Master Lease And Deed Of Trust

EXECUTION VERSION


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MASTER LEASE AND DEED OF TRUST


Dated as of December 6, 2000


among


ELECTRONIC ARTS REDWOOD, INC.,
as Lessee


and


SELCO SERVICE CORPORATION,
as Lessor


and


FIRST AMERICAN TITLE INSURANCE COMPANY,
as Trustee under the Deed of Trust


Lease Financing of Corporate Headquarters Buildings
Located in Redwood City, San Mateo County, California


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This Master Lease and Deed of Trust is subject to a lien in favor of KeyBank National Association, as the Agent ("Agent") under the Participation Agreement. This Master Lease and Deed of Trust has been executed in several counterparts. To the extent, if any, that this Master Lease and Deed of Trust constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no lien on this Master Lease and Deed of Trust may be created through the transfer or possession of any counterpart other than the original counterpart containing the receipt therefor executed by the Agent on or following the signature page hereof.


This counterpart is [not] the original counterpart.


MASTER LEASE AND DEED OF TRUST


THIS MASTER LEASE AND DEED OF TRUST (as amended, restated or otherwise modified and in effect from time to time, this "Master Lease"), dated as of December 6, 2000, is entered into by and among ELECTRONIC ARTS REDWOOD, INC., a Delaware corporation, as lessee (in such capacity, together with its permitted successors and assignees, the "Lessee"), SELCO SERVICE CORPORATION, an Ohio corporation doing business in California as Ohio SELCO Service Corporation, as lessor (in such capacity, together with its permitted successors and assigns, the "Lessor") and acknowledged by FIRST AMERICAN TITLE INSURANCE COMPANY, as Trustee under the Deed of Trust contained in this Master Lease.


W I T N E S S E T H:
- - - - - - - - - -


WHEREAS, this Master Lease pertains to certain real property situated in San Mateo County, California, described on Exhibit A attached to the Participation Agreement (as more fully defined in Appendix A to the Participation Agreement, the "Land") and the improvements (the "Improvements") now or hereafter located on the Land (the Land together with the Improvements, as more fully defined in Appendix A to the Participation Agreement, the "Property"); and


WHEREAS, pursuant to a Participation Agreement (as amended, restated or otherwise modified and in effect from time to time, the "Participation Agreement"), dated as of December 6, 2000, by and among the Lessee, the Construction Agent, the Guarantor, the Lessor, the Note Purchaser, the Conduit Agent, the Liquidity Banks, the Letter of Credit Issuer and the Agent, the Lessor and the Lessee have agreed, subject to the terms and conditions thereof, to finance the acquisition of the Land and the construction of the Improvements;


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 hereby agree as follows:


ARTICLE I
DEFINITIONS


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


ARTICLE II
LEASE OF IMPROVEMENTS


Section 2.1. Acceptance and Lease of the Property. On the terms and subject to the conditions set forth in the Participation Agreement and set forth herein, (i) the Lessor hereby agrees to lease the Lessor's interest in the Property (including any and all of the Lessor's


Master Lease


contractual rights and benefits relating thereto) to the Lessee for the Lease Term and (ii) the Lessee hereby agrees to lease such interest from the Lessor for the Lease Term.


Section 2.2. Acceptance Procedure. The Lessee hereby agrees that the execution and delivery by the Lessee of this Master Lease shall, without further act, constitute the irrevocable acceptance by the Lessee of all of the Property for all purposes of this Master Lease and the other Operative Documents on the terms set forth therein and herein, and that all of the Property shall be deemed to be included in the leasehold estate of this Master Lease and shall be subject to the terms and conditions of this Master Lease as of the Initial Funding Date.


Section 2.3. Lease Term. The term of this Master Lease shall be for five and one-half (5 1/2) years (the "Lease Term"). The Lease Term shall commence on (and include) the Initial Funding Date and end on (but exclude) the Maturity Date, unless earlier terminated pursuant to the terms hereof or pursuant to Section 6.5 of the Construction Agency Agreement.


Section 2.4. Title/Risk of Loss. 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 on the Initial Funding Date (including all Liens other than Lessor Liens) and Applicable Law. The Lessee shall not in any event have any recourse against the Lessor for any defect in or exception to title to the Property other than those resulting from Lessor Liens. Notwithstanding the Lessor's holding of title to the Property hereunder, the Lessee shall retain all risk of loss with respect thereto, except to the extent expressly provided herein or in the Construction Agency Agreement.


ARTICLE III
PAYMENT OF RENT


Section 3.1. Basic Rent.


(a) Basic Rent. On each Basic Rent Payment Date during the Lease Term, the Lessee shall pay directly for the account of the Lessor, or as otherwise directed by the Lessor, the accrued and unpaid Basic Rent then due. The Lessor hereby irrevocably directs that the proceeds of all Basic Rent allocable to the Notes and the Equity Investment shall be paid to Agent in accordance with the provisions of the Participation Agreement.


(b) Payment of Basic Rent. Basic Rent shall be payable on each Basic Rent Payment Date, as provided in the Participation Agreement.


Section 3.2. Supplemental Rent. The Lessee shall pay as Supplemental Rent hereunder the following:


(a) If the Lessee acquires the Lessor's interest in and to the Property pursuant to Section 16.1 hereof or exercises its Purchase Option pursuant to Section 18.1(a) hereof, then the Lessee will pay, as Supplemental Rent hereunder, an amount equal to the Outstanding Lease Balance.


(b) If a third party or parties acquires the Lessor's interest in and to the Property pursuant to Section 18.3 hereof, then the Lessee shall pay, or cause to be paid, in the case of


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proceeds received pursuant to Section 18.3 hereof, as Supplemental Rent, the Gross Remarketing Proceeds (as determined in accordance with Section 18.3 hereof).


(c) If the Remarketing Option is exercised pursuant to Section 18.3 hereof, then the Lessee shall pay, as Supplemental Rent whether or not a sale of the Property occurs, an amount equal to the Maximum Recourse Amount (if any) (determined in accordance with Section 18.3 hereof).


(d) If a third party or parties acquires the Lessor's interest in and to the Property pursuant to Section 17.8 hereof, then the Lessee shall pay, or cause to be paid, in the case of proceeds received pursuant to Section 17.8 hereof, as Supplemental Rent, the Unwind Proceeds (as determined in accordance with Section 17.8 hereof).


(e) If the Unwind Option is exercised pursuant to Section 17.8 hereof, then the Lessee shall pay, as Supplemental Rent, whether or not a sale of the Property occurs, an amount equal to the Maximum Unwind Amount (if any) (determined in accordance with Section 17.8 hereof).


(f) Without duplication of any of the foregoing, whenever any make whole premium, yield maintenance premium or brokerage cost is due on any of the Notes, Loans or Equity Investment pursuant to Section 4.3, 4.4 or 4.6 of the Participation Agreement or any UpFront Fees, Commitment Fees, Issuance Fees, Structuring Fees or other fees due to any Lessor Party under the Operative Documents, the Lessee shall pay to the Lessor the same amount hereunder as Supplemental Rent.


(g) All other amounts (other than Basic Rent and the amounts set forth in clauses (a) - (f) above) payable by the Lessee under this Master Lease and the other Operative Documents.


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 and payable or, if no date is specified for the payment of any such amount, within five (5) Business Days after written demand of the Lessor or any other Lessor Party to whom such amount is payable.


Section 3.3. Non-Payment of Rent. If the Lessee fails to pay any Rent when due, the Lessee shall pay to the Lessor or the Person entitled thereto, as Supplemental Rent, among other things, on demand, to the extent permitted by Applicable Law, interest at the applicable Overdue Rate on any installment of Basic Rent and on any payment of any Supplemental Rent not paid when due or demanded by the Lessor or any Indemnitee for the period from and including the due date thereof to but excluding the date paid. The expiration or other termination of the obligations of the Lessee to pay Basic Rent hereunder shall not limit or modify the obligations of the Lessee with respect to accrued Supplemental Rent. Unless expressly provided otherwise in this Master Lease or the Participation Agreement, in the event of any failure on the part of the Lessee to pay and discharge any Basic Rent or 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 Operative Document for nonpayment or late payment of such Basic Rent or Supplemental Rent, all of which shall also constitute Supplemental Rent.


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Section 3.4. Security Deposit. On the first Rent Payment Date of the Base Lease Term, the Lessee shall make a payment to the Lessor in an amount of $16,000,000 (such amount, the "Security Deposit"), the proceeds of which shall be used by the Lessor to retire a portion of the outstanding balance of the Notes (in the aggregate principal amount of such Security Deposit so paid).


Section 3.5. Method of Payment. Each payment of Basic Rent or Supplemental Rent payable by the Lessee pursuant to this Master Lease or any other Operative Document shall be made by wire transfer prior to 2:00 p.m., New York time on the date due, to the relevant account specified on Schedule I of the Participation Agreement in immediately available funds consisting of Dollars. Payments received after 2:00 p.m., New York time, on the date due shall, solely for the purpose of Section 17.1, be deemed to have been received on such day; provided, however, that for the purpose of the second sentence of Section 3.3, such payments shall be deemed to have been received on the next succeeding Business Day and subject to interest at the Overdue Rate as provided in such Section 3.3.


Section 3.6. Non-Business Day Payments. If any Basic Rent Payment Date falls on a day that is not a Business Day, the amount of Basic Rent otherwise due on such Basic Rent Payment Date shall instead be due on the next succeeding Business Day and Basic Rent shall be recalculated as if such next succeeding Business Day were such Basic Rent Payment Date.


Section 3.7. Assignment of Basic Rent and Other Payments . The Lessor hereby irrevocably directs that each payment of Basic Rent, Supplemental Rent, Outstanding Lease Balance, Purchase Option Price, Maximum Recourse Amount, and Maximum Unwind Amount payable by the Lessee under this Master Lease or any other Operative Document shall be made for its account to or as directed by the Agent pursuant to the payment instructions set forth in Schedule I of the Participation Agreement and applied in accordance with the relevant provisions of Article XI of the Participation Agreement. To the extent that the Lessee shall have timely made such payments in full in immediately available funds to the Agent or as directed by the Agent, the Lessee's obligation with respect to such payment under the Operative Documents shall be deemed satisfied in the amount of such payment and none of the Lessee Parties shall be responsible for any undue delay or failure on the part of the Agent in remitting the appropriate amounts to the other Lessor Parties or any other Person entitled to such payment.


ARTICLE IV
RIGHTS OF THE LESSEE; INSPECTION RIGHTS; REPORTS


Section 4.1. Rights of the Lessee. Subject to Section 4.2 hereof, and subject to the terms of the other Operative Documents to which the Lessee is a party, during the Lease Term at any time when no Lease Event of Default shall exist, the Lessee shall be entitled to receive, enjoy, distribute and otherwise dispose of the income, royalties, payments, recoveries and other proceeds with respect to (or included as a part of) the Property without the consent or joinder of the Lessor.


Section 4.2. Inspection Rights. Without limiting any Lessor Party's rights set forth in Section 8.1(e) of the Participation Agreement, upon five (5) Business Days prior notice to the Lessee, each of the Lessor Parties and their respective authorized representatives (the "Inspecting


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Parties") may inspect (a) the Property, including, to the extent relevant, environmental testing and sampling, and (b) the books and records of the Lessee relating to the Property and make copies and abstracts therefrom, but only after material related to matters other than the Property shall have been redacted therefrom. All such inspections shall be at the expense and risk of the Inspecting Parties, except that if a Lease Event of Default or Lease Default has occurred and is continuing, the Lessee shall reimburse the Inspecting Parties for the reasonable costs of such inspections and such inspections shall be at the Lessee's risk, excluding the gross negligence or willful misconduct of an Inspecting Party. The Lessee shall furnish to the Inspecting Parties statements that are, to the best of the Lessee's knowledge after reasonable inquiry, accurate in all material respects, regarding the condition and state of repair of the Property at such times as may be reasonably requested; provided, however, the Lessor Parties shall not require such statements more than once a year so long as no Lease Default or Lease Event of Default shall have occurred and be continuing. No inspection shall unreasonably interfere with the Lessee's operations or the operations of any other occupant of the Property. None of the Inspecting Parties shall have any duty to make any such inspection or inquiry and none of the Inspecting Parties shall incur any liability or obligation by reason of not making any such inspection or inquiry. None of the Inspecting Parties shall incur any liability or obligation by reason of making any such inspection or inquiry unless and to the extent, so long as no Lease Default or Lease Event of Default has occurred and is continuing at the time of inspection, such Inspecting Party causes damage to the Property or any property of the Lessee or any other Person during the course of such inspection.


Section 4.3. Reports. To the extent permissible under Applicable Law, the Lessee shall prepare and file in a timely fashion, or, where the Lessor shall be required to file, the Lessee shall prepare and make available to the Agent on behalf of the Lessor Parties within a reasonable time prior to the date for filing and the Lessor shall timely file, any reports with respect to the condition or operation of the Property that shall be required to be filed with any Governmental Authority.


ARTICLE V
NET LEASE, ETC.


Section 5.1. Net Lease. This Master Lease shall constitute a net lease and the Lessee's obligations to pay all Basic Rent and Supplemental Rent shall be absolute and unconditional under any and all circumstances. Any present or future law to the contrary notwithstanding, this Master Lease shall not terminate, nor shall the Lessee be entitled to any abatement, suspension, deferment, reduction, setoff, counterclaim, or defense with respect to the Basic Rent or Supplemental 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: (i) any defect in the condition, merchantability, design, construction, quality or fitness for use of the Property or any part thereof, or the failure of any Improvements or the Land to comply with all Applicable Laws, including any inability to use any Improvements or Land by reason of such non-compliance; (ii) any damage to, removal, abandonment, salvage, loss, contamination of, scrapping or destruction of or any requisition or taking of any Improvements or the Land or any part thereof, (iii) any restriction, prevention or curtailment of or interference with the use of any Improvements or the Land or any part thereof; (iv) any defect in the Lessor's title to or rights to any Improvements or the Land or any Lien on such title or rights or on any Improvements or the Land; (v) any change, waiver, extension, indulgence or other action or


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omission or breach in respect of any obligation or liability of or by any of the Lessor Parties; (vi) to the extent permitted by Applicable Law, any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to any Transaction Party or any action taken with respect to this Master Lease by any trustee or receiver of any Transaction Party or by any court, in any such proceeding; (vii) any claim that the Lessee has or might have against any Person, including the Lessor or any vendor, manufacturer, or supplier of any of the Improvements; (viii) any failure on the part of the Lessor to perform or comply with any of the terms of this Master Lease or any of the terms of any other Operative Document or any other agreement; (ix) any invalidity or unenforceability or illegality or disaffirmance of this Master Lease against or by the Lessee or any provision hereof or any of the other Operative Documents or any provision of any thereof; (x) the impossibility or illegality of performance by the Lessee or the Lessor; (xi) any action by any court, administrative agency or other Governmental Authority; (xii) any Adverse Environmental Condition, or (xiii) 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 agreement of the Lessee in the preceding sentence shall not affect any claim, action or right that the Lessee may have against the Lessor or any other Person, including pursuant to Section 20.1 hereof. 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 Document 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 Master Lease.


Section 5.2. No Termination or Abatement. The Lessee shall remain obligated under this Master Lease in accordance with its terms and shall not take any action to terminate, rescind or avoid this Master Lease (except as provided herein) notwithstanding any action for bankruptcy, insolvency, reorganization, liquidation, dissolution or other proceeding affecting any Transaction Party or any action with respect to this Master Lease which may be taken by any trustee, receiver or liquidator of any Transaction Party or by any court with respect to any Transaction Party. The Lessee hereby waives all right (i) to terminate or surrender this Master Lease (except as provided herein) or (ii) to avail itself of any abatement, suspension, deferment, reduction, setoff, counterclaim or defense with respect to any Basic Rent or Supplemental Rent. The Lessee shall remain obligated under this Master Lease in accordance with its terms and to the extent waivable under applicable law, 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 Master Lease. Notwithstanding any such statute or otherwise, the Lessee shall be bound by all of the terms and conditions contained in this Master Lease.


ARTICLE VI
ASSIGNMENT BY THE LESSEE; SUBLEASING


Section 6.1. General. THE LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE CONSENTING PARTIES, TRANSFER, ASSIGN OR ENCUMBER (OTHER THAN UNDER THE OPERATIVE DOCUMENTS) THIS MASTER LEASE OR ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER OR SUBLEASE THE PROPERTY OR ANY PART THEREOF EXCEPT AS PERMITTED BY SECTION 6.2 HEREOF, AND ANY SUCH TRANSFER, ASSIGNMENT, ENCUMBRANCE


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OR SUBLEASE THAT IS NOT PERMITTED BY SECTION 6.2 HEREOF AND MADE WITHOUT SUCH WRITTEN CONSENTS THERETO SHALL BE NULL AND VOID.


Section 6.2. Subletting. At the beginning of the Base Lease Term, the Lessee may sublease the Property or any portion thereof to any Person; 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 Lessor Parties under this Master Lease and the other Operative Documents and the Lessee shall remain directly and primarily liable under this Master 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 Master Lease and to the rights of the Lessor hereunder; (c) each sublease prohibits the sublessee from engaging in any activities on the Property that are not consistent with those permitted by Section 8.2 or that are otherwise prohibited by Section 8.2; (d) 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; (e) each sublease shall have a term which expires on or prior to the Maturity Date (or, if longer, includes a provision which expressly provides for automatic termination at or prior to the earlier of (i) the Maturity 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 hereof; and (f) no sublease has a Material Adverse Effect.


Section 6.3. Assignment of Subleases. As additional security to the Lessor for the performance of all of the Obligations, the Lessee hereby assigns to the Lessor and grants to the Lessor a security interest in all of the following, to the extent assignable: all of the Lessee's right, title and interest in and to (x) all leases and subleases, whether now or hereafter in effect, of the Property (or any portion thereof), and (y) all rents, fees and other sums payable to the Lessee under any lease or sublease of the Property (or any portion thereof). The Lessor shall have no obligation to perform, and the Lessee shall not by reason of this Section 6.3 be relieved of its obligation to perform, any of the Lessee's covenants or agreements under this Master Lease or covenants or agreements of the Lessee, as sublessor under any such lease or sublease.


ARTICLE VII
LESSEE ACKNOWLEDGMENTS


Section 7.1. Condition of the Property. THE LESSEE ACKNOWLEDGES AND AGREES THAT ALTHOUGH THE LESSOR OWNS AND HOLDS TITLE TO THE PROPERTY, THE LESSEE IS LEASING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR, OR ANY OTHER TRANSACTION PARTY AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE (EXCLUDING LESSOR LIENS), (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 ANY FUNDING DATE. NO TRANSACTION PARTY 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 SUCH PERSON), VALUE,


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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 LAND OR THE IMPROVEMENTS (OR ANY PART THEREOF) AND NO TRANSACTION PARTY (EXCEPT FOR THE LESSEE AND THE GUARANTOR, BUT SOLELY TO THE EXTENT EXPRESSLY PROVIDED IN THE PARTICIPATION AGREEMENT) SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS ATTRIBUTABLE TO SUCH PERSON) OR THE FAILURE OF THE LAND OR THE IMPROVEMENTS, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAW AND SHALL ASSUME ALL RISKS OF DEFECTS AND ADVERSE PHYSICAL OR ENVIRONMENTAL CONDITION IN CONNECTION WITH EACH AND EVERY SITE, INCLUDING, WITHOUT LIMITATION, THE RISK THAT ITS EXAMINATION DID NOT REVEAL ALL DEFECTS OR ADVERSE CONDITIONS.


Section 7.2. Acknowledgment of Note Purchases, Equity Investment and Lease Assignment. The Lessor and the Lessee hereby acknowledge that the right of the Lessor to receive Basic Rent and Supplemental Rent and certain other rights under this Master Lease has been pledged to the Agent t ...