account for the Security Deposit, but may intermingle it with other funds of
Landlord.
Landlord shall be entitled to all interest and/or dividends, if any,
accruing on the Security Deposit.
Landlord shall not be required to credit
Tenant with any interest for any period during which Landlord does not receive
interest on the Security Deposit.
12.7.
THE SECURITY DEPOSIT MAY BE IN THE FORM OF CASH, A LETTER OF CREDIT
OR ANY OTHER SECURITY INSTRUMENT ACCEPTABLE TO LANDLORD IN ITS SOLE DISCRETION.
TENANT MAY AT ANY TIME, EXCEPT DURING DEFAULT (AS DEFINED BELOW), DELIVER A
LETTER OF CREDIT (THE "L/C SECURITY") AS THE ENTIRE SECURITY DEPOSIT, AS
FOLLOWS.
(A)
IF TENANT ELECTS TO DELIVER L/C SECURITY, THEN TENANT SHALL
PROVIDE LANDLORD, AND MAINTAIN IN FULL FORCE AND EFFECT THROUGHOUT THE TERM AND
UNTIL THE DATE THAT IS SIXTY (60) DAYS AFTER THE THEN CURRENT TERM EXPIRATION
DATE, A LETTER OF CREDIT IN THE FORM OF EXHIBIT E ISSUED BY AN ISSUER REASONABLY
SATISFACTORY TO LANDLORD, IN THE AMOUNT OF THE SECURITY DEPOSIT, WITH AN INITIAL
TERM OF AT LEAST ONE YEAR.
LANDLORD MAY REQUIRE THE L/C SECURITY TO BE
RE-ISSUED BY A DIFFERENT ISSUER AT ANY TIME DURING THE TERM IF LANDLORD
REASONABLY BELIEVES THAT THE ISSUING BANK OF THE L/C SECURITY IS OR MAY SOON
BECOME INSOLVENT; PROVIDED, HOWEVER, LANDLORD SHALL RETURN THE EXISTING L/C
SECURITY TO THE EXISTING ISSUER IMMEDIATELY UPON RECEIPT OF THE SUBSTITUTE L/C
SECURITY.
IF ANY ISSUER OF THE L/C SECURITY SHALL BECOME INSOLVENT, THEN TENANT
SHALL IMMEDIATELY DELIVER TO LANDLORD (WITHOUT THE REQUIREMENT OF NOTICE FROM
LANDLORD) SUBSTITUTE L/C SECURITY ISSUED BY AN ISSUER REASONABLY SATISFACTORY TO
LANDLORD, AND OTHERWISE CONFORMING TO THE REQUIREMENTS SET FORTH IN THIS
ARTICLE 12.
AS USED HEREIN WITH RESPECT TO THE ISSUER OF THE L/C SECURITY,
"INSOLVENT" SHALL MEAN THE DETERMINATION OF INSOLVENCY AS MADE BY SUCH ISSUER'S
PRIMARY BANK REGULATOR (I.E., THE STATE BANK SUPERVISOR FOR STATE CHARTERED
BANKS; THE OCC OR OTS, RESPECTIVELY, FOR FEDERALLY CHARTERED BANKS OR THRIFTS;
OR THE FEDERAL RESERVE FOR ITS MEMBER BANKS).
IF, AT THE TERM EXPIRATION DATE,
ANY RENT REMAINS UNCALCULATED OR UNPAID, THEN:
(I) LANDLORD SHALL WITH
REASONABLE DILIGENCE COMPLETE ANY NECESSARY CALCULATIONS; (II) TENANT SHALL
EXTEND THE EXPIRY DATE OF SUCH L/C SECURITY FROM TIME TO TIME AS LANDLORD
REASONABLY REQUIRES; AND (III) IN SUCH EXTENDED PERIOD, LANDLORD SHALL NOT
UNREASONABLY REFUSE TO CONSENT TO AN APPROPRIATE REDUCTION OF THE L/C SECURITY.
TENANT SHALL REIMBURSE LANDLORD'S LEGAL COSTS (AS ESTIMATED BY LANDLORD'S
COUNSEL) IN HANDLING LANDLORD'S ACCEPTANCE OF L/C SECURITY OR ITS REPLACEMENT OR
EXTENSION.
(B)
IF TENANT DELIVERS TO LANDLORD SATISFACTORY L/C SECURITY IN PLACE
OF THE ENTIRE SECURITY DEPOSIT, LANDLORD SHALL REMIT TO TENANT ANY CASH SECURITY
DEPOSIT LANDLORD PREVIOUSLY HELD.
15
(C)
LANDLORD MAY DRAW UPON THE L/C SECURITY, AND HOLD AND APPLY THE
PROCEEDS IN THE SAME MANNER AND FOR THE SAME PURPOSES AS THE SECURITY DEPOSIT,
IF:
(I) AN UNCURED DEFAULT (AS DEFINED BELOW) EXISTS; (II) AS OF THE DATE
FORTY-FIVE (45)