors and Assigns		39

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SECTION 24.6.		Headings and Table of Contents		39
SECTION 24.7.		Counterparts		39
SECTION 24.8.		GOVERNING LAW		39
SECTION 24.9.		Liability Limited		39
SECTION 24.10.		Original Lease		40

 

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LEASE

THIS DOCUMENT SECURES FUTURE ADVANCES

THIS LEASE (this “Lease” ), dated as of March 26, 2007, between ADOBE SYSTEMS INCORPORATED, a Delaware corporation, as Lessee (together with its permitted successors and assigns, the “Lessee” ), and SELCO SERVICE CORPORATION, an Ohio corporation doing business in California as “Ohio SELCO SERVICE CORPORATION”, as Lessor (in such capacity, the “Lessor” ).

WITNESSETH:

WHEREAS, the Lessor and the Lessee previously entered into a lease financing (the “Prior Transaction” ) pursuant to that certain Participation Agreement dated as of September 26, 2001 (the “Prior Participation Agreement” ), to, inter alia , construct Improvements on the Land;

WHEREAS, the Lessor and the Lessee desire to refinance the Prior Transaction;

WHEREAS, pursuant to that certain Participation Agreement dated as of the date hereof (as amended, modified, restated or supplemented from time to time, the “Participation Agreement” ), among the Lessee, the Lessor, the Purchasers described therein, the Lender described therein, and KeyBank National Association, as Administrative Agent for the Participants, the Participants have agreed to re-finance the Property;

WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires to lease from the Lessor, the Property; and

WHEREAS, the Property will be subject to the terms of this Lease;

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 agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1.  Definitions; Interpretation .  Capitalized terms used but not otherwise defined in this Lease have the respective meanings specified in Appendix A to the Participation Agreement, and the rules of interpretation set forth in such Appendix A shall apply to this Lease.

ARTICLE II

LEASE

SECTION 2.1.  Acceptance and Lease of Property .  Pursuant to the Prior Participation Agreement, the Lessor did acquire and accept (a) a leasehold interest in the Land, and (b) the Improvements constructed thereon.  The Lessor now agrees that it shall, commencing on the first

 

day of the Lease Term, demise and lease to the Lessee hereunder for the Lease Term the Lessor’s interest in the Property, and the Lessee hereby agrees, expressly for the direct benefit of the Lessor, to accept and lease from the Lessor for the Lease Term, the Lessor’s interest in the Property.

SECTION 2.2.  Acceptance Procedure .  The Lessee hereby agrees that the execution and delivery by it of this Lease shall, without further act, constitute the acceptance by the Lessee of the Property for all purposes of this Lease and the other Operative Documents on the terms set forth herein and therein, and that the Property, including all Improvements constructed or installed on the Property, shall be deemed to be included in the leasehold estate of this Lease and shall be subject to the terms and conditions of this Lease as of the first day of the Lease Term.

SECTION 2.3.  Lease Term .  The Lease Term (the “Lease Term” ) of this Lease shall commence on (and include) and be in full force and effect on the Closing Date, and shall end on (and include) the Expiration Date (as the same may be extended in accordance with Section 19.1 hereof).

SECTION 2.4.  Title .  The Property is leased to the Lessee without any representation or warranty, express or implied, by the Lessor and subject to the rights of parties in possession, the existing state of title (including, without limitation, all Liens other than Lessor Liens attributable to Lessor) and all Applicable Law.  The Lessee shall in no event have any recourse against the Lessor for any defect in or exception to title to the Property other than resulting from Lessor Liens attributable to the Lessor.

ARTICLE III

PAYMENT OF RENT

SECTION 3.1.  Rent .

(a)           During the Lease Term, the Lessee shall pay Basic Rent for the Property to the Lessor on each Rent Payment Date, on the date required under Section 20.1(m) in connection with the Lessee’s exercise of the Remarketing Option and on any date on which this Lease shall terminate with respect to the Property.

(b)           Neither the Lessee’s inability or failure to take possession of all or any portion of the Property when delivered by the Lessor, nor the inability or failure of the Lessor to deliver all or any portion of the Property to the Lessee on the Closing Date or thereafter, whether or not attributable to any act or omission of the Lessee or any act or omission of the Lessor, shall delay or otherwise affect the Lessee’s obligation to pay Rent for the Property in accordance with the terms of this Lease.

SECTION 3.2.  Payment of Rent.   Rent shall be paid absolutely net to each Person entitled thereto, so that this Lease shall yield to such Person the full amount thereof, without setoff, deduction or reduction.

SECTION 3.3.  Supplemental Rent .  The Lessee shall pay to the Lessor or any other Person entitled thereto any and all Supplemental Rent promptly as the same shall become due

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and payable, and if the Lessee fails to pay any Supplemental Rent, the Lessor and such other Persons shall have all rights, powers and remedies provided for herein or by law or equity or otherwise.  The Lessee shall pay to the Lessor, as Supplemental Rent, among other things, (a) all rent, taxes, insurance  and any other amounts payable by the Lessor as tenant under the Ground Lease, and (b) on demand, to the extent permitted by Applicable Law, interest at the Default Rate (or if no rate is applicable, at a rate per annum equal to the Base Rate plus a margin of 2% per annum) on any installment of Basic Rent not paid when due for the period for which the same shall be overdue and on any payment of Supplemental Rent not paid when due or demanded by the Lessor for the period from the due date or the date of any such demand, as the case may be, until the same shall be paid.  The expiration or other termination of the Lessee’s obligations to pay Basic Rent hereunder shall not limit or modify the obligations of the Lessee with respect to Supplemental Rent.  Unless expressly provided otherwise in this Lease, in the event of any failure on the part of the Lessee to pay and discharge any Supplemental Rent as and when due, the Lessee shall also promptly pay and discharge any fine, penalty, interest or cost which may be assessed or added under any agreement to which Lessee is a party or which is authorized in writing by the Lessee with a third party for nonpayment or late payment of such Supplemental Rent, all of which shall also constitute Supplemental Rent.

SECTION 3.4.  Method of Payment .  Each payment of Rent payable by the Lessee to the Lessor under this Lease or any other Operative Document shall be made by the Lessee to the Administrative Agent as assignee of the Lessor under the Assignment of Lease and Rent (or, if all amounts owing to the Participants under the Operative Documents have been paid in full, to the Lessor) prior to 2:00 P.M. (New York time), to the Account in immediately available funds consisting of lawful currency of the United States of America on the date when such payment shall be due.  Payments received after 2:00 P.M. (New York time), on the date due shall for the purpose of Section 16.1 hereof be deemed received on such day; provided, however , that for the purposes of the second sentence of Section 3.3 hereof, such payments shall be deemed received on the next succeeding Business Day and subject to interest at the Default Rate as provided in such Section 3.3.

ARTICLE IV

QUIET ENJOYMENT; RIGHT TO INSPECT

SECTION 4.1.  Quiet Enjoyment .  Subject to Sections 2.4 and 4.2, and subject to the rights of the Lessor contained in Article XVI hereof and the other terms of the Operative Documents to which the Lessee is a party, the Lessee shall peaceably and quietly have, hold and enjoy the Property for the Lease Term, free of any claim or other action by the Lessor or anyone claiming by, through or under the Lessor (other than the Lessee) with respect to any matters arising from and after the Closing Date.  Such right of quiet enjoyment is independent of, and shall not affect the rights of the Lessor or any assignee thereof otherwise to initiate legal action to enforce the obligations of the Lessee under this Lease.

SECTION 4.2.  Right to Inspect .  During the Lease Term, the Lessee shall upon reasonable advance written  notice from the Lessor (except that no advance notice will be required after the occurrence and during the continuance of a Lease Event of Default), permit any Participant or the Administrative Agent and their respective authorized representatives to inspect the Property during normal business hours, provided , that such inspections shall not unreasonably interfere with the Lessee’s business operations at the Property.

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ARTICLE V

NET LEASE, ETC.

SECTION 5.1.  Net Lease.   This Lease shall constitute a net lease.  Any present or future law to the contrary notwithstanding, this Lease shall not terminate, nor shall the Lessee be entitled to any abatement, suspension, deferment, reduction, setoff, counterclaim, or defense with respect to the Rent, nor shall the obligations of the Lessee hereunder be affected (except as expressly herein permitted and by performance of the obligations in connection therewith) by reason of: (a) any defect in the condition, merchantability, design, construction, quality or fitness for use of the Property or any part thereof, or the failure of the Property to comply with all Applicable Law, including any inability to occupy or use the Property or any part thereof by reason of such non-compliance; (b) any damage to, removal, abandonment, salvage, loss, contamination of or Release from, scrapping or destruction of or any requisition or taking of the Property or any part thereof, (c) any restriction, prevention or curtailment of or interference with the construction on or any use of the Property or any part thereof including eviction; (d) any defect in title to or rights to the Property or any Lien on such title or rights or on the Property (other than Lessor Liens); (e) any change, waiver, extension, indulgence or other action or omission or breach in respect of any obligation or liability of or by the Administrative Agent or any Participant; (f) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to Lessee, any Participant or any other Person, or any action taken with respect to this Lease by any trustee or receiver of the Lessee, any Participant or any other Person, or by any court, in any such proceeding; (g) any claim that the Lessee has or might have against any Person, including without limitation any Participant or any vendor, manufacturer, contractor of or for the Property; (h) any failure on the part of the Lessor to perform or comply with any of the terms of this Lease (other than performance by the Lessor of its obligations set forth in Section 2.1 hereof), of any other Operative Document or of any other agreement; (i) any invalidity or unenforceability or illegality or disaffirmance of this Lease against or by the Lessee or any provision hereof or any of the other Operative Documents or any provision of any thereof; (j) the impossibility or illegality of performance by the Lessee, the Lessor or both; (k) any action by any court, administrative agency or other Governmental Authority; or (l) any other cause or circumstances whether similar or dissimilar to the foregoing and whether or not the Lessee shall have notice or knowledge of any of the foregoing.  The Lessee’s agreement in the preceding sentence shall not affect any claim, action or right the Lessee may have against the Lessor or any other Participant.  The parties intend that the obligations of the Lessee hereunder shall be covenants and agreements that are separate and independent from any obligations of the Lessor hereunder or under any other Operative Documents and the obligations of the Lessee shall continue unaffected unless such obligations shall have been modified or terminated in accordance with an express provision of this Lease.

SECTION 5.2.  No Termination or Abatement .  The 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 (except as provided herein), notwithstanding any action for bankruptcy, insolvency, reorganization, liquidation, dissolution, or other proceeding affecting the Lessor or

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any Participant, or any action with respect to this Lease which may be taken by any trustee, receiver or liquidator of the Lessor or any Participant or by any court with respect to the Lessor or any Participant.  The Lessee hereby waives all right to terminate or surrender this Lease (except as provided herein) or except as a consequence of a reduction in the Property Cost as a result of Casualty or Condemnation proceeds pursuant to the terms of Section 14.3(a) of this Lease, or as a result of a purchase of any or all of the Property pursuant to Section 18.1 of this Lease, to avail itself of any abatement, suspension, deferment, reduction, setoff, counterclaim or defense with respect to the Property Cost.  The Lessee shall remain obligated under this Lease in accordance with its terms and the 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 and the Operative Documents.  Notwithstanding any such statute or otherwise, the Lessee shall be bound by all of the terms and conditions contained in this Lease.

ARTICLE VI

ASSIGNMENT AND SUBLEASING BY LESSEE

SECTION 6.1.  General .  THE LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT AND EACH PARTICIPANT (SUCH CONSENTS TO BE GIVEN OR WITHHELD IN THE SOLE DISCRETION OF THE ADMINISTRATIVE AGENT AND EACH PARTICIPANT), TRANSFER, ASSIGN OR ENCUMBER THIS LEASE OR ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER OR SUBLEASE THE PROPERTY OR ANY PART THEREOF EXCEPT AS PERMITTED BY SECTION 6.2, AND ANY SUCH TRANSFER, ASSIGNMENT, ENCUMBRANCE OR SUBLEASE THAT IS NOT PERMITTED BY SECTION 6.2 AND MADE WITHOUT SUCH WRITTEN CONSENTS THERETO SHALL BE NULL AND VOID.

SECTION 6.2.  Subletting .  During the Lease Term, the Lessee may sublease the Property or any portion thereof to any Person upon no less than five (5) days prior written notice to the Administrative Agent and the Lessor; provided, however , that:  (a) no sublease or other relinquishment of possession of the Property shall in any way discharge or diminish any of the obligations of the Lessee to the Lessor and the other Participants under this Lease and the other Operative Documents and the Lessee shall remain directly and primarily liable under this Lease and the other Operative Documents to which it is a party; (b) any sublease of the Property shall expressly be made subject to and subordinated to this Lease and to the rights of the Lessor hereunder; (c) each sublease shall expressly provide for the immediate surrender of the Property to the Lessor after notice from the Lessor to such sublessee of the occurrence of a Lease Event of Default and a request for such surrender; and (d) all such subleases shall expressly provide for automatic termination at or prior to the earlier of (i) the Expiration Date and (ii) the occurrence of a Lease Event of Default unless the Lessee shall have exercised its Purchase Option and purchased the Property pursuant to Section 18.1.

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ARTICLE VII

LESSEE ACKNOWLEDGMENTS

SECTION 7.1.  Condition of the Property .  THE LESSEE ACKNOWLEDGES AND AGREES THAT ALTHOUGH THE LESSOR WILL (A) OWN AND HOLD LEASEHOLD TITLE TO THE LAND AND (B) OWN AND HOLD TITLE TO THE IMPROVEMENTS, THE LESSEE IS SOLELY RESPONSIBLE FOR PROPERTY AND ANY ALTERATIONS OR MODIFICATIONS THERETO.  THE LESSEE FURTHER ACKNOWLEDGES AND AGREES THAT IT IS LEASING THE PROPERTY “AS IS, WHERE IS, AND WITH ALL FAULTS” WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE ADMINISTRATIVE AGENT OR ANY PARTICIPANT AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE (EXCLUDING LESSOR LIENS ATTRIBUTABLE TO LESSOR), (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 APPLICABLE LAW WHICH MAY EXIST ON THE DATE HEREOF, ON THE CLOSING DATE OR ON ANY DATE THEREAFTER.  NEITHER THE ADMINISTRATIVE AGENT NOR ANY PARTICIPANT 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 (OTHER THAN FOR LESSOR LIENS ATTRIBUTABLE TO THE ADMINISTRATIVE AGENT OR SUCH PARTICIPANT, AS THE CASE MAY BE), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT (EXCEPT SECTION 4.1 HEREOF) WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND NEITHER THE LESSOR NOR ANY OTHER PARTICIPANT SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS ATTRIBUTABLE TO THE LESSOR OR SUCH OTHER PARTICIPANT) OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAW.

SECTION 7.2.  Enforcement of Warranties; No Obligation of Lessor to Repair, etc .  The Lessor hereby appoints the Lessee as the Lessor’s attorney-in-fact, with full authority in the place and stead of the Lessor, to take such actions from time to time during the Lease Term so long as no Lease Event of Default shall have occurred and be continuing, at the Lessee’s sole cost and expense, as are necessary or desirable to enforce any warranty or guaranty of any Person relating to the Property.  The 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 (other than for Advances made in accordance with and pursuant to the terms of the Participation Agreement) or maintain the Property in any way.  The Lessee waives any right to (a) require the Lessor to maintain, repair, or rebuild all or any part of the Property or (b) make repairs at the expense of the Lessor pursuant to any Applicable Law, Insurance Requirement, contract, agreement, or covenant, condition or restriction in effect at any time during the Lease Term.

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SECTION 7.3.  No Liability of Participants, etc.   Nothing contained in this Lease shall be construed as constituting the consent or request of the Lessor, any other Participant, Affected Party, Indemnitee or other Person, 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 NEITHER THE ADMINISTRATIVE AGENT NOR ANY PARTICIPANT IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING ANY INTEREST IN THE PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC’S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR OR ANY OTHER PARTICIPANT IN AND TO THE PROPERTY.

ARTICLE VIII

POSSESSION AND USE OF THE PROPERTY, ETC.

SECTION 8.1.  Utility Charges .  The Lessee shall pay or cause to be paid all charges for electricity, power, gas, oil, water, telephone, sanitary sewer service and all other rents and utilities used in or on the Property during the Lease Term.  The Lessee shall be entitled to receive any credit or refund with respect to any utility charge paid by the Lessee and the amount of any credit or refund received by the Lessor on account of any utility charges paid by the Lessee, net of the costs and expenses reasonably incurred by the Lessor in obtaining such credit or refund, shall be promptly paid over to the Lessee.

SECTION 8.2.  Possession, Use and Operation of the Property .  Lessee covenants that the Property shall be used, operated and maintained as a first class office building and in a manner consistent with this Lease and the standards applied by the Lessee for other office building similar to the Property owned or leased by the Lessee and its Subsidiaries.  The 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.  The Lessee shall not commit or permit any waste or abandonment of the Property or any part thereof.

SECTION 8.3.  Compliance with Applicable Laws and Insurance Requirements; Necessary Permits, etc.   Subject to the terms of Article XII relating to permitted contests, the Lessee, at its sole cost and expense, shall:

(a)           comply in all material respects with all Applicable Laws (including all  Environmental Laws) relating to the Property, including the use, construction, operation, maintenance, repair and restoration thereof and the remarketing thereof pursuant to Article XX, whether or not compliance therewith shall require structural or extraordinary changes in the Improvements or interfere with the use and enjoyment of the Property,

(b)           comply in all material respects with all Insurance Requirements, and

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(c)           procure, maintain and comply in all material respects with all Necessary Permits, and notify the Lessor within ten (10) days of an officer of the Lessee having knowledge of any actual or pending termination or revocation of any Necessary Permit.

SECTION 8.4.  Non-discrimination Required by Ground Lease .  The Lessee herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the following conditions:

“That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, age, handicap, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the Lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein leased.”

ARTICLE IX

MAINTENANCE AND REPAIR

SECTION 9.1.  Maintenance and Repair .  The Lessee, at its sole cost and expense, shall maintain the Property in good condition (ordinary wear and tear excepted) and make all necessary repairs thereto, of every kind and nature whatsoever, whether interior or exterior, ordinary or extraordinary, structural or nonstructural or foreseen or unforeseen, in each case as required by all Applicable Laws and Insurance Requirements and in no event less than the standards applied by the Lessee in the operation and maintenance of facilities similar to the Property owned or leased by the Lessee or its Subsidiaries.

ARTICLE X

MODIFICATIONS, ETC

SECTION 10.1.  Modifications .  During the Lease Term, the 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, however , that:

(a)           except for any Modification required to be made pursuant to any Applicable Law (a “Required Modification” ), no Modification shall diminish the Fair Market Sales Value, residual value, utility or remaining useful life of the Property; and

(b)           such Modifications shall comply with Articles VIII and IX.

All Modifications shall remain part of the realty and title thereto shall immediately vest in the Lessor and be subject to the this Lease; provided, however , that Modifications that (i) are not Required Modifications, (ii) were not financed by the Participants and (iii) can be removed

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without causing (A) damage to the Property, (B) any diminution in the Fair Market Sales Value of the Property and (C) any diminution in the remaining useful life of the Property, shall be the property of the Lessee or other third party and may be removed by the Lessee during the Lease Term and shall not be subject to this Lease.  The Lessee may place upon the Property any trade fixtures, machinery, equipment, inventory or other property belonging to the Lessee or third parties and may remove the same, subject, however , to the terms of Section 9.1;  provided, however , that such trade fixtures, machinery, equipment, inventory or other property can be removed without causing damage to the Property, any diminution in the Fair Market Sales Value of the Property or any diminution in the remaining useful life of the Property; provided, further, however , that the Lessee shall keep and maintain at the Property and shall not remove from the Property any Equipment financed or otherwise paid for by the Participants pursuant to the Participation Agreement or the Prior Participation Agreement.

ARTICLE XI

DISCHARGE OF LIENS; CONDITION UPON RETURN

SECTION 11.1.  Lessee’s Obligation to Discharge Liens .  The Lessee agrees that except as otherwise provided herein and subject to the terms of Article XII relating to permitted contests, the Lessee shall not directly or indirectly create or allow to remain, and shall promptly discharge at its sole cost and expense, any Lien (other than any Permitted Property Lien), defect, attachment, levy, title retention agreement or claim upon the Property or any Lien, attachment, levy or claim with respect to the Rent or with respect to any amounts held by any Participant pursuant to the Operative Documents, other than Permitted Property Liens.

SECTION 11.2.  Condition Upon Return to Lessor .  The Lessee shall, upon the expiration or earlier termination of this Lease (other than as a result of the Lessee’s purchase of the Property from the Lessor as provided herein), vacate and surrender the Property to the Lessor in its then-current, “AS IS” condition, without any express or implied warranty subject to the Lessee’s obligations under Sections 8.3, Article IX, 10.1, 11.1, 14.3, 14.4 and Article XX.  Title to all improvements, furnishings, furniture, fixtures and any personal property of the Lessee which were not funded by the Lessor and the Lenders pursuant to the Participation Agreement or the Prior Participation Agreement, located on or about the Property whether or not affixed to the realty, shall, subject to the following sentence, be and remain the property of the Lessee throughout the Lease Term, and at any time during the Lease Term, may be removed by the Lessee or, at the Lessee’s election surrendered with the Property, in which event title to such surrendered property shall, if the Lessor so elects, be deemed transferred to the Lessor.  Notwithstanding the foregoing, any fixture constituting part of the Property which is required by Applicable Law or which cannot be removed without causing (a) material damage to the Property, (b) any diminution in the Fair Market Sales Value of the Property or (c) any diminution in the remaining useful life of the Property, shall at all times remain part of the Property.

 

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ARTICLE XII

PERMITTED CONTESTS; GRANTS AND RELEASES OF EASEMENTS;  GROUND
LEASE PURCHASE OPTION

SECTION 12.1.  Permitted Contests in Respect of Applicable Law Other Than Impositions .  Except to the extent otherwise provided in Section 13.5(b) of the Participation Agreement regarding Taxes and other Impositions, if, to the extent and for so long as (a) a test, challenge, appeal or proceeding for review of any Applicable Law relating to the Property shall be prosecuted diligently and in good faith in appropriate proceedings by the Lessee or (b) compliance with such Applicable Law shall have been excused or exempted by a valid nonconforming use, variance permit, waiver, extension or forbearance, the Lessee shall not be required to comply with such Applicable Law relating to the Property but only if and so long as any such test, challenge, appeal, proceeding, waiver, extension, forbearance or noncompliance shall not, in the reasonable opinion of the Lessor, the other Participants and the Administrative Agent, involve (i) any risk of criminal liability being imposed on any Indemnitee or (ii) any substantial risk of (A) foreclosure, forfeiture or loss of the Property or any material part thereof, (B) the nonpayment of Rent or (C) the sale of, or the creation of any Lien (other than a Permitted Property Lien) on, any part of the Property, (D) civil liability being imposed on any Indemnitee or the Property, or (E) enjoinment of, or interference with, the use, possession or disposition of the Property in any material respect.  The Lessor, at the Lessee’s sole cost and expense, shall execute and deliver to the Lessee such authorizations and other documents as may reasonably be required in connection with any such permitted contest.

The Lessor will not be required to join in any proceedings pursuant to this Section 12.1 unless a provision of any Applicable Law requires that such proceedings be brought by or in the name of the Lessor; and in that event the Lessor will join in the proceedings or permit them or any part thereof to be brought in its name if and so long as (a) the Lessee has not elected the Remarketing Option, (b) no Lease Default shall have occurred and be continuing and (c) the Lessee pays all related expenses of the Administrative Agent and the Indemnitees with respect to such proceedings and indemnifies the Administrative Agent and the Indemnitees with respect thereto

SECTION 12.2.  Grants and Releases of Easements; Lessor’s Waivers .  Provided that no Lease Event of Default shall have occurred and be continuing, from time to time upon request of the Lessee and subject to the Lessee’s prompt reimbursement of the Lessor’s costs and expenses, the Lessor (as holder of record of a leasehold interest in the Property) shall execute such documents reasonably satisfactory in form (which have been prepared at Lessee’s expense) to effect any of the actions set forth in clauses (a), (b), (c), (d), (e) and (f) of the following sentence, if in the Lessee’s reasonable and good faith opinion such action by the Lessor is necessary or appropriate to effect such intended actions.  Provided that (i) no Lease Event of Default shall have occurred and be continuing and (ii) that the same will not adversely affect the fair market sales value, performance, utility or remaining useful life of the Property; and subject to the provisions of Articles VII, IX and X and Section 8.3, the Lessor hereby consents in each instance to the following actions by the Lessee as the Lessor’s agent, and the Lessor hereby appoints the Lessee the Lessor’s attorney-in-fact, with full authority in the place and stead of the Lessor to take such action or actions from time to time during the Lease Term, but at the Lessee’s sole cost

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and expense: (a) the granting of easements, licenses, rights-of-way and other rights and privileges in the nature of easements reasonably necessary or desirable for the use, repair, operation or maintenance of the Property as herein provided; (b) the release of existing easements or other rights in the nature of easements which are for the benefit of the Property; (c) if required by applicable Governmental Authority, the dedication or transfer of unimproved portions of the Property for road, highway or other public purposes; (d) the execution of amendments to any covenants and restrictions; (e) the filing and processing of  any and all permit applications, authorizations, entitlements, agreements with any government or regulatory agency or amendments thereof, or other documents reasonably required or beneficial for construction or Modification of the Improvements, or amendments to Permitted Property Liens or governmental permits or approvals affecting the Property; and (f) the execution and filing of tract or parcel maps subdividing the Land into lots or parcels or reconfiguring existing lots or parcels; provided, however , that in each case:  (i) such grant, release, dedication, transfer or amendment is, in the Lessee’s judgment, reasonably necessary or beneficial in connection with the use, maintenance, alteration or improvement of the Property, (ii) such grant, release, dedication, transfer or amendment will not cause the Property or any portion thereof to fail to comply with the provisions of this Lease or any other Operative Documents and all Applicable Law (including, without limitation, all applicable zoning, planning, building and subdivision ordinances, all applicable restrictive covenants and all applicable architectural approval requirements); (iii) any and all governmental consents or approvals required prior to (or as a consequence of) such grant, release, dedication, transfer, annexation or amendment have been obtained, and any and all filings required prior to (or as a consequence of) such action have been made; (iv) the Lessee shall remain obligated under this Lease and under any instrument executed by the Lessee consenting to the assignment of the Lessor’s interests in this Lease as security for indebtedness, in each such case in accordance with their terms, as though such grant, release, dedication, transfer or amendment had not been effected; (v) the Lessee shall pay and perform any obligations of the Lessor under such grant, release, dedication, transfer or amendment and (vi) such grant, release, dedication, transfer or amendment will not materially adversely affect the Fair Market Sales Value, residual value, utility or remaining useful life of the Property.  The Lessor acknowledges the Lessee’s right to finance and to secure under the Uniform Commercial Code, inventory, furnishings, furniture, equipment, machinery, leasehold improvements and other personal property located at the Property other than Equipment, and the Lessor agrees to execute Lessor waiver forms and release of Lessor Liens in favor of any purchase money seller, lessor or lender which has financed or may finance in the future such items.  Without limiting the effectiveness of the foregoing, provided , that no Lease Event of Default shall have occurred and be continuing, the Lessor shall, upon the request of the Lessee, and at the Lessee’s sole cost and expense, execute and deliver any instruments necessary or appropriate to confirm any such grant, release, dedication, transfer, annexation or amendment to any Person permitted under this Section 12.2 including landlord waivers with respect to any of the foregoing.

SECTION 12.3.  Purchase Option Under Ground Lease .  So long as no Event of Default under this Lease shall have occurred and be continuing, Lessor shall not exercise any purchase option right under the Ground Lease without Lessee’s prior written consent (which consent Lessee may withhold in its sole discretion at any time unless an Event of Default under this Lease shall have occurred and be continuing).  So long as no Event of Default under this Lease shall have occurred and be continuing, upon the Lessee’s written request, Lessor shall (at Lessee’s cost and expense and no cost or expense to Lessor) cooperate with Lessee so as to

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permit Lessee to acquire the Ground Lessor’s interest under the Ground Lease and become the lessor thereunder pursuant to any purchase option right contained in the Ground Lease (which cooperation may include either an assignment of such purchase option rights to Lessee or by Lessor exercising such purchase option on behalf of and for the benefit of the Lessee); provided, however, that Lessor shall have no obligation or liability with respect to the purchase of such interests of the Ground Lessor, and Lessee shall indemnify and hold Lessor harmless from and against any and all loss, cost, liability, claim, damage or expense suffered or incurred by Lessor (including taxes and attorney’s fees and costs) as a consequence of, or in any way related to, the assignment to Lessee or the exercise of any such purchase option right under the Ground Lease or any actions taken by Lessor with respect thereto.

ARTICLE XIII

INSURANCE

SECTION 13.1.  Required Insurance.   During the Lease Term, the Lessee shall, at its own expense, maintain insurance as set forth herein.

(a)           Commercial General Liability Insurance.   During the Lease Term, the Lessee shall procure and carry or cause to be procured and carried, at the Lessee’s sole cost and expense, commercial general liability insurance (including for bodily injuries or death sustained by persons and damage to property) and such other public liability coverages as are ordinarily procured by the Lessee with respect to similar facilities.  The terms and amounts of such liability insurance shall be consistent with normal industry practice, but in any event not less than the scope and amount of coverage as are ordinarily procured by the Lessee with respect to office buildings similar to the Property; provided, however, that such coverage shall be in an amount of at least $5,000,000 combined single limit per occurrence and in the aggregate, as applicable.  In no event may the coverage described in this clause (a) be provided on claims-made (as opposed to an occurrence) coverage form.

(b)           Property Insurance .  During the Lease Term, the Lessee shall obtain, and keep in full force and effect, a policy or policies of property insurance insuring the Property for the full replacement cost thereof (without depreciation) against physical damage to the Improvements caused by perils now or hereafter defined in an “all risks” insurance policy, including but not limited to fire, lightning, windstorm, hail, explosion, riot and civil commotion, vandalism and malicious mischief, and smoke, with coverage for flood to the extent available on commercially reasonable terms for the Lessee.  Lessee will self-insure against loss or damage to the Improvements caused by any earthquake, and Lessee will not be required to maintain earthquake insurance but may elect to do so.

(c)           Worker’s Compensation and Employers’ Liability Insurance .  During the Lease Term, the Lessee shall (i) maintain workers’ compensation insurance as required by the State of California, and (ii) maintain employer’s liability insurance with a $1,000,000 minimum limit per accident and a $1,000,000 minimum limit for excess liability.

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(d)           Automobile Liability Insurance .  During the Lease Term, the Lessee shall maintain automobile liability insurance against claims for personal injury (including bodily injury and death) and property damage covering all owned, leased, non-owned and hired vehicles, including loading and unloading, with a $1,000,000 minimum limit per occurrence.

SECTION 13.2.  Deductibles; Insurance Providers; Coverage and Endorsements; Confirmation of Insurance, etc.

(a)           Deductibles .  The insurance required to be obtained by Lessee under this Article XIII may be subject to such reasonable deductible amounts as is consistent with the Lessee’s practice for other properties similar to the Property owned or leased by Lessee, and may be carried under blanket policies maintained by or on behalf of the Lessee so long as such policies otherwise comply with the provisions of this Article XIII.

(b)           Insurance Providers .  All insurance required to be carried pursuant to the requirements of this Article XIII shall be written by reputable insurance companies that are financially sound and solvent and otherwise reasonably appropriate considering the amount and type of insurance being provided by such companies.  Any insurance company selected by the Lessee which is rated in Best’s Insurance Guide or any successor thereto (or if there be none, an organization having a similar national reputation) shall have a general policyholder rating of “A--” and a financial rating of at least “IX” or , if not rated in Best’s Insurance Guide, an S&P rating of “BBB” or better, or be otherwise reasonably acceptable to the Lessor and the Administrative Agent.  Such rating shall not be required with respect to any insurance required by this Article XIII if on any date such insurance is underwritten by an Eligible Captive Insurance Subsidiary of Lessee, Lessee’s Consolidated Leverage Ratio for the most recently preceding four (4) quarter period is 3.00 to 1.00 or less.

(c)           Endorsements .  All insurance required to be carried or arranged for by the Lessee pursuant to the requirements of Section 13.1 shall provide in the policy or by special endorsement that:

(i)            in the case of insurance required by Section 13.1(a) or 13.1(d), the Administrative Agent and each Participant are included as “additional insureds” ;

(ii)           in the case of insurance required by Section 13.1(b), the Lessor is named as “loss payee” , each Participant is named as its interest may appear, and such insurance shall include a standard form “mortgagee endorsement” in favor of the Administrative Agent on behalf of the Participants;

(iii)          the insurer thereunder waives all rights of subrogation against the Administrative Agent and each Participant;

(iv)          such insurance shall be primary and shall apply to any loss or claim before any contribution of any other insurance carried by or on behalf of the Lessor;

(v)           if the insurers cancel such insurance for any reason whatsoever or any materially adverse change is made in policy terms or conditions, such cancellation or

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change shall not be effective as to the Administrative Agent and the Participants for thirty (30) days after receipt by the Lessor, the Administrative Agent and the Participants of written notice from such insurers of such cancellation or change; and if such insurance is allowed to lapse for nonpayment of premium, such lapse shall not be effective as to the Administrative Agent and the Participants for ten (10) days after receipt by the Lessor, the Administrative Agent and the Participants of written notice from such insurers of such lapse; and

(vi)          with respect to all liability insurance, in as much as the policies are written to cover more than one insured, all terms, conditions, insuring agreements and endorsements, with the exception of the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured, and such policies shall be endorsed to provide a severability of interest or cross liability clause.

(d)           Payment of Premiums .  The Lessee shall pay or cause to be paid all premiums for the insurance required hereunder.  The Lessee shall renew or replace, or cause to be renewed or replaced, each insurance policy required hereunder prior to the expiration date thereof.

(e)           Confirmation of Insurance .  Promptly (but in any event within thirty (30) days) after (i) the renewal of each insurance policy required hereunder, (ii) the issuance of any additional policies or amendments or supplements to any of such policies or (iii) the issuance of any such insurance the Lessee shall provide the Lessor certificates of insurance evidencing the existence of all insurance then required to be maintained by the Lessee pursuant to this Article XIII.

ARTICLE XIV

RISK OF LOSS; CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS

SECTION 14.1.  Risk of Loss.

(a)           Lease Term .  During the Lease Term, 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 other acts of God, taking, destruction, confiscation, requisition or commandeering, partial or complete, of or to the Property and/or any part thereof, however caused or occasioned, shall be borne by the Lessee until the Property has been returned to the Lessor in accordance with the provisions of this Lease or has been purchased by the Lessee or another Person in accordance with the provisions of this Lease.  The Lessee agrees that no occurrence specified in the preceding sentence shall impair, in whole or in part, any obligation of the Lessee under this Lease, including the obligation to pay Basic Rent and Supplemental Rent.

(b)           Participants Not Accountable to Lessee .  None of the Administrative Agent, any Participant or their respective agents, employees or contractors shall in any event be answerable or accountable to the Lessee for any loss of or decrease in the enjoyment or beneficial use of the Property, except for loss or damages arising from the gross negligence or willful misconduct of the Administrative Agent or such Participant, as the case may be.

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SECTION 14.2.  [Reserved].

SECTION 14.3.  Casualty or Condemnation.

(a)           Subject to the provisions of this Article XIV, if all or a portion of the Property is damaged or destroyed in whole or in part by a Casualty during the Lease Term or if the use, access, occupancy, easement rights or title to the Property or any part thereof, is the subject of a Condemnation during the Lease Term, then

(i)            in the case of a Casualty affecting the Property that is not an Event of Loss, any insurance proceeds payable with respect to such Casualty shall be paid directly to the Lessee (or if received by the Lessor, shall be paid over to the Lessee) for the sole purpose of reconstruction, refurbishment and repair of the Property; provided, however , that in the event that either (A) such reconstruction, refurbishment or repair cannot be completed prior to the end of the Lease Term or (B) the Lessee shall elect not to use such proceeds for the reconstruction, refurbishment or repair of the Property, then all such insurance proceeds payable with respect to such Casualty shall be paid to the Lessor to be applied towards the payment of the Property Cost in accordance with Section 7.2 of the Participation Agreement,

(ii)           in the case of a Condemnation of any part of the Property that is not an Event of Loss, any award or compensation relating thereto shall be paid to the Lessee for the sole purpose of restoration of the Property; provided, however , that if such restoration cannot be completed prior to the end of the Lease Term, then such award or compensation shall be paid to the Lessor to be applied towards the payment of the Property Cost in accordance with Section 7.2 of the Participation Agreement, and

(iii)          in the case of any Casualty or Condemnation that is an Event of Loss, such award or compensation shall be paid to the Lessor to be applied toward the payment of the Property Cost on the Termination Date in accordance with Article XV;

provided, however , that, in each case, if a Lease Event of Default shall have occurred and be continuing, such award, compensation or insurance proceeds shall be paid directly to the Lessor or, if received by the Lessee, shall be held in trust for the Lessor and the other Participants, and shall be paid by the Lessee to the Account to be distributed in accordance with Article VII of the Participation Agreement.  At any time that a Lease Event of Default shall have occurred and be continuing, all amounts held by the Lessor, the Administrative Agent, or any other Participants on account of any award, compensation or insurance proceeds either paid directly to the Lessor, any other Participant or the Administrative Agent or turned over to the Lessor, any other Participant or the Administrative Agent shall at the option of the Lessor either be (i) paid to the Lessee for the repair of damage caused by such Casualty or Condemnation in accordance with clause (d) of this Section 14.3, or (ii) applied to the repayment of the Property Cost on the Termination Date in accordance with Article XV.

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(b)           The 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 the Lessee’s reasonable request, and at the Lessee’s sole cost and expense, the Lessor and the Administrative Agent shall participate in any such proceeding, action, negotiation, prosecution or adjustment.  The Lessor and the Lessee agree that this Lease shall control the rights of the Lessor and the Lessee in and to any such award, compensation or insurance payment.

(c)           If the Lessor or the Lessee shall receive notice of a Casualty or of an actual, pending or threatened Condemnation of the Property or any interest therein, the Lessor or the Lessee, as the case may be, shall give notice thereof to the other and to the Administrative Agent promptly after the receipt of such notice.

(d)           If pursuant to this Section 14.3 and Section 15.1, this Lease shall continue in full force and effect following a Casualty or Condemnation with respect to the Property, the Lessee shall, at its sole cost and expense (and, without limitation, if any award, compensation or insurance payment is not sufficient to restore the Property in accordance with this clause (d), the Lessee shall pay the shortfall), promptly and diligently repair any damage to the Property caused by such Casualty or Condemnation in conformity with the requirements of Sections 8.3 and 9.1, to restore the Property to substantially the same condition, operative value and useful life as existed immediately prior to such Casualty or Condemnation.  Upon completion of such restoration, the Lessee shall furnish to the Lessor (which, in turn, shall furnish to the Administrative Agent) an architect’s certificate of substantial completion and an Authorized Officer’s Certificate confirming that such restoration has been completed pursuant to this Lease.

(e)           In no event shall a Casualty or Condemnation affect the Lessee’s obligations to pay Rent pursuant to Section 3.1 or to perform its obligations and pay any amounts due on the Expiration Date or pursuant to Articles XVIII and XIX.

(f)            Any Exc