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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended October 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from ___________ to ___________
Commission File No. 0-1424
ADC Telecommunications, Inc.
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(Exact name of registrant as specified in its charter)
Minnesota 41-0743912
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4900 West 78th Street
Minneapolis, Minnesota 55435
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 938-8080
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.20 par value
Common Stock
Purchase Rights
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
/X/ Yes / / No
The aggregate market value of voting stock held by nonaffiliates of
the registrant, as of December 15, 1993, was approximately $910,884,000 (based
on the last sale price of such stock as reported by the NASDAQ National Market
System).
The number of shares outstanding of the registrant's common stock,
$.20 par value, as of December 15, 1993, was 27,725,682.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. / /
DOCUMENTS INCORPORATED BY REFERENCE
Pursuant to General Instruction G(3), the responses to Items 10, 11,
12 and 13 of Part III of this report are incorporated herein by reference to the
information contained in the Company's definitive proxy statement for its 1994
Annual Meeting of Shareholders to be filed with the Securities and Exchange
Commission on or before February 28, 1994.
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PART I
ITEM 1. BUSINESS
ADC Telecommunications, Inc. designs, manufactures and markets a broad
range of transmission and networking systems and physical connectivity products
for broadband telecommunications networks utilizing copper and fiber optic
transmission media. The Company markets its products worldwide through its own
direct sales force, as well as through distributors, dealer organizations and
original equipment manufacturers (OEMs). The Company's products are designed for
use in the public telecommunications networks maintained by telephone operating
companies, interexchange carriers, other telecommunications common carriers and
broadcast and cable TV networks, and for use in private telecommunications
networks maintained by large businesses, government agencies, and educational
and other non-profit institutions.
The Company was incorporated in 1953 as a Minnesota corporation under the
name Magnetic Controls Company. In 1961, Magnetic Controls Company was merged
with ADC Incorporated, a Minnesota corporation incorporated in 1935. In 1984,
the Company sold substantially all of the assets of its magnetics operations.
In 1985, Magnetic Controls Company changed its corporate name to ADC
Telecommunications, Inc. in order to better reflect the Company's commitment to
the telecommunications market and to identify the Company more closely with its
ADC trademark.
In July 1989, ADC acquired Kentrox Industries, Inc. (Kentrox), a
manufacturer of public network service access equipment for private
telecommunications networks, located in Portland, Oregon. In June 1990, the
Company acquired technology and other assets of TELINQ Systems Incorporated,
located in Richardson, Texas. The ADC TELINQ Development Center-SM- (TELINQ) is
an advanced development center for ADC and is responsible for developing high
speed digital transmission products. In July 1990, ADC acquired American
Lightwave Systems, Inc. (ALS). ALS, located in Meriden, Connecticut, designs,
manufactures and markets fiber optic video transmission equipment for the
telephone, cable television, broadcast and government
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markets. In May 1991, the Company acquired Fibermux Corporation (Fibermux),
located in Chatsworth, California. Fibermux designs, manufactures, markets, and
installs enterprise-wide communication systems for the interconnection and
transport of Local Area Network (LAN) and other voice, data and video traffic,
primarily in private telecommunications networks. As used herein, the terms
"Company" and "ADC" refer to ADC Telecommunications, Inc. and its wholly-owned
subsidiaries unless the context requires otherwise.
THE TELECOMMUNICATIONS MARKET
The largest market for the Company's broad range of telecommunications
products consists of companies providing service in the public
telecommunications networks and the OEMs which supply such companies. The
Company's transmission and physical connectivity products for the public network
market are primarily located in central transmission facilities (i.e., in
telephone company networks, central office and outside plant facilities which
contain the equipment used in switching and transmitting incoming and outgoing
telephone circuits to complete local and long distance telephone connections).
Another market for the Company's products consists of rapidly growing
private voice, data and video telecommunications networks maintained by
businesses, government agencies, and educational and other non-profit
institutions. The Company's customers in this market primarily include large
businesses and government agencies with their own communications networks and
the OEMs and Value Added Resellers (VARs) which supply such networks. The
Company's products for private networks are located on the private network
customers' premises and consist of enterprise-wide communication systems and
public network service access equipment.
The market for the Company's products has grown in large part due to the
effects of three ongoing developments in the telecommunications industry.
First, rapid technological change has created a demand for new products
employing advanced technologies. Second, the shift to data and video network
traffic has resulted in increasing demand for voice, data and video networking
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capabilities within private networks and, more recently, over the public
networks as well. Third, the policy of deregulation being followed by the
Federal Communications Commission and other similar regulatory agencies
throughout the world has increased opportunities for independent companies to
supply products and services within public telephone system markets and within
private voice, data and video communications markets.
The Company believes that for the foreseeable future technological change
will be the most important development in the continuing evolution of the
telecommunications market. One important technological change in the past
decade has been the increasing replacement of analog technology with digital
technology in transmission networks. In analog technology, information is
converted to a voltage or current wave form for processing or transmission. In
digital technology, information is converted to digital bits and then processed
or transmitted using computer-based components.
A second important change in transmission technology has been the
introduction of fiber optic systems, which are based on a physical property of
light that allows transmission of light pulses in a coded analog or digital
format through a glass fiber approximately the size of a human hair. Fiber
optic systems are increasingly replacing copper-based transmission systems
because of their capacity to carry large volumes of information at high speeds,
their small size and their insensitivity to electromagnetic interference.
A third important technological change in the telecommunications
marketplace is in the use of integrated circuits and miniaturization, which has
facilitated the transfer of certain telecommunications functions from central
switching and transmission locations to locations closer to the business or
residential end-user. In addition, because of the increased use of integrated
circuits in both public and private telecommunications, networks have become
significantly more complex. Increasingly, high speed switching, network
performance monitoring, information compression, and data translation functions
are being performed by network equipment. The Company believes that over the
long term, the majority of new equipment purchased by telephone operating
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companies and private network customers will employ digital technology and that
a significant portion of such equipment will utilize the fiber optic
transmission medium.
PRODUCTS
The Company categorizes its products into the following groups:
TRANSMISSION PRODUCTS: Transmission products permit and enhance the
generation of electronic and optical signals over a telecommunications circuit.
Certain of the transmission products also provide access in order to monitor,
test and reroute circuits within telecommunications transmission systems. ADC's
transmission products are designed for use in copper-based and fiber optic
transmission systems.
NETWORKING PRODUCTS: Networking products provide interconnection and
transportation of voice, data and video signals within a single customer
building or campus as well as network access to the public network. The
Company's networking products are designed for use in copper-based and fiber
optic networks.
BROADBAND CONNECTIVITY PRODUCTS: Broadband connectivity products provide
the physical connectivity (contact points) for connecting different
telecommunications system components and gaining access to telecommunications
system circuits by electromechanical means for the purpose of testing,
monitoring or reconfiguring such circuits. A majority of the Company's
broadband connectivity products are designed for use in copper-based
transmission systems, with the remainder designed for use in fiber optic
transmission systems.
Historically, most of the Company's products have been used in connection
with copper-based telecommunications systems, reflecting the historical
installed base of equipment utilizing copper cable in domestic and international
telecommunications networks. As a direct result of this large installed base,
the Company expects that, for the foreseeable future, a substantial portion of
its existing and new products will be sold to maintain and improve the
functionality of copper-based telecommunications systems. Although the Company
expects to continue to allocate considerable resources to improving existing and
developing new products for these systems, it will also devote significant
resources to the development of fiber optic products because the
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Company believes that such products represent an increasing source of future
growth of broadband connectivity product revenues.
The percentages of total consolidated net sales attributable to each of the
Company's product groups and to fiber optic products in total for the past three
fiscal years are set forth in Part II, Item 7 hereof. As used herein, "copper
products" refer to products used in copper-based telecommunications systems,
and "fiber optic products" refer to products used in fiber optic
telecommunications systems.
TRANSMISSION PRODUCTS
DIGITAL REPEATERS: The Company's copper-based digital repeaters regenerate
digital signals that have degraded because of transmission over long distances,
primarily in central office applications. Digital repeaters are sold primarily
to telephone operating companies and other telecommunications common carriers.
TEST AND MONITORING SYSTEMS: The Company manufactures three remote digital
test and performance monitoring products. The T-Sentry-R- system and
SENTRY 45-TM- system provide non-intrusive remote network performance monitoring
and alarm surveillance on DS1 and DS3 signals. The Company's NetStar-R- system,
a remotely operable, intrusive T1 test and monitoring system, is designed for
high capacity T1 telephone central office testing and private network facility
management.
The Company has developed and recently released for commercial use its open
systems-based FiberWatch-TM- remote fiber test and surveillance system. The
FiberWatch system provides a database of installed fibers, performs scheduled
and on-demand testing, and provides mapping and graphing capability for location
of faults in networks.
ADC also manufactures and sells the Logix control system, a software system
which enables the user to network numerous test and monitoring systems and to
interface with higher level network management systems. The Logix system has an
open architecture that supports
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various standards and provides for the centralized management of all ADC test
and monitoring systems.
The Company's test and monitoring systems are sold to telephone operating
companies, other telecommunications common carriers, OEMs, distributors, and
users of private voice and data communication networks.
COAXIAL MULTIPLEXER: Under contract with a large computer manufacturer,
the Company manufactures a coaxial multiplexer device used to connect up to
eight computer monitors by a single cable to a main computer. The device is
sold exclusively to this customer under an agreement that is cancelable at its
option.
FIBER VIDEO DELIVERY EQUIPMENT: Through its ALS subsidiary, the Company
manufacturers fiber optic based video transmission systems. The LiteAmp-R-,
FN6000-TM-, LC6000-TM- and LX6000-TM- systems transmit a variety of analog
signals over fiber in cable television (CATV) applications, broadcast
applications and interactive systems for distance learning and campus
interconnects. The DV6000-TM- system transmits a variety of signal types using
a high speed, uncompressed digital format (2.4 billion bits per second) over
fiber in broadcast, CATV and private network applications. With the recent
addition of channel drop/add/pass capability, the DV6000 system can now be
utilized in more complex network applications. The PixlNet-TM- DS1 compressed
digital video system, which is expected to be commercially released by ALS
during 1994, will be targeted for video teleconferencing and distance learning
applications.
The Company's fiber video delivery systems are sold directly to CATV
companies, telephone operating companies, other telecommunications common
carriers and users of private data and video communication networks. ALS also
provides fiber optic subsystems for the video portion of the Homeworx product
described below.
CUSTOMER LOOP TRANSMISSION: The Company's fiber loop converter (FLC)
products convert electrical signals to optical signals for transmission over
fiber optic cables at T1 and T3 speeds and supply the power required to transmit
such signals between floors within a building. FLCs deploying from one to four
T1 circuits provide an alternative to multiplexing in high-capacity T1
applications. FLCs deploying T3 circuits provide full bandwidth T3 delivery and
transport at OC-1 speed.
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The Company's Soneplex-TM- products perform the FLC functions as well as
full multi-plexing, performance monitoring, alarming, remote
provisioning/switching and other functions, all at speeds up to the OC-3 level.
The Company is continuing to develop modules for upgrading the functionality of
its Soneplex products.
The Company's Soneplex system chassis can be configured for High bit rate
Digital Subscriber Line (HDSL) transmission. This HDSL product, which the
Company has acquired through a licensing and product development arrangement,
transports electrical signals over copper wire without pre-conditioning of the
circuit or regeneration of the signal. This product enhances existing copper
networks and provides a migration path to fiber transmission.
The Company's fiber loop converter and Soneplex product families are
intended for large business customer loop transmission. The Company also has a
customer loop transmission system under development for the small business and
residential customer called the Homeworx system. The Company initiated customer
field trials of the Homeworx access transport platform during 1993 and intends
to perform additional customer field trials and commercially release two
versions of this product in 1994. Customer loop transmission products are sold
to telephone operating companies, other telecommunications common carriers and
users of private voice and data communications networks.
ATM SWITCH: Through a licensing and product development arrangement, the
Company recently acquired an Asynchronous Transfer Mode (ATM) switching system
that supports advanced high-speed data and video applications in the public
telecommunications networks. The Company intends to perform a customer field
trial and release this product commercially in 1994. The ATM switching system
will primarily be sold to telephone operating companies, interexchange carriers
and other telecommunications common carriers.
CITYCELL-TM- SYSTEM: The Kentrox CityCell Digital Microcell System is a
fiber-fed, radio frequency digital transmission microcell that extends cellular
communications coverage, primarily in large urban areas. Kentrox sells its
CityCell product primarily to public cellular communications providers and users
of private voice and data communications networks.
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NETWORKING PRODUCTS
PUBLIC NETWORK ACCESS EQUIPMENT: Through its Kentrox subsidiary, the
Company manufactures digital public network service access equipment. These
products, known as the T-SERV-R- Channel Service Unit, T-SMART-R- Intelligent
Channel Service Unit, the DataSMART-TM- DSU/CSU, the D-Serv DSU/CSU, the
DataSMART-TM- E1 SMDSU-TM-, the DataSMART-TM- T3E3 SMDSU-TM- and the DataSMART-
TM- 45 SMDSU-TM- are used to interconnect digitally the common carrier network
and the customer premises network. This equipment monitors circuits and
provides system protection and other network management functions. The T-SMART
product also enables the customer to test the performance of its voice network.
The D-Serv and DataSMART product lines allow connection of both voice and data
circuits.
Kentrox has recently developed and introduced ATM DSUs, at both DS1 and DS3
transmission speeds, for the transport of voice, data and video signals.
Kentrox intends to perform customer field trials and release these products
commercially in 1994.
The Kentrox public network service access equipment is sold through
telephone operating companies, interexchange carriers, other telecommunications
common carriers, OEMs and distributors, or directly to users of private voice
and data communication networks.
INTERNETWORKING PRODUCTS: Through its Fibermux subsidiary, the Company
manufactures internetworking products. The Crossbow-TM- multi-LAN hub family of
products interconnects workstations, personal computers and terminals, utilizing
many different LAN protocols and cabling types. The LightWatch-R- network
management system controls networks based on Crossbow hubs, from one location,
utilizing the Simple Network Management Protocol (SNMP). The Magnum 100-R-
family of products transports multiple voice, data and video signals
simultaneously over a 100-megabit (million bits per second) speed fiber optic
backbone. The Magnum 100 backbones link LANs, mainframes, minicomputers,
personal computers, telephone systems and video equipment with diverse protocols
using time-division multiplexing technology, within the enterprise network or
over the public common carrier network. LightWatch network management software
also controls Magnum 100 networks. The Company also sells LAN backbone products
utilizing other technologies such as fiber distributed data interface (FDDI) and
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internetworking components such as routers, some of which have been acquired by
the Company through licensing and product development arrangements. Fibermux
sells internetworking products principally to users of private data
communication networks.
Fibermux currently has under development its ATMosphere-TM- ATM backbone
wiring hub. The ATMosphere product, in its first phase, will provide a high
speed, ATM-based backbone between Crossbow hubs and virtual networking
management for users attached to Crossbow hubs. Fibermux intends to perform
customer field trials and release this product commercially in 1994.
PATCH/SWITCH SYSTEM AND PATCHMATE-TM- MODULE: The Company's Patch/Switch
system is a data network management product that provides access to, monitors,
tests and reconfigures digital data circuits and permits local or remote
switching to alternate circuits or backup equipment. This system is fully
modular, permitting the user to select and combine the particular functions
desired in a system. The PatchMate Module is a manually operated
electromechanical device used to gain access in order to monitor, test, and
reconfigure digital data circuits. The Patch/Switch System and PatchMate Module
are sold principally to users of private data communication networks.
BROADBAND CONNECTIVITY PRODUCTS
JACKS, PLUGS AND PATCH CORDS: Jacks and plugs are the basic components
used to gain access to copper telecommunications circuits for testing and
maintenance. A jack is a connecting device to which the wires of a circuit are
attached and through which access to that circuit is obtained by the insertion
of the plug. This access permits the circuit to be monitored, tested or
re-routed (patched). Patch cords are wires or cables with a plug on each end.
ADC offers a complete line of jacks and plugs in the longframe and smaller
bantam formats. The bantam products are approximately half the size of the
longframe products. The Company also manufactures a line of jacks in both of
these formats which are designed to be mounted on printed circuit boards
wherever access points are required, as well as a line of coaxial jacks and
plugs used for gaining access to high frequency circuits.
ADC incorporates its jacks, plugs and patch cords into its own products and
also sells them in component form primarily to OEMs, whose products are used by
telephone operating companies
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and other companies providing communication services. These components are
generally manufactured to industry-recognized compatibility and reliability
standards as off-the-shelf items.
JACKFIELDS AND PATCH BAYS: A jackfield is a module containing an assembly
of jacks wired to terminal blocks or connectors and used by telecommunications
companies to gain access to copper communication circuits for testing or
patching the circuits. ADC manufactures jackfields in both longframe and bantam
formats, including prewired and connectorized models. When testing a large
number of circuits, series of jackfields are combined in specialized rack
assemblies, which often may include test modules. These assemblies are called
patch bays. ADC manufactures a range of jackfields and patch bays in various
configurations. The Company's analog jackfields and analog and digital patch
bays are sold primarily to OEMs, telephone operating companies and other
telecommunications common carriers. The Company also manufactures and sells
specialized jackfields for use in audio and video transmission networks in the
broadcast industry.
DSX PRODUCTS: ADC manufactures digital signaling cross-connect (DSX)
modules and bays which are jackfields and patch bays designed to gain access to
and cross-connect digital copper circuits for both voice and data transmission.
Since introduction of DSX products in 1977, the Company has continued to expand
and refine its DSX product offerings, and has become a leading manufacturer of
products for the mechanical termination and interconnection of digital circuits
used in voice and data transmission. During 1993, ADC added the Mini-DSX-3
product, a double-density, double-capacity module, to its DSX product family.
The Company's DSX products are sold primarily to telephone operating companies
and other telecommunications common carriers.
TERMINAL BLOCKS AND FRAME PRODUCTS: Terminal blocks are molded plastic
blocks with contact points used to facilitate multiple wire interconnections.
ADC manufactures a wide variety of terminal blocks. The Company's cross-connect
frames are terminal block assemblies used to connect the external wiring of a
telecommunications network to the internal wiring of a telephone operating
company central office or to interconnect various pieces of equipment within a
telephone company. ADC sells its terminal blocks and cross-connect frames
primarily to OEMs and telephone operating companies.
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FIBER OPTIC PATCH CORDS: Fiber optic patch cords are functionally similar
to copper patch cords and are the basic components used to gain access to fiber
telecommunications circuits for testing, maintenance, cross-connection and
configuration purposes. ADC manufactures its own FC, SC and ST-R-* connectors
for use in the fiber optic patch cords. The Company's LightTracer -TM- fiber
optic patch cord provides immediate identification of fiber optic connections.
The Company incorporates its fiber optic patch cords into its own products and
sells them in component form principally to OEMs, whose products are used by
telephone operating companies and other companies providing communication
services.
FIBER DISTRIBUTION PANELS AND FRAMES: Fiber distribution panels and frames
are functionally similar to copper panels and frames with the added feature of
additional bend protection and provide interconnection points between fiber
optic cables coming into a building and fiber optic cables connected to fiber
optic equipment within the building. The Company sells fiber distribution
products primarily to telephone operating companies and users of private voice
and data communications networks.
FIBERGUIDE-R- SYSTEMS: The FiberGuide system is a modular routing system
which provides a segregated, protected method of storing and routing fiber patch
cords and cables within buildings. ADC sells its FiberGuide systems to
telephone operating companies and users of private telecommunication networks.
ENGINEER, FURNISH AND INSTALL SERVICES: Engineer, furnish and install
(EF&I) services consist of layout and installation of new telecommunications
networks, modification of existing networks or the addition of equipment to
existing networks. The Company sells its EF&I services to telephone operating
companies, other common carriers and users of private telecommunications
networks.
PRODUCT DEVELOPMENT
The Company is committed to an ongoing program of new product development
which combines internal development efforts with acquisition, joint venture,
licensing or marketing
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* (a registered trademark of American Telephone & Telegraph Co.)
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arrangements relating to new products and technologies from sources outside the
Company. Development and product engineering expenses for fiscal 1993, 1992 and
1991 were $40,988,000, $36,063,000 and $32,315,000, respectively (approximately
11.2%, 11.4% and 11.0%, respectively, of consolidated net sales).
The Company's product development program emphasizes the innovative
application of existing technology in the design of new products rather than the
research and development of new technology. The Company's product development
group works closely with marketing personnel in an effort to determine emerging
user needs in the telecommunications market and continually reviews and
evaluates technological changes affecting this market.
The Company is currently conducting development efforts with respect to
technologies and products in each of its three product groups. Among other
projects, the Company's development activities are directed at the integration
of fiber optic technology into additional products and the incorporation of ATM
technology into voice, data and video products for both public and private
telecommunications networks. There is also emphasis on developing copper and
fiber optic products for applications in the local loop.
MARKETING AND DISTRIBUTION
ADC sells its products to customers in three primary markets: (1) the
United States public telecommunications network market, (2) the private and
governmental voice, data and video network market in the United States, and (3)
the international public and private network market.
Major providers in the public telecommunications market in the United
States include the Bell Operating Companies, other local telephone companies
(such as GTE Corporation, United Telecommunications, Inc. and Centel
Corporation), long-distance telephone companies (such as AT&T
Communications/Information Systems, MCI Telecommunications Corp., Sprint and
Williams Telecommunications Co.), CATV companies (such as Cox Enterprises, Inc.
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Liberty Cable Company, TCI, Inc.) other emerging telecommunication common
carriers (such as MFS Communications Company and Teleport Communications
Group, Inc.), and major OEMs which service these same customers (such as AT&T
Technologies, Inc., Northern Telecom, Inc., Alcatel Alsthom Compagnie Generale
D'Electricite, NEC America, Inc., Fujitsu Limited and Tellabs Operations,
Inc.). The Company sells its products to most of the major providers and OEMs.
The private network market includes predominantly large businesses and
state and federal government agencies which own and operate their own voice and
data networks for internal use. The major OEMs in this market include
International Business Machines Corporation (IBM), AT&T Paradyne Corporation,
Digital Equipment Corporation, Northern Telecom, Inc., Codex Corporation and
Racal Corporation.
The Company's products are sold in the United States by approximately 112
field sales representatives located in 24 sales offices throughout the country,
and by several dealer organizations and distributors. The Company also has a
customer service group, which supports field sales personnel and is responsible
for application engineering, customer training, entering orders and supplying
delivery status information, and a field service engineering group, which
provides on-site service to customers.
The foreign markets with the greatest potential for sales of the Company's
products consist of the telephone operating companies in the public
telecommunications networks of Canada, Western Europe, Australia, New Zealand,
Mexico and the Asian region. The Company sells its products to foreign
customers through 23 Company-employed field salespersons, eight foreign
independent sales representatives and 81 foreign distributors. On October 31,
1993, the Company's foreign distribution network was selling products in 61
nations throughout the world. To date, the principal foreign market for the
Company's products has been Canada. The Company has wholly-owned subsidiaries
in Canada, the United Kingdom, Belgium, Australia, Mexico, Singapore and
Venezuela. The Company's foreign sales offices are located in Toronto,
Montreal, Ottawa, Vancouver, London, Brussels, Sydney, Mexico City, Singapore
and Caracas.
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Consolidated export sales to unaffiliated customers for fiscal years 1993,
1992 and 1991 were $58,919,000, $49,347,000 and $37,960,000, respectively
(approximately 16.1%, 15.6% and 12.9%, respectively, of consolidated net sales).
The Company warrants most of its products against defects in materials and
workmanship under normal use and service for periods of up to 15 years. To
date, the Company's warranty experience has been favorable, with a low rate of
product return.
COMPETITION
Competition in the telecommunications products market is intense. The
Company manufactures, markets and sells products similar to those manufactured
by numerous other companies, some of which, such as AT&T Technologies, Inc. and
Switchcraft, Inc., a subsidiary of Raytheon Company, have greater resources than
those available to the Company. The Company faces increasing competition from a
number of other smaller competitors. The Company believes its success in
competing with other manufacturers of telecommunications products depends
primarily on its engineering, manufacturing and marketing skills, the price,
quality and reliability of its products, and its delivery and service
capabilities.
The Company's Fibermux subsidiary competes with a number of other
companies, none of which is dominant, and faces both strong price competition
and pressure from alternative distribution strategies utilized by these other
companies. The Company's Kentrox and ALS subsidiaries have various competitors,
none of which is dominant.
The Company believes that technological change, the shift in network
traffic to data and video and continuing industry deregulation will continue to
cause rapid evolution in the competitive environment of the telecommunications
market, the full scope and nature of which is impossible to predict at this
time. The Company believes the most significant competitive effect of
continuing
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industry deregulation has been, and will continue for the immediate future to
be, the creation of new opportunities for suppliers of telecommunications
products like the Company. The Company expects, however, that such
opportunities will attract increased competition from others as well. In
addition, the Company expects that AT&T Technologies, Inc. will continue to be a
major supplier to the Bell Operating Companies, and is competing more
extensively outside the Bell system. The Company also believes that the rapid
technological changes which characterize the telecommunications industry will
continue to make the markets in which the Company competes attractive to new
entrants.
MANUFACTURING AND SUPPLIES
The manufacturing process for the Company's electronic products consists
primarily of assembly and test of electronic systems built from fabricated
parts, printed circuit boards and electronic components. The manufacturing
process for the Company's electromechanical products consists primarily of
fabrication of jacks, plugs, and other basic components from raw materials,
assembly of components and testing. The Company's sheet metal, plastic molding,
stamping and machining capabilities permit the Company to configure components
to customer demand.
The Company purchases raw materials and component parts, consisting
primarily of copper wire, optical fiber, steel, brass, nickel-steel alloys,
gold, plastics, printed circuit boards, solid state components, discrete
electronic components and similar items, from several suppliers. Although a
number of components used by the Company are single sourced, the Company has
experienced no significant difficulties to date in obtaining adequate quantities
of these raw materials and component parts. The Company believes that
alternative sources of supply exist, or can be developed without causing
significant delays, for all of its raw materials and component parts.
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PROPRIETARY RIGHTS
The Company owns a number of United States and foreign patents relating to
its products. These patents, in the aggregate, constitute a valuable asset of
the Company. The Company, however, believes that its business is not dependent
upon any single patent or any group of related patents.
The Company has registered the initials ADC alone and in conjunction with
specific designs as trademarks in the United States and various foreign
countries.
EMPLOYEES
As of October 31, 1993, there were 2,462 persons employed by the Company.
The Company considers relations with its employees to be good.
ITEM 2. PROPERTIES
The Company's corporate headquarters are currently located in two leased
buildings in Minnetonka, Minnesota, comprising 144,700 square feet. A 57,000
square foot facility, also leased in Minnetonka, is occupied by the Company's
Minnesota fiber optic operations. The Company also leases a 119,000 square foot
facility in Minnetonka, Minnesota, in which the engineering, product management,
manufacturing and manufacturing support operations for the Company's
transmission products are located. The Company also owns two buildings
comprising 132,800 square feet in Bloomington, Minnesota, which house
manufacturing and manufacturing support operations.
The Company owns a 76,000 square foot facility and a 20,000 square foot
facility in LeSueur, Minnesota, which are used for electromechanical assembly
and warehouse space. The Company leases additional warehouse space on a short
term basis from time to time to meet its needs. The Company owns an 11,700
square foot facility in Bloomington, Minnesota, which is
16
<PAGE>
leased to an unaffiliated company. In addition, the Company owns approximately
38 acres of undeveloped land in Eden Prairie, Minnesota.
The Company's Kentrox subsidiary owns a 105,000 square foot facility in
Portland, Oregon, which serves as its office and manufacturing facility and
leases approximately 4,000 square feet of space in Waseca, Minnesota, which
serves as a research and development center. The Company leases approximately
15,000 square feet of space in Richardson, Texas, for the TELINQ Development
Center. The Company's ALS subsidiary leases approximately 47,000 square feet of
space in Meriden, Connecticut as its office and manufacturing facility. The
Company's Fibermux subsidiary leases approximately 97,000 square feet in
Chatsworth, California as it office and manufacturing facility. The Company
also leases sales office facilities in the United States, Canada, the United
Kingdom, Belgium, Australia, Mexico, Venezuela and Singapore.
Leases for the Company's headquarters, sales offices and manufacturing
facilities expire at different times through 2000 and are generally renewable on
a fixed term or a month-to-month basis. The Company believes that the
facilities used in its operations are very well maintained and in excellent
condition.
For information regarding encumbrances on the Company's properties, see
Note 3 to the Consolidated Financial Statements included in Part II, Item 8, of
this report.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
17
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Office Officer Since Age
- ---- ------ ------------- ---
<S> <C> <C> <C>
Charles M. Denny, Jr. Chairman of the Board 1970 62
William J. Cadogan President, Chief Executive 1987 45
Officer and Chief Operating
Officer
Lynn J. Davis Senior Vice President, 1984 46
General Manager, Broadband
Connectivity Division
Lawrence D. Asten Vice President, Sales, 1992 46
Customer Services and
Marketing
Joan K. Berg Vice President, Controller 1987 41
Bruce W. Brown Vice President, and 1993 43
President of Fibermux
M. Farooque Mesiya Vice President, and 1992 48
President of ALS
William B. Porter Vice President, and 1991 61
President of Kentrox
Robert E. Switz Vice President, Chief Financial 1994 47
Officer
Jeffrey S. Wetherell Vice President, International 1991 51
</TABLE>
18
<PAGE>
Executive officers of the Company are elected by the Board of Directors.
The Company's executive officers were last elected to their positions on
February 23, 1993 except for Messrs. Brown and Switz. Messrs. Denny, Cadogan
and Davis and Ms. Berg have served in various capacities with the Company for
more than five years. Biographical information regarding the other named
officers follows.
Mr. Asten joined ADC in February 1992. Prior to such time, he was employed
by Telco Systems, Inc., a manufacturer of fiber optic transmission products and
customer premises network access equipment. At Telco Systems he served as Vice
President, Worldwide Sales, beginning in 1987.
Mr. Brown joined the Company in July 1993. He was employed by
Ungermann-Bass, Inc. from 1990 to July 1993, most recently holding the position
of Executive Vice President, Customer Operations. Prior to joining
Ungermann-Bass, Mr. Brown was Senior Vice President, Marketing, Sales & Service
for McData Corporation, a Colorado-based networking company. He was also
elected a Vice President of ADC in July 1993.
Mr. Mesiya joined the Company in 1990, following the acquisition of ALS.
He has held the position of President of ALS since 1986, and was elected a Vice
President of ADC in October 1992.
Mr. Porter joined the Company in 1989, following the acquisition of
Kentrox. He was named President of Kentrox in December 1991. Before that time
he was Vice President, National Accounts, for ADC for one year. For three years
prior to December 1990, he served as Vice President of Sales and Marketing of
Kentrox.
Mr. Switz joined the Company in January 1994. Prior to that time, he was
employed at Burr-Brown Corporation, most recently as Vice President, Chief
Financial Officer and Director, Ventures and Systems Business.
Mr. Wetherell joined the Company in December 1991. Prior to that time, he
was employed by Telex Communications, Inc., where he held various domestic and
international positions beginning in 1984, and was the President and Chief
Executive Officer from 1989 to 1991.
19
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's Common Stock, $.20 par value, is traded in the
over-the-counter market and is quoted on the NASDAQ National Market System under
the symbol "ADCT".
The following table sets forth the high and low daily sale prices for each
quarter during the fiscal years ended October 31, 1993 and 1992, as reported on
the NASDAQ National Market System. In June 1993, the Company effected a
two-for-one stock split in the form of a 100% stock dividend, and all sales
prices are adjusted to reflect such stock split.
<TABLE>
<CAPTION>
1993 Low High
---- --- ----
<S> <C> <C>
Fourth Quarter $29.25 $44.00
Third Quarter 20.13 31.25
Second Quarter 18.63 23.50
First Quarter 18.13 24.75
<CAPTION>
1992 Low High
---- --- ----
<S> <C> <C>
Fourth Quarter $16.13 $19.00
Third Quarter 12.88 18.25
Second Quarter 11.88 14.50
First Quarter 10.25 15.50
</TABLE>
No cash dividends have been declared or paid during the past two years and
the Company has no present intention of declaring a cash dividend. The
Company's revolving credit agreements permit cash dividends only to the extent
of 25% of net income for the preceding four quarters.
As of December 15, 1993, there were approximately 1,648 holders of record
of the Company's Common Stock.
20
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following is a summary of certain consolidated statement of income and
balance sheet information of ADC Telecommunications, Inc. and Subsidiaries for
the five years ended October 31, 1993. This summary should be read in
conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this report. All share and per share amounts have been
restated for a two-for-one stock split effected in the form of a 100% stock
dividend in June 1993, and all amounts except per share amounts are presented in
thousands. No cash dividends have been declared or paid in any of the years
presented.
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
NET SALES $ 366,118 $ 316,496 $ 293,839 $ 259,802 $ 196,388
COST OF PRODUCTS SOLD 178,572 155,074 148,614 133,802 107,764
--------- --------- --------- --------- ---------
Gross Profit 187,546 161,422 145,225 126,000 88,624
--------- --------- --------- --------- ---------
EXPENSES:
Selling 70,432 61,329 53,577 45,297 34,742
Development and product engineering 40,988 36,063 32,315 25,462 17,360
Administration 22,879 21,637 20,792 17,496 13,838
Personnel reduction --- 3,800 -- -- --
--------- --------- --------- --------- ---------
Total expenses 134,299 122,829 106,684 88,255 65,940
--------- --------- --------- --------- ---------
OPERATING INCOME 53,247 38,593 38,541 37,745 22,684
OTHER INCOME (EXPENSE), NET:
Interest 183 (942) (108) 1,255 2,831
Other (3,693) (2,925) (2,028) (828) 730
--------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 49,737 34,726 36,405 38,172 26,245
PROVISION FOR INCOME TAXES 18,101 13,700 14,380 15,269 9,842
--------- --------- --------- --------- ---------
NET INCOME $ 31,636 $ 21,026 $ 22,025 $ 22,903 $ 16,403
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
AVERAGE COMMON SHARES
OUTSTANDING 27,499 27,088 26,738 26,530 26,334
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
EARNINGS PER SHARE $ 1.15 $ .78 $ .82 $ .86 $ .62
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
ORDERS $ 375,637 $ 322,823 $ 284,993 $ 265,272 $ 206,418
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
BALANCE SHEET DATA (October 31)
CASH AND CASH EQUIVALENTS $ 16,324 $ 20,484 $ 30,109 $ 25,978 $ 17,576
TOTAL ASSETS 280,054 240,762 247,169 181,665 143,831
LONG-TERM OBLIGATIONS:
Current maturities of long-term debt 300 324 1,412 1,257 444
Long-term debt 810 14,110 43,634 4,841 4,691
TOTAL STOCKHOLDERS' INVESTMENT 220,394 182,188 158,374 134,013 110,470
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
21
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The percentage relationships to net sales of certain income and expense
items for the three years ended October 31, 1993 and the percentage changes in
these income and expense items between years are contained in the following
table:
<TABLE>
<CAPTION>
Percentage Increase
Percentage of Net Sales (Decrease) Between Years
----------------------------- ------------------------
1993 vs. 1992 vs.
1993 1992 1991 1992 1991
---- ---- ---- ------ -------
<S> <C> <C> <C> <C> <C>
NET SALES 100.0% 100.0% 100.0% 15.7% 7.7%
COST OF PRODUCTS SOLD (48.8) (49.0) (50.6) 15.2 4.3
----- ----- -----
GROSS PROFIT 51.2 51.0 49.4 16.2 11.2
EXPENSES:
Selling (19.2) (19.4) (18.2) 14.8 14.5
Development and
product engineering (11.2) (11.4) (11.0) 13.7 11.6
Administration (6.3) (6.8) (7.1) 5.7 4.1
Personnel reduction -- (1.2) -- -- --
----- ----- -----
Operating Income 14.5 12.2 13.1 38.0 .1
Other Income
(Expense), Net:
Interest .1 (.3) - - -
Other (1.0) (.9) (.7) 26.3 44.2
----- ----- -----
Income Before
Income Taxes 13.6 11.0 12.4 43.2 (4.6)
Provision for
Income Taxes (5.0) (4.4) (4.9) 32.1 (4.7)
----- ----- -----
Net Income 8.6% 6.6% 7.5% 50.5 (4.5)
----- ----- -----
----- ----- -----
</TABLE>
RESULTS OF OPERATIONS
NET SALES: Net sales for the three years ended October 31, 1993 reflect
the following volume increases (decreases) by product group and in total
(dollars in thousands):
<TABLE>
<CAPTION>
Percentage
Increase (Decrease)
Net Sales Between Years
--------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992
--------------------------------------------------------------------- vs. vs.
Net Sales % Net Sales % Net Sales % 1992 1991
-------------------- -------------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transmission $ 69,386 18.9% $ 60,500 19.1% $ 51,355 17.5% 14.7% 17.8%
Networking 95,540 26.1 84,227 26.6 54,214 18.4 13.4 55.4
Broadband
Connectivity * 201,192 55.0 171,769 54.3 188,270 64.1 17.1 (8.8)
--------- ----- --------- ----- --------- ----- ---- -----
Total $ 366,118 100.0% $ 316,496 100.0% $ 293,839 100.0% 15.7 7.7
--------- ----- --------- ----- --------- ----- ---- -----
--------- ----- --------- ----- --------- ----- ---- -----
- ----------------------
<FN>
* Previously reported as Cable Management.
</TABLE>
The 1993 and 1992 increases in net sales of transmission products are
primarily attributable to sales of new products and, in 1993, increased sales of
fiber video delivery systems to public
22
<PAGE>
telecommunications network providers. The Company intends to continue
introducing new transmission products in 1994. If such new products meet with
reasonable market acceptance, the Company anticipates that net sales of all
transmission products will grow as a percentage of the Company's total net
sales.
The 1993 increase in net sales of networking products primarily represents
increased sales of public network access equipment to private network customers.
The 1992 increase in net sales of networking products primarily reflects the
acquisition of Fibermux in May 1991. Due to the timing of the acquisition,
Fibermux product revenues were included in net sales of networking products
for all of 1993 and 1992 and for six months in 1991.
Although the Fibermux acquisition contributed to increased net sales and
orders during all of 1992 and the last six months of 1991, net sales and orders
for the Company as a whole were lower than anticipated during that 18-month
period due to the effects of recession in the public network market. These
effects are reflected in the 1992 decrease in net sales of broadband
connectivity products. The Company began experiencing improvement in its public
network market business during the second quarter of 1992 which continued
throughout the remainder of 1992 and 1993.
Within the broadband connectivity product group, net sales of ADC's copper
products utilizing telephone jacks have declined as a percentage of total net
sales during the last three years as shown in the following table:
<TABLE>
<CAPTION>
Percentage of Net Sales for
Year Ended October 31,
------------------------------
1993 1992 1991
------------------------------
<S> <C> <C> <C>
DSX products 28.7% 29.0% 35.5%
Wired assemblies and communication
component products 4.5 5.7 7.0
</TABLE>
Although these products currently account for a substantial portion of the
Company's revenues, management believes that future sales of copper products
utilizing telephone jacks will continue gradually to decline as a percentage of
total net sales primarily due to the ongoing evolution of technologies within
the telecommunications marketplace (see Item 1 Business -- The
Telecommunications Market) and the addition of new products to the ADC product
portfolio.
Net sales of fiber optic products represented 34.2%, 29.9% and 20.9% of
total net sales in 1993, 1992 and 1991, respectively. These year-to-year
increases reflect the Company's increasing emphasis on development and marketing
of fiber optic products. Management anticipates increasing the Company's fiber
optic product offerings which should expand total sales of such products.
23
<PAGE>
GROSS PROFIT: The 1993 and 1992 increases in gross profit percentage to
51.2% and 51.0% of net sales, respectively, from 49.4% of net sales in 1991
primarily reflect more favorable product sales mix, successful manufacturing
cost reduction efforts and higher net sales volumes.
OPERATING EXPENSES: Total operating expenses represented 36.7%, 38.8% and
36.3% of net sales in 1993, 1992 and 1991, respectively. The 1992 increase
primarily reflects the first full year of Fibermux operating expenses, and a
$3,800,000 personnel reduction charge ($.09 per share after taxes) recorded in
the Company's first quarter 1992. This charge represented employee separation
costs related to the elimination of positions during that quarter.
The 14.8% and 14.5% increases in selling expenses in 1993 and 1992,
respectively, also reflect increased marketing and selling activities associated
with new product introductions and expansion of markets.
The 13.7% and 11.6% increases in development and product engineering
expenses in 1993 and 1992, respectively, also reflect significant investments
in product development and introduction. The Company has been able to maintain
its development and product engineering expenses as a relatively constant
percentage of net sales during the 1991 to 1993 period by planning for and
controlling such expenditures.
The 5.7% and 4.1% increases in administration expenses in 1993 and 1992,
respectively, primarily reflect the growth of the Company. Due to effective
management of expenditures, the Company has decreased its ratio of
administration expenses as a percentage of net sales over the three-year period.
The major technological changes underway in the telecommunications industry
(see Item 1 Business -- The Telecommunications Market) will require the Company
to continue investing significantly in product development. Company management
recognizes the need to balance the cost of product development with expense
control and remains committed to minimizing the rate of increase of such
expenses.
OTHER INCOME (EXPENSE), NET: The interest income (expense) category
reflected net interest income earned on cash balances during 1993 and the
Company's first two quarters of 1991. In May 1991, the Company borrowed $40
million to acquire Fibermux, resulting in net interest expense from that date
through 1992. (See "Liquidity and Capital Resources" below for a discussion of
the Company's borrowings.)
24
<PAGE>
Other expense primarily represented amortization of the goodwill portions
of the Fibermux, Kentrox and ALS acquisition prices, beginning at their
respective acquisition dates.
INCOME TAXES: See Note 6 to the Consolidated Financial Statements
included in Part II, Item 8 of this report for a reconciliation of the federal
statutory tax rate to effective tax rates of 36%, 39% and 40% in 1993, 1992 and
1991, respectively. In addition to the non-deductible goodwill amortization
amounts discussed above which impact all three years, the 1993 rate reflects a
1% higher federal statutory rate as well as the beneficial impact of tax
credits.
In February 1992 the Financial Accounting Standards Board issued Statement
No. 109, "Accounting for Income Taxes" (FASB 109), which the Company intends to
implement in the first quarter of 1994. Management has determined that the
impact of adopting FASB 109 will not be significant to the Company in fiscal
1994.
NET INCOME: For the year ended October 31, 1993, net income of
$31,636,000, or $1.15 per share, represented a 50.5% increase over net income
for the year ended October 31, 1992 of $21,026,000, or $.78 per share. Net
income for 1992 represented a 4.5% decrease from 1991 net income of $22,025,000,
or $.82 per share.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents, primarily short-term investments in commercial
paper with maturities of less than 90 days, decreased $4,160,000 and $9,625,000
during 1993 and 1992, respectively, and increased $4,131,000 during 1991. In
1993 and 1992, property and equipment additions and long-term debt repayments,
offset by cash generated from operating activities, represented the majority of
the decreases. The Company's Fibermux acquisition utilized approximately $10
million of cash generated by operating activities and $39 million of long-term
debt in 1991. Repayment of the Fibermux and other long-term debt consumed
approximately $13 million and $31 million of cash during 1993 and 1992,
respectively. The other major use of cash generated by operating activities was
property and equipment additions which expenditures approximated $21 million,
$16 million and $25 million in 1993, 1992 and 1991, respectively.
The Company may borrow up to $40 million under revolving credit agreements.
Borrowings under these agreements bear interest at floating short-term market
rates, can be repaid any time without penalty and can be converted to term loans
bearing interest principally at the prime rate, payable in annual installments
through December 2000. In May 1991, the Company's
25
<PAGE>
acquisition of Fibermux was partially financed by borrowing the total $40
million. The full $40 million was outstanding until April 1992, when the
Company began repaying the debt. At October 31, 1993, all revolving credit
borrowings had been repaid, $40 million of revolving borrowing remained
available to the Company and its long-term debt to total capitalization ratio
was .4%. The long-term debt to total capitalization ratio was 7.2% at October
31, 1992.
Management expects that cash generated from operating activities plus
borrowings available under revolving credit agreements will be adequate to fund
operating requirements and property and equipment expenditures in 1994.
However, management recognizes the dynamic nature of the telecommunications
industry and the possibility that one or more of the Company's product
initiatives may achieve strong market acceptance during the year. In such
event, the Company would consider appropriate financing alternatives. Total
property and equipment additions for 1994 are expected to be approximately $25
million.
26
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
(A) STATEMENT OF REGISTRANT
No separate financial statements of the Company's subsidiaries are included
herein because the Company is primarily an operating company and its
subsidiaries are wholly-owned.
(B) Consolidated Statements
Report of Independent Public Accountants . . . . . . . . . . . . . . . . 28
Consolidated Balance Sheets as of October 31, 1993 and 1992. . . . . . . 29
Consolidated Statements of Income for the years ended
October 31, 1993, 1992 and 1991 . . . . . . . . . . . . . . . . . . 30
Consolidated Statements of Changes in Stockholders' Investment
for the years ended October 31, 1993, 1992 and 1991 . . . . . . . . 31
Consolidated Statements of Cash Flows for the years ended
October 31, 1993, 1992 and 1991 . . . . . . . . . . . . . . . . . . 32
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 33
Supplemental Schedules to Consolidated Financial Statements
Schedules V and VI -- Property and Equipment and
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . 40
Schedule X -- Supplementary Income Statement Information. . . . . . 41
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission have been
omitted as not required, not applicable or the information required has been
included elsewhere in the financial statements and related notes.
(C) SUPPLEMENTAL FINANCIAL INFORMATION -- Unaudited . . . . . . . . . . . . 42
27
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ADC Telecommunications, Inc.:
We have audited the accompanying consolidated balance sheets of ADC
TELECOMMUNICATIONS, INC. AND SUBSIDIARIES as of October 31, 1993 and 1992, and
the related consolidated statements of income, changes in stockholders'
investment and cash flows for each of the three years in the period ended
October 31, 1993. These financial statements and the schedules referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ADC Telecommunications, Inc.
and Subsidiaries as of October 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
October 31, 1993, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules to
consolidated financial statements are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
consolidated financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Minneapolis, Minnesota
December 15, 1993
28
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - OCTOBER 31
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1993 1992
--------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 16,324 $ 20,484
Accounts receivable, net of reserves of $2,541
and $2,651 66,830 47,414
Inventories, net of reserves of $5,048
and $3,807 48,278 39,063
Prepaid income taxes and other 11,099 8,394
--------- ---------
Total current assets 142,531 115,355
--------- ---------
PROPERTY AND EQUIPMENT:
Land and buildings 30,794 28,922
Machinery and equipment 100,117 84,462
Furniture and fixtures 15,617 14,057
Accumulated depreciation and amortization (83,652) (69,496)
--------- ---------
Total property and equipment 62,876 57,945
OTHER ASSETS, principally goodwill 74,647 67,462
--------- ---------
$ 280,054 $ 240,762
--------- ---------
--------- ---------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 300 $ 324
Accounts payable 21,194 12,445
Accrued compensation and benefits 20,490 15,847
Accrued income taxes 2,368 1,254
Other accrued liabilities 10,549 10,201
--------- ---------
Total current liabilities 54,901 40,071
--------- ---------
DEFERRED INCOME TAXES 3,949 4,393
LONG-TERM DEBT, less current maturities above 810 14,110
--------- ---------
Total liabilities 59,660 58,574
--------- ---------
STOCKHOLDERS' INVESTMENT:
Common stock (27,697 and 13,610 shares issued
and outstanding) 5,539 2,722
Paid-in capital 29,465 25,745
Retained earnings 186,405 154,769
Deferred compensation (1,015) (1,048)
--------- ---------
Total stockholders' investment 220,394 182,188
--------- ---------
$ 280,054 $ 240,762
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
29
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED OCTOBER 31
(IN THOUSANDS, EXCEPT PER SHARE STATISTICS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
NET SALES $ 366,118 $ 316,496 $ 293,839
COST OF PRODUCT SOLD 178,572 155,074 148,614
--------- --------- ---------
GROSS PROFIT 187,546 161,422 145,225
--------- --------- ---------
Gross profit percentage 51.2% 51.0% 49.4%
--------- --------- ---------
EXPENSES:
Selling 70,432 61,329 53,577
Development and product engineering 40,988 36,063 32,315
Administration 22,879 21,637 20,792
Personnel reduction -- 3,800 --
--------- --------- ---------
Total expenses 134,299 122,829 106,684
--------- --------- ---------
OPERATING INCOME 53,247 38,593 38,541
--------- --------- ---------
OTHER INCOME (EXPENSE), NET:
Interest 183 (942) (108)
Other (3,693) (2,925) (2,028)
--------- --------- ---------
INCOME BEFORE INCOME TAXES 49,737 34,726 36,405
PROVISION FOR INCOME TAXES 18,101 13,700 14,380
--------- --------- ---------
NET INCOME $ 31,636 $ 21,026 $ 22,025
--------- --------- ---------
--------- --------- ---------
AVERAGE COMMON SHARES
OUTSTANDING 27,499 27,088 26,738
--------- --------- ---------
--------- --------- ---------
EARNINGS PER SHARE $ 1.15 $ 0.78 $ 0.82
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
30
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
FOR THE YEARS ENDED OCTOBER 31
(IN THOUSANDS)
<TABLE>
<CAPTION>
Common Stock
-------------------- Paid-in Retained Deferred
Shares Amount Capital Earnings Compensation
-------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE OCTOBER 31, 1990 13,289 $ 2,658 $ 20,093 $ 111,718 $ (456)
Stock issued for employee
benefit plans 140 28 2,192 -- (348)
Reduction of deferred
compensation -- -- -- -- 464
Net income -- -- -- 22,025 --
-------- --------- --------- --------- ---------
BALANCE
OCTOBER 31, 1991 13,429 2,686 22,285 133,743 (340)
Stock issued for employee
benefit plans 181 36 3,460 -- (1,484)
Reduction of deferred
compensation -- -- -- -- 776
Net income -- -- -- 21,026 --
-------- --------- --------- --------- ---------
BALANCE OCTOBER 31, 1992 13,610 2,722 25,745 154,769 (1,048)
Stock split effected in the form
of a stock dividend 13,778 2,756 (2,756) -- --
Stock issued for employee
benefit plans 309 61 6,476 -- (781)
Reduction of deferred
compensation -- -- -- -- 814
Net income -- -- -- 31,636 --
-------- --------- --------- --------- ---------
BALANCE OCTOBER 31, 1993 27,697 $ 5,539 $ 29,465 $ 186,405 $ (1,015)
-------- --------- --------- --------- ---------
-------- --------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
31
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED OCTOBER 31
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 31,636 $ 21,026 $ 22,025
Adjustments to reconcile net income to net cash from
operating activities -
Depreciation and amortization 20,587 19,878 17,954
Reduction in deferred compensation 814 776 464
Decrease in deferred income taxes (444) (243) (840)
Changes in assets and liabilities
Accounts receivable (19,416) (6,041) 3,987
Inventories (9,215) 1,364 (2,114)
Prepaid income taxes and other assets (3,586) (921) (1,996)
Accounts payable 2,967 560 (2,121)
Accrued liabilities 6,105 (1,644) (192)
--------- --------- ---------
Total cash from operating activities 29,448 34,755 37,167
--------- --------- ---------
CASH FLOWS FROM INVESTMENT ACTIVITIES:
Property and equipment additions, net (21,243) (15,780) (24,567)
Acquisition payments (2,199) -- (49,289)
Investment in technology (763) -- --
Long-term investments (1,835) -- --
--------- --------- ---------
Total cash used for investment activities (26,040) (15,780) (73,856)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in long-term debt (13,324) (30,612) 38,948
Common stock issued 5,756 2,012 1,872
--------- --------- ---------
Total cash from (used for) financing activities (7,568) (28,600) 40,820
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,160) (9,625) 4,131
CASH AND CASH EQUIVALENTS, beginning of period 20,484 30,109 25,978
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 16,324 $ 20,484 $ 30,109
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 308 $ 2,271 $ 1,402
Income taxes paid $ 18,206 $ 13,361 $ 13,242
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
32
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS AND OPERATIONS - The consolidated financial statements include the
accounts of ADC Telecommunications, Inc. (a Minnesota corporation) and its
wholly-owned subsidiaries, referred to collectively herein as the Company. All
significant intercompany transactions and balances have been eliminated in
consolidation.
The Company designs, manufactures and markets products that serve a broad range
of transmission, networking, and broadband connectivity functions in
telecommunications networks utilizing copper and fiber optic transmission media.
Revenue is recognized at the time of shipment. Export sales were $58,919,000,
$49,347,000 and $37,960,000 in 1993, 1992 and 1991, respectively.
CASH EQUIVALENTS - Cash equivalents primarily represent short-term investments
in commercial paper with maturities of less than three months which yielded 3%
and 4% at October 31, 1993 and 1992, respectively. These investments are
reflected in the accompanying consolidated balance sheets at cost, which
approximates market.
INVENTORIES - Inventories include material, labor and overhead and are stated at
the lower of first-in, first-out cost or market. Inventories at October 31
consisted of:
<TABLE>
<CAPTION>
1993 1992
--------- --------
(In Thousands)
<S> <C> <C>
Purchased materials and manufactured
products $ 42,889 $ 35,302
Work-in-process 5,389 3,761
-------- --------
$ 48,278 $ 39,063
-------- --------
-------- --------
</TABLE>
PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost. Additions
and improvements to property and equipment are capitalized at cost while
maintenance and repair expenditures are charged to operations as incurred.
Depreciation charges are computed using the straight-line method for financial
reporting purposes and both straight-line and accelerated methods for income tax
purposes. For financial reporting purposes, depreciation is provided over the
following estimated useful lives:
<TABLE>
<CAPTION>
Years
------
<S> <C>
Buildings and improvements 5-30
Machinery and equipment 3-10
Furniture and fixtures 3-10
-----
-----
</TABLE>
GOODWILL AND OTHER INTANGIBLES - The excess of the cost over the net assets of
acquired businesses (goodwill of $77,000,000 and $70,000,000 at October 31,
1993 and 1992, respectively) is being amortized on a straight-line basis over
25 years. Related accumulated amortization at October 31, 1993 and 1992 was
$8,653,000 and $5,856,000, respectively. Other intangibles are being amortized
on a straight-line basis over 5 years.
RESEARCH AND DEVELOPMENT COSTS - The Company's policy is to expense all research
and development costs in the period incurred.
WARRANTY COSTS - The Company warrants most of its products against defects in
materials and workmanship under normal use and service for periods extending to
fifteen years. Historically, warranty costs have been insignificant. The
Company maintains reserves for warranty costs based on this experience.
33
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(2) ACQUISITIONS:
Effective May 6, 1991, the Company acquired Fibermux Corporation (Fibermux).
During the third quarter of 1990, the Company acquired technology and other
assets of TELINQ Systems Incorporated and the stock of American Lightwave
Systems, Inc. (ALS). Payments and accruals related to these acquisitions through
October 31, 1993, totalled $74,463,000.
These acquisitions have been accounted for as purchases, and, accordingly, the
total purchase prices were allocated to the net assets acquired based on
estimated fair values at the dates of the acquisitions. The excess of cost over
the net assets has been recorded as goodwill. The results of operations have
been included in the Consolidated Statements of Income from the respective
acquisition dates. The inclusion of financial data for these acquisitions prior
to the dates of acquisition would not have materially affected reported
results.
(3) DEBT:
Under revolving credit agreements, the Company has credit arrangements which
permit borrowing, on an unsecured basis, up to $40,000,000 through December
1996, principally at prevailing market rates of interest. The agreements
require, among other matters, that the Company meet certain defined net worth,
interest coverage and liability to equity ratios, and restrict cash dividends.
The Company was in compliance with these covenants at October 31, 1993. The
revolving credit borrowings can be repaid at any time prior to maturity without
penalty. At maturity, the Company will have an option to convert any
outstanding revolving credit loan balances to term loans bearing interest
principally at the prime rate, payable in annual installments through December
2000. The Company is required to pay commitment fees based upon the average
unused amounts of the commitments. There are no compensating balance
requirements.
In May 1991, the Company borrowed $40,000,000 under the revolving credit
agreements to partially finance the acquisition of Fibermux. The debt
outstanding under such agreements was repaid during 1993 and 1992. The weighted
average annual interest rates during the period borrowings were outstanding were
4.9%, 5.3% and 6.6% for 1993, 1992 and 1991, respectively.
At October 31, 1993 and 1992, the Company had a mortgage note payable of
$1,100,000 and $1,434,000 respectively, collateralized by certain land,
buildings and equipment. The note is payable in annual installments of
approximately $300,000 through 1996 and bears interest at a rate of 7.55%.
34
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(4) EMPLOYEE BENEFIT PLANS:
PENSION PLAN - The Company maintains a defined benefit plan covering a
majority of its employees. The Company funds the plan in accordance with the
requirements of Federal laws and regulations. Plan assets consist of fixed
income securities and a managed portfolio of equity securities.
Pension expense included the following components:
<TABLE>
<CAPTION>
1993 1992 1991
-------- --------- --------
(In Thousands)
<S> <C> <C> <C>
Service cost for benefits
earned during the period $ 1,828 $ 1,412 $ 1,364
Interest cost on the projected
benefit obligation 1,348 1,207 984
Return on assets (2,137) (1,216) (2,250)
Net amortization and deferral 984 266 1,590
-------- -------- --------
$ 2,023 $ 1,669 $ 1,688
-------- -------- --------
-------- -------- --------
Discount rate used to determine
actuarial present value of
benefits at October 31 7.0% 7.0% 7.5%
-------- -------- --------
-------- -------- --------
</TABLE>
The rate of compensation used to measure the projected benefit obligation was 5%
in 1993 and 6% in 1992 and 1991. The expected long-term rate of return on plan
assets was 9%.
The following table sets forth the funded status of the plan as of October 31:
<TABLE>
<CAPTION>
1993 1992
----------- ----------
(In Thousands)
<S> <C> <C>
Accumulated benefit obligation:
Vested $ (16,282) $ (11,964)
Nonvested (1,248) (2,271)
--------- ---------
Total (17,530) (14,235)
Excess of projected benefit
obligation over accumulated
benefit obligation (4,216) (5,016)
--------- ---------
Projected benefit obligation (21,746) (19,251)
Market value of plan assets 16,990 14,467
--------- ---------
Unfunded projected benefit obligation (4,756) (4,784)
Unrecognized net (gain) loss (872) 969
Unrecognized prior service cost 2,092 1,285
Unrecognized transition liability 993 1,064
--------- ---------
Total accrued pension liability $ (2,543) $ (1,466)
--------- ---------
--------- ---------
</TABLE>
35
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(4) EMPLOYEE BENEFIT PLANS (CONTINUED):
The Company also maintains supplemental defined benefit retirement plans for
members of the Board of Directors and for certain officers. The cost of these
plans was $210,000, $257,000 and $494,000 for 1993, 1992 and 1991, respectively.
RETIREMENT SAVINGS PLAN - The Company has a voluntary plan of investment
available to any employee who has completed one year of service. The Company
contributes 1% of wages to the Retirement Savings Plan on behalf of all
employees covered under the plan. Based on Company performance, salary
deferrals up to 6% of wages are partially matched by the Company. Employees are
fully vested in salary deferrals and Company contributions at all times. The
contributions to this plan totalled $3,210,000, $2,639,000 and $2,415,000 in
1993, 1992 and 1991, respectively. A portion of the cash contributions is
invested in the Company's stock by the Plan's trustee.
STOCK AWARD PLANS - The Company maintains a Stock Incentive Plan which provides
for the granting of certain stock awards, including stock options at fair market
value and restricted shares, to key employees of the Company.
The Company also maintains a Non-Employee Director Stock Option Plan in order to
enhance the ability to attract and retain the services of experienced and
knowledgeable outside directors. The plan provides for granting of a maximum of
110,000 nonqualified stock options at the fair market value.
During 1993, 1992, and 1991, the Company issued shares of common stock to
certain employees which are restricted as to their transferability through
October 31, 1996. The market value of such stock at the date of issuance is
being amortized to income over the restricted period. The unamortized amount of
the resulting deferred compensation is recorded as a reduction of shareholders'
investment. In addition, the Company awarded stock retention bonuses which
provide for cash payments to offset the personal income taxes incurred upon the
lapsing of stock restrictions. The compensation expense associated with this
plan was $1,938,000, $1,008,000 and $970,000 in 1993, 1992 and 1991,
respectively.
36
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(4) EMPLOYEE BENEFIT PLANS(CONTINUED):
The following schedule summarizes activity in the plans:
<TABLE>
<CAPTION>
Stock Restricted Grant
Options Stock Price
---------- ---------- --------
<S> <C> <C> <C>
Outstanding at October 31, 1991 997,026 137,172 $7-$18
Granted 873,400 113,400 $13-$18
Exercised (335,564) -- $7-$12
Restrictions lapsed -- (106,854) $12-$18
Cancelled (132,022) (19,250) $7-$12
---------- ----------
Outstanding at October 31, 1992 1,402,840 124,468 $7-$18
Granted 93,200 28,300 $20-$42
Exercised (474,737) -- $7-$18
Restrictions lapsed -- (23,000) $10-$18
Cancelled (78,933) (19,210) $13-$26
---------- ----------
Outstanding at October 31, 1993 942,370 110,558 $7-$42
---------- ----------
---------- ----------
Exercisable at October 31, 1993 619,092 -- $7-$23
---------- ----------
---------- ----------
</TABLE>
(5) CAPITAL STOCK:
AUTHORIZED STOCK - The Company is authorized to issue 50,000,000 shares of
common stock at 20 cents par value and 10,000,000 shares of preferred
stock, no par value. The Board of Directors has the power to determine the
dividend, voting, conversion and redemption rights of each series of
preferred stock which they may create. There are no preferred shares
issued.
STOCK SPLIT - On May 26, 1993, the Company declared a two-for-one stock
split effected in the form of a 100% stock dividend paid June 28, 1993 to
shareholders of record as of June 15, 1993. The share and per share
information in this report (except balance sheet data) have been adjusted
to reflect the effect of the dividend.
SHAREHOLDER RIGHTS PLAN - The Company has a Shareholder Rights Plan which
provides that if any person or group acquires 20% or more of the Company's
common stock, each Right not owned by such person or group will entitle its
holder to purchase, at the Right's then-current purchase price ($16 2/3 at
October 31, 1993), common stock of the Company having a value of twice the
Right's purchase price. The Rights would not be triggered, however, if the
acquisition of 20% or more of the Company's common stock is pursuant to a
tender offer or exchange for all outstanding shares of the Company's common
stock which is determined by the Board of Directors to be fair and in the
best interests of the Company and its shareholders. If the Board of
Directors determines that a 10% shareholder's interest is likely to have an
adverse effect on the long-term interests of the Company and its
shareholders, the Rights may also become exercisable. The Rights are
redeemable at 1 2/3 cents any time prior to the time they become
exercisable. The Rights will expire on October 6, 1996 if not previously
redeemed or exercised.
37
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(6) INCOME TAXES:
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Current taxes payable -
Federal $ 17,820 $ 12,071 $ 12,807
Foreign 426 567 828
State 2,859 1,629 1,802
--------- --------- ---------
21,105 14,267 15,437
Deferred (3,004) (567) (1,057)
--------- --------- ---------
Total provision $ 18,101 $ 13,700 $ 14,380
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company records a reduction in income taxes payable for qualifying tax
credits in the year in which they occur.
The benefit for deferred taxes is primarily due to timing differences in the tax
deductibility of employee benefit plan costs, depreciation and certain accrued
expenses and reserves which are not yet deductible for income tax purposes.
The effective income tax rate differs from the Federal statutory rate as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate 35% 34% 34%
Current year tax credits utilized
for research and development (2) (3) (3)
Goodwill 2 3 2
State income taxes, net 3 3 3
Other, net (2) 2 4
---- ---- ----
Effective income tax rate 36% 39% 40%
---- ---- ----
---- ---- ----
</TABLE>
In February 1992 the Financial Accounting Standards Board issued Statement
No. 109, "Accounting for Income Taxes" (FASB 109), which the Company intends to
implement in the first quarter of 1994. Management has determined that the
impact of adopting FASB 109 will not be significant to the Company in fiscal
1994.
The Company's United States income tax returns for the years 1990 and 1991 are
currently under examination. Management believes that adequate provision for
income taxes has been made for all years through 1993.
38
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(7) COMMITMENTS AND CONTINGENCIES:
OPERATING LEASES - A portion of the Company's operations are conducted
using leased equipment and facilities. These leases are non-cancellable
and renewable with expiration dates ranging through the year 2000. The
rental expense included in the accompanying consolidated income statements
was $5,347,000, $5,324,000 and $4,834,000 for 1993, 1992 and 1991,
respectively.
The following is a schedule of future minimum rental payments required
under all non-cancellable operating leases as of October 31, 1993:
<TABLE>
<CAPTION>
(In Thousands)
--------------
<S> <C>
1994 $ 4,528
1995 4,059
1996 2,817
1997 1,694
1998 and Thereafter 2,536
--------
$ 15,634
--------
--------
</TABLE>
CONTINGENCIES - The Company is exposed to a number of asserted and
unasserted potential claims encountered in the normal course of business.
In the opinion of management, the resolution of these matters will not have
a material adverse effect on the Company's financial position or results of
operations.
CHANGE OF CONTROL - The Board of Directors has approved the extension of
certain employee benefits, including salary continuation to key employees,
in the event of a change of control of the Company. The Board has retained
the flexibility to cancel such provisions under certain circumstances.
(8) PERSONNEL REDUCTION:
During the first quarter of 1992, the Company recorded a one-time charge
associated with a workforce reduction program designed to reduce payroll
costs.
39
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULES TO CONSOLIDATED FINANCIAL STATEMENTS
SCHEDULES V AND VI - PROPERTY AND EQUIPMENT AND ACCUMULATED DEPRECIATION:
Transactions in property and equipment and accumulated depreciation accounts for
the years ended October 31, 1993, 1992, and 1991 were as follows:
<TABLE>
<CAPTION>
Machinery Furniture
Land and and and
Buildings Equipment Fixtures Total
--------- --------- --------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
PROPERTY AND EQUIPMENT
Balance at October 31, 1990 $ 20,259 $ 63,596 $ 11,110 $ 94,965
Additions 5,961 18,504 2,619 27,084*
Retirements (1,518) (3,384) (368) (5,270)
--------- --------- --------- ---------
Balance at October 31, 1991 24,702 78,716 13,361 116,779
Additions 4,320 10,844 1,427 16,591
Retirements (100) (5,098) (731) (5,929)
--------- --------- --------- ---------
Balance at October 31, 1992 28,922 84,462 14,057 127,441
Additions 2,073 17,803 1,670 21,546
Retirements (201) (2,148) (110) (2,459)
--------- --------- --------- ---------
Balance at October 31, 1993 $ 30,794 $ 100,117 $ 15,617 $ 146,528
--------- --------- --------- ---------
--------- --------- --------- ---------
ACCUMULATED DEPRECIATION
Balance at October 31, 1990 $ 8,050 $ 35,644 $ 5,887 $ 49,581
Provisions 1,716 11,315 1,423 14,454
Retirements (1,495) (3,268) (301) (5,064)
--------- --------- --------- ---------
Balance at October 31, 1991 8,271 43,691 7,009 58,971
Provisions 1,699 12,439 1,505 15,643
Retirements (3) (4,403) (712) (5,118)
--------- --------- --------- ---------
Balance at October 31, 1992 9,967 51,727 7,802 69,496
Provisions 1,852 13,026 1,435 16,313
Retirements (201) (1,859) (97) (2,157)
--------- --------- --------- ---------
Balance at October 31, 1993 $ 11,618 $ 62,894 $ 9,140 $ 83,652
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
* Includes $2,311,000 acquired in connection with the purchase of Fibermux in
1991 (see note 2 to the consolidated financial statements).
40
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION:
The following amounts were charged to cost of products sold and operating
expenses as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Advertising $ 4,284 $ 3,836 $ 3,646
------- ------- -------
------- ------- -------
</TABLE>
The amounts of royalties, taxes other than payroll and income taxes, and
repairs and maintenance are not material in the aggregate.
41
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
1993
-----------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $ 78,648 $ 88,999 $ 93,346 $ 105,125 $ 366,118
--------- --------- --------- --------- ---------
Gross Profit 40,138 45,291 48,638 53,479 187,546
--------- --------- --------- --------- ---------
Income
Before Income Taxes 8,350 11,212 14,345 15,830 49,737
Provision
for Income Taxes 3,090 4,148 5,164 5,699 18,101
--------- --------- --------- --------- ---------
Net Income $ 5,260 $ 7,064 $ 9,181 $ 10,131 $ 31,636
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Average Common
Shares Outstanding 27,324 27,484 27,544 27,641 27,499
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Earnings Per Share $ 0.19 $ 0.26 $ 0.33 $ 0.37 $ 1.15
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
1992
-----------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales $ 64,754 $ 78,829 $ 83,847 $ 89,066 $ 316,496
--------- --------- --------- --------- ---------
Gross Profit 30,826 40,525 42,969 47,102 161,422
--------- --------- --------- --------- ---------
Income
Before Income Taxes (2,092) 10,235 12,461 14,122 34,726
Provisions
for Income Taxes (816) 3,992 4,860 5,664 13,700
--------- --------- --------- --------- ---------
Net Income $ (1,276) $ 6,243 $ 7,601 $ 8,458 $ 21,026
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Average Common
Shares Outstanding 26,956 27,062 27,140 27,196 27,088
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Earnings Per Share $ (0.05) $ 0.23 $ 0.28 $ 0.31 $ 0.78
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
42
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See Part I of this Report for information with respect to executive
officers of the Company. Pursuant to General Instruction G(3), reference is
made to the information contained under the captions "Election of Directors" and
"Section 16(a) Reporting" in the Company's definitive proxy statement for its
1994 Annual Meeting of Shareholders to be filed with the Securities and Exchange
Commission on or before February 28, 1994, which information is incorporated
herein.
ITEM 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G(3), reference is made to the
information contained under the caption "Executive Compensation" (except for the
information set forth under the subcaption "Compensation and Organization
Committee Report on Executive Compensation," which is not incorporated herein)
in the Company's definitive proxy statement for its 1994 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission on or
before February 28, 1994, which information is incorporated herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Pursuant to General Instruction G(3), reference is made to the
information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Company's definitive proxy statement
for its 1994 Annual Meeting of Shareholders to be filed with the Securities and
Exchange Commission on or before February 28, 1994, which information is
incorporated herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G(3), reference is made to the information
contained in the last paragraph under the caption "Election of Directors --
Compensation of Directors" in the Company's definitive proxy statement for its
1994 Annual Meeting of Shareholders to be filed with the Securities and Exchange
Commission on or before February 28, 1994, which information is incorporated
herein.
43
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K(a)
(a) 1. FINANCIAL STATEMENTS
The following consolidated financial statements of the Company are
included in Part II, Item 8 of this Annual Report on Form 10-K:
Report of Independent Public Accountants.
Consolidated Balance Sheets as of October 31, 1993 and 1992.
Consolidated Statements of Income for the years ended October 31,1993,
1992 and 1991.
Consolidated Statements of Changes in Stockholders' Investment for
the years ended October 31, 1993, 1992 and 1991.
Consolidated Statements of Cash Flows for the years
ended October 31, 1993, 1992 and 1991.
Notes to Consolidated Financial Statements.
Supplemental Financial Information (Unaudited).
2. FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules are included in Part II,
Item 8 of this Annual Report on Form 10-K:
Schedules V --Property and Equipment and Accumulated
and VI Depreciation.
Schedule X --Supplementary Income Statement Information.
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission have been
omitted as not required or not applicable, or the information required has been
included elsewhere in the financial statements and related notes.
3. LISTING OF EXHIBITS
Exhibit
Number Description
--------- -----------
3-a Restated Articles of Incorporation of ADC
Telecommunications, Inc., as amended to date. (Incorporated
by reference to Exhibit 3-a to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1991.)
3-b Composite Restated Bylaws of ADC Telecommunications, Inc.,
as amended to date (Incorporated by reference to Exhibit
3-b to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1989.)
4-a Specimen certificate for shares of Common Stock of ADC
Telecommunications, Inc. (Incorporated by reference to
Exhibit 4-a to the Company's Quarterly Report on Form 10-Q
for the quarter ended July 31, 1989.)
44
<PAGE>
Exhibit
Number Description
--------- -----------
4-b Restated Articles of Incorporation of ADC
Telecommunications, Inc., as amended to date. (Incorporated
by reference to Exhibit 4-b to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1991.)
4-c Composite Restated Bylaws of ADC Telecommunications, Inc.,
as amended to date (Incorporated by reference to Exhibit
3-b to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1989.)
4-d Amended and Restated Rights Agreement, amended and restated
as of August 16, 1989, between ADC Telecommunications, Inc.
and Norwest Bank Minnesota, N.A., as Rights Agent.
(Incorporated by reference to Exhibit 1 to Amendment No. 1
on Form 8 dated August 16, 1989, to the Company's
Registration Statement on Form 8-A dated September 23,
1986.)
10-a* Stock Option and Restricted Stock Plan, restated as of
January 26, 1988. (Incorporated by reference to Exhibit
19-a to the Company's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1988.)
10-b* Amendment to Stock Option and Restricted Stock Plan dated as
of September 26, 1989. (Incorporated by reference to
Exhibit 10-e to the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1989.)
10-c* The ADC Telecommunications, Inc. 1991 Stock Incentive Plan,
as amended. (Incorporated by reference to Exhibit 10-a to
the Company's Quarterly Report on Form 10-Q for the quarter
ended January 31, 1993.)
10-d* Management Incentive Plan for the fiscal year ended October
31, 1991. (Incorporated by reference to Exhibit 10-e to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1991.)
10-e* Management Incentive Plan for the fiscal year ended October
31, 1992. (Incorporated by reference to Exhibit 10-e to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1992.)
10-f* Management Incentive Plan for the fiscal year ended October
31, 1993.
10-g* FITL Management Incentive Plan for the fiscal year ended
October 31, 1993.
10-h* International Management Incentive Plan for the fiscal year
ended October 31, 1993.
10-i* Transmission Market Development Management Incentive Plan
for the fiscal year ended October 31, 1993.
10-j* Vice President of Sales and Customer Service Management
Incentive Plan for the fiscal year ended October 31, 1993.
10-k* Fibermux Management Incentive Plan for the fiscal year ended
October 31, 1993.
10-l* Kentrox Management Incentive Plan for the fiscal year ended
October 31, 1993.
10-m* Agreement, dated as of November 1, 1991, between ADC
Telecommunications, Inc. and Charles M. Denny, Jr., related
to retirement and consulting arrangements. (Incorporated by
reference to Exhibit 10-h to the Company's Annual Report on
Form 10-K for the fiscal year ended October 31, 1991.)
10-n* ADC Telecommunications, Inc. Change in Control Severance Pay
Plan Statement and Summary Plan Description. (Incorporated
by reference to Exhibit 10-q to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1989.)
45
<PAGE>
Exhibit
Number Description
--------- -----------
10-o* Compensation Plan for Directors of ADC Telecommunications,
Inc., restated as of December 31, 1988. (Incorporated by
reference to Exhibit 19-b to the Company's Quarterly Report
on Form 10-Q for the quarter ended January 31, 1989.)
10-p* First Amendment of the Compensation Plan for Directors of
ADC Telecommunications, Inc. restated as of December 31,
1988. (Incorporated by reference to Exhibit 10-s to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1989.)
10-q* ADC Telecommunications, Inc. Directors' Supplemental
Retirement Plan dated as of January 23, 1990. (Incorporated
by reference to Exhibit 10-m to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1990.)
10-r* ADC Telecommunications, Inc. Nonemployee Director Stock
Option Plan. (Incorporated by reference to Exhibit 19-b of
the Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1991.)
10-s* ADC Telecommunications, Inc. Deferred Compensation Plan,
dated as of November 1, 1978. (Incorporated by reference to
Exhibit 10-n to the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1990.)
10-t* ADC Telecommunications, Inc. Excess Benefits Plan, dated as
of January 1, 1985. (Incorporated by reference to Exhibit
10-o to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1990.)
10-u* ADC Telecommunications, Inc. 401(k) Excess Plan, dated as of
September 1, 1990. (Incorporated by reference to Exhibit
10-p to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1990.)
10-v Lease, dated February 25, 1991, between American Lightwave
Systems, Inc. and 999 Research Parkway, Inc. (Incorporated
by reference to Exhibit 10-t to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1991.)
10-w Lease, dated March 1, 1986, between ADC Telecommunications,
Inc. and Metro International Ltd. as amended. (Incorporated
by reference to Exhibit 10-w to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1991.)
10-x Lease Agreement, dated October 26, 1990, between Lutheran
Brotherhood and ADC Telecommunications, Inc. (Incorporated
by reference to Exhibit 10-w to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1990.)
10-y Lease Agreement, dated August 21, 1990, between Minnetonka
Corporate Center I Limited Partnership and ADC
Telecommunications, Inc. (Incorporated by reference to
Exhibit 10-x to the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1990.)
10-z Sublease Agreement, dated October 31, 1990, between Seagate
Technology, Inc. and ADC Telecommunications, Inc.
(Incorporated by reference to Exhibit 10-y to the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1990.)
46
<PAGE>
Exhibit
Number Description
--------- -----------
10-aa Renewal of Lease, dated July 9, 1990, between ADC
Telecommunications, Inc. and Metro International General
Partner Canada, Inc. (Incorporated by reference to Exhibit
10-z to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1990.)
10-bb Lease, dated September 30, 1993, between American Lightwave
Systems, Inc. and 999 Research Parkway, Inc.
10-cc Lease, dated August 2, 1993, between ADC Telecommunications,
Inc. and Engelsma Limited Partnership.
10-dd Lease, dated December 18, 1992, between Fibermux Corporation
and Greenville Dallas Delaware, Inc.
10-ee* Supplemental Executive Retirement Plan Agreement for
William J. Cadogan, dated as of November 1, 1990, between
ADC Telecommunications, Inc. and William J. Cadogan.
21-a Subsidiaries of the Company.
23-a Consent of Independent Public Accountants to incorporation
by reference of financial material included in this report
into Company's Registration Statement on Form S-8 (File No.
2-83584), Registration Statement on Form S-8 (File No.
322654), Registration Statement on Form S-8 (File No.
33-40356) and Registration Statement on Form S-8 (File No.
33-40357.)
24-a Powers of attorney.
There have been excluded from the exhibits filed with this
report instruments defining the rights of holders of
long-term debt of the Company where the total amount of the
securities authorized under such instruments does not exceed
10% of the total assets of the Company. The Company hereby
agrees to furnish a copy of any such instruments to the
Commission upon request.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended October 31, 1993.
(c) See Exhibit Index and Exhibits attached to this report.
(d) See Financial Statement Schedules included in Part II, Item
8 of this report.
__________________
* Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to the Annual Report on Form 10-K.
47
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ADC TELECOMMUNICATIONS, INC.
Dated: January 11, 1994 By: /s/ Robert E. Switz
------------------------
Robert E. Switz
Vice President, Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
William J. Cadogan* President, Chief Executive Officer,
Chief Operating Officer and Director
(principal executive officer)
By: /s/ Robert E. Switz Vice President,
-------------------- Chief Financial Officer
Robert E. Switz (principal financial officer)
By: /s/ Joan K. Berg Vice President, By: /s/ Joan K. Berg
------------------- Controller ----------------
Joan K. Berg (principal accounting officer) Joan K. Berg
Attorney-in-Fact*
Dated: January 11, 1994
Charles M. Denny, Jr.* Director
Thomas E. Holloran* Director
B. Kristine Johnson* Director
Charles W. Oswald* Director
Jean-Pierre Rosso* Director
Donald M. Sullivan* Director
Warde F. Wheaton* Director
John D. Wunsch* Director
* By Power of Attorney filed with this report as Exhibit 24-a hereto.
48
<PAGE>
ADC TELECOMMUNICATIONS, INC.
Annual Report on Form 10-K
For the Fiscal Year Ended October 31, 1993
EXHIBIT INDEX
Exhibit
Number Description Page
--------- ----------- ----
3-a Restated Articles of Incorporation of N/A
ADC Telecommunications, Inc., as amended
to date. (Incorporated by reference to
Exhibit 3-a to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1991.)
3-b Composite Restated Bylaws of ADC Telecommunications, N/A
Inc., as amended to date (Incorporated
by reference to Exhibit 3-b to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1989.)
4-a Specimen certificate for shares of Common Stock N/A
of ADC Telecommunications, Inc.
(Incorporated by reference to Exhibit
4-a to the Company's Quarterly Report on
Form 10-Q for the quarter ended July 31,
1989.)
4-b Restated Articles of Incorporation of ADC N/A
Telecommunications, Inc., as amended to
date. (Incorporated by reference to
Exhibit 4-b to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1991.)
4-c Composite Restated Bylaws of ADC Telecommunications, N/A
Inc., as amended to date (Incorporated
by reference to Exhibit 3-b to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1989.)
4-d Amended and Restated Rights Agreement, amended N/A
and restated as of August 16, 1989,
between ADC Telecommunications, Inc. and
Norwest Bank Minnesota, N.A., as Rights
Agent. (Incorporated by reference to
Exhibit 1 to Amendment No. 1 on Form 8
dated August 16, 1989, to the Company's
Registration Statement on Form 8-A dated
September 23, 1986.)
10-a Stock Option and Restricted Stock Plan, restated N/A
as of January 26, 1988. (Incorporated
by reference to Exhibit 19-a to the
Company's Quarterly Report on Form 10-Q
for the quarter ended April 30, 1988.)
10-b Amendment to Stock Option and Restricted Stock Plan N/A
dated as of September 26, 1989. (Incorporated by
reference to Exhibit 10-e to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1989.)
10-c The ADC Telecommunications, Inc. 1991 Stock N/A
Incentive Plan, as amended.
(Incorporated by reference to Exhibit
10-a to the Company's Quarterly Report
on Form 10-Q for the quarter ended
January 31, 1993.)
49
<PAGE>
Exhibit
Number Description Page
-------- ----------- ----
10-d Management Incentive Plan for the fiscal year N/A
ended October 31, 1991. (Incorporated
by reference to Exhibit 10-e to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1991.)
10-e Management Incentive Plan for the fiscal year N\A
ended October 31, 1992. (Incorporated
by reference to Exhibit 10-e to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1992.)
10-f Management Incentive Plan for the fiscal year xx
ended October 31, 1993.
10-g FITL Management Incentive Plan for the fiscal xx
year ended October 31, 1993.
10-h International Management Incentive Plan for the xx
fiscal year ended October 31, 1993.
10-i Transmission Market Development Management Incentive xx
Plan for the fiscal year ended October 31, 1993.
10-j Vice President of Sales and Customer Service xx
Management Incentive Plan for the fiscal year ended
October 31, 1993.
10-k Fibermux Management Incentive Plan for the fiscal xx
year ended October 31, 1993.
10-l Kentrox Management Incentive Plan for the fiscal xx
year ended October 31, 1993.
10-m Agreement, dated as of November 1, 1991, between ADC N/A
Telecommunications, Inc. and Charles M.
Denny, Jr., related to retirement and
consulting arrangements. (Incorporated
by reference to Exhibit 10-h to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1991.)
10-n ADC Telecommunications, Inc. Change in Control N/A
Severance Pay Plan Statement and Summary Plan
Description. (Incorporated by reference to
Exhibit 10-q to the Company's Annual Report on
Form 10-K for the fiscal year ended
October 31, 1989.)
10-o Compensation Plan for Directors of ADC N/A
Telecommunications, Inc., restated as of
December 31, 1988. (Incorporated by
reference to Exhibit 19-b to the
Company's Quarterly Report on Form 10-Q
for the quarter ended January 31,
1989.)
10-p First Amendment of the Compensation Plan N/A
for Directors of ADC Telecommunications,
Inc. restated as of December 31, 1988.
(Incorporated by reference to Exhibit
10-s to the Company's Annual Report on
Form 10-K for the fiscal year ended
October 31, 1989.)
10-q ADC Telecommunications, Inc. Directors' N/A
Supplemental Retirement Plan dated as of
January 23, 1990. (Incorporated by
reference to Exhibit 10-m to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1990).
10-r ADC Telecommunications, Inc. Nonemployee N/A
Director Stock Option Plan.
(Incorporated by reference to Exhibit
19-b of the Company's Quarterly Report
on Form 10-Q for the quarter ended April
30, 1991).
50
<PAGE>
Exhibit
Number Description Page
-------- ----------- ----
10-s ADC Telecommunications, Inc. Deferred N/A
Compensation Plan, dated as of November
1, 1978. (Incorporated by reference to
Exhibit 10-n to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1990.)
10-t ADC Telecommunications, Inc. Excess Benefits N/A
Plan, dated as of January 1, 1985.
(Incorporated by reference to Exhibit
10-o to the Company's Annual Report on
Form 10-K for the fiscal year ended
October 31, 1990).
10-u ADC Telecommunications, Inc. 401(k) Excess N/A
Plan, dated as of September 1, 1990.
(Incorporated by reference to Exhibit
10-p to the Company's Annual Report on
Form 10-K for the fiscal year ended
October 31, 1990).
10-v Lease, dated February 25, 1991, between N/A
American Lightwave Systems, Inc. and 999
Research Parkway, Inc. (Incorporated by
reference to Exhibit 10-t to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1991).
10-w Lease, dated March 1, 1986, between ADC N/A
Telecommunications, Inc. and Metro
International Ltd. as amended.
(Incorporated by reference to Exhibit
10-w to the Company's Annual Report on
Form 10-K for the fiscal year ended
October 31, 1991).
10-x Lease Agreement, dated October 26, 1990, N/A
between Lutheran Brotherhood and ADC
Telecommunications, Inc. (Incorporated
by reference to Exhibit 10-w to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1990).
10-y Lease Agreement, dated August 21, 1990, N/A
between Minnetonka Corporate Center I
Limited Partnership and ADC
Telecommunications, Inc. (Incorporated
by reference to Exhibit 10-x to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1990).
10-z Sublease Agreement, dated October 31, 1990, N/A
between Seagate Technology, Inc. and ADC
Telecommunications, Inc. (Incorporated
by reference to Exhibit 10-y to the
Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1990).
10-aa Renewal of Lease, dated July 9, 1990, between N/A
ADC Telecommunications, Inc. and Metro
International General Partner Canada,
Inc. (Incorporated by reference to
Exhibit 10-z to the Company's Annual
Report on Form 10-K for the fiscal year
ended October 31, 1990).
10-bb Lease, dated September 30, 1993, between xx
American Lightwave Systems, Inc. and 999
Research Parkway, Inc.
10-cc Lease, dated August 2, 1993, between ADC xx
Telecommunications, Inc. and Engelsma
Limited Partnership.
10-dd Lease, dated December 18, 1992, between xx
Fibermux Corporation and Greenville
Dallas Delaware, Inc.
51
<PAGE>
Exhibit
Number Description Page
--------- ----------- ----
10-ee Supplemental Executive Retirement Plan xx
Agreement for William J. Cadogan, dated as
of November 1, 1990, between ADC
Telecommunications, Inc. and William J.
Cadogan.
21-a Subsidiaries of the Company.
23-a Consent of Independent Public Accountants xx
to incorporation by reference of
financial material included in this
report into Company's Registration
Statement on Form S-8 (File No.
2-83584), Registration Statement on Form
S-8 (File No. 33-22654), Registration
Statement on Form S-8 (File No.
33-40356) and Registration Statement on
Form S-8 (File No. 33-40357.)
24-a Manually signed powers of attorney. xx
52
<PAGE>
Exhibit 10-f
ADC TELECOMMUNICATIONS
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
<PAGE>
ADC TELECOMMUNICATIONS
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Management Incentive Plan - Fiscal Year ("FY") 1993, effective November 1, 1992
through October 31, 1993.
II. PURPOSE
The purpose of the Plan is to provide, with full regard to the protection of
shareholder's investments, a direct financial incentive for eligible full-time
management employees to strive continually to perform an effective leadership
role and make a significant contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply,
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will be
effective as of the date approved by the Committee and will be communicated to
the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No part-time employee will be eligible for the Plan, and no employee will become
a participant in the Plan after May 1, 1993.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1993 goal categories and weights for Corporate and
Business Unit participants are as follows:
<TABLE>
<CAPTION>
CORPORATE BUSINESS UNIT
PARTICIPANT PARTICIPANT
----------- -----------
<S> <C> <C>
Corporate Revenue 40%
Corporate Operating Income 40% 15%
* Corporate Customer Service/Inventory Turn
Management 20%
Business Unit Revenue 35%
Business Unit Operating Income 35%
* Business Unit Customer Service/Inventory
Turn Management 15%
TOTAL 100% 100%
</TABLE>
The goals relevant to you are specified on the attached Participant Form.
* CORPORATE AND BUSINESS UNIT CUSTOMER SERVICE/INVENTORY TURN MANAGEMENT
goals measure the company's ability to deliver products to meet customer's
request dates while also effectively managing inventories. Customer
service/inventory turn management is measured by average inventory turns (the
direct cost of goods sold divided by average direct inventory cost) and by
shipping performance (relative to meeting customer request dates). A single
numerical representation of customer service/inventory management is derived by
multiplying the average inventory turn by the percentage of customer request
dates met by ADC.
For example, if ADC's average annual inventory turns is 3.4 and the
percentage of customer request dates met is 78%, the result is a customer
service/inventory turn management achievement of 2.65.
Average inventory turns 3.4
% customer request dates met .78
----
Result 2.65
VII. COMPANY PERFORMANCE MINIMUM PAYOUT REQUIREMENTS
The following minimum Company performance goals must be met to assure protection
of shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if net profits are in excess of a
threshold rate of return on stockholders' equity. This rate has been
established at 10%, after tax, based on stockholders' equity at the
beginning of the fiscal year.
B. CORPORATE PARTICIPANTS must meet threshold corporate revenue OR corporate
operating income goals. BUSINESS UNIT PARTICIPANTS must meet threshold
business unit revenue OR business unit operating income OR corporate
operating income goals.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. DETERMINATION OF ACHIEVEMENT AGAINST GOALS AND OBLIGATION TO MAKE PAYMENTS.
The obligation to make payments under the Plan will be determined by achievement
of Corporate and Business Unit goals determined by the Board of Directors.
B. CALCULATION OF INDIVIDUAL PAYMENTS UNDER THIS PLAN IS A FUNCTION OF:
1. Target incentive opportunity - expressed as a percentage of an individual's
FY 1993 earnings. The target % for each participant is designated on the
"Participant Form".
2. Participant's 1993 fiscal year base salary earnings
3. Corporate performance against the established goals (Corporate Participant)
Corporate and Business unit performance against the established goals
(Business Unit Participant)
4. Individual performance may or may not be used to adjust incentive awards.
An individual award can be factored plus or minus 50% in increments of 1%
to account for individual performance.
C. HOW INDIVIDUAL AWARDS ARE DETERMINED IS SHOWN BY THE FOLLOWING EXAMPLES:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 50,0000
<TABLE>
<CAPTION>
Corporate Participant: Weight Achievement
- ---------------------- ------ -----------
<S> <C> <C>
Corporate Revenue: 40% 100%
Corporate Operating Income: 40% 90%
Corporate Customer Service/Inventory 20% 90%
Turn Management:
</TABLE>
Calculation of Payment:
[($50,000 x 11% Target x 40% corporate revenue weight x 100% achievement) +
($50,000 x 11% Target x 40% corporate operating income weight x 90%
achievement) +
($50,000 x 11% Target x 20% corporate customer service/inventory turn mgmt
weight x 90% achievement)] =
$5,170.00
---------
BUSINESS UNIT PARTICIPANT
Assume the same Plan participant works in a Business Unit that achieves the
following against its goals:
<TABLE>
<CAPTION>
Weight Achievement
------ -----------
<S> <C> <C>
Corporate Operating Income: 15% 90%
Business Unit Revenue: 35% 100%
Business Unit Operating Income: 35% 100%
Business Unit Customer Service/ 15% 90%
Inventory Turn Management:
</TABLE>
Calculation of Payment:
[($50,000 x 11% Target x 15% corporate operating income weight x 90%
achievement) +
($50,000 x 11% Target x 35% business unit revenue weight x 100% achievement) +
($50,000 x 11% Target x 35% business unit operating income weight x 100%
achievement) +
($50,000 x 11% Target x 15% business unit customer service/inventory turn mgmt
weight x 90% achievement)] =
$5,335.00
---------
<PAGE>
D. LIMITATION OF RIGHT PRIOR TO RECEIPT OF PAYMENT. No participant entitled
to receive payment under the calculation determined by this Section VII and VIII
will have any right to pledge, assign, or otherwise dispose of any unpaid
portion of such payment.
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. VOLUNTARY RESIGNATION. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal year will relinquish all right to any
payment under the Plan.
B. CHANGE BASED UPON UNSATISFACTORY JOB PERFORMANCE. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment under
this plan.
C. CHANGE BASED UPON JOB ELIMINATION. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. CHANGE BASED UPON A PROMOTION / DEMOTION. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 93.
E. CHANGE BASED UPON TRANSFER BETWEEN CORPORATE AND BUSINESS UNIT PARTICIPANT
CATEGORIES. A current participant who transfers between Corporate and Business
Unit or between different Business Units with different goals during FY 93 will
have a pro rata calculation based on the goals and length of time spent in the
respective participant categories.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board of
Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
Exhibit 10-g
ADC TELECOMMUNICATIONS
FITL MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
<PAGE>
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the FITL Management Incentive Plan of ADC
Telecommunications, Inc. ("Company") - Fiscal Year ("FY") 1993, effective
November 1, 1992 through October 31, 1993.
II. PURPOSE
The purpose of the Plan is to provide, with full regard to the protection of
shareholders' investments, a direct financial incentive for eligible full-time
management employees to strive continually to perform an effective leadership
role and make a significant contribution to the FITL (Fiber in the Loop)
Division and the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply,
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will be
effective as of the date approved by the Committee and will be communicated to
the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No part-time employee will be eligible for the Plan, and no employee will become
a participant in the Plan after May 1, 1993.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
VI. PLAN GOALS
The Plan reinforces annual goals which support the FITL Division's and the
Company's long-term strategic plan. The FY 1993 goal categories and weights
for FITL Management Incentive Plan participants are as follows:
Corporate Operating Income 20%
FITL Market Development 40%
FITL System Development 40%
VII. OVERALL PLAN OPERATION
As stated in Section VI above, 20% of the weight for each participant's
incentive is based on the Company's operating income results. The corporate
operating income goals appear on an Attachment to this document.
Achievement on each of the two FITL components of this Plan, i.e., Market
Development and System Development, is expressed in terms of point values. For
each of these two components, the points associated with threshold, target and
maximum achievement and their corresponding payout percentages are as follows:
Threshold 3 points 30% of target
Target 6 points 100% of target
Maximum 10 points 200% of target
<PAGE>
Payouts for point totals between threshold and target, or between target and
maximum, will be interpolated on a straight-line basis. Fractions of points
will be counted.
A description of the Market Development and System Development components in
this Plan appears in Sections VIII and IX.
VIII. FITL MARKET DEVELOPMENT COMPONENT
Points for this component are awarded for accounts which are signed up and/or
"turned up" (equipment connected and operational) during FY 1993, and for which
general product approval is obtained during FY 1993.
For purposes of this Plan, accounts are designated as either "major" or "other."
Major accounts are limited to the following 13 organizations:
7 Regional Bell Operating Companies (RBOCs)
GTE
United Telephone System
Pentagon
British Telecom (Business TPON)
BEZEQ
Telmex
For each major account that is signed up within FY 1993 for a lab trial, field
trial, or first office application (FOA), 1 point will be awarded. For an
account to be considered signed up, the following documentation must exist:
Lab trial Formal letter of intent
Field trial Formal letter of intent or purchase order, depending
on the account
FOA Purchase order
Although the account must be signed up during FY 1993 for the above 1 point to
be awarded, the actual lab trial, field trial, and/or FOA does not have to
occur during FY 1993.
For each major account that is successfully "turned up" in FY 1993, 2 additional
points will be awarded for a successful lab trial. If a field trial and/or FOA
is successfully completed, 3 points will be awarded. The maximum number of
points per major account for this turn-up phase is 3 points. The success of any
such turn-up operation must be documented in writing by the Manager of Technical
Support - Customer Services Division.
For each major account for whom general product approval is obtained during FY
1993, 1 additional point will be awarded. General product approval must be
confirmed by written notification of Approved Supplier status or similar
documentation from the account.
A maximum of 5 points will be awarded for any one major account.
For accounts other than those identified as major, point credit will be one-half
of the major accounts. A MAXIMUM OF TWO POINTS MAY BE AWARDED FOR ALL MARKET
DEVELOPMENT ACTIVITIES FOR THOSE ACCOUNTS THAT ARE NOT CLASSIFIED AS A MAJOR
ACCOUNT.
<PAGE>
A summary of the award points for major and other accounts appears below:
<TABLE>
<CAPTION>
EVENT MAJOR OTHER
----- ----- -----
<S> <C> <C>
Account is signed up 1 point 0.5 point
System is turned up
Lab trial only, or: 2 points, or 1.0 point, or
Field trial or FOA 3 points 1.5 points
General product approval 1 point 0.5 points
5 points 2.0 points
MAXIMUM PER ACCOUNT MAXIMUM ALL MINOR ACCOUNTS
</TABLE>
The above points apply to a full FITL system as specified on the attached
"Addendum 1" based on the System Engineering Specification. The points do not
apply to any special partially operational systems. However, in the event that
trial of a partial system leads to additional trials of or approval for a full
system during FY 1993, the above point schedule will be applied to that account.
In the event that an account is signed up during FY 1993 but subsequently during
the Fiscal Year cancels plans to turn the system up, the sign-up point will not
be awarded for that account.
IX. FITL SYSTEM DEVELOPMENT COMPONENT
Points for this component are awarded for achieving any or all of 4 technical
hurdles or milestones during FY 1993 based on the Type A ONU system:
<TABLE>
<CAPTION>
MILESTONE DEADLINE POINTS
--------- -------- -------
<S> <C> <C>
Hardware Design Verification Testing 7/31/93 1.5 points
("DVT") is completed per written plan
Software System Design Verification Testing 7/31/93 1.5 points
("DVT") is completed per written plan
Hardware B-Release is ready, 9/30/93 1.5 points
including preparation of all drawings
and bills-of-material
System Software B-Release is ready, 9/30/93 1.5 points
including preparation of all drawings
or other documentation and bill-of-material
</TABLE>
For purposes of this Plan, DVT will be considered completed when all tests and
steps have been executed according to the written DVT plan and a complete
listing of all problems identified during the testing phase has been prepared.
In the event that any of the above four milestones is achieved ahead of
schedule, an additional 0.05 point per standard business week day will be
awarded for that milestone, i.e., added to the original 1.5 points. Conversely,
in the event that any of the above 4 milestones is behind schedule, 0.025 points
per standard business week day up to and including October 31, 1993 will be
subtracted for that milestone, i.e., subtracted from the original 1.5 points.
Zero points will be awarded for any milestone that is not achieved by October
31, 1993. However, the Chief Executive Officer of the Company may at his
discretion authorize milestone deadline changes for the purpose of this Plan if
they are the result of customer-driven product development modifications and
constitute a strategic redirection in product development. Any such changes
must be authorized prior to the occurrence of the new milestone deadlines.
<PAGE>
In addition to the points awarded for the above 4 milestones, 1 point may be
awarded for each major new product development successfully achieved to customer
evaluation during FY 1993 that is beyond the FITL business plan for FY 1993.
The definition of "major new product development successfully achieved to
customer evaluation" will be determined at the end of FY 1993 for purposes of
this Plan at the discretion of the Chief Executive Officer of the Company.
X. COMPANY PERFORMANCE MINIMUM PAYOUT REQUIREMENTS
No portion of the incentive payout will be made to any participant under this
Plan unless the Company's corporate net profits are in excess of a threshold
rate of return on stockholders' equity ("ROE"). This rate has been established
at 10%, after tax, based on stockholders' equity at the beginning of the Fiscal
Year.
XI. CALCULATION OF PAYMENTS
A. DETERMINATION OF ACHIEVEMENT AGAINST GOALS AND OBLIGATION TO MAKE
PAYMENTS. The obligation to make payments under the Plan will be
determined by achievement of Corporate and Business Unit goals determined
by the Board of Directors.
B. CALCULATION OF INDIVIDUAL PAYMENTS UNDER THIS PLAN IS A FUNCTION OF:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1993 earnings. The target % for each participant is
designated on the "Participant Form".
2. Participant's 1993 fiscal year base salary earnings
3. Corporate and FITL performance against the established goals
4. Individual performance may or may not be used to adjust incentive awards.
An individual award can be factored plus or minus 50% in increments of 1%
to account for individual performance.
C. LIMITATION OF RIGHT PRIOR TO RECEIPT OF PAYMENT. No participant entitled
to receive payment under the calculation determined by this Section VII
and VIII will have any right to pledge, assign, or otherwise dispose of
any unpaid portion of such payment.
XII. SAMPLE INCENTIVE CALCULATION
To illustrate how incentive awards are calculated, assume a Plan participant has
a target payout of 11% of base salary earnings of $60,000, or $6,600.
For the CORPORATE OPERATING INCOME GOAL, assume that the Company achieved its
target operating income level.
For the FITL MARKET DEVELOPMENT COMPONENT, assume that:
- - One major account was signed up in FY 1993 but did not complete any trials
during the fiscal year. Only 1 point would be awarded.
- - A second major account signed up and completed a field trial and FOA
during FY 1993, plus gave general product approval during FY 1993. One
point would be awarded for being signed up, plus 3 points for the FOA,
plus 1 point for general product approval, for a total of 5 points.
- - One other account (non-major) was signed up for 0.5 point.
A total of 6.5 points would be achieved for this component.
<PAGE>
For the FITL SYSTEM DEVELOPMENT COMPONENT, assume that:
- - Hardware DVT was completed on 7/31/93, so 1.5 points would be awarded.
- - System Software DVT was completed on 8/14/93 (10 days late). One-quarter
of a point or 0.25 (0.025 x 10) would be subtracted from the target of 1.5
points for a final point value of 1.25 points.
- - Hardware B-release was completed 5 days ahead of schedule. One-quarter of
a point or 0.25 (0.05 x 5) would be added to the target of 1.5 points for
a final point value of 1.75 points.
- - System Software B-release was completed on 9/30/93, so 1.5 points would be
awarded.
A total of 6 points would be awarded for this component.
The following calculations illustrate how the incentive award would be
determined:
<TABLE>
<CAPTION>
Goal/Component Points Achievement Weight
-------------- ------ ----------- ------
<S> <C> <C> <C>
Corporate operating income N/A 100.0% 20%
FITL Market Development 6.5 112.5% 40%
FITL System Development 6.0 100.0% 40%
</TABLE>
Calculation of Payment:
($60,000 x 11% Target x 20% Corporate Operating Income weight x 100%
achievement) +
($60,000 x 11% Target x 40% FITL Market Development weight x 112.5%
achievement) +
($60,000 x 11% Target x 40% FITL System Development weight x 100% achievement) =
$6,930.00
XIII. EFFECT OF CHANGE IN EMPLOYMENT STATUS
VOLUNTARY RESIGNATION: A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all rights to any
payment under the Plan.
CHANGE BASED UPON UNSATISFACTORY JOB PERFORMANCE: A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all rights to any payment
under this Plan.
CHANGE BASED UPON JOB ELIMINATION: Subject to the approval of the Committee, a
participant who is involuntarily terminated or transferred to a non-eligible
position because of a job elimination may retain the right to a pro-rata payment
based upon the time served in the eligible position during the Fiscal Year.
CHANGE BASED UPON A PROMOTION/DEMOTION: A current participant who is promoted
or demoted from an incentive eligible position to another incentive eligible
position during the Fiscal Year will have a pro-rata calculation of payment
based upon the time served in each position during the Fiscal Year.
CHANGE BASED UPON TRANSFER BETWEEN CORPORATE AND BUSINESS UNIT PARTICIPANT
CATEGORIES: A current participant who transfers between the Corporate staff and
FITL Business Unit or between different Business Units with different goals
during FY 1993 will have a pro-rata calculation based on the goals and length of
time spent in the respective participant categories.
<PAGE>
XIV. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this Plan in whole or in part, at its discretion, and nothing in this
Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board of
Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
Exhibit 10-h
ADC TELECOMMUNICATIONS
INTERNATIONAL MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
<PAGE>
ADC TELECOMMUNICATIONS
INTERNATIONAL MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
International Management Incentive Plan - Fiscal Year ("FY") 1993, effective
November 1, 1992 through October 31, 1993.
II. PURPOSE
The purpose of the Plan is to provide, with full regard to the protection of
shareholder's investments, a direct financial incentive for eligible full-time
management employees to strive continually to perform an effective leadership
role and make a significant contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply,
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will be
effective as of the date approved by the Committee and will be communicated to
the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No part-time employee will be eligible for the Plan, and no employee will become
a participant in the Plan after May 1, 1993.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1993 goal categories and weights are as follows:
Corporate Operating Income 15%
International Revenue 50%
International Contribution Income 35%
TOTAL 100%
VII. COMPANY PERFORMANCE MINIMUM PAYOUT REQUIREMENTS
The following minimum Company performance goals must be met to assure protection
of shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if net profits are in excess of a
threshold rate of return on stockholders' equity. This rate has been
established at 10%, after tax, based on stockholders' equity at the
beginning of the fiscal year.
B. Participants must meet the threshold of the International revenue OR the
International contribution income OR the corporate operating income goal.
VIII. CALCULATION OF PAYMENTS
A. DETERMINATION OF ACHIEVEMENT AGAINST GOALS AND OBLIGATION TO MAKE PAYMENTS.
The obligation to make payments under the Plan will be determined by
achievement of Corporate and Business Unit goals determined by the Board of
Directors.
B. CALCULATION OF INDIVIDUAL PAYMENTS UNDER THIS PLAN IS A FUNCTION OF:
1. Target incentive opportunity - expressed as a percentage of an individual's
FY 1993 earnings. The target % for each participant is designated on the
"Participant Form".
2. Participant's 1993 fiscal year base salary earnings
3. Corporate and International performance against the established goals
4. Individual performance may or may not be used to adjust incentive awards.
An individual award can be factored plus or minus 50% in increments of 1%
to account for individual performance.
C. HOW INDIVIDUAL AWARDS ARE DETERMINED IS SHOWN BY THE FOLLOWING EXAMPLE:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 50,0000
<PAGE>
<TABLE>
<CAPTION>
Weight Achievement
------ -----------
<S> <C> <C>
Corporate Operating Income: 15% 90%
International Revenue: 50% 100%
International Contribution Income: 35% 100%
</TABLE>
Calculation of Payment:
[$50,000 x 11% Target x 15% corporate operating income weight x 90%
achievement)+
($50,000 x 11% Target x 50% International revenue weight x 100% achievement) +
($50,000 x 11% Target x 35% International contribution income weight x 100%
achievement) =
$5,417.50
D. LIMITATION OF RIGHT PRIOR TO RECEIPT OF PAYMENT. No participant entitled
to receive payment under the calculation determined by this Section VII and VIII
will have any right to pledge, assign, or otherwise dispose of any unpaid
portion of such payment.
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. VOLUNTARY RESIGNATION. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal year will relinquish all right to
any payment under the Plan.
B. CHANGE BASED UPON UNSATISFACTORY JOB PERFORMANCE. A participant who is
involuntarily terminated or transferred to a non-eligible position for
reasons of unsatisfactory job performance will relinquish all right to any
payment under this plan.
C. CHANGE BASED UPON JOB ELIMINATION. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to
a non-eligible position because of a job elimination may retain the right
to a pro-rata payment based upon the time served in the eligible position
during the fiscal year.
D. CHANGE BASED UPON A PROMOTION/DEMOTION A current participant who is
promoted or demoted from an incentive eligible position to another
incentive eligible position during the fiscal year will have a pro rata
calculation of payment based upon the time served in each position during
FY 93.
E. CHANGE BASED UPON TRANSFER BETWEEN INTERNATIONAL AND OTHER ADC DIVISIONS.
A current participant who transfers between Corporate and Business Unit or
between different Business Units with different goals during FY 93 will
have a pro rata calculation based on the goals and length of time spent in
the respective participant categories.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board of
Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
FY 1993 INTERNATIONAL SALES INCENTIVE PLAN
EXAMPLE FOR INSIDE SALES REPRESENTATIVE
1ST QUARTER RESULTS
% of Quota Achieved: 100%; % of Payout: 5% of quarterly earnings.
Quarterly base salary earnings: $7,000
Quarterly bonus calculation: 5% x $7,000 = $350.00
2ND QUARTER RESULTS
% of Quota Achieved: 105%, % of Payout: 5% of quarterly earnings.
Quarterly base salary earnings: $7,000
Quarterly bonus calculation: 5% x $7,000 = $350.00
3RD QUARTER RESULTS
% of Quota Achieved: 97%; % of Payout: 3% of quarterly earnings.
Quarterly base salary earnings: $7,350
Quarterly bonus calculation: 3% x $7,350 = $220.50
4TH QUARTER RESULTS
% of Quota Achieved: 115%; % of Payout: 5% of quarterly earnings.
Quarterly base salary earnings: $7,350
Quarterly bonus calculation: 5% x $7,350 = $367.50
ANNUAL RESULTS
% of Quota Achieved: 105%; % of Payout: 3% of annual earnings.
Number of Objective Points Achieved: 5, % of Payout: 3% of annual earnings.
Annual base salary earnings: $28,700
Annual bonus calculation: (3% + 3%) x $28,700 = $1,722.00
TOTAL BONUS PAYMENTS FOR THE YEAR: $3,010.00
<PAGE>
Exhibit 10-i
ADC TELECOMMUNICATIONS
TRANSMISSION MARKET DEVELOPMENT
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
<PAGE>
ADC TELECOMMUNICATIONS
TRANSMISSION MARKET DEVELOPMENT
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
I. PURPOSE
The purpose of the FY 1993 Transmission Market Development Incentive Plan
("Plan") is to reward the strategic positioning of key company products.
II. EFFECTIVE DATE
The Plan is effective from November 1, 1992 through October 31, 1993 ("Fiscal
Year").
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply,
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
To qualify for participation under the Plan, the employee must be employed
full-time in the ADC Transmission Division as a Sr. Market Manager or Director
Market Development.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
VI. SUMMARY OF PAYMENT CATEGORIES
A. FITL LAB/FIELD TRIAL BONUS: a bonus of $10,000 will be awarded to an
individual for the first sanctioned FITL lab/field trial in each major account
(refer to Plan definition). In order to qualify for the bonus, a written
customer commitment must be obtained by ADC during the Fiscal Year.
B. SONEPLEX APPROVAL BONUS: A bonus of $5,000 will be awarded to an individual
for attainment of Soneplex approval in each major account (refer to Plan
definition). In order to qualify for the bonus, written confirmation of product
approval must be received by ADC during the Fiscal Year.
<PAGE>
VII. MAJOR ACCOUNT PLAN DEFINITION
For purposes of the Plan, a major account is limited to the following ten
organizations: Bell Atlantic, NYNEX, Bell South, Southwestern Bell, PacBell,
Ameritech, United Telephone, U.S. West, Bell Canada, and GTE.
VIII. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. VOLUNTARY RESIGNATION. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal year will relinquish all right to any
payment under the Plan.
B. CHANGE BASED UPON UNSATISFACTORY JOB PERFORMANCE. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment under
this plan.
C. CHANGE BASED UPON JOB ELIMINATION. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
payment based upon the results achieved in the eligible position during the
fiscal year.
IX. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board of
Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
Exhibit 10-j
ADC TELECOMMUNICATIONS
VP OF SALES AND CUSTOMER SERVICE
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
<PAGE>
ADC TELECOMMUNICATIONS
VP OF SALES AND CUSTOMER SERVICE
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), VP of
Sales and Customer Service Management Incentive Plan - Fiscal Year ("FY") 1993,
effective November 1, 1992 through October 31, 1993.
II. PURPOSE
The purpose of the Plan is to provide, with full regard to the protection of
shareholder's investments, a direct financial incentive for eligible full-time
management employees to strive continually to perform an effective leadership
role and make a significant contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply,
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
To qualify for participation under this plan, the employee must be employed
full-time by ADC as a VP of Sales and Customer Service.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1993 goal categories and weights are as follows:
<TABLE>
<S> <C>
Domestic Revenue 50%
Corporate Operating Income 30%
* Corporate Customer Service/Inventory Turn
Management 20%
TOTAL 100%
<FN>
* CORPORATE CUSTOMER SERVICE/INVENTORY TURN MANAGEMENT goals measure the
company's ability to deliver products to meet customer's request dates while
also effectively managing inventories. Customer service/inventory turn
management is measured by average inventory turns (the direct cost of goods sold
divided by average direct inventory cost) and by shipping performance (relative
to meeting customer request dates). A single numerical representation of
customer service/inventory management is derived by multiplying the average
inventory turn by the percentage of customer request dates met by ADC.
</TABLE>
For example, if ADC's average annual inventory turns is 3.4 and the
percentage of customer request dates met is 78%, the result is a customer
service/inventory turn management achievement of 2.65.
<TABLE>
<S> <C>
Average inventory turns 3.4
% customer request dates met .78
----
Result 2.65
</TABLE>
VII. COMPANY PERFORMANCE MINIMUM PAYOUT REQUIREMENTS
The following minimum Company performance goals must be met to assure protection
of shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if net profits are in excess of a
threshold rate of return on stockholders' equity. This rate has been
established at 10%, after tax, based on stockholders' equity at the
beginning of the fiscal year.
B. Participants must meet threshold domestic revenue OR corporate operating
income goals.
VIII. CALCULATION OF PAYMENTS
A. DETERMINATION OF ACHIEVEMENT AGAINST GOALS AND OBLIGATION TO MAKE PAYMENTS.
The obligation to make payments under the Plan will be determined by
achievement of Corporate and Business Unit goals determined by the Board of
Directors.
B. CALCULATION OF INDIVIDUAL PAYMENTS UNDER THIS PLAN IS A FUNCTION OF:
1. Target incentive opportunity - expressed as a percentage of an individual's
FY 1993 earnings. The target % for each participant is designated on the
"Participant Form".
2. Participant's 1993 fiscal year base salary earnings
3. Performance against the established goals
<PAGE>
4. Individual performance may or may not be used to adjust incentive awards.
An individual award can be factored plus or minus 50% in increments of 1%
to account for individual performance.
C. HOW INDIVIDUAL AWARDS ARE DETERMINED IS SHOWN BY THE FOLLOWING EXAMPLE:
Assume we have a Plan participant with the following facts:
<TABLE>
<S> <C>
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 50,0000
</TABLE>
<TABLE>
<CAPTION>
CORPORATE PARTICIPANT:
Weight Achievement
------ ------------
<S> <C> <C>
Domestic Revenue: 50% 100%
Corporate Operating Income: 30% 90%
Corporate Customer Service/Inventory 20% 90%
Turn Management:
</TABLE>
Calculation of Payment:
[($50,000 x 11% Target x 50% domestic revenue weight x 100% achievement) +
($50,000 x 11% Target x 30% corporate operating income weight x 90% achievement)
+ ($50,000 x 11% Target x 20% corporate customer service/inventory turn mgmt
weight x 90% achievement)] =
$5,225.00
-----------
-----------
D. LIMITATION OF RIGHT PRIOR TO RECEIPT OF PAYMENT. No participant entitled
to receive payment under the calculation determined by this Section VII and
VIII will have any right to pledge, assign, or otherwise dispose of any
unpaid portion of such payment.
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. VOLUNTARY RESIGNATION. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal year will relinquish all right to
any payment under the Plan.
B. CHANGE BASED UPON UNSATISFACTORY JOB PERFORMANCE. A participant who is
involuntarily terminated or transferred to a non-eligible position for
reasons of unsatisfactory job performance will relinquish all right to any
payment under this plan.
C. CHANGE BASED UPON JOB ELIMINATION. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to
a non-eligible position because of a job elimination may retain the right
to a pro-rata payment based upon the time served in the eligible position
during the fiscal year.
D. CHANGE BASED UPON A PROMOTION / DEMOTION. A current participant who is
promoted or demoted from an incentive eligible position to another
incentive eligible position during the fiscal year will have a pro rata
calculation of payment based upon the time served in each position during
FY 93.
E. CHANGE BASED UPON TRANSFER BETWEEN DOMESTIC SALES AND OTHER ADC DIVISIONS.
A current participant who transfers between Corporate and Business Unit or
between different Business Units with different goals during FY 93 will
have a pro rata calculation based on the goals and length of time spent in
the respective participant categories.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board of
Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
Exhibit 10-k
ADC/FIBERMUX CORPORATION
MANAGEMENT INCENTIVE PLAN
FISCAL 1993
<PAGE>
FIBERMUX MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
INTRODUCTION
- - The Board of Directors of Fibermux Corporation has authorized a Management
Incentive Plan ("The Plan") to be administered by the Company President
and the Human Resources Department.
- - The Plan provides you with an opportunity to share in the Financial and
Objective results achieved by the Company and you. This document
describes that opportunity, which becomes effective beginning Fiscal 1993.
(June 29, 1992 through June 30, 1993)
PLAN SUMMARY
- - The purpose of the Management Incentive Plan is to provide incentive
compensation to key employees of Fibermux who are major contributors to
the revenue growth, profitability, and management of the Company.
- - Two principles are primary to the Plan design:
1. THE PLAN REINFORCES THE ANNUAL FINANCIAL GOALS which are part of our
long-term plans. The goals featured in the plan relate to Fibermux'
revenue and earnings before interest and taxes ("EBIT").
2. THE PLAN PLACES EMPHASIS ON INDIVIDUAL PERFORMANCE AND GROUP
ACHIEVEMENTS as a basis for compensation. Measurable Performance
Objectives will be mutually established by each participant and their
immediate manager. Accomplishing these objectives will determine the
amount of incentive payout on the Objectives section of the Plan. An
example form for Performance Objectives is included as Attachment E
to this document.
ELIGIBILITY
- - Participation in the Plan is determined by position title and job
responsibility. Your eligibility is communicated through an Incentive
Plan Agreement.
- - No employee, not previously designated as a participant, will be included
in the Management Incentive Plan after December 31 of the current fiscal
year.
- - A participant in the Management Incentive Plan who voluntarily resigns
full-time employment prior to the end of the fiscal year will not be
eligible for any payout from the Plan. Part-time and/or temporary
employees are not eligible for participation.
- 1 -
<PAGE>
ADC/FIBERMUX CORPORATION
MANAGEMENT INCENTIVE PLAN
FISCAL 1993
- - Employees participating in a Sales Compensation Plan are not eligible to
participate in the Management Incentive Plan.
PLAN GUIDELINES
The operation of the Plan can best be explained by considering the following:
1. WHAT ARE THE INCENTIVE OPPORTUNITIES FOR EACH PERFORMANCE GOAL?
The incentive opportunity for each performance measure (Financial Goals
and individual Performance Objectives) will be weighted by the following
percentages:
<TABLE>
<CAPTION>
Vice President
And Assoc. Vice President Director Manager
------------------------- -------- -------
<S> <C> <C> <C>
Financial Goals 60% 55% 50%
Performance Objectives 40% 45% 50%
</TABLE>
2. WHAT ARE THE FINANCIAL GOALS AND HOW ARE THEY MEASURED?
The incentive compensation earned for Financial Goals will be based upon
the Participants Base Salary, the actual revenue and the actual earnings
before interest and taxes as a percent ("%") of revenue ("EBIT %") as
compared to the Companys target revenue and EBIT% set forth in its Annual
Operating Plan ("AOP") approved by the Fibermux Board of Directors.
The Company's Fiscal 1993 AOP Financial Goals are:
Revenue $ 65,700,000
EBIT $ 13,131,000
EBIT% 19.99%
The incentive compensation earned for a fiscal year shall be determined by
calculating the percent of plan ("POP") for each of the actual revenue and
actual EBIT% for such fiscal year. The POP shall be calculated as
follows:
POPR = Actual Revenue Dollars POPP = Actual EBIT%
---------------------- ------------
AOP Revenue Dollars AOP EBIT%
As used herein, "POPR" means the POP determined for the actual revenue and
"POPP" means the POP determined for the actual EBIT%.
The financial goals will be weighted at 75% for EBIT achievement and 25%
for revenue achievement.
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<PAGE>
ADC/FIBERMUX CORPORATION
MANAGEMENT INCENTIVE PLAN
FISCAL 1993
No incentive compensation on financial goals will be paid if either the
actual revenue or the actual EBIT% falls below 80% of the respective AOP
amount (I.E., the POP is less than 80%). The maximum POP is 120%.
The incentive compensation bonus will be based on the participant's base
salary as of July 1, 1992. For eligible employees hired after June 29,
but before December 31, the base salary at their time of hire will be used
to calculate their pro-rated incentive compensation bonus.
3. WHAT ARE THE PERFORMANCE OBJECTIVES AND HOW ARE THEY MEASURED?
Each participant in the Plan will be required to establish three key
measurable Performance Objectives for each six-month period in Fiscal 1993
(Attachment E). The objectives may be set in the following ways:
- Three measurable objectives that have a completion date by the end of
the six-month period;
- Three measurable objectives that will take the entire year to achieve
but measurable milestones will be achieved at the end of the six-month
period;
- A combination of the above.
These objectives will be mutually established and agreed upon by the
participant and their immediate manager. Objectives must be approved by
the Department Vice President, and in some cases, the President.
Participant attainment of these objectives will determine incentive
payments for this part of the Plan.
The review of the objective attainment will be assessed by the participant
and their immediate manager. The manager will then recommend to the
Department Vice President, the Director, Human Resources, and President
the performance appraisal against these objectives and the incentive
payment on the Objective section of the Plan.
If a Participant's job title and/or responsibilities change, Fibermux
reserves the right to change a Participant's objectives.
4. WHAT IF MY OBJECTIVES CHANGE?
A participant can change their Performance Objectives up to forty-five
(45) days into the six (6) month period. After that time, no changes will
be accepted.
If a Participant's objectives change, the new Performance Objectives must
be approved by the participant's immediate manager, the Department Vice
President, the Director, Human Resources, and the President.
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<PAGE>
ADC/FIBERMUX CORPORATION
MANAGEMENT INCENTIVE PLAN
FISCAL 1993
5. HOW ARE INDIVIDUAL INCENTIVE PAYMENTS DETERMINED?
A participant's incentive payment is determined by the following:
- The participant's incentive target opportunity. The target
opportunity is expressed as a percentage of the participant's base
salary as of July 1 of the fiscal year and varies by job level. The
target percentage for each position will be noted on the Incentive
Plan Agreement which will be sent to each participant;
- How well Fibermux performs against its established annual financial
goals;
- How well participants perform relative to their individual
Performance Objectives.
6. WHEN AND HOW ARE INCENTIVE PAYMENTS MADE?
1. Financial Goals Payment
Payment will be made annually, within two and one-half months after
the end of the fiscal year. The calculations of the incentive
payouts will be made after the company financial results have been
audited.
2. Performance Objectives Payment
Payment will be made semi-annually. The first payment will be within
forty-five days after the first six-month period. The second payment
will be made in conjunction with the financial goals payment made
within two and one-half months after the end of the fiscal year.
The Plan does not constitute or provide any guarantee of employment or
compensation to participants, and Fibermux has no commitment to adopt this
specific Plan in any future fiscal year. The President and the Board of
Directors of Fibermux will retain full discretion in the administration of the
Plan, and their decisions will be final.
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<PAGE>
Exhibit 10-l
ADC TELECOMMUNICATIONS
KENTROX MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
<PAGE>
ADC TELECOMMUNICATIONS
KENTROX MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1993
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), Kentrox
Management Incentive Plan - Fiscal Year ("FY") 1993, effective November 1, 1992
through October 31, 1993.
II. PURPOSE
The purpose of the Plan is to provide, with full regard to the protection of
shareholder's investments, a direct financial incentive for eligible full-time
management employees to strive continually to perform an effective leadership
role and make a significant contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply,
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will be
effective as of the date approved by the Committee and will be communicated to
the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No part-time employee will be eligible for the Plan, and no employee will become
a participant in the Plan after May 1, 1993.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1993 goal categories and weights are as follows:
Corporate Operating Income 20%
Kentrox Revenue 30%
Kentrox Operating Income 30%
Microcell Revenue 20%
TOTAL 100%
VII. COMPANY PERFORMANCE MINIMUM PAYOUT REQUIREMENTS
The following minimum Company performance goals must be met to assure protection
of shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if net profits are in excess of a
threshold rate of return on stockholders' equity. This rate has been
established at 10%, after tax, based on stockholders' equity at the
beginning of the fiscal year.
B. Participants must meet the threshold of the Kentrox revenue OR the Kentrox
operating income OR the corporate operating income goal.
VIII. CALCULATION OF PAYMENTS
A. DETERMINATION OF ACHIEVEMENT AGAINST GOALS AND OBLIGATION TO MAKE
PAYMENTS. The obligation to make payments under the Plan will be
determined by achievement of Corporate and Business Unit goals determined
by the Board of Directors.
B. CALCULATION OF INDIVIDUAL PAYMENTS UNDER THIS PLAN IS A FUNCTION OF:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1993 earnings. The target % for each participant is
designated on the "Participant Form".
2. Participant's 1993 fiscal year base salary earnings
3. Corporate and Kentrox performance against the established goals
4. Individual performance may or may not be used to adjust incentive awards.
An individual award can be factored plus or minus 50% in increments of 1%
to account for individual performance.
C. HOW INDIVIDUAL AWARDS ARE DETERMINED IS SHOWN BY THE FOLLOWING EXAMPLE:
Assume we have a Plan participant with the following facts:
Grade: 38
Target Payout: 11% of base salary earnings
Base Salary Earnings: 50,0000
<PAGE>
<TABLE>
<CAPTION>
Weight Achievement
------ -----------
<S> <C> <C>
Corporate Operating Income: 20% 90%
Kentrox Revenue: 30% 100%
Kentrox Operating Income: 30% 100%
Microcell Revenue 20% 90%
</TABLE>
Calculation of Payment:
[$50,000 x 11% Target x 20% corporate operating income weight x 90%
achievement) +
($50,000 x 11% Target x 30% Kentrox revenue weight x 100% achievement) +
($50,000 x 11% Target x 30% Kentrox operating income weight x 100%
achievement) +
($50,000 x 11% Target x 20% Microcell Revenue weight x 90% achievement)] =
$5,280.00
D. LIMITATION OF RIGHT PRIOR TO RECEIPT OF PAYMENT. No participant entitled
to receive payment under the calculation determined by this Section VII
and VIII will have any right to pledge, assign, or otherwise dispose of
any unpaid portion of such payment.
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. VOLUNTARY RESIGNATION. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal year will relinquish all right
to any payment under the Plan.
B. CHANGE BASED UPON UNSATISFACTORY JOB PERFORMANCE. A participant who is
involuntarily terminated or transferred to a non-eligible position for
reasons of unsatisfactory job performance will relinquish all right to any
payment under this plan.
C. CHANGE BASED UPON JOB ELIMINATION. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to
a non-eligible position because of a job elimination may retain the right
to a pro-rata payment based upon the time served in the eligible position
during the fiscal year.
D. CHANGE BASED UPON A PROMOTION / DEMOTION A current participant who is
promoted or demoted from an incentive eligible position to another
incentive eligible position during the fiscal year will have a pro rata
calculation of payment based upon the time served in each position during
FY 93.
E. CHANGE BASED UPON TRANSFER BETWEEN ADC MINNESOTA AND KENTROX. A current
participant who transfers between Corporate and Business Unit or between
different Business Units with different goals during FY 93 will have a pro
rata calculation based on the goals and length of time spent in the
respective participant categories.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board of
Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
Exhibit 10-bb
LEASE
THIS LEASE, dated as of December 18, 1992, is made by and between
GREENVILLE DALLAS DELAWARE, INC., a Delaware corporation ("Landlord"), and ADC
TELECOMMUNICATIONS, INC.,a Minnesota corporation, and FIBERMUX CORPORATION, a
California corporation (collectively, "Tenant"), upon the following terms and
conditions.
1. LEASE OF PREMISES AND DEFINITIONS.
(a) Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, on an as-is basis except as herein otherwise specifically provided,
that certain building commonly known as 21415 Plummer Street, Los Angeles,
California depicted on the attached EXHIBIT A (hereinafter referred to as the
"Premises" and sometimes as the "Building"), subject, however, to, and together
with, the easements, restrictions and other matters of record and access which
is disclosed by inspection.
(b) The term "Property" shall mean that certain real property, of
which the Premises is a part, legally described on the attached Exhibit B, on
which Property are located the Building and the building commonly known as 21605
Plummer Street ("Rockwell Building").
(c) The term "Tenant's Proportionate Share" shall mean the percentage
from time to time obtained by dividing the rentable area of the Premises
(including any space added to the Premises as provided in this Lease) by the sum
of the rentable area of the Building and the rentable area of the Rockwell
Building. Such rentable areas shall be initially measured, not later than the
Commencement Date, by Tenant's space planner, at Tenant's expense, in accordance
with the National Standard Method for Measuring Floor Area in Office Buildings,
ANSI Z65.1-1980 ("BOMA Standard"), which space planner shall submit such
measurements to Landlord for Landlord's approval (which approval shall be given
or withheld in writing, shall not be unreasonably withheld and shall be deemed
to be not given if not given or withheld in writing within 10 days after a
written request for such approval has been received by Landlord from Tenant).
If the rentable area of the Building, as so measured and approved, is within 1%
of 97,104 square feet, then the rentable area of the Building shall, for
purposes of this Lease, be deemed to be 97,104 square feet. If the rentable
area of the Rockwell Building, as so measured and approved, is within 1% of
130,572 square feet, then the rentable area of the Rockwell Building shall, for
purposes of this Lease, be deemed to be 130,572 square feet. If the Building
and/or the Rockwell Building is/are subsequently altered so as to affect
its/their rentable area(s), Landlord shall, at Landlord's expense, cause the
altered building(s) to be remeasured by a qualified party in accordance with
<PAGE>
the BOMA Standard, which remeasurements shall be submitted top Tenant for
Tenant's approval (which approval shall be given or withheld in writing, shall
not be unreasonably withheld and shall be deemed to be not given if not given or
withheld in writing within 10 days after a written request for such approval has
been received by Tenant from Landlord). If the rentable area of the Building or
of the Rockwell Building, as so remeasured and approved, is within 1% of the
actual or deemed rentable area of the Building or Rockwell Building applicable
under this Lease immediately prior to the alteration(s), then the rentable area
of the Building or of the Rockwell Building shall, for the purposes of this
Lease, be deemed to be the actual or deemed rentable area of the Building or of
the Rockwell Building applicable under this Lease immediately prior to the
alteration(s). If less than all of the Rockwell Building is added to the
Premises pursuant to this Lease, Landlord shall, at Landlord's expense, cause
the added space to be measured by a qualified party in accordance with the BOMA
Standard, which measurement shall be submitted to Tenant for Tenant's approval
(which approval shall be given or withheld in writing, shall not be unreasonably
withheld and shall be deemed to be not given if not given or withheld in writing
within 10 days after a written request for such approval has been received by
Tenant from Landlord). The parties to this Lease shall execute an amendment to
this Lease establishing Tenant's Proportionate Share and the rentable areas of
the Premises, the Building and/or the Rockwell Building, if necessary, at the
time of the initial measurement and each subsequent measurement.
(d) "Appraisal" shall mean an appraisal of Market Rent (as defined in
this Lease below) conducted in accordance with the procedures set forth in
attached Exhibit D.
(e) "Market Rent" shall mean the annual Base Rent (expressed as an
amount per square foot of rentable area) that the Landlord would receive as of
the commencement date of the term in question if it were to lease the space in
question pursuant to the terms of this Lease (except to the extent that this
Lease is inconsistent with the assumptions and requirements set forth below) to
a tenant with a credit standing comparable to that of Tenant; with parking
rights as provided in this Lease; for a term equal to the period in question;
with a commencement date of the date in question; and in an "as is" condition,
except to the extent that Landlord is required under this Lease to make
improvements. In determining the "Market Rent", current conditions in the
marketplace for comparable transactions shall be considered, including without
limitation, tenant inducements, if and to the extent then a part of market
conditions, such as, but not limited to, buildout allowances or work, free rent,
financial inducements and credits for moving expenses. For purposes of
determining Market Rent it shall be assumed that Landlord and Tenant are each
ready, willing and able to enter into such a lease but are under no compulsion
to do so.
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<PAGE>
(f) The term "Consumer Price Index" shall mean the Consumer Price
Index issued by the U.S. Department of Labor, Bureau of Labor
Statistics for Urban Wage Earners and Clerical Workers, U.S. City Average
(1982-1984=100), or its successor index
2. TERM. The initial term of this Lease shall commence on the
Commencement Date (defined below) and shall end on the last day of the 72nd
month thereafter.
Landlord agrees to use its best efforts (including appropriate legal
proceedings, if reasonably required) to enforce that certain Agreement dated
December 1, 1992, between Landlord and Symbolics, Inc. and that certain letter
agreement dated November 6, 1992, among Landlord, Rockwell International
Corporation ("Rockwell") and Symbolics, Inc., copies of which have been provided
to Tenant. The Commencement Date shall be the earlier of the date that Tenant
commences business operations in the Premises or the date 180 days following the
date of this Lease, unless Rockwell's vacation of the Premises is delayed beyond
February 28, 1993, in which case the Commencement Date shall be extended by the
number of days (not to exceed 30 days) of such delay. If such delay exceeds 30
days, Tenant shall have the option to (a) terminate this Lease or (b) continue
with the extension of the Commencement Date for such period (not to exceed 30
days) as Tenant shall determine, such option to be exercised by Tenant by
written notice given to Landlord within 10 days after the expiration of the
initial 30-day period of delay referred to above. Tenant shall have full
occupancy of the Premises immediately following Rockwell's vacation of the
Premises until the Commencement Date in order to construct the Tenant
Improvements and move into the Building. Such occupancy shall be subject to each
and every provision of this Lease except that Tenant shall not be obligated to
pay any Base Rent or Impositions applicable to the period prior to the
Commencement Date. Upon determination of the Commencement Date, Landlord and
Tenant will execute an agreement confirming the Commencement Date.
3. RENT. Tenant shall pay to Landlord, in advance, on the
Commencement Date and on the 1st day of each calendar month thereafter during
the initial term of this Lease, the following net monthly rental ("Base Rent"),
over and above the other and additional payments to be made by Tenant as
hereinafter provided, as follows:
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<PAGE>
<TABLE>
<CAPTION>
Base Rent to
Months be paid per month
- ---------------------- -----------------
<S> <C>
1st month $77,000.00
2nd through 5th month $ 0
6th through 9th month $38,500.00
10th through 36th month $77,000.00
37th through 72nd month $77,000.00, subject to the following
increase.
</TABLE>
; provided, however, that the Base Rent payable for the first month shall be
reduced by $2,531.50 for each day that Tenant's commencement of business
operations in the Premises is later than the date 150 days after the date of
this Lease (but such reduction shall in no event exceed $77,000). Commencing
with the first day of the 37th month of the initial term hereof, the Base Rent
shall be increased based upon the percentage increase in the Consumer Price
Index, as such Index for the 36th month of the initial term hereof bears to such
Index for the month preceding the first full month of the initial term;
provided, however, that in no event shall the monthly Base Rent commencing on
the 37th month of the initial term be more than $88,550.00 or less than
$83,930.00.
Notwithstanding the foregoing, if the rentable area of the Premises is
deemed, pursuant to paragraph 1(c) of this Lease, to be an amount other than
97,104 square feet, then Tenant shall pay to Landlord, in advance, on the
Commencement Date and on the 1st day of each month thereafter during the initial
term of this Lease, the following Base Rental, rather than the Base Rental set
forth in the immediately preceding grammatical paragraph:
<TABLE>
<CAPTION>
Base Rent to
Months be paid per month
- ---------------------- -----------------
<S> <C>
1st month $.793 per rentable square foot
2nd through 5th month $ 0
6th through 9th month $.3965 per rentable square foot
10th through 36th month $.793 per rentable square foot
37th through 72nd month $.793 per rentable square foot, subject
to the following increase.
</TABLE>
; provided, however, that the Base Rent payable for the first month shall be
reduced by $.02607 per rentable square foot for each day that Tenant's
commencement of business operations in the Premises is later than the date 150
days after the date of this Lease (but such reduction shall in no event exceed
$.793 per rentable square foot for one month). In such case, commencing with the
first day of the 37th month of
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<PAGE>
the initial term hereof, the Base Rent shall be increased based upon the
percentage increase in the Consumer Price Index, as such Index for the 36th
month of the initial term hereof bears to such Index for the month preceding the
first full month of the initial term; provided, however, that in no event shall
the monthly Base Rent commencing on the 37th month of the initial term be more
than $.9120 per rentable square foot or less than $.8644 per rentable square
foot.
The foregoing Base Rent schedules refer to calendar months beginning
with the first full calendar month of the initial term of this Lease.
Accordingly, if the Commencement Date is other than the first day of a calendar
month, the Base Rent for the partial month preceding the first full calendar
month of the initial term of this Lease, which is payable on the Commencement
Date, shall be determinated on a prorated basis, using for such determination
the monthly Base Rent stated above with respect to the 10th calendar month.
The term "rent" as used in this Lease shall refer collectively to the
Base Rent and to all additional rent, charges and other sums payable hereunder.
Tenant hereby acknowledges that late payment by Tenant to Landlord of rent and
other sums due hereunder after the expiration of any applicable grace period
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any trust deed covering the Premises.
ACCORDINGLY, IF ANY INSTALLMENT OF RENT OR ANY OTHER SUMS DUE FROM TENANT SHALL
NOT BE RECEIVED BY LANDLORD WHEN DUE OR IF A GRACE PERIOD IS APPLICABLE, PRIOR
TO THE EXPIRATION OF THE GRACE PERIOD, TENANT SHALL PAY TO LANDLORD A LATE
CHARGE EQUAL TO 5% OF SUCH OVERDUE AMOUNT. THE PARTIES HEREBY AGREE THAT SUCH
LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COSTS LANDLORD WILL
INCUR BY REASON OF LATE PAYMENT BY TENANT BASED UPON THE CIRCUMSTANCES EXISTING
AS OF THE DATE OF THIS LEASE. [INITIALS OF THE PARTIES AS TO THE TWO SENTENCES
SHOWN IN BOLD: _______________________]
4. PARKING. Tenant shall have the right to use 215 parking spaces
on the Property in the Fibermux Area shown on the attached EXHIBIT A ("Fibermux
Area"). Landlord, using reasonable efforts, shall also attempt to obtain
parking for an additional 173 vehicles (the "Additional Parking Spaces"). Any
Additional Parking Spaces not provided within the Fibermux Area shall be
provided first (a) in the Rockwell Area shown on the attached EXHIBIT A
("Rockwell Area"), and (b) then at 21540 Plummer Street (across the street from
the Premises). All Additional Parking Spaces to be provided by Landlord shall
meet applicable governmental requirements and shall be approximately the same
size as the existing spaces in the Fibermux and Rockwell Areas shown on the
attached EXHIBIT A. All parking spaces to be provided by Landlord in the
Fibermux Area and the other areas shall be identified and controlled in a manner
reasonably acceptable to Landlord and Tenant. Such parking spaces shall also be
non-tandem and shall be on the basis of the
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<PAGE>
existing stall striping; provided, however, that Tenant may, in its sole
discretion, elect to permit Landlord to provide some or all of the Additional
Parking Spaces on a tandem basis; and provided further, however, that Tenant may
restripe the delivery area of the Premises and/or the parking spaces on any
parking area provided by Landlord for Tenant's use, at Tenant's sole expense,
and in such event the number of additional parking spaces yielded by such areas
after such restriping by Tenant shall be deemed to be "Additional Parking
Spaces" for purposes of this Lease.
For each month after the Commencement Date and continuing through the
initial term of this Lease, so long as 173 Additional Parking Spaces are not so
provided, Landlord shall pay to Tenant on the first day of each such month a sum
equal to $45.00 times the number of such Additional Parking Spaces not so
provided for that month; provided, however, that for the first seven months
following the Commencement Date, the sum due from Landlord for each such
Additional Parking Space not provided shall only be $22.50; and provided
further, however, that, if Tenant adds Additional Parking Spaces as a result of
its restriping of the Fibermux Area as provided above, Landlord shall have no
obligation to make such payments with respect to such added spaces from and
after the date that they are added to the Fibermux Area. Tenant shall deduct
such amounts due for each month of the initial Lease term from the monthly
rental payment for such month; provided, however, that, as to the 1st through
5th full calendar months following the Commencement Date, the sums due from
Landlord shall be deducted by Tenant from the payment of Base Rent due for the
6th full calendar month following the Commencement Date (and, if necessary, the
Base Rent payments due in subsequent months) under this Lease.
From and after the date Tenant has more than 215 parking spaces on the
Property (except to the extent that such excess parking spaces are leased to
Tenant as a result of Tenant's exercise of the Expansion Option), such payments
of $45.00 per month or $22.50 per month, as the case may be, shall cease with
respect to each such space in excess of 215 spaces. For each Additional Parking
Space provided by Landlord in the locations described in subparagraphs (a) and
(b) above after the date of this Lease, the amount otherwise payable by Landlord
hereunder shall be reduced by $30.00 per month for each such Additional Parking
Space so provided.
Tenant may enter into a lease or leases for parking at other than the
sites described in subparagraphs (a) and (b) above for: those Additional Parking
Spaces which Landlord does not commit by a written notice delivered to Tenant by
February 1, 1993 to provide to Tenant as of the Commencement Date; or any
Additional Parking Spaces that are provided by Landlord at any time during the
initial term of this Lease and are thereafter, during such initial term,
terminated by any landlord(s) thereof. Landlord shall provide at least 75 days'
prior written notice to Tenant if Landlord will be providing Additional Parking
Spaces after the
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<PAGE>
Commencement Date. Landlord shall provide at least 75 days' prior written
notice to Tenant if Landlord will cease to provide any Additional Parking
Spaces, in which case Tenant shall be entitled to enter into parking leases to
replace such Additional Parking, as provided above. Notwithstanding the
foregoing, notices from Landlord to Tenant of either the provision or cessation
of Additional Parking Spaces which result from the elimination of any parking
permitted by the City of Los Angeles upon its easement area shall be the 75 days
notice specified above or the number of days of notice of elimination of parking
Landlord receives from the City of Los Angeles, whichever is less. Within ten
(10) days after entering into any parking lease, Tenant shall provide a copy
thereof to Landlord. If Landlord thereafter provides to Tenant the Additional
Parking Spaces required on either of the sites described in subparagraphs (a) or
(b) above, and Tenant consequently cancels its parking lease(s), Landlord shall,
at Landlord's election made by written notice to Tenant at the time such
Additional Parking Spaces are delivered to Tenant, either reimburse Tenant for
the lease cancellation charge for each such canceled parking space or pay Tenant
$15 per month for the remainder of the initial term of this Lease for each
parking space as to which Landlord has elected not to pay the such cancellation
charge. Such reimbursement by Landlord to Tenant for lease cancellation charges
shall include Tenant's unamortized costs of improving such parking site, based
on a six-year amortization period.
Notwithstanding the foregoing provisions of this paragraph 4, if
Rockwell ceases to lease all or any portion of the Rockwell Building, then the
following shall apply:
(1) If Rockwell at any time no longer leases any space in the Rockwell
Building, then a portion of the parking spaces in the Rockwell Area will be
added, at no cost to Tenant, to the parking spaces already available to Tenant,
which portion shall be determined by adding together the parking spaces then in
the Rockwell Area and the Fibermux Area, dividing such sum by the total rentable
square footage of the Rockwell Building and of the Building, multiplying such
dividend (the "Dividend") by the rentable area of the Building and subtracting
the number of parking spaces in the Fibermux Area from the result. The
resulting figure will be rounded to the nearest whole number. If Tenant has then
exercised or subsequently exercises the Expansion Option, then another portion
of the parking spaces in the Rockwell Area will be provided to Tenant, at no
cost to Tenant, which portion shall be determined by multiplying the Dividend by
the rentable area of the Expansion Space, the resulting figure to be rounded to
the nearest whole number.
(2) If Rockwell continues to lease a part of the Rockwell Building,
then a portion of the parking spaces in the Rockwell Area will be added, at no
cost to Tenant, to the parking spaces available to Tenant in the Fibermux Area,
which portion shall be determined as follows:
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[total parking spaces in the Rockwell Area] - [(total parking
spaces in the Rockwell Area) x (rentable area of the portion of
Rockwell Building being leased by Rockwell) divided by rentable
area of Rockwell Building] - [(total parking spaces on the
Property) x (rentable area of the portion of the Rockwell
Building that is not being leased by Rockwell) divided by (total
rentable area of the Building and the Rockwell Building)],
rounded to the nearest whole number
PLUS, IF TENANT HAS THEN EXERCISED OR
SUBSEQUENTLY EXERCISES THE EXPANSION OPTION:
[total parking spaces on the Property x (rentable area of the
Expansion Space) divided by (total rentable area of the Building
and the Rockwell Building)], rounded to the nearest whole number
If Rockwell at any time no longer leases any portion of the Rockwell Building,
spaces shall be reallocated as provided in subparagraph (1) above,
notwithstanding that parking spaces may have been previously allocated pursuant
to subparagraph (2) above. The parking spaces made available to Tenant under
subparagraphs (1) and (2) above shall be as close as possible to the space
leased by Tenant and served by such parking. Such added parking spaces shall be
deemed to be Additional Parking Spaces as follows:
(A) if Tenant does not elect to lease any Expansion Space
pursuant to paragraph 55 of this Lease, then all such added
parking spaces shall be deemed to be Additional Parking Spaces; or
(B) if Tenant elects to lease any Expansion Space pursuant to
paragraph 55 of this Lease, then all such added parking spaces shall
be deemed to be Additional Parking Spaces, except for the portion of
such added parking spaces leased to Tenant with respect to the
Expansion Space as provided above.
If any of the approximately 97 parking spaces in the Rockwell Area that are
located upon an easement granted by the City of Los Angeles are eliminated
because such easement is revoked in whole or in part by the City of Los Angeles,
and if such elimination results in a reduction in the number of parking spaces
that would otherwise have been provided to Tenant as set forth above, then
Landlord shall for the remainder of the initial term of this Lease pay to
Tenant, on the first day of each month during which such parking spaces would
otherwise have been provided to Tenant as set forth above, a sum equal to $45.00
times the number of parking spaces that would otherwise have been provided to
Tenant as set forth above.
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5. FULL NET LEASE. Landlord shall receive the rent free and clear
of any and all other impositions, taxes, liens, charges, or expenses of any
nature whatsoever in connection with the ownership and operation of the
Premises, except as herein expressly provided. In addition to the rent reserved
above, Tenant shall pay to the parties respectively entitled thereto all
impositions, insurance premiums, operating charges, maintenance charges,
construction costs, and any other charges, costs, and expenses that arise or may
be contemplated under any provisions of this Lease during the term hereof. It is
the intention of the parties that this Lease shall not be terminable for any
reason by Tenant, and that Tenant shall in no event be entitled to any set-off
against, abatement of, or reduction in rent payable under this Lease, except as
herein otherwise expressly provided (including, without limitation, the
provisions of paragraph 43 of this Lease).
6. USE. The Premises shall be used and occupied only for the
businesses of testing, assembly, fabrication, warehousing and/or shipping of
electronic components, circuit boards and/or cabinets, and for sales and/or
general office uses related to such types of businesses and for other uses
incidental to the foregoing and for no other use or purpose.
7. QUIET ENJOYMENT. Provided Tenant performs its obligations
hereunder, Tenant shall lawfully and quietly occupy the Premises during the term
of this Lease without hindrance or molestation by Landlord, subject, however, to
the matters herein set forth; provided, however, that, if Tenant is dispossessed
of all or part of the Premises by any party who or which does not claim such
possession through Tenant, Tenant shall be entitled to an equitable abatement of
Base Rent, Impositions, Insurance Costs and other charges under this Lease from
the date of Tenant's dispossession until Tenant's possession is restored and, if
Tenant's possession is not restored within 60 days after Tenant was
dispossessed, Tenant may terminate this lease by written notice given to
Landlord within ten (10) days after the expiration of such 60-day period and
before Tenant's possession is restored.
8. PAYMENT OF IMPOSITIONS. Tenant covenants and agrees to pay to
Landlord Tenant's Proportionate Share (as defined in paragraph 1(c) of this
Lease) of all "Impositions" upon or with respect to the Property. As used
herein, the term "Impositions" shall include any form of real estate tax,
assessment, license fee, commercial rental tax, improvement bond or bonds, levy,
or other tax, general and special, ordinary and extraordinary, foreseen as well
as unforeseen, of any kind or nature whatsoever, imposed by any authority having
the power to tax (including any city, state, or federal government, or any
school, agricultural, sanitary, water, fire, street, drainage, or other
improvement district thereof ) against any legal or equitable interest of
Landlord in the Premises or in the Property, against Landlord's right to rent or
other income therefrom, and against Landlord's business of leasing the Premises
or the Property; provided, however, that "Impositions" shall not include
inheritance, personal or corporate income, or estate taxes. The term
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"Impositions" shall also include any tax, fee, levy, assessments, or charge: (a)
in substitution of, partially or totally, any of the above-listed Impositions,
or (b) that is imposed by reason of this transaction, any modifications or
changes hereto, or any transfers hereof. Except as otherwise provided in this
Lease, all such payments shall be made at least fifteen (15) days prior to the
delinquency date. Tenant shall have the right to contest Impositions if there
are reasonable grounds to do so or, if Tenant may not legally do so, to cause
Landlord to do so at Tenant's expense.
9. PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency
all taxes assessed against and levied upon trade fixtures, furnishings,
equipment, and all other personal property of Tenant contained in the Premises
or elsewhere.
10. UTILITIES. Tenant shall pay all utility deposits and fees, and
all monthly service charges for heat, water, gas, electricity, sewer service,
elevator (if there be any) and cleaning service, telephone service, and any
other utilities or services whatsoever furnished to the Premises during the term
of this Lease.
11. PROPERTY INSURANCE. Landlord shall procure and maintain
throughout the terms of this Lease all-risk property and liability insurance
insuring the Property (including improvements and betterments, boilers and
machinery owned by Landlord, but excluding all equipment, trade fixtures,
inventory, machinery and other personal property of the Tenant); provided,
however, that Tenant shall maintain builder's risk insurance reasonably
satisfactory to Landlord effective from the commencement of construction of the
Tenant Improvements until the Commencement Date and Landlord's all-risk
insurance shall insure the Tenant Improvements from and after the Commencement
Date. Landlord's all-risk insurance shall insure the Property against risk of
direct physical loss (including loss caused by the perils of earthquake and, if
the Property is in an officially designated flood hazardous area, flood).
Landlord's insurance shall be in an amount equal to the actual replacement cost
of the Property (exclusive of foundations and excavations) without deduction for
physical depreciation, without a coinsurance clause and with a deductible not in
excess of $50,000. The property insurance carrier shall have an A. M. Best
Company rating of A:VII or better. Tenant agrees not to do, or fail to do,
anything which will violate the reasonable and customary terms of any such
insurance to the extent such terms are set forth in policies, copies of which
are delivered to Tenant, or otherwise disclosed to Tenant, increase the cost of
such insurance beyond a reasonable level (unless Tenant agrees to pay such
increase) or prevent Landlord from procuring policies reasonably satisfactory to
Landlord. Within ten days of billing by Landlord, Tenant will reimburse Landlord
for Tenant's Proportionate Share of the lesser of (a) all costs of such property
insurance carried by Landlord with respect to the Property, and (b) all costs
which would have been charged by an identically rated carrier (other than
Landlord's carrier) for the same coverage ("Insurance Costs"). Certificates
evidencing all such insurance coverages shall be delivered to Tenant by the date
of this Lease. Such certificates of insurance
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will provide for thirty (30) days advance notice to Tenant and Landlord in the
event of cancellation or nonrenewal of such insurance.
12. OTHER INSURANCE. Tenant agrees to maintain in full force and
from the Date of this Lease and in effect at all times during the term of this
Lease, at no expense to Landlord, for the protection of Tenant and Landlord, as
their interest may appear, policies of insurance issued by a responsible carrier
or carriers reasonably acceptable to Landlord which afford the following
coverages:
(a) Worker's Compensation - Statutory limits;
(b) Employer's liability - Not less than:
Bodily Injury by Accident - $250,000 each accident
Bodily Injury by Disease - $250,000 policy limit
Bodily Injury by Disease - $250,000 each employee; and
(c) Commercial General Liability Insurance on a coverage form at
least as broad as the most recent edition of Commercial General Liability
Coverage Form (CG0001) published by the Insurance Services Office, Inc. naming
the Landlord as Additional Insured using an endorsement form at least as broad
as the most recent edition of Additional Insured-Managers or Lessors of Premises
Endorsement Form (CG2011) as published by the Insurance Services Office, Inc.
The limits of such insurance shall be no less than:
<TABLE>
<S> <C>
Each Occurrence Limit $2,000,000
General Aggregate Limit $2,000,000
Products/Completed Operations
Aggregate Limit $2,000,000
Personal Injury and Advertising
Injury Limit $1,000,000
Fire Damage (Any One Fire) $50,000
Medical Expense (Any One Person) $5,000
</TABLE>
Such Commercial General Liability Insurance shall cover Bodily Injury, Personal
Injury and Property Damage Liability occasioned by or arising out of or in
connection with the use, operation and occupancy of the Premises. Such
Commercial General Liability Insurance policy must cover events that occur
during the policy period regardless of when the claim is made. Such insurance
shall be primary insurance to any other insurance that may be available to
Landlord. Any other insurance available to Landlord shall be non-contributing
with and excess to this insurance.
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<PAGE>
Certificates evidencing all such insurance coverages shall be
delivered to Landlord by the date of this Lease. Such certificates of insurance
will provide for thirty (30) days advance notice to Tenant and Landlord in the
event of cancellation or nonrenewal of such insurance.
13. LOSS PAYABLE REQUIREMENTS. All policies of insurance required
hereunder shall provide that the proceeds thereof shall be payable to Tenant and
Landlord, as their respective interests may appear, and, if Landlord so elects,
the policies referenced in paragraph 11 may be payable also to the holder of any
mortgage or deed of trust on the Premises as the interest of such holder may
appear, pursuant to a standard mortgagee clause or a loss payable clause.
14. WAIVER OF CLAIMS. Each party to this Lease hereby releases the
other from any and all claims, and waives its entire right of recovery against
the other, for loss or damage arising out of or incident to the perils insured
against under the policies specified in paragraphs 11 and 12 above to the extent
such loss or damage is insured against under such policies, whether due to the
negligence of such parties or the agents, employees, contractors, or invitees of
either of them. Tenant also waives all claims against Landlord with respect to
Tenant's personal property in the Premises.
15. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS. Tenant agrees
that, if Tenant shall at any time fail to make any payment or perform any other
act to be made or performed by it under this Lease, Landlord may, but shall not
be obligated to, make such payment or perform such other act to the extent
Landlord may deem desirable, with full rights of offset, and without waiving or
releasing Tenant from any obligation under this Lease. All sums so paid by
Landlord and all expenses paid in connection therewith, including without
limitation attorneys' fees, together with interest thereon at the Default
Interest Rate (defined in the paragraph of this Lease entitled "Miscellaneous")
from the date of such payment, shall be paid by Tenant to Landlord on demand.
16. MAINTENANCE AND REPAIR. Except as otherwise set forth in this
Lease, Tenant shall, at Tenant's sole cost and expense, keep the entire Premises
(and every part thereof, including, without limitation, the roof membrane)
secure, clean and in good order, condition, and repair, and shall make promptly
all necessary repairs, interior and exterior, ordinary as well as extraordinary,
foreseen as well as unforeseen, casualty and condemnation excepted; provided,
however, that Landlord shall be responsible for maintaining and repairing the
foundation, the structure of the exterior walls and of the roof and the other
structural members of the Building in accordance with prudent property
management standards, unless the need for such maintenance and repair results
from Tenant's failure to satisfy its maintenance and repair obligations with
respect to the remainder of the Premises or (subject to
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the provisions of paragraphs 11 and 14 of this Lease) the negligence or
intentional acts of Tenant, its employees, agents, contractors or invitees.
Tenant shall also, at Tenant's sole cost and expense, keep the entire Fibermux
Area and any portions of the Rockwell Area provided by Landlord to Tenant for
parking pursuant to paragraph 4 of this Lease or any other provision of this
Lease (including, but not limited to, all paving, striping, landscaping and
attendant driveways, entrances, walkways, curbs, gutters, drains and the like)
clean and in good order, condition and repair, and shall make promptly all
necessary repairs, ordinary as well as extraordinary, foreseen as well as
unforeseen. When used in this paragraph, the term "repair(s)" shall include
alterations, replacements, and renewals. All repairs shall be equal in quality
and class to the original work. Landlord shall have no obligation, in any
manner whatsoever, to repair or maintain the Premises, except as specifically
otherwise provided in this Lease. Landlord may, at its option, perform Tenant's
repair obligations under this Lease at Tenant's expense if Tenant does not do so
within the applicable cure period provided for in this Lease.
17. SURRENDER OF PREMISES. Upon expiration or any sooner termination
of this Lease, Tenant shall surrender to Landlord the entire Premises, together
with all Alterations (as defined in paragraph 25 of this Lease), in the same
condition as when received or installed (unless such Alterations are to be
removed pursuant to paragraph 24 of this Lease), ordinary wear and tear and
casualty and condemnation excepted, and clean and free of debris and free of any
liens created or suffered to be created by Tenant and (b) Tenant shall properly
remove from the Premises all Hazardous Materials for which it has responsibility
under this Lease. Tenant may, and upon Landlord's request shall, remove any
Trade Fixtures or personal property belonging to Tenant, provided that Tenant
shall perform prior to expiration of the term of this Lease all restoration made
necessary by such removal. Landlord may, at Tenant's expense, retain or dispose
of in any manner any Trade Fixtures or personal property of Tenant that Tenant
does not remove from the Premises upon expiration or termination of the term of
this Lease, in which case title thereto shall vest in Landlord. The term "Trade
Fixtures" as used herein shall mean all fixtures, equipment, and personal
property owned by Tenant and used in connection with the operation of any
business on the Premises, whether or not affixed to the Premises.
18. SERVICE CONTRACTS. Tenant shall, at Tenant's sole cost and
expense, either (a) enter into a regularly scheduled preventive
maintenance/service contract with a maintenance contractor for servicing all hot
water, heating, and air conditioning systems, elevators (if there be any) and
building equipment within the Premises or (b) provide similar services through
the use of its own qualified employees. The maintenance contractor and the
contract, or the employees of Tenant, as the case may be, shall be subject to
the approval of Landlord (which approval shall be given or withheld in writing,
shall not be unreasonably withheld and shall be deemed to be not given if not
given or withheld in writing within 10
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days after a written request for such approval has been received by Landlord
from Tenant). The contract or employee-provided services shall include all
services suggested by the equipment manufacturers and shall become effective,
and a copy thereof shall be delivered to Landlord, within thirty (30) days of
the date Tenant takes possession of the Premises. Landlord shall deliver to
Tenant the service manuals for the items to be serviced as provided in this
paragraph and shall deliver and assign to Tenant all warranties covering such
items.
19. WASTE. Tenant shall not do or suffer any waste or damage,
disfigurement, or injury to the Premises or permit or suffer any overloading of
the floors of the Premises.
20. ADA. During the construction of the Tenant Improvements
specified in paragraph 53 of this Lease, Tenant shall also alter and renovate
the Premises to meet the standards established under the provisions of the
Americans With Disabilities Act ("ADA"), and, for such alterations and
additions, Landlord will pay Tenant the sum of $38,000.00 ("ADA Payment"),
regardless of the actual cost of such alterations and renovations. During the
full term of this Lease, Tenant shall also promptly, at its expense (except for
the ADA Payment), comply with the requirements of the ADA applicable to the
Premises, to the construction of the Tenant Improvements, to all other
alterations of the Premises by Tenant and to Tenant's use of the Premises.
21. WAIVER OF REPAIR AND DEDUCT. Tenant hereby waives any and all
rights it may have to make repairs at Landlord's expense or in lieu thereof to
vacate the Premises as provided in California Civil Code Section 1942 or any
other law, statute, or ordinance now or hereafter in effect; provided, however,
that such waiver does not constitute a waiver of any of Tenant's specific
self-help or setoff rights expressly set forth in this Lease.
22. COMPLIANCE WITH LAWS. Tenant shall, at Tenant's sole cost and
expense, comply promptly with all laws, ordinances, orders, regulations, and
requirements of all federal, state, and local governmental agencies, and with
the reasonable recommendations of any insurer under any policies required under
this Lease, that may be applicable to the Premises or the use thereof; provided,
however, that: (a) Tenant shall not be obligated to make any repairs,
alterations or improvements to the Premises that are required by governmental
authorities pursuant to requirements that were in effect on the date of this
Lease to the extent that the Building was not in compliance with such
requirements on the date of this Lease, except for ADA requirements; and (b)
Tenant shall not be responsible for any matters for which Landlord is
responsible under paragraph 23 of this Lease. Landlord shall be responsible for
the costs of compliance described in subparagraphs (a) and (b) of this paragraph
22. Tenant shall be obligated to make any repairs, alterations or improvements
to the Premises that are required by governmental
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authorities to comply with requirements enacted after the day of this Lease;
provided, however, that, with respect to such requirements that apply generally
to buildings similar to the Building, (1) Tenant will be obligated to cause such
compliance to occur and to pay the cost of such compliance only to the extent
such the cost of such compliance is equal to or less than $25,000 in any
calendar year and (2) Landlord will be obligated to cause such compliance to
occur and to pay the cost of such compliance only to the extent that the cost of
such compliance is in excess of $25,000 per calendar year. If Landlord pays any
cost under subparagraph (2) of this paragraph 22, then monthly Base Rent shall
be increased thereafter by an amount equal to the monthly amortization of such
cost paid by Landlord, determined using an interest rate equal to the Reference
Rate and a period equal to the manufacturer's estimated useful life of the
improvement, alteration and/or replacement to which such cost relates.
23. HAZARDOUS MATERIALS. Tenant agrees not to cause or permit the
presence, use, generation, release, discharge, storage, disposal, or
transportation of any Hazardous Materials (as defined below) on, under, in,
above, to, or from the Property other than presence, use, storage and
transportation which is both (a) required for and solely incidental to Tenant's
principal use and operation of the Premises, and (b) in strict compliance with
all applicable federal, state, and local laws, regulations, and orders (such
obligations of Tenant being referred to below as "Tenant's Environmental
Obligations"). For the purposes of this Lease the term "Hazardous Materials"
shall refer to any substances, materials, and wastes that are or become
regulated as hazardous or toxic substances under any applicable local, state, or
federal law, regulation, or order ("Environmental Laws"). Tenant shall
indemnify, defend, and hold Landlord harmless from and reimburse Landlord for
any breach of Tenant's Environmental Obligations and all of the following which
may result from such a breach: (1) any loss, cost, expense, claim, or liability
arising out of any investigation, reporting, monitoring, clean-up, containment,
removal, storage, or restoration work required by any applicable federal, state,
or local law, governmental agency, or political subdivision or prudent standards
of real estate ownership and management; and (2) any claims of third parties for
loss, injury, expense, or damage arising out of the presence, release, or
discharge of any Hazardous Materials on, under, in, above, to, or from the
Premises during the term of this Lease.
Landlord shall indemnify, defend, and hold Tenant harmless from and
reimburse Tenant as to the presence, use, generation, release, discharge,
storage, disposal, or transportation of any Hazardous Materials on, under, in,
above, to, or from the Property prior to the Commencement Date, other than as a
result of the breach of Tenant's Environmental Obligations, and all of the
following which may result therefrom: (A) any loss, cost, expense, claim, or
liability arising out of any investigation, reporting, monitoring, clean-up,
containment, removal, storage, or restoration work required by any applicable
federal, state, or local law (which
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requirements Landlord agrees to satisfy at its sole expense), governmental
agency, or political subdivision or prudent standards of real estate ownership
and management; and (B) any claims of third parties for loss, injury, expense,
or damage arising out of such presence, release, or discharge of any Hazardous
Materials on, under, in, above, to, or from the Premises ("Landlord's
Environmental Indemnity"). Landlord will deliver to Tenant, not later than the
date required by paragraph 59 of this Lease, an irrevocable Standby Letter of
Credit ("Letter of Credit") in the initial amount of $2,000,000, issued to
Tenant (but not its assigns) by The Development Bank of Singapore Ltd. (New York
Agency), or another bank of Landlord's selection which is reasonably
satisfactory to Tenant, as security for the performance of Landlord's
Environmental Indemnity. Such Letter of Credit shall be in substantially the
form attached to this Lease as EXHIBIT E.
If Landlord defaults at any time during the initial term in the
performance of Landlord's Environmental Indemnity and such default continues
uncured for 30 days after written notice to Landlord, Tenant may draw upon the
Letter of Credit for the full amount paid by Tenant to cure a breach of
Landlord's Environmental Indemnity. Landlord will, at Landlord's expense, keep
the Letter of Credit in effect in the initial amount, less such draws, until the
31st day after the end of the initial term of this Lease (or, if Hazardous
Materials as to which Landlord has indemnified the Tenant pursuant to this Lease
are present or have been used, generated, released, discharged, stored, disposed
of or transported on, in, above, to or from the Property during the initial term
of this Lease, then until such later date as (i) all governmental agencies
having jurisdiction under Environmental Laws make final determinations that all
of the proper actions have been taken or that no actions are required with
respect to such Hazardous Materials and such determinations have been delivered
to Tenant or (ii) a court having jurisdiction over such matters determines that
Landlord has no indemnification responsibilities to Tenant regarding such
Hazardous Materials under the terms of this Lease and all appeals or the time
periods therefor have been exhausted with no change in such determination);
provided, however, that Tenant may waive such requirement at any time by express
written notice.
Tenant will have the right to draw on the Letter of Credit for the
then full amount of the Letter of Credit if Landlord fails to renew the Letter
of Credit in an amount equal to the original amount thereof, less any amounts
drawn by Tenant to date, and for a period equal to the shorter of (x) 1 year or
more or (y) the remaining portion of the period with respect to which Landlord
is required to maintain the Letter of Credit, if such period can be determined
with certainty, and accomplish such renewal and deliver the renewed Letter of
Credit to Tenant at least 15 days before any expiration date, time being of the
essence. If Tenant draws upon the Letter of Credit because Landlord has failed
to renew the Letter of Credit as required above, Tenant shall hold the proceeds
of such draw in a separate interest-
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bearing account (in Tenant's name) of Tenant's choosing. The proceeds and
interest in such account shall be paid to Tenant or Landlord as follows:
(AA) to Landlord, upon receipt by Tenant of a renewed Letter of
Credit conforming to the requirements of this Lease;
(BB) to Tenant, if and to the extent that Tenant would have been
entitled to draw upon the Letter of Credit if it had been renewed; and/or
(CC) to Landlord, if and when Landlord is no longer required to
provide the Letter of Credit under the terms of this Lease.
Tenant agrees that, upon termination of Landlord's obligation to
provide the Letter of Credit, Tenant will surrender the Letter of Credit to
Landlord and will execute all such certificates as Landlord reasonably requests
in connection with the termination of the Letter of Credit.
Landlord represents and warrants to Tenant that Landlord has no
knowledge of the presence of any Hazardous Materials on, in, or under the
Property in violation of an Environmental Law or of the escape, seepage,
leakage, spillage, discharge, deposit, disposal, emission or release of any
Hazardous Materials on, in, under or from the Premises in violation of an
Environmental Law, except if set forth in (a) that certain Environmental
Assessment for 21605 Plummer Street, Chatsworth (Symbolic II), prepared by
Rockwell, or (b) that certain draft soil and groundwater assessment report for
21415 and 21605 Plummer Street, Chatsworth, California, dated November 23, 1992,
prepared by Groundwater Technology, or (c) that certain letter prepared by
Clayton Environmental Consultants dated November 10, 1992 (collectively, the
"Environmental Assessments"). Tenant represents and warrants to Landlord that
Tenant has no knowledge of the presence of any Hazardous Materials on, in, or
under the Property in violation of an Environmental Law or of the escape,
seepage, leakage, spillage, discharge, deposit, disposal, emission or release of
any Hazardous Materials on, in, under or from the Premises in violation of an
Environmental Law, except if set forth in the Environmental Assessments.
Tenant agrees to provide to Landlord, within 10 days of receipt, a
copy of any notice regarding violation of any Environmental Law on or about the
Premises arising out of Tenant's operations on the Premises, a copy of any
report required by an Environmental Law regarding violation of the Environmental
Law on or about the Premises arising out of Tenant's operations on the Premises
and a copy of any notice of the emission or release of Hazardous Materials in
violation of an Environmental Law or arising out of Tenant's operations on the
Premises. Each Party agrees to provide to the other, within 10 days of receipt,
a copy of all test reports and correspondence associated with the investigation,
monitoring and
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remediation of soil and groundwater on, in or under the Property and a copy of
any notice regarding the presence of any Hazardous Materials on, in, or under
the Property or the escape, seepage, leakage, spillage, discharge, deposit,
disposal, emission or release of any Hazardous Materials on, in, under or from
the Property in violation of any Environmental Law.
If (aa) there is any Hazardous Material on, in, or under the Premises
in violation of an Environmental Law (other than those arising out of a breach
of Tenant's Environmental Obligations) and (bb) as a result thereof, there is,
in the reasonable opinion of Tenant, a danger of harm to the employees or
invitees of Tenant, and a governmental agency having jurisdiction orders Tenant
to vacate the Premises or any affected portion of the Premises and Tenant does
so, then all Base Rent, Impositions, Insurance Costs and other amounts due under
this Lease will abate from the date of such vacation, in proportion to the space
vacated, until the governmental agency which ordered the vacation rescinds or
terminates its order. If such governmental order is not rescinded or
terminated within ninety (90) days after such vacation of all or part of the
Premises by Tenant, either Landlord or Tenant may, within 30 days after the
expiration of such 90 day period, terminate this Lease by written notice to the
other party.
Tenant shall have the right during the term of this Lease to conduct
such environmental testing and monitoring of the Premises as Tenant deems
appropriate, including the installation of ground water monitoring wells and/or
such other testing and monitoring as might be included in a Phase II
environmental assessment. Such testing and monitoring shall be conducted in
accordance with applicable laws and regulations and only after not less than
thirty (30) days prior written notice to Landlord.
The obligations of Landlord and Tenant under this paragraph shall
survive the assignment, termination or cancellation of this Lease. The rights
of Landlord and Tenant under this paragraph shall be in addition to any other
rights and remedies which Landlord or Tenant may have against the Property, each
other or any other person under any other document or any Environmental Law.
24. ALTERATIONS. Except for non-structural alterations costing less
than $25,000, Tenant shall not alter the Premises or any part of the Property
without the prior written consent of Landlord (which consent shall be given or
withheld in writing, shall not be unreasonably withheld and shall be deemed to
be not given if not given or withheld in writing within 10 days after a written
request for such consent has been received by Landlord from Tenant), which
consent may be granted upon the condition that such alterations be removed (and
the affected portion of the Premises restored), at Tenant's expense, at the
expiration or earlier termination of this Lease. Each written request for such
consent shall contain a paragraph to be
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signed by Landlord indicating whether or not the alteration in question must be
removed by Tenant at the expiration or earlier termination of this Lease.
25. PROPERTY OF LANDLORD. Unless otherwise provided in this Lease,
all repairs, improvements, changes, alterations, and building equipment and
machinery (other than Trade Fixtures, Tenant's telephone switch and equipment,
air compressors and auxiliary air conditioners) made or installed by Tenant
(collectively, "Alterations") shall immediately upon completion or installation
thereof be and become the property of Landlord without payment therefor by
Landlord.
26. DAMAGE OR DESTRUCTION. Subject to the other provisions of this
Lease, if the Premises or any portion thereof becomes damaged or wholly or
partially untenantable because of fire, earthquake, act of God, the elements or
other casualty, Landlord shall repair such damage with and to the extent of the
insurance proceeds made available to Landlord for such purpose. However, if in
Landlord's opinion such repairs cannot be made within one hundred eighty (180)
days, Landlord shall so notify Tenant in writing within thirty (30) days of the
date of such damage. In such event, either Tenant or Landlord may terminate
this Lease within thirty (30) days after Landlord's notice. Termination shall
be effected by written notice delivered to the other party within said thirty
(30) day period. If this Lease is not so terminated, it shall remain in full
force and effect except that an abatement of Base Rent, Impositions, Insurance
Costs and other amounts due under this Lease shall be allowed Tenant for such
part of the Premises as shall be rendered unusable by Tenant in the conduct of
its business during the time such part is so unusable.
27. WAIVER. Tenant hereby waives California Civil Code Sections
1932, 1933, 1941 and 1942, and the provisions of any other law now or hereafter
in effect that would relieve Tenant from any obligation to pay rent under this
Lease except to the extent expressly provided in this Lease.
28. CONDEMNATION. If the Premises or any portion thereof is taken
under the power of eminent domain (hereinafter referred to as "Condemnation"),
this Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever occurs first. If more than 10% of
the floor area of the Premises is taken by Condemnation, then at Tenant's
option, exercisable only in writing and within ten (10) days after Landlord
shall have given Tenant written notice of such taking (or, in the absence of
such notice, within ten (10) days after the condemning authority shall have
taken possession), and provided that Tenant is not in default under this Lease,
Tenant may terminate this Lease as of the date the condemning authority takes
possession. If Tenant does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Basic Rent shall be
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reduced in the proportion that the floor area of the portions of the Premises
taken bears to the total floor area of the Premises.
29. CONDEMNATION AWARD. In the event any portion of the Premises is
taken by Condemnation, Landlord shall be entitled to and shall receive the total
award made in such Condemnation, which award Tenant hereby assigns to Landlord,
except that Tenant shall be entitled to receive such portion of the award as may
be specifically allocated in such proceedings to compensation for Tenant's Trade
Fixtures, for improvements paid for by Tenant and not reimbursed out of the
Tenant Improvement Allowance and for Tenant's relocation expenses.
30. RESTORATION. If less than the entire Premises shall be taken by
Condemnation, and this Lease is not terminated pursuant to paragraph 28, with
the net amount of any award received by Landlord in any proceeding for physical
damage to the Premises after deducting all of Landlord's costs and expenses of
collection, including without limitation attorneys' fees, Landlord shall
promptly restore that portion of the Premises not so taken to a complete
architectural unit.
31. TENANT'S WORK. All work done by Tenant, its agents and
contractors, in or about the Premises or the Property (hereinafter called the
"Work") shall be done in all cases subject to the following conditions, each of
which Tenant covenants to observe and perform:
(a) No Work involving any structural change and no Work
involving any alteration, restoration, or rebuilding costing more than $25,000
shall be undertaken until detailed plans and specifications have first been
submitted to and approved in writing by Landlord (which approval shall be given
or withheld in writing, shall not be unreasonably withheld and shall be deemed
to be not given if not given or withheld in writing within 10 days after a
written request for such approval has been received by Landlord from Tenant).
(b) No Work involving a cost, as reasonably estimated by Tenant,
of more than $25,000 shall be undertaken except under the supervision of an
architect or engineer approved in writing by Landlord (unless such requirement
is waived by Landlord in writing).
(c) All Work shall be (i) commenced only after Landlord has
received 10 days' prior notice of such Work or Landlord has approved such Work
and only after all required local and other governmental permits and
authorizations have been obtained, (ii) done in a good and workmanlike manner,
(iii) performed in compliance with the building and zoning laws and with all
other laws, ordinances, regulations, and requirements of all federal, state, and
local governmental agencies, and in accordance with the recommendations of any
insurer under any policies required by this Lease, and (iv) completed promptly
and
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free of liens. Approval of any Work by Landlord shall not imply or be construed
to indicate compliance with above requirements.
32. MECHANICS' LIENS. Tenant shall not suffer or permit any
mechanics' or other liens (or claims thereof) to be filed against the Premises
(or Tenant's leasehold interest therein or hereunder) or the Property by reason
of work, labor, services, or materials supplied or claimed to have been supplied
to Tenant or anyone holding the Premises or any part thereof through or under
Tenant; provided, however, that Tenant shall have the right to contest any such
liens so long as Tenant provides Landlord with reasonable security (by bond,
escrow or otherwise) during such contest. Landlord shall have the right at all
reasonable times to post and keep posted on the Premises any notices that
Landlord may deem necessary or advisable for the protection of Landlord, the
Premises and the Property from mechanics' liens. If any such liens (or claims
thereof) shall at any time be filed against the Premises or the Property, Tenant
shall contest the liens or claims as provided above or shall cause the same to
be discharged of record within forty-five (45) days after the date of filing.
33. FINANCIAL STATEMENTS. Upon the request of Landlord, Tenant shall
provide to Landlord, at no expense to Landlord, copies of the most recent
quarterly and annual financial reports with respect to Tenant as have been made
available by Tenant to its shareholders.
34. LANDLORD'S ENTRY. Tenant agrees to permit Landlord and any
authorized representatives of Landlord, upon reasonable prior notice to Tenant,
to enter the Premises with reasonable frequency during usual business hours, or
at any other time in case of emergency, (a) to inspect (which may include
environmental audits) the Premises and, if Landlord so desires, but without
implying any obligation of Landlord to do so, to make any repairs deemed
necessary or desirable by Landlord and to perform any work in the Premises
deemed necessary by Landlord to comply with any laws or the recommendations of
any insurer, and (b) during the final twelve months of the term of this Lease,
for the purpose of leasing the Premises, during which twelve-month period
Landlord may display on the Premises, in such manner as not to interfere
unreasonably with Tenant's business, usual "For Sale" or "To Let" signs.
35. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not, without the prior consent of Landlord
(which consent shall be given or withheld in writing, shall not be unreasonably
withheld and shall be deemed to be not given if not given or withheld in writing
within 10 days after a written request for such consent has been received by
Landlord from Tenant), assign this Lease or any interest herein, sublet the
Premises or any part thereof, or permit the use of the Premises by any party
other than Tenant. This
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Lease shall not, nor shall any interest herein, be assignable as to the interest
of Tenant by operation of law except as herein otherwise provided. Any of the
foregoing acts without such consent shall be void and shall, at the option of
Landlord, terminate this Lease. In connection with each consent requested by
Tenant, Tenant shall submit to Landlord the terms of the proposed transaction,
the identity of the parties to the transaction, the proposed documentation for
the transaction, and all other information reasonably requested by Landlord
concerning the proposed transaction and the parties involved.
(b) If the Tenant is a privately held corporation, the transfer
(except pursuant to a public offering), assignment, or hypothecation of any
stock or interest in such corporation in excess of fifty percent (50%) in the
aggregate of the voting stock or interest in Tenant shall be deemed an
assignment or transfer within the meaning and provisions of this paragraph. If
Tenant is a publicly held corporation, the public offering or trading of stock
in Tenant shall not be deemed an assignment or transfer within the meaning of
this paragraph.
(c) Without limiting the other instances in which it may be
reasonable for Landlord to withhold its consent to an assignment or subletting,
Landlord and Tenant acknowledge that it shall be reasonable for Landlord to
withhold its consent in the following instances:
(1) if at the time consent is requested or at any time
prior to the granting of consent, Tenant is in default under this Lease or would
be in default under this Lease but for the pendency of any grace or cure period
specified in this Lease; or
(2) if the proposed assignee or sublessee is a governmental
agency; or
(3) if, in Landlord's reasonable judgment, the use of the
Premises by the proposed assignee or sublessee would involve occupancy in
violation of this Lease.
(d) If at any time during the term of this Lease Tenant desires
to assign its interest in this Lease or sublet all or any part of the Premises,
Tenant shall give notice to Landlord setting forth the terms of the proposed
assignment or subletting ("Tenant's Request"). If the consummation of the
assignment or sublease would cause Tenant to occupy less than 50% of the
rentable area of the Premises, Landlord shall have the option, exercisable by
written notice given to Tenant within thirty (30) days after Tenant's Request is
given ("Landlord's Option Period"), either (1) to consent to the assignment
(which consent shall not be unreasonably withheld and shall be deemed to be not
given if not given or withheld in writing within such 30-day period), in which
event the provisions of subparagraph (g) shall be applicable,
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or to consent to the subletting in which event the provisions of subparagraph
(h) shall be applicable; (2) to become the assignee or sublessee of Tenant
(instead of the entity specified in Tenant's Request) upon the terms set forth
in Tenant's Notice; (3) in the event of (A) a proposed assignment, or (B) a
proposed subletting of the entire Premises, or a portion of the Premises for all
or substantially all of the remainder of the term, to terminate this Lease with
respect to, and to retake possession of, the space in question, together with,
if only a portion of the Premises is involved, such rights of access to and from
such portion as may be reasonably required for its use and enjoyment. If the
foregoing sentence is applicable and Landlord does not exercise one of such
options, or if Landlord consents or is deemed to consent to the proposed
assignment or sublease, Tenant shall be free for a period of one hundred twenty
(120) days after giving Tenant's Request, or one hundred twenty (120) days after
the date Landlord's consent (if such consent is required) is given to Tenant, or
one hundred twenty (120) days after the expiration of Landlord's Option Period
(if applicable), to assign its entire interest in this Lease or to sublet such
space to the entity specified in Tenant's Request upon the terms set forth
therein or to any third party upon the same terms set forth in Tenant's Request,
subject to obtaining Landlord's prior consent as hereinabove provided.
(e) Notwithstanding the provisions of subparagraphs (a) and (b)
above, Tenant may assign this Lease or sublet the Premises or any portion
thereof, with prior notice to Landlord but without the necessity of Landlord's
consent and without extending any option to Landlord pursuant to subparagraph
(d) above, to any corporation which controls, is controlled by or is under
common control with Tenant, or to any corporation resulting from the merger or
consolidation with Tenant ("Affiliate").
(f) No sublease, once consented to by Landlord, shall be
modified or terminated by Tenant without Landlord's prior consent (which consent
shall be given or withheld in writing, shall not be unreasonably withheld and
shall be deemed to be not given if not given or withheld in writing within 10
days after a written request for such consent has been received by Landlord from
Tenant).
(g) In the case of an assignment to an entity other than
Landlord or an Affiliate, 50% of all sums and other economic consideration
received by Tenant as a result of such assignment shall be paid to Landlord
after first deducting 50% of: (1) the unamortized cost of leasehold improvements
paid for by Tenant, (2) the cost of any concessions and inducements given to the
assignee by Tenant and (3) the cost of any real estate commissions and other
marketing costs incurred by Tenant in connection with such assignment.
(h) In the case of a subletting to an entity other than Landlord
or an Affiliate, 50% of all sums and economic consideration received by Tenant
as a result of such subletting shall be paid to Landlord after first deducting
50% of (1) the
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rental due hereunder, prorated to reflect only rental allocable to the sublet
portion of the Premises, (2) the cost of leasehold improvements made to the
sublet portion of the Premises at Tenant's cost, amortized over the term of this
Lease except for leasehold improvements made for the specific benefit of the
sublessee, and the cost of any concessions and inducements given to the
subtenant by Tenant, all of which shall be amortized over the term of the
sublease, and (3) the cost of any real estate commissions and other marketing
costs incurred by Tenant in connection with such subletting, amortized over the
term of the sublease.
(i) Regardless of Landlord's consent, no subletting or
assignment (except to Landlord pursuant to the provisions of subparagraph (d)
above) shall release Tenant of Tenant's obligation or alter the primary
liability of Tenant to pay the rent and to perform all other obligations to be
performed by Tenant hereunder. The acceptance of rent by Landlord from any
other person shall not be deemed to be a waiver by Landlord of any provision
hereof. Consent to one assignment or subletting shall not be deemed consent to
any subsequent assignment or subletting. In the event of default by any
assignee of Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against such assignee or successor. Landlord may consent
to subsequent assignments or subletting of this Lease or amendments or
modifications to this Lease with assignees of Tenant, without notifying Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto,
and such action shall not relieve Tenant of liability under this Lease.
(j) In the event Tenant shall once request the consent of
Landlord to any assignment or subletting, then as to each request for consent to
a further assignment or subletting Tenant shall pay Landlord's then reasonable
and standard processing fee and Landlord's reasonable attorneys' fees incurred
in connection therewith; provided, however, that Tenant shall not be required to
pay Landlord in excess of $500 for Landlord's processing fee or attorney's fees
in connection with any such request.
(k) In the event of an assignment of this Lease by Tenant to an
Affiliate, if Tenant returns the Letter of Credit to Landlord and requests
Landlord to do so in writing, Landlord shall promptly cause the Letter of Credit
to be reissued in the name of the assignee as Beneficiary. In the event of any
other assignment of this Lease by Tenant, the Letter of Credit will not be
issued in the name of the assignee and the assignee will have no right to draw
upon or have the benefits of the Letter of Credit.
(l) If the initial Tenant assigns this Lease to an Affiliate and
does not request that the Letter of Credit be reissued in the name of the
Affiliate as Beneficiary pursuant to subparagraph 35(k) above, the Letter of
Credit shall be
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maintained by Landlord as required by this Lease for the remainder of the
initial term of this Lease and the initial Tenant shall be entitled to draw upon
the Letter of Credit on its own behalf or on behalf of such Affiliate.
36. SUBORDINATION. At Landlord's option, this Lease shall be
subordinate to any ground lease, mortgage, deed of trust, or any other
hypothecation or security now or hereafter placed upon the Premises and to any
and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements, and extensions thereof.
Notwithstanding such subordination, Tenant's right to a quiet possession of the
Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee, or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust, or ground lease, and shall give written
notice thereof to Tenant, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of such mortgage, deed of trust, or ground lease or the date of the
recording thereof.
37. ATTORNMENT. In the event any proceedings are brought for the
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage or deed of trust now or hereafter on the Premises or any part thereof,
Tenant shall, if so requested by the purchaser upon such foreclosure or sale or
the grantee under a deed in lieu of foreclosure, attorn to such purchaser or
grantee and recognize such purchaser or grantee as the Landlord under this
Lease.
38. INDEMNIFICATION. Tenant agrees to indemnify, defend, and save
Landlord harmless from and to reimburse Landlord for any and all claims arising
from (a) the conduct or management of, or any work or thing whatsoever done by
or for Tenant in or about the Premises or the Property during the term of this
Lease, (b) any condition existing during the term of this Lease of (i) the
Premises, (ii) any street, curb, or sidewalk adjoining the Premises, or (iii)
any vaults, passageways, or spaces therein or appurtenant thereto, (c) any
breach or default on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed pursuant to the terms of this
Lease, (d) any act or negligence of Tenant or any of its agents, contractors,
servants, employees, or licensees occurring about the Premises, (e) any
accident, injury, or damage whatsoever caused to any person, firm, or
corporation occurring during the term of this Lease in or about the Premises or
upon or under the sidewalks or the land adjacent thereto, and (f) any and all
costs, counsel fees, expenses, and liabilities reasonably incurred in connection
with the such claim or action or proceeding brought thereon, except to the
extent that any of the above-described claims arise out of the negligence or
willful misconduct of Landlord, in which case Landlord agrees to indemnify,
defend, and save Tenant harmless from and to reimburse Tenant for any and all
claims arising from such
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negligence or wilful misconduct. In case any action or proceedings be brought
against an indemnified party by reason of an indemnified claim, the indemnifying
party, upon notice from the indemnified party, covenants to resist or defend
such action or proceeding by counsel satisfactory to the indemnified party.
39. ATTORNEYS' FEES. If any action arising out of this Lease is
brought by either party hereto against the other, then and in that event the
unsuccessful party to such action shall pay to the prevailing party all costs
and expenses, including reasonable attorneys' fees, incurred by such prevailing
party, and if the prevailing party shall recover judgment in such action, such
costs, expenses and attorneys' fees (at trial and on appeal) shall be included
in and as part of such judgment.
40. LANDLORD'S CORRECTION OF DEFECTS; REPRESENTATIONS. Tenant shall,
within 30 days after commencing construction of the Tenant Improvements, provide
Landlord with a written list of operating defects, if any, observed by Tenant in
the Building's systems or the portions of the Premises for which Landlord has
maintenance responsibility under paragraph 16 of this Lease. Landlord will, not
later than the Commencement Date (or such earlier date as may be reasonably
required by Tenant in order for Tenant to complete the Tenant Improvements on or
before the Commencement Date), correct such defects. Except as otherwise
expressly provided in this Lease, Landlord has made no representations of any
nature whatsoever in connection with the condition of the Premises or the
Property or any part thereof, and Landlord shall not be liable for any defects
therein.
41. EVENTS OF DEFAULT. The following events shall be deemed to be
events of default by Tenant under this Lease:
(a) The failure of Tenant to pay any installments of Base Rent
or additional rent when due, or any other payment or reimbursement to Landlord
required herein when due, where such failure shall continue for a period of five
(5) days after written notice of such failure.
(b) (i) The application by Tenant for, or Tenant's consent to
the appointment of, a receiver, trustee, or liquidator of Tenant or of all or a
substantial part of Tenant's assets, (ii) the making by Tenant of any general
arrangement or assignment for the benefit of creditors, (iii) Tenant becoming a
"debtor" as defined in 11 U.S.C. Section 101 or any successor statute thereto
(unless, in the case of a petition filed against Tenant, the same is dismissed
within sixty (60) days), (iv) the appointment of a trustee or receiver to take
possession of all or substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease (unless possession is restored to
Tenant within ninety (90) days) or (v) the attachment, execution, or other
judicial seizure of all or substantially all of Tenant's
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assets located at the Premises or of Tenant's interest in this Lease (unless
such seizure is discharged within ninety (90) days).
(c) Tenant shall fail to comply with any other term, provision,
or covenant of this Lease, where such failure shall continue for a period of
twenty (20) days after written notice thereof to Tenant, provided, however, that
if such failure cannot reasonably be cured within twenty (20) days, Tenant shall
not be deemed in default with respect to such failure if Tenant commences to
cure such default within said twenty (20) day period and thereafter diligently
and continuously prosecutes such cure to a prompt completion. In the event
Landlord serves Tenant with a "Notice to Perform or Quit" pursuant to applicable
unlawful detainer statutes, such notice shall also constitute the notice
required by this subparagraph, provided that such notice gives Tenant at least
twenty (20) days in which to perform or quit.
42. LANDLORD'S REMEDIES. Upon the occurrence of any event of default
by Tenant, Landlord may, at its option and without any further notice or demand
(in addition to any other rights and remedies under this Lease, at law or in
equity) do any of the following:
(a) Landlord shall have the right, so long as such default
continues, to give notice of termination to Tenant. On the date specified in
such notice (which shall not be less than three (3) days after the giving of
such notice) this Lease shall terminate.
(b) In the event of any such termination of this Lease, Landlord
may then or at any time thereafter re-enter the Premises and remove therefrom
all persons and property and again repossess and enjoy the Premises, without
prejudice to any other remedies that Landlord may have by reason of Tenant's
default or of such termination.
(c) The amount of damages that Landlord may recover in the event
of such termination shall include, without limitation: (1) the amount at the
time of award (computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent) of
(A) unpaid rent earned at the time of termination, (B) the amount by which the
unpaid rent that would have been earned during the period from termination until
the award exceeds the amount of such rent loss that Tenant proves could have
been reasonably avoided, and (C) the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rent loss
that Tenant proves could be reasonably avoided; (2) all legal expenses and other
related costs incurred by Landlord following Tenant's default; (3) all costs
incurred by Landlord in restoring the Premises to good order and condition, or,
to the extent reasonably necessary to accomplish such reletting, in remodeling,
renovating, or otherwise
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preparing the Premises for reletting; and (4) all other costs (including without
limitation any brokerage commissions) incurred by Landlord in
reletting the Premises.
(d) Following the termination of this Lease (or upon Tenant's
failure to remove its personal property from the Premises after the expiration
of the term of this Lease), Landlord may remove any and all personal property
located in the Premises and sell or place such property in a public or private
warehouse or elsewhere at the sole cost and expense of Tenant in accordance with
applicable law. Tenant waives all claims for damages that may be caused by
Landlord's removing, storing, or selling the property as herein provided.
(e) Landlord shall have the right to cause a receiver to be
appointed in any action against Tenant to take possession of the Premises and to
collect the rents or profits derived therefrom. The appointment of such
receiver shall not constitute an election on the part of Landlord to terminate
this Lease unless notice of such intention is given to Tenant.
(f) Landlord shall have the remedy described in California Civil
Code Section 1951.4 (i.e. Landlord may continue this Lease in effect after
Tenant's abandonment and recover rent as it becomes due, because Tenant has the
right to sublet or assign, subject only to reasonable limitations). Even though
Tenant has breached this Lease and abandoned the Premises, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's right to
possession, and Landlord may enforce all its rights and remedies under this
Lease, including the right to recover rent in periodic actions as it becomes due
under this Lease. In such event, Landlord may re-enter the Premises and remove
all persons and property if the Premises have not been vacated, using any
available summary proceedings, without such re-entry or removal being deemed a
termination or acceptance of surrender of this Lease. Landlord may then elect to
relet the Premises for the account of Tenant for a period that may extend beyond
the term hereof, and upon such other terms as Landlord may reasonably deem
appropriate. Tenant shall reimburse Landlord upon demand for all costs incurred
by Landlord in connection with such reletting, including without limitation
necessary restoration, renovation, or improvement costs, attorneys' fees, and
brokerage commissions. The proceeds of such reletting shall be applied first to
any sums then due and payable to Landlord from Tenant, including the
reimbursement described above. The balance, if any, shall be applied to the
payment of future rent as it becomes due hereunder.
43. TENANT'S SETOFF RIGHTS. If (a) Landlord fails to perform any
repair or maintenance obligation of Landlord under this Lease, and fails to cure
such default within 30 days after receipt of notice of such default from Tenant
(or, if Landlord's repair or maintenance obligation cannot be reasonably
performed within 30 days, Landlord fails to commence to perform it within such
30-day period and to
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thereafter diligently prosecute it to a prompt conclusion), or (b) Landlord
fails to pay Tenant the Tenant Improvement Allowance when required to do so
under this Lease, and fails to cure such default within one year after receipt
of notice of such default from Tenant, Tenant may cure such default and charge
the costs to Landlord (plus interest on such charges from the date the charges
are incurred by Tenant, at the Default Interest Rate), and may set off such
costs and interest, and/or any portion of the Tenant Improvement Allowance that
has not been made to Tenant by Landlord (plus interest on such portion from the
date it was due to Tenant, at the Default Interest Rate), against installments
of Base Rent due under this Lease; provided, however, that Tenant shall not
set-off against more than 25% of the Base Rent due in any month (but such
limitation shall not apply to the final 6 months of this Lease). Tenant shall
be permitted to continue to set off against succeeding installments of Base Rent
due under this Lease until the total amount of such costs or payment and
interest thereon have been recovered by Tenant.
44. CUMULATIVE REMEDIES. The specified remedies to which Landlord
may resort under the terms of this Lease are cumulative and are not intended to
be exclusive of any other remedies or means of redress to which Landlord may be
entitled, either at law or in equity, in case of any breach or threatened breach
by Tenant of any covenant, agreement, or condition of this Lease.
45. NO WAIVERS. The failure of Landlord to insist in any one or more
instances upon the strict performance or observance of any of the covenants,
agreements, or conditions of this Lease or to exercise any option herein
contained shall not be construed as a waiver or a relinquishment of future
performance or observance of such covenant, agreement, or condition or exercise
of such option.
46. HOLDING OVER. Tenant covenants that it will vacate the Premises
immediately upon the expiration or sooner termination of this Lease. If, with
Landlord's consent, Tenant retains possession of the Premises or any part
thereof after the expiration or termination hereof, Tenant shall pay Landlord
200% of the Base Rent due under this Lease immediately before such expiration or
termination, for the time Tenant thus remains in possession. The provisions of
this paragraph do not exclude Landlord's rights of re-entry or any other right
hereunder, including without limitation the right to refuse 200% Base Rent and
instead to remove Tenant through summary proceedings for holding over beyond the
expiration of the term of this Lease.
47. NOTICES. All notices, demands, and requests that may or are
required to be given by either party to the other shall be in writing and shall
be deemed given when sent by United States Certified Mail, postage prepaid, (a)
if for Tenant, addressed to Tenant (Attn: Chief Financial Officer), prior to
Commencement Date at 9310 Topanga Canyon Boulevard, Chatsworth, California 91311
and after the Commencement Date at the address of the Premises, in either
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case with a copy to ADC Telecommunications, Inc., 12501 Whitewater Drive,
Minnetonka, Minnesota 55343 (Attn: Chief Financial Officer and Attn: General
Counsel), or at such other address or addresses as Tenant may from time to time
designate by written notice to Landlord, or (b) if for Landlord, addressed to
Landlord, c/o GSIC Realty Corporation, 255 Shoreline Drive, Suite 600, Redwood
City, California 94065 or at such other places as Landlord may from time to time
designate by written notice to Tenant.
48. LIMITATION OF LANDLORD'S LIABILITY. In the event of a sale or
transfer by Landlord of its interest in the Premises or this Lease, such sale or
transfer shall operate to release the transferor from all liability for the
performance of the obligations of Landlord hereunder, expressed or implied, from
and after the date of such transfer, and Tenant agrees thereafter to look solely
to the successor in interest of Landlord in and to this Lease for the
performance of Landlord's obligations hereunder accruing after the date of such
transfer (including the return of the Security Deposit) and thereupon Landlord
shall be discharged from any further liability with respect thereto.
49. ESTOPPEL CERTIFICATES. At any time and from time to time upon
not less than ten (10) days' prior request by Landlord, Tenant agrees to
execute, acknowledge, and deliver to Landlord a statement in writing certifying
(a) that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the same is in full force and effect as modified and
identifying the modifications), (b) the dates to which Base Rent, Impositions,
Insurance Costs and other amounts due under this Lease have been paid, and (c)
whether there is then existing any claim by Tenant of default hereunder by
Landlord and, if so, specifying the nature thereof. It is intended that any such
statement may be relied upon by any person proposing to acquire Landlord's
interest in this Lease or any prospective mortgagee of, or assignee of any
mortgage upon, such interest. At any time and from time to time upon not less
than ten (10) days' prior request by Tenant, Landlord agrees to execute,
acknowledge, and deliver to Tenant a statement in writing certifying (a) that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and
identifying the modifications), (b) the dates to which Base Rent, Impositions,
Insurance Costs and other amounts due under this Lease have been paid, and (c)
whether there is then existing any claim by Landlord of default hereunder by
Tenant and, if so, specifying the nature thereof. It is intended that any such
statement by Landlord may be relied upon by any person proposing to receive a
mortgage or assignment of Tenant's interest in this Lease or to enter into any
sublease of all or part of the Premises.
50. BROKERAGE. Each party represents and warrants to the other that
it has not dealt with any broker, agent, or other person in connection with this
transaction and that no other broker, agent, or other person brought about this
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transaction through it, other than CB Commercial Real Estate, Mel Goldstein, Bob
Shafer, The Johnston Group and Cal Johnston (whose commissions shall be paid by
Landlord), and each party agrees to indemnify and hold the other party harmless
from and to reimburse the other party for any and all claims by any other
broker, agent, or person claiming a commission or other form of compensation by
virtue of having dealt with it with respect to this leasing transaction. The
provisions of this paragraph shall survive the termination of this Lease.
51. SECURITY DEPOSIT. Tenant shall, upon execution of this Lease,
deposit with Landlord the sum of $77,000.00 as security for the full and
faithful performance of every provision of this Lease to be performed by Tenant
during the full term of this Lease (the "Security Deposit"). If Tenant defaults
with respect to any provision of this Lease during the term of this Lease and
such default continues beyond the applicable grace period, Landlord may use,
apply, or retain all or any part of the Security Deposit for the payment of Base
Rent or any other sum in default, for the payment of any other amount that
Landlord may spend or become obligated to spend by reason of Tenant's default,
or to compensate Landlord for any other loss, cost, or damage that Landlord may
suffer by reason of Tenant's default. If any portion of the Security Deposit is
so used or applied, Tenant shall, within five (5) days after written demand
therefor, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Landlord shall not be required to keep
the Security Deposit separate from its general funds and Tenant shall not be
entitled to interest on such deposit. Landlord shall refund the Security Deposit
to Tenant within 10 days after the expiration of the term of this Lease. If (a)
Tenant has reasonable grounds, valid as of a date not more than 30 days prior to
the date that the final full monthly Base Rent payment is due under this Lease,
to believe that the then Landlord is unlikely to be in a financial position to
return the Security Deposit during the required refund period (the then pendency
of bankruptcy proceedings with regard to such Landlord or any general partner
thereof being absolute and unrebuttable evidence of reasonable grounds for such
belief), and/or (b) the then Landlord is a successor to the initial Landlord
under this Lease and has failed to enter into a written agreement running to the
benefit of and enforceable by Tenant whereby the then Landlord unconditionally
assumes all of the Landlord's obligations under this Lease with respect to the
Security Deposit or an original copy of such agreement has not been delivered to
Tenant (provided, however, that the then Landlord may in the alternative provide
Tenant with an opinion of counsel reasonably satisfactory to Tenant that, under
California law then in effect, Tenant shall have the same rights with respect to
the then Landlord without such a written agreement that it would have had if
such a written agreement were executed and delivered to Tenant) and/or (c) if
Landlord is a lender who shall have acquired title to the Premises without
personal obligation to refund the Security Deposit to Tenant within the required
refund period, Tenant shall give notice of such fact(s) to Landlord on or before
the date 15 days prior to the date that the final full monthly Base Rent payment
is due under this Lease. If Landlord
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receives such notice and does not, prior to the date 5 days before the date that
the final full monthly Base Rent payment is due under this Lease, (i) if
subparagraph (a) above applies, provide Tenant with reasonable security for the
performance of Landlord's obligation to refund the Security Deposit and/or (ii)
if subparagraph (b) above applies, provide Tenant with the written agreement or
opinion described in such subparagraph (b) and/or (iii) if subparagraph (c)
above applies, provide to Tenant the lender-Landlord's written personal
commitment to Tenant to refund the Security Deposit during the required refund
period, Tenant may setoff such Security Deposit against the payment of Base Rent
and any other sums due Landlord under this Lease that are due on such payment
date or any subsequent date.
52. SIGNAGE. Tenant shall not place or permit on the exterior or
roof of the Premises or on the balance of the real property constituting the
Premises or on the balance of the Property any sign, advertisement,
illumination, projection, or similar thing (a "Sign"), unless (a) Landlord has
given its prior written consent thereto (which consent shall be given or
withheld in writing, shall not be unreasonably withheld and shall be deemed to
be not given if not given or withheld in writing within 10 days after a written
request for such consent has been received by Landlord from Tenant), and (b)
such Sign complies with applicable law. Subject to the foregoing, Tenant may
place a monument sign in front of the Premises, Tenant may place a directional
delivery sign at the delivery driveway shown on the attached EXHIBIT A, and may
place a sign or signs on the exterior of the Premises.
53. TENANT IMPROVEMENTS.
(a) Tenant shall construct the improvements to the Premises
described on the attached EXHIBIT C (collectively, the "Tenant Improvements").
Tenant shall promptly commence the work for Tenant Improvements and shall
diligently pursue such work to completion, as described in subparagraph (e)
below.
(b) Tenant shall submit to Landlord complete, finished drawings
and specifications (the "Plans") for the Tenant Improvements. The Plans shall
be subject to Landlord's approval (which approval shall be given or withheld in
writing, shall not be unreasonably withheld and shall be deemed to be not given
if not given or withheld in writing within 10 days after a written request for
such approval has been received by Landlord from Tenant). Within ten (10)
business days after its receipt of the Plans, Landlord shall notify Tenant of
its approval or disapproval of the Plans, and if Landlord disapproves the Plans,
the revisions that Landlord requires in order to obtain such approval. Tenant
and Tenant's architect or engineer shall meet with Landlord and its agents
within a reasonable period of time after any request for such meeting by
Landlord to answer questions or provide additional information with respect to
the Plans. As promptly as reasonably possible thereafter, Tenant shall submit
to Landlord modified Plans incorporating the revisions required by Landlord.
The modified Plans shall be subject to
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Landlord's approval (which approval shall be given or withheld in writing, shall
not be unreasonably withheld and shall be deemed to be not given if not given or
withheld in writing within 10 days after a written request for such approval has
been received by Landlord from Tenant). The final Plans and specifications
approved by Landlord are hereinafter referred to as the "Final Plans." If
appropriate, Tenant shall cause two sets of reproducible Final Plans, marked for
pricing and construction to be delivered to Landlord within 5 days after
Landlord's approval of the Final Plans. Tenant shall engage an architectural
firm, duly licensed in the State of California, for preparation of the Plans and
supervision of the construction of the Tenant Improvements. Such firm shall be
subject to Landlord's approval (which approval shall be given or withheld in
writing, shall not be unreasonably withheld and shall be deemed to be not given
if not given or withheld in writing within 10 days after a written request for
such approval has been received by Landlord from Tenant). Tenant shall not
commence any work in the Premises until Landlord has finally approved the Plans
(which approval shall be given or withheld in writing, shall not be unreasonably
withheld and shall be deemed to be not given if not given or withheld in writing
within 10 days after a written request for such approval has been received by
Landlord from Tenant).
(c) Tenant shall pay all the Tenant Improvement Costs (as
defined below) and, provided there are no events of default by Tenant, Landlord
will provide the Tenant Improvement Allowance specified in subparagraph (e)
below. Tenant Improvement Costs shall include, but not be limited to, the cost
of the work described on the attached EXHIBIT C to the extent included in the
Final Plans, and the following with respect to the Final Plans: hard costs of
construction (including builder's risk insurance and the Performance and Payment
Bonds hereinafter specified), permitting fees and the fees of Tenant's architect
and engineer, and of Tenant's construction manager, if any. Tenant Improvement
Costs shall not include any of Tenant's equipment or other personal property or
trade fixtures.
(d) Tenant shall employ a general contractor for the Tenant
Improvements duly licensed in the State of California and approved by Landlord
(which approval shall be given or withheld in writing, shall not be unreasonably
withheld and shall be deemed to be not given if not given or withheld in writing
within 10 days after a written request for such approval has been received by
Landlord from Tenant). Upon request by Landlord, Tenant shall deliver to
Landlord a copy of the construction contract entered into by Tenant and the
general contractor. Before any work commences, the general contractor shall
obtain and deliver to Landlord Performance and Payment Bonds in form and amount
approved by Landlord (which approval shall be given or withheld in writing,
shall not be unreasonably withheld and shall be deemed to be not given if not
given or withheld in writing within 10 days after a written request for such
approval has been received by Landlord from Tenant). Such Bonds shall name
Landlord as the
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obligee and shall be written by surety companies which have been approved by
Landlord (which approval shall be given or withheld in writing, shall not be
unreasonably withheld and shall be deemed to be not given if not given or
withheld in writing within 10 days after a written request for such approval has
been received by Landlord from Tenant) and are either on the United States
Department of the Treasury's list of sureties acceptable to the United States
Government or have at least a BB+ rating by Bests. The Tenant Improvements
shall be constructed in a good and workmanlike manner and shall comply with all
laws, codes and ordinances applicable to the Premises. Not less than five (5)
days prior to the date Tenant desires to commence the Tenant Improvements,
Tenant shall give written notice to Landlord setting forth or accompanied by all
of the following:
(i) A description and schedule for the work to be
performed;
(ii) The names and addresses of all contractors,
subcontractors and material suppliers who have then been engaged to construct or
supply the Tenant Improvements;
(iii) Copies of all licenses and permits which may be
required in connection with the Tenant Improvements and which can then be
obtained; and
(iv) Certificates of builder's risk insurance
reasonably satisfactory to Landlord.
As additional rent under this Lease, Tenant shall make, at its expense, any
repairs to the Premises and any corrections to the Tenant Improvements, the need
for which arise from the actions or omissions of anyone constructing the Tenant
Improvements. During the progress of the work to be done by Tenant, such work
shall be subject to inspection by representatives of Landlord who shall be
permitted access and the opportunity to inspect, at all reasonable times upon
reasonable advance notice, in compliance with any safety and work rules then
imposed at the Premises by Tenant or its contractors, but this provision shall
not in any way whatsoever create any obligation on Landlord to conduct any such
inspection.
(e) Upon completion of the Tenant Improvements in accordance
with the Final Plans and the requirements of the ADA, Landlord shall pay to
Tenant an amount (the "Tenant Improvement Allowance") equal to the sum of (1)
the lesser of the Tenant Improvement Costs or $600,000, plus (2) the ADA
Payment, upon receipt of all of the following: (i) unconditional lien waivers
from all contractors, subcontractors and suppliers of materials and equipment,
(ii) an affidavit executed by the general contractor certifying the cost of the
Tenant Improvements and stating that it has delivered to Landlord lien waivers
from all
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subcontractors and suppliers and that the contractor has paid all debts or
settled all claims for labor and materials in connection with the Tenant
Improvements, (iii) an affidavit executed by Tenant that it accepts and is
satisfied with the Tenant Improvements and that all contractors and suppliers in
connection with the Tenant Improvements have been paid, (iv) a certification of
completion executed by the Tenant's architect confirming that the Tenant
Improvements have been completed in accordance with the Final Plans and that, if
required, a Certificate of Occupancy (temporary or permanent) has been issued
with respect to the Premises by the local authority having jurisdiction thereof,
and (v) if required by Landlord, a complete set of "as-built" plans and
specifications for the Tenant Improvements. The Tenant Improvements shall be
deemed completed upon satisfaction of all of the foregoing. Tenant's obligation
to pay the rent under this Lease shall not be postponed due to delay of any
nature, however arising, in completion of the Tenant Improvements, except for
delays caused by Landlord's failure to perform its repair and maintenance
obligations under paragraphs 16 and 40 of this Lease, in which case the
Commencement Date shall, at Tenant's option to be exercised by written notice to
Landlord, be extended by the number of days of delay so caused by Landlord.
(f) Tenant agrees to expend at least $400,000 in excess of the
Tenant Improvement Allowance for the Tenant Improvements, including costs of
Tenant's internal space planners and internal environmental review.
54. OPTIONS TO EXTEND TERM. Tenant shall have two options
(collectively the "Options" and individually an "Option") to extend the term of
this Lease for two additional consecutive six (6) year periods, the first of
which shall commence on the expiration of the initial term of this Lease (the
"First Renewal Option") and the second of which shall commence six (6) years
thereafter (the "Second Renewal Option"), provided that:
(a) The First Renewal Option shall be exercised by written
notice of exercise delivered to Landlord no later than nine (9) months before
the expiration of the initial term of this Lease, and the Second Renewal Option
shall be exercised by written notice of exercise delivered to Landlord no later
than nine (9) months before the expiration of the term of the First Renewal
Option. If Tenant fails to so exercise the First Renewal Option, both of the
Options shall terminate. If Tenant so exercises the First Renewal Option but
fails to so exercise the Second Renewal Option, the Second Renewal Option shall
terminate;
(b) At the time each Option is exercised and at the commencement
of the term of each Option, this Lease must be in full force and effect and
Tenant must not then be in default under this Lease. The foregoing conditions
are for the benefit of and may be waived by Landlord; and
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(c) All of the terms, covenants and conditions of this Lease
shall remain in effect during the term of each Option except that (i) the Base
Rent commencing with the first day of the first month for each month of the
first thirty-six (36) months of the First Renewal Option shall be increased
based upon the percentage increase in the Consumer Price Index as such Index for
the 37th month of the initial term of this Lease bears to such Index for the
last month of the initial term; provided, however, that in no event shall the
Base Rent commencing with the first month of such term be more than 115% or less
than 109% of the Base Rent payable for the last month of the initial term of
this Lease; and (ii) commencing with the first day of the 37th month of the term
of the First Renewal Option, the Base Rent shall be increased based upon the
percentage increase in the Consumer Price Index as such Index for the 36th month
of such term bears to such Index for the last month of the initial term;
provided, however, that in no event shall the Base Rent commencing with the 37th
month of such term be more than 115% or less than 109% of the Base Rent payable
for the 36th month of the term of the First Renewal Option, and (iii) the Base
Rent for each month of the term of the Second Renewal Option shall be the Market
Rent for the Premises for the term of the Second Renewal Option (determined by
Appraisal if the parties cannot agree upon the Market Rent within 30 days after
Tenant's exercise of the Second Renewal Option); except that commencing with the
first day of the 37th month of the term of the Second Renewal Option, the Base
Rent shall be increased based upon the percentage increase in the Consumer Price
Index as such Index for the 36th month of such term bears to such Index for the
last month of the term of the First Renewal Option; provided, however, that in
no event shall the Base Rent commencing with the 37th month of such term be more
than 115% or less than 109% of the Base Rent payable for the 36th month of the
term of the Second Renewal Option.
55. EXPANSION SPACE. Rockwell presently occupies that portion of the
Property commonly known as 21605 Plummer Street (the "Rockwell Building") which
contains approximately 130,572 rentable square feet of space. Rockwell has the
right to park 410 cars in the Rockwell Area. The term of the lease agreement for
the Rockwell Building expires on June 30, 1997, but Rockwell has the option to
cancel on one-year's prior written notice. If Rockwell cancels its tenancy and
Landlord determines not to grant Rockwell rights to occupy the Rockwell Building
(or any portion thereof in excess of 105,000 square feet of rentable area) on
some basis, then, subject to the terms of this paragraph, Tenant shall have one
option (the "Expansion Option") to add to the Premises demised under this Lease,
the "Expansion Space" which shall be (i) the Rockwell Building, or (ii) a
portion thereof which shall consist of not less than 25,000 rentable square feet
and shall be configured (as mutually agreed upon by Landlord and Tenant in
writing) in such a manner as to meet Tenant's reasonable requirements and
applicable codes and any reasonable objections of Landlord set forth in written
notice to Tenant within ten (10) days after Landlord's receipt of Tenant's
Notice (as hereinafter defined), as follows:
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(a) Tenant agrees to accept the Expansion Space in its "as is"
condition on the Availability Date (hereinafter defined) except as in this
paragraph otherwise provided;
(b) Landlord shall give Tenant written notice ("Landlord's
Notice") of the date upon which the Expansion Space shall be available (the
"Availability Date") and of the location and size of the Expansion Space. Tenant
shall have one option to have the Expansion Space added to the Premises demised
under this Lease on the Availability Date upon all the terms, covenants and
conditions contained in this Lease except that (i) the Base Rent for the
Expansion Space for the balance of the term of this Lease shall be Market Rent
with an $8.00 per net rentable square foot improvement allowance and without
reduction for the cost of creating all demising walls and related improvements
necessary for the Expansion Space to function separately from the remainder of
the Rockwell Building, which demising walls and related improvements Tenant
shall cause to be constructed and the costs of which shall be paid one-half by
Tenant and one-half by Landlord (which improvement allowance and other Landlord
reimbursements shall be paid to Tenant in accordance with disbursing procedures
similar to those provided for in paragraph 53 of this Lease), (ii) Tenant shall
be permitted to take occupancy of the Expansion Space on the Availability Date
in order to construct improvements therein, subject to each and every provision
of this Lease except that Tenant shall not be obligated to pay Base Rent with
respect to the Expansion Space until the "Rent Start Date" (defined below), and
(iii) the Rent Start Date shall be the 180th day after the Availability Date or
the date Tenant substantially completes its improvements in and occupies the
Expansion Space for business purposes, whichever is the earlier;
(c) The Expansion Option shall be exercised, if at all, by
written notice ("Tenant's Notice") of exercise given to Landlord not later than
twenty (20) days after Tenant's receipt of the Landlord's Notice. If Tenant
fails to so exercise the Expansion Option it shall terminate;
(d) If Landlord and Tenant cannot agree upon the determination
of Market Rent on or before the date that Tenant is required to give Landlord
Tenant's Notice, and Tenant nonetheless elects to give Tenant's Notice, the
determination of Market Rent as to such Expansion Space will be submitted to
Appraisal in accordance with attached EXHIBIT D. If on the date Base Rent as to
such Expansion Space is scheduled to commence pursuant to this Lease the
Appraisal has not been completed, Tenant will pay Base Rent based on Landlord's
reasonable estimate of Market Rent. Upon determination of Market Rent by
Appraisal, Landlord will pay to Tenant or Tenant will pay to Landlord, as
appropriate, the amount equal to the overpayment or underpayment of Base Rent
from such commencement until the determination of Market Rent by Appraisal,
together with interest accrued thereon during such period at the Default
Interest Rate. Upon
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establishment of the Base Rent for the Expansion Space, the parties agree to
execute an appropriate amendment to this Lease to reflect, as of the
Availability Date (i) the increase in the net rentable area of the Premises,
(ii) the increase in the Base Rent, and (iii) the increased Tenant's
Proportionate Share;
(e) As conditions precedent to Tenant's right to the Expansion
Option, at the time the Expansion Option is exercised and on the Availability
Date, this Lease must be in full force and effect, Tenant must not then be in
default thereunder and Tenant's interest under this Lease must not have been
assigned by operation of law or otherwise (except pursuant to an assignment with
respect to which Landlord has agreed in this Lease to give its consent or as to
which Landlord's consent is not required under this Lease). The foregoing
conditions are for the benefit of and may be waived by Landlord; and
(f) Landlord shall not be liable to Tenant for any loss or
damage for any failure to deliver possession of the Expansion Space to Tenant by
reason of the holding over or retention of possession by a tenant or occupant of
the Expansion Space and no such failure shall impair the validity of this Lease
or extend its term. Landlord will, however, exert reasonable efforts (including
legal proceedings to the full extent permitted under applicable laws) to cause
the other tenant to deliver possession of the Expansion Space.
(g) Tenant shall have the right to receive additional parking
with respect to the Expansion Space, at no cost to Tenant, as provided in
paragraph 4 of this Lease.
56. RIGHTS OF FIRST OFFER. Tenant will have rights of first offer to
lease additional space in the Rockwell Building in accordance with the following
provisions:
(a) ANNUAL NOTICES. No earlier than August 1 and no later than
October 1 of each calendar year during the term, Landlord will notify Tenant in
writing ("Annual Notice") of any rentable space within the Rockwell Building
that Landlord does not intend to warehouse, use or occupy and that is then
unleased or that will become unleased during the following calendar year in the
absence of the exercise of a Superior Right (as defined below). The Annual
Notice will include the following:
(1) identification of the configurations of such space that
Landlord intends to use in marketing such space
"Configurations");
(2) the date on which each such Configuration that is then
leased will become unleased if no Superior Right (as defined
below) is exercised;
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(3) identification of the rights of other tenants in the
Rockwell Building to lease any such Configuration pursuant
to right of first offer, right of first refusal, renewal,
extension or expansion provisions in their leases ("Superior
Rights"), together with identification of the date on which
each such Superior Right terminates; and
(4) Landlord's reasonable determination of Market Rent as to
each Configuration.
Landlord will not be required to give an Annual Notice (or any Interim Notices
or Reconfiguration Notices, as provided below, as to the calendar year to be
covered by the Annual Notice) unless, on or before July 1 of the year in which
such Annual Notice is to be given, Tenant has notified Landlord in writing of
Tenant's request that Landlord do so.
(b) INTERIM NOTICES. If any rentable space within the Rockwell
Building that was not required to be included in the previous Annual Notice,
subject to the exercise of a Superior Right, becomes unleased during the
calendar year following the date that the previous Annual Notice was given to
Tenant, Landlord will notify Tenant in writing ("Interim Notice") of such fact
within 20 days after Landlord first has knowledge of such fact. The Interim
Notice will include the following:
(1) the Configurations for such space;
(2) the date on which each such Configuration that is then
leased will become unleased if no Superior Right is
exercised;
(3) identification of each Superior Right applicable to each
such Configuration and the date on which each such Superior
Right terminates; and
(4) Landlord's reasonable determination of Market Rent as to
each Configuration.
(c) RECONFIGURATION NOTICES. If Tenant has failed to exercise
its rights of first offer with respect to a particular Configuration identified
in an Annual Notice, as provided in this paragraph, and if Landlord subsequently
reconfigures such Configuration so that the area of such Configuration increases
or decreases by 20% or more, Landlord will, prior to such reconfiguration,
notify Tenant of such reconfiguration ("Reconfiguration Notice"). The
Reconfiguration Notice will include the following:
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(1) the new Configurations resulting from such reconfiguration;
(2) the date on which each such new Configuration that is then
leased will become unleased if no Superior Right is
exercised;
(3) identification of each Superior Right applicable to each
such new Configuration and the date on which each such
Superior Right terminates; and
(4) Landlord's reasonable determination of Market Rent as to
each such new Configuration.
(d) TENANT'S ELECTION TO LEASE. Tenant may elect to lease all
(and not part) of any Configuration set forth in an Annual
Notice, an Interim Notice or a Reconfiguration Notice as
follows:
(1) Tenant's election to lease such Configuration must be made,
if at all, by written notice to Landlord ("Election Notice")
not later than (A) the November 1 following an Annual Notice
and (B) 15 days after an Interim Notice or Reconfiguration
Notice is given to Tenant. Tenant will be deemed to have
elected not to lease such Configuration if the Election
Notice is not given to Landlord within the applicable
response period.
(2) Tenant must have first elected to lease all Configurations
that are then unleased before Tenant may elect to lease any
Configurations that are then leased.
(3) Tenant may not elect to lease any space under this paragraph
during the last two years of the initial term of this Lease
or any Extended Term, unless Tenant has then exercised its
next available option to extend the term of this Lease.
(e) SUPERIOR RIGHTS. Any election by Tenant to lease a
Configuration will be subject to the rights of other
tenants having applicable Superior Rights as identified
in the Annual Notice, Interim Notice or Reconfiguration
Notice.
(f) COMMENCEMENT OF LEASE REGARDING CONFIGURATION. A
Configuration will become a part of the Premises, upon the
same terms and conditions as are provided in this Lease
(except as expressly modified in this paragraph), upon
the later of (1) the date that all holders of Superior
Rights applicable to such Configuration have relinquished
their rights or the date all of such Superior Rights have
terminated in accordance with their terms, whichever is
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earlier, or (2) the date such Configuration is delivered to Tenant, free from
rights of others.
(g) RENT. Base Rent for any space added to the Premises under this
paragraph will be equal to the Market Rent, determined as of the date of the
commencement of the term of this Lease with respect to such space. If Landlord
and Tenant cannot agree upon the determination of Market Rent on or before the
date that Tenant is required to give Landlord an Election Notice, and Tenant
nonetheless elects to lease such space, the determination of Market Rent as to
such space will be submitted to Appraisal in accordance with attached EXHIBIT D.
If on the date Base Rent as to such space is scheduled to commence pursuant to
this Lease the Appraisal has not been completed, Tenant will pay Base Rent based
on Landlord's reasonable estimate of Market Rent. Upon determination of Market
Rent by Appraisal, Landlord will pay to Tenant or Tenant will pay to Landlord,
as appropriate, the amount equal to the overpayment or underpayment of Base Rent
from such commencement until the determination of Market Rent by Appraisal,
together with interest accrued thereon during such period at the Default
Interest Rate.
(h) CONDITION OF SPACE. Any space leased by Tenant under this
paragraph will be delivered to Tenant in its "as is" condition as of the
commencement of the term of this Lease as applied to such space.
(i) AMENDMENT TO LEASE AND MEMORANDUM OF LEASE. Within ten (10) days
after request by Landlord or Tenant, the parties shall execute an amendment to
this Lease and to any Memorandum of Lease adding to the Premises any space which
Tenant has elected to lease pursuant to this paragraph, as of the commencement
date specified in this paragraph with respect to such space, and upon the terms
and conditions of this Lease.
(j) EFFECT OF DEFAULT. If any default exists by Tenant under this
Lease that has not been cured or is being cured by Tenant within the applicable
grace period at the time the Election Notice is given or at the commencement of
the term of this Lease as to the space in question, Tenant will have no right to
exercise its option as to the applicable space and/or to lease such space.
The time limitations with respect to Tenant's election to lease space
under this paragraph set forth in subparagraph (d) above and the condition set
forth in subparagraph (j) above are solely for the benefit of Landlord, and
Landlord may at its option waive any such limitation or condition.
57. ADDITIONAL ENVIRONMENTAL ASSESSMENTS; ASBESTOS REMOVAL. Landlord
will promptly obtain and provide to Tenant, in sufficient time to allow Tenant
to prepare for construction of the Tenant Improvements, the additional
environmental investigation and assessment work requested by Dana Wagner of
- 41 -
<PAGE>
Bruce A. Liesch Associates, Inc. pursuant to a letter to Brad Childs (sic) dated
December 1, 1992 and a letter to Che Hsien Chang dated November 20, 1992, and
Landlord shall complete such governmental environmental reporting as shall be
required by applicable laws. Tenant will pay Landlord 50% of the reasonable cost
of such work, within 10 days of written demand. Landlord agrees that Landlord
will, at Landlord's sole expense, remove, encapsulate or otherwise address any
asbestos situated in any space leased by Tenant pursuant to this Lease when such
space is first made available by Landlord to Tenant in accordance with
applicable laws and in such a time frame (to the extent reasonably possible) as
not to interfere with the timely completion of improvements to be constructed in
such space by Tenant.
58. ROOF ANTENNAS. Subject to the terms of paragraph 31 of this
Lease, Tenant may install on the roof of the Premises antenna and satellite
dishes for use in connection with its business, so long as such installation
does not interfere with the use and operation of (a) any television, radio,
communications or other equipment in any adjoining structure, or (b) any
electronic control system or elevators in any adjoining structure, or (c) any
other transmitting, receiving or master TV antenna on any adjoining structure.
59. CONTINGENCIES. Tenant's obligations under this Lease shall be
contingent upon the following occurring or being satisfied on or before the
dates set forth below:
(a) Tenant shall receive the Letter of Credit on or before the
date 15 business days after the date of this Lease.
(b) Tenant shall receive, on or before the date 25 business days
after the date of this Lease, Subordination, Non-disturbance and Attornment
Agreements, in the form attached to this Lease as Exhibit F, executed by each
holder of any deed of trust that has priority over this Lease (which agreements
Landlord agrees to use its best efforts to provide to Tenant on or before the
date 25 business days after the date of this Lease and which agreements Landlord
and Tenant agree to execute).
Tenant may waive such contingencies by written notice given to
Landlord on or before the applicable contingency date. Tenant's failure to so
waive any such contingency on or before the applicable contingency date shall be
deemed to be an exercise of Tenant's right to terminate this Agreement based
upon the failure of such contingency.
60. MEMORANDUM OF LEASE; RECORDABLE TERMINATION. Either party will,
upon the written request of the other party, execute a short form lease
("Memorandum of Lease") regarding this Lease, in a form suitable for recording
in the Los Angeles County Records. Such Memorandum of Lease will be dated as of
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<PAGE>
the date of this Lease and will disclose the parties; the term of this Lease,
descriptions of the Premises, Tenant's extension and expansion rights and rights
of first refusal and such other terms and conditions as the parties agree upon.
The party requesting the execution of such Memorandum of Lease will bear all
costs of the Memorandum of Lease, including any recording fees. Upon the
determination of the Commencement Date and the written request of either party,
the parties will execute an amendment to the Memorandum of Lease setting forth
the Commencement Date, with the party requesting the execution of such amendment
bearing all costs of the amendment, including any recording fees. Upon the
execution of a pertinent amendment to this Lease and the written request of
either party, the parties will execute a corresponding amendment to the
Memorandum of Lease, with the party requesting the execution of such amendment
bearing all costs of the amendment, including any recording fees. Either party
will, following any termination of this Lease and upon the written request of
the other party, execute a document setting forth the date of such termination,
in a form suitable for recording in the Los Angeles County Records. Failure of
a party to execute such a document will not affect the termination, and in such
event the party requesting the document may execute and file an affidavit
setting forth the date of termination. The party requesting the execution of
such document will bear all costs thereof, including any recording fees.
61. MISCELLANEOUS. This Lease cannot be changed orally, but only by
agreement in writing signed by the party against whom, or against whose
successors and assigns, enforcement of the change is sought. The voluntary or
other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall
not work a merger as to any existing subtenancies and shall, at the option of
Landlord, terminate any and all such existing subtenancies or, at Landlord 's
option, operate as an assignment to it of any and all such subtenancies. The
words "Landlord" and "Tenant" as used herein shall include the plural as well as
the singular. If there is more than one tenant, the obligations hereunder
imposed upon the Tenant shall be joint and several. Time is of the essence of
this Lease and each and all of its provisions. This Lease shall be construed
and enforced in accordance with the laws of the State of California. The term
"Default Interest Rate" shall mean an annual rate equal to the reference or
prime rate of Bank of America ("Reference Rate"), or the successor to such rate,
plus 2 percentage points per annum, or the maximum interest rate permitted by
law, whichever is less. Any amount due from Tenant, if not paid when first due,
shall bear interest at the Default Interest Rate from the date due until paid.
If any covenant, agreement, or condition of this Lease or the application
thereof to any person, firm, corporation, or circumstance is or becomes to any
extent invalid or unenforceable, the remainder of this Lease, or the application
of such covenant, agreement, or condition to persons, firms, corporations, or
circumstances other than.those as to which it is invalid or unenforceable, shall
not be affected thereby, and in lieu of each clause or provision of this Lease
that is illegal, invalid, or unenforceable, there shall be added as a part of
this Lease a clause or provision as
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<PAGE>
similar in terms to such clause or provision as is possible and as may be legal,
valid, and enforceable. If any excavation or other building operation shall be
made, or is about to be made, upon any adjoining property or streets, upon the
request of Landlord, Tenant shall permit the owner or lessee of such adjoining
property and their respective representatives to enter the Premises and shore
the foundations and walls thereof, and to do any other act or thing reasonably
necessary, in Landlord's opinion, for the safety or preservation of the
Premises. Landlord's acceptance of a partial rent payment shall not constitute
a waiver of any rights of Tenant or Landlord, including, without limitation, any
right Landlord may have to recover possession of the Premises, in unlawful
detainer, or otherwise. The parties agree that, except as in this Lease
otherwise provided, and subject to the provisions of paragraph 35 of this Lease,
the covenants and agreements herein contained shall bind and inure to the
benefit of the successors and assigns of the parties.
Exhibits A through F are attached hereto and become part of
this Lease.
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<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.
LANDLORD:
GREENVILLE DALLAS DELAWARE, INC., a Delaware corporation
By /s/ S. Bradford Child
------------------------------------------------------
Its
--------------------------------------------------
And By
---------------------------------------------------
Its
-------------------------------------------------
TENANT:
ADC TELECOMMUNICATIONS, INC., a Minnesota corporation
By /s/ LeRoy Morgan
------------------------------------------------------
Its Vice President
------------------------------------------------
FIBERMUX CORPORATION, a California corporation
By /s/ Steve Kim
------------------------------------------------------
Steve Y. Kim, President
And By /s/ Frederic T. Boyer
----------------------------------------------
Frederic T. Boyer, Chief Financial Officer
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<PAGE>
EXHIBIT A
INSIDE OF SHADED AREA = "ROCKWELL AREA"
410 SPACES
BALANCE IS "FIBERMUX/AREA"
<PAGE>
EXHIBIT B
LEGAL DESCRIPTION
Parcels B and C and the Southerly 111.5 of D of Parcel Map L.A. No. 5336, in the
City of Los Angeles, in the County of Los Angeles, State of California, as per
map filed in Book 168 Pages 61 and 62 of Parcel Maps, in the Office of the
County Recorder of Los Angeles, State of California.
Except 50 percent of all oil, gas, mineral, asphaltum and other hydrocarbon
substances underlying said property or that may be produced thereon or
therefrom, but without the right of entry above the depth of 500 feet below the
surface of said land, as reserved by Frank S. Lombardi, et al. in Deed recorded
March 1, 1956 in Book 50473 Page 258, Official Records.
<PAGE>
OFFICE -- ASSEMBLY/WAREHOUSE
FIBERMUX BLOCK PLAN
FIRST FLOOR
21415 PLUMMER ST CHATSWORTH, CA
12/7/92
<PAGE>
FIBERMUX BLOCK PLAN
SECOND FLOOR
21415 PLUMMER ST CHATSWORTH, CA
12/7/92
<PAGE>
EXHIBIT C
December 9, 1992
VER. B
SCOPE STATEMENT
FIBERMUX PROJECT
21415 PLUMMER STREET
OFFICE
ARCHITECTURAL
A. Reuse existing walls to extent possible.
B. All walls to receive paint (some graphics may be used). VP and
President's offices to receive grade 1 vinyl. Restrooms to receive grade
2 vinyl.
C. Reuse existing ceiling tile and grid replacing damaged tile as required.
D. Reuse existing doors and frames. Replace existing hardware with Schlage
L series. Any new doors and frames to match existing. A master key
system for the building is desirable.
E. Office areas will be carpeted reusing existing to the extent possible.
All new carpet will be broadloom. Reused carpet will be thoroughly
cleaned before occupancy.
F. Provide alternate cost to install dissipative tile, Armstrong Excelon
SDT, in the lab areas.
G. Major corridor walls to receive grade 2 vinyl.
H. Reuse existing window treatments. Replace missing and repair
nonfunctional window treatment items.
I. All construction will be in accordance with all laws, codes, and
regulations including ADA.
ALTERNATES
A. Provide cost to upgrade ceiling tile to USG Glacier 2'x 2' with shadow
reveal as an alternate.
B. Provide cost to upgrade all doors to solid core oak doors.
C. Provide alternative cost for multispec (Zolatone) paint on major corridor
walls.
<PAGE>
E. Director, VP offices and conference room walls will extend to the deck
and receive sound batt insulation. All other walls shall extend to the
dropped ceiling unless otherwise required by code.
ELECTRICAL
A. Reuse existing light fixtures. Provide Lithonia Optimax 2'x 4' fixtures
in the CADD drafting area.
B. Convenience power and communications wiring to be supplied to panel
workstations through power poles. Three duplex outlets and one
communications outlet box to be provided in each private office.
Communication outlets will be piped in the wall to the plenum space.
C. Tenant has a LAN that will require wiring.
D. All communication and computer wiring to be performed by the
communication contractor.
E. Re configure the emergency lighting to support the new room layout.
F. General Contractor will remove all workstation communication cabling.
The house and entrance cabling will remain.
ALTERNATES
A. Provide cost to upgrade light fixtures to Lithonia Optimax in the open
office areas as an alternate. Recessed can fixtures will be utilized
along one long wall of each room with the Optimax fixtures to eliminate
the "cave" effect.
B. Develop alternate cost to add Leviton occupancy sensing switches to all
private offices and conference rooms.
MECHANICAL
A. HVAC system to be re configured as necessary to provide comfort to new
room layout. Existing HVAC heat pumps will be reused with new
distribution provided. Any new diffusers to match existing. HVAC system
to be tested and balanced before occupancy.
B. Provide additional HVAC capacity as required to meet comfort
requirements.
2
<PAGE>
C. Review the possibility of moving the air handlers (one or more on the
lower floor) to improve the layout and flow of the assembly process.
Develop a cost alternative associated with the scheme along with detailed
drawings.
FURNISHINGS
A. Tenant will provide office furniture and all labor and equipment to move
furniture and furnishings to the building.
B. Contractor will provide electricians to make connections to the furniture
panels during the move.
C. Tenant will provide A/V equipment (except screens) and white boards.
ALTERNATES
A. Provide a recessed aluminum framed bulletin board with sliding, lockable
glass doors (4'x 6') next to the lunch room entrance.
3
<PAGE>
LUNCH ROOM
ARCHITECTURAL
A. Walls will receive grade 2 vinyl. More than one type of vinyl
incorporating graphics will likely be used.
B. Floors will be carpeted except in vending and serving areas which will be
VCT tile.
C. Casework in the lunch room will be new. Provide pigeonhole unit for bag
lunches.
ALTERNATES
A. Provide alternate price for ceramic tile in place of VCT in vending and
serving areas.
ELECTRICAL
A. Provide necessary power and water to vending machines. Estimate 6
vending machines at 20A each plus two additional 20A outlets for
microwaves. The coffee machine will require a 3/8" water line.
B. Provide utility connections required for future soup and salad bar
including drain (note: the drain could be handled with an integral sump
and pump in the salad bar).
B. Lighting will be a combination of recessed cans and accent lighting.
MECHANICAL
A. Provide adequate ventilation including air changes in lunch room. Note
there is a concern regarding food odors in the eating areas.
ALTERNATES
A. Provide the cost to add activated charcoal filtration to the lunch room
air handlers.
FURNISHINGS
A. Tenant will provide new furniture for the lunch room.
4
<PAGE>
TRAINING CENTER/CONFERENCE ROOMS/DEMO ROOM/BOARD ROOM
ARCHITECTURAL
A. Wall covering to be grade 2 vinyl.
B. Doors to have sound gaskets and threshold seals.
C. Each room will have an AV screen.
D. Provide blocking to support white boards.
E. Provide tack strips (2 walls) in the Training Room.
F. One conference room will be configured to support video conferencing and
will require acoustic panels on all the walls.
ALTERNATES
A. Provide cost to extend all drywall partitions to the deck and receive
sound batt insulation.
B. Provide alternate cost for 2'x 2' USG Glacier tile with shadow reveal
edge and foil backing.
ELECTRICAL
A. Lighting must support A/V presentations as well as good general lighting.
Must be able to dim lighting or provide various lighting levels through
light types.
B. Provide wall mounted raceways along the two longest walls to furnish
power and communication connection in the Training Room.
C. Provide five boxes piped to the plenum in one conference room to support
video teleconferencing.
D. Each conference room will have one communication box piped to the plenum
to provide network connection.
MECHANICAL
A. Separate HVAC control for these spaces to be provided.
B. HVAC to be sized to provide comfort at maximum room occupancy and
equipment load (e.g. computer training).
5
<PAGE>
COMPUTER ROOM
ARCHITECTURAL
A. Walls will extend to the deck
B. Install 2' x 4' vinyl coated ceiling tile.
C. Floor will receive dissipative VCT tile.
D. This room is a secured area and will minimally require a secure lock
(e.g. Medico) or a card reader station if such a system is installed by
the Tenant.
E. The existing computer room will be relocated.
ALTERNATES
A. Provide cost for access flooring including ramp and railing in one-half
of the room.
B. Provide cost of viewing window in hallway wall (4' x 6') if allowable by
code.
ELECTRICAL
A. Reuse existing lighting, if possible.
B. Power requirements will be identified on separate attached list.
C. Provide EPO switch at the door for the computer equipment as required by
code.
MECHANICAL
A. Room shall have separate HVAC control including humidity control. Reuse
existing equipment, if possible.
ALTERNATES
A. Provide a separate zone pre-action sprinkler system coordinated with the
EPO system.
6
<PAGE>
ASSEMBLY AREA
ARCHITECTURAL
A. All walls to receive paint and possibly graphics.
B. Floor to be VCT tile. Floor to receive static dissipative wax before
occupancy.
C. Reuse existing ceiling tile and lighting.
D. Warehouse floors will be sealed with gray urethane.
E. All warehouse walls to receive paint.
F. Provide capability to load/unload trucks at the grade level doors. This
may require a lift which might be recessed into the floor.
G. Provide a strip curtain enclosure for the water wash machine. Note: a
frame to support the curtain will have to be fabricated.
H. Provide a curb around the water wash machine (suggest a painted flange
curb, gasketed and bolted to the floor).
I. Fencing could be used to secure the stock areas.
J. Provide the capability to handle and properly dispose of trash. Design
must comply with existing laws and regulations.
ALTERNATES
A. Provide alternate cost to remove dropped ceiling and provide lighting
using fluorescent industrial fixtures. This alternate would include
using spiral duct for HVAC which would be painted. Exposed ceiling would
be reviewed for finish.
B. Provide the cost for corner protectors and wall protection on walls in
the high traffic areas of the warehouse and assembly areas.
ELECTRICAL
A. Provide convenience power to benches via drop cords. See the layout for
locations.
B. Electrical power and utility connections for assembly equipment are
provided in the attached equipment list.
7
<PAGE>
MECHANICAL
A. Provide a compressed air distribution system. Air compression system
will include a compressor, dryer and coalescing filter furnished by the
Tenant.
B. Recommendations for compressed air system are attached.
C. Provide vacuum system piping from the vacuum pump (by Tenant) to required
equipment (see equipment schedule).
8
<PAGE>
OTHER
FIRE PROTECTION
A. Revise the sprinkler system to accommodate the new room layout and meet
code and insurance requirements.
B. Revise the fire alarm system as required to provide the required pull
stations and alarm coverage for all areas of the building.
SECURITY
A. A card access security system will be reviewed for incorporation. Such a
system will include card readers at primary entrances, electric strikes
in those entrance doors and release switches in panic hardware.
B. All door locks will be organized to a building master system.
LIFE SAFETY
A. Provide required fire extinguishers.
ALTERNATES
A. Provide recessed fire extinguisher and first aid cabinets.
PAGING
A. Provide a paging system for the assembly and warehouse areas.
PLUMBING
A. All existing restroom and drinking fountain fixtures to remain.
B. See lunch room and assembly area equipment lists for other plumbing
requirements.
C. Provide an eyewash and emergency shower near the water wash machine.
9
<PAGE>
EXHIBIT D
APPRAISAL PROCEDURES
The parties to this Lease will initially attempt to agree upon the
Market Rent. If they have been unable to so agree within the period that they
are required to agree as to such matter under the Lease, then either party may
request by written notice to the other party ("Appraisal Request") that the
matter be determined by an appraisal board consisting of three appraisers who
are members of the Appraisers Institute (or a successor or similar organization,
if such organization no longer exists) and have at least five (5) years'
experience appraising commercial real estate in the Chatsworth, California area.
One appraiser will be appointed by each party, and each such appraiser will have
no material financial or other business interest in common with the party
selecting such appraiser. If a party fails to appoint an appraiser and notify
the other party of such appointment within 30 days after the Appraisal Request
is made, then the appraiser that was appointed by such other party within such
30 day period will be the sole appraiser. If two appraisers are properly
appointed and such first two appraisers are unable to agree on a third appraiser
within thirty (30) days after the appointment of the second appraiser, then such
third appraiser will be appointed by the presiding judge of the Los Angeles
County Superior Court, or by any person to whom such presiding judge formally
delegates the matter, or, if such methods of appointment fail, by the American
Arbitration Association.
The parties will submit a copy of this Lease to the sole appraiser or
the three appraisers, as the case may be. If the appraisal is conducted by a
sole appraiser, such sole appraiser will render to Landlord and Tenant his or
her determination of the Market Rent applicable during the period in question to
the parties by the 60th day after the Appraisal Request was made. If the
appraisal is conducted by three appraisers, each appraiser will submit his or
her determination(s) of the Market Rent applicable during the period in question
in a sealed envelope by the 30th day following appointment of the last
appraiser, and any determinations not submitted by such time shall be
disregarded. In such cases, the parties will meet on such 30th day (or if it is
not a business day, on the first business day thereafter) at 11:00 a.m. at the
office of Landlord, or such other place as the parties may agree, and
simultaneously deliver the determinations. If the determinations of at least
two of the appraisers are identical in amount, such amount will be deemed the
decision of the appraisers. If the determination of the three appraisers are
different in amount, the decision as to the Market Rent will be independently
determined as follows:
(a) If neither the highest nor lowest determination differs from
the middle determination by more than 15% of such middle
determination, then the decision will be deemed to be the average of
the three determinations; and
<PAGE>
(b) If clause (a) does not apply, then the decision will be
deemed to be the average of the middle determination and the
determination closest in amount to such middle determination.
The decision of the appraisers, determined as above set forth, will be
final and non-appealable. The fees and expenses of the appraiser or appraisers
will be shared equally by Landlord and Tenant.
During the period of time that any appraisal is pending under this
Lease, Tenant shall pay Base Rent at the rate that was last in effect under the
Lease and the appropriate retroactive adjustment shall be made between the
parties within 10 days after the appraisers have made their determination.
<PAGE>
EXHIBIT E
[Issuer's Letterhead]
IRREVOCABLE STANDBY LETTER OF CREDIT
To Beneficiaries:
ADC Telecommunications, Inc. Letter of Credit No.
__________________________________ Issue Date:_______________, 199_
__________________________________
Fibermux Corporation
__________________________________
__________________________________
Gentlemen:
For the account of GREENVILLE DALLAS DELAWARE, INC. ("Customer"), with
an address at 255 Shoreline Drive, Ste. 600, Redwood City, California 94065, THE
DEVELOPMENT BANK OF SINGAPORE, LTD. ("Issuer") hereby establishes in your favor
as "Beneficiary" this IRREVOCABLE STANDBY LETTER OF CREDIT (the "Standby
Letter"), available for payment in the manner and on the terms following:
1. This Standby Letter authorizes Beneficiary to draw one or more
drafts upon Issuer, at sight, in the full amount then due and payable to
Beneficiary after Customer's default under the terms of paragraph 23 of that
certain Lease dated as of ______________, 1992, between Greenville Dallas
Delaware, Inc., as Landlord, and ADC Telecommunications, Inc. and Fibermux
Corporation, jointly as Tenant (the "Lease").
2. Beneficiary's Draft(s) must:
(a) not exceed, in the aggregate,_______________Dollars
(US$___________) (the "Drawing Amount");
(b) not be dated later than the Expiry Date specified in
paragraph 6 of this Standby Letter;
(c) quote upon its face, "Drawn under Irrevocable Standby Letter
of Credit No.________________, dated_____________,199_, and
issued by THE DEVELOPMENT BANK OF SINGAPORE, LTD. (NEW YORK
AGENCY), [insert address] ; and
-------------------------
<PAGE>
(d) be duly completed and signed in the form of EXHIBIT SL.1
attached to this Standby Letter and incorporated by
reference as though repeated here verbatim.
3. This Standby Letter has the sole purpose of making payment
available against the monetary sum due and owing from Customer to Beneficiary
after Customer's default under paragraph 23 of the Lease, all as certified by
Beneficiary in the Request for Payment (described under paragraph (4) of this
Standby Letter).
4. To receive payment under this Standby Letter, Beneficiary must
present the following documents (the "Required Documents"):
(a) Beneficiary's original Draft as detailed in paragraph 2 of
this Standby Letter;
(b) the original of a Request for Payment Under Irrevocable
Standby Letter of Credit (the "Request For Payment") written
on Beneficiary's letterhead, duly completed and signed by
persons who certify their authority to bind Beneficiary, all
in the form of EXHIBIT SL.2 attached to this Standby Letter
and incorporated by reference as though repeated here
verbatim; and
(c) the original of this Standby Letter.
5. Reference in this Standby Letter to the Lease Agreement or to any
other aspect of the underlying bargain between Beneficiary and Customer is for
identification purpose only. No intent exists to incorporate into this Standby
Letter any term of the Lease or any aspect of such underlying bargain.
6. This Standby Letter shall stay in force until 11.59 p.m., New
York, New York time on the ______ day of __________________, 199__ (as may be
extended from time to time, the "Expiry Date") and shall be deemed automatically
extended without amendment for additional periods of not less than one (1) year
from the then effective Expiry Date until __________________, 199__ , unless not
later than sixty (60) days prior to the then effective Expiry Date Issuer shall
present to Beneficiary a notice that this Standby Letter will not be renewed or
that this Standby Letter will be renewed for an additional period of less than
one (1) year.
7. Beneficiary must present all the Required Documents on or before
the Expiry Date to Issuer at Issuer's letter of credit department, [Insert
address]. The word "present" (or "presentation" for purposes of this Standby
Letter) means actual receipt through registered mail, through a professional
overnight courier service, or through personal hand delivery.
<PAGE>
8. The right to draw under this Standby Letter may not be assigned
and shall not be transferable.
9. The amount available under this Standby Letter should be
irrevocably decreased from time to time by the amount of each Draft honored by
Issuer. In the spaces provided below in this paragraph, Issuer shall note the
amount of each such Draft so honored, the date it paid such Draft and the
reduced amount available under this Standby Letter as consequence of each such
payment.
Reduced amount of this
Draft Amount Date Paid Standby Letter
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
10. This Standby Letter shall be governed by the Uniform Customs and
Practice for Documentary Credits (1983 Revision) Publication No. 400 of the
International Chamber of Commerce (the "Uniform "Customs") and, as to matters
not governed by the Uniform Customs, the laws of the State of New York.
11. Issuer engages with Beneficiary that each Draft and other
Required Documents related thereto shall be duly honored upon presentation to
the Issuer of such Required Documents if drawn and presented in strict
compliance with the terms of this Standby Letter.
THE DEVELOPMENT BANK OF SINGAPORE,
LTD. (NEW YORK AGENCY)
By________________________________
Its__________________________
PLEASE EXAMINE THIS STANDBY LETTER AT ONCE. IF
YOU FEEL UNABLE TO MEET ANY OF ITS REQUIREMENTS,
PLEASE CONTACT CUSTOMER IMMEDIATELY TO SEE IF THE
STANDBY LETTER CAN BE AMENDED. OTHERWISE, YOU RISK
LOSING PAYMENT UNDER THIS STANDBY LETTER FOR
FAILURE TO COMPLY STRICTLY WITH ITS TERMS AS
WRITTEN.
<PAGE>
EXHIBIT SL.1
DRAFT
Drawn under Irrevocable Standby Letter or Credit No.________, dated
_____________________________, 199__, and issued by THE DEVELOPMENT BANK OF
SINGAPORE. LTD. (NEW YORK AGENCY)
$______________________ ___________________ __, _____
On sight, pay_______________________________________________DOLLARS
(US$________________________) by a single check payable to the following two (2)
payees: ADC Telecommunications, Inc. and Fibermux Corporation.
TO: The Development Bank of Singapore (New York Agency)
[Address of Bank]
Attn: Letter of Credit Department
ADC TELECOMMUNICATIONS, INC.
By_________________________________
Title_________________________
FIBERMUX CORPORATION
By_________________________________
Title_________________________
<PAGE>
EXHIBIT SL.2
[Beneficiary's Letterhead]
REQUEST FOR PAYMENT
UNDER
IRREVOCABLE STANDBY LETTER OF CREDIT
[Date]
Letter of Credit No._____________
Issue Date:_______________, 19___
To Issuer:
The Development Bank of Singapore, Ltd. (New York Agency)
[Address of Bank]
Attn: Letter of Credit Department
Gentlemen:
The undersigned are, collectively, the "Beneficiary" of the captioned
IRREVOCABLE STANDBY LETTER OF CREDIT (the "Standby Letter"). As the "Issuer,"
you established the Standby Letter in Beneficiary's favor for the account of the
"Customer," GREENVILLE DALLAS DELAWARE, INC. Beneficiary hereby draws on the
Standby Letter in the amount of________________________________________________
Dollars (US$________________________).
In support of this drawing, Beneficiary hereby certifies and warrants:
1. The Standby Letter was issued to back up certain of Customer's
obligations under a lease (the "Lease"), as more particularly described in the
Standby Letter.
2. The Customer has defaulted on one or both of the following obligations
(Beneficiary must so indicate below) imposed upon Customer by the Lease:
(a) Customer has failed to keep the Standby Letter in effect for the
period of time required by paragraph 23 of the Lease [yes ____];
or
(b) Customer has defaulted in the performance of Landlord's
Environmental Indemnity in a manner and as defined in paragraph
23 of the Lease [yes ____].
Such default(s) have not only occurred but are continuing without cure.
Beneficiary has not transferred or otherwise assigned, in whole or in part, its
rights under the Lease.
<PAGE>
3. This Request For Payment is attached to a Draft for the sum of
________________________________________________________________Dollars
(US$________________). That Draft, this Request For Payment and the original
copy of the Standby Letter constitute the "Required Documents" referred to in
paragraph (4) in the Standby Letter.
4. If paragraph 2 (b) of this Request for Payment is applicable, under
the terms of the Lease the sum of such Draft is presently due and payable from
Customer to Beneficiary, but Customer has wrongfully failed to pay such sum.
Beneficiary served upon Customer and other parties all demands, notices, and the
like as required (if any) under the Lease.
5. The terms of the Lease presently entitle Beneficiary to draw upon the
Standby Letter for the full sum of the Draft to which this Request For Payment
is attached.
6. Each individual who has signed this Request for Payment and
accompanying Draft:
(i) is an officer of the Beneficiary for which such individual
signed, and
(ii) has authority to bind such Beneficiary in all matters
concerning the Standby Letter.
IN WITNESS WHEREOF, the undersigned Beneficiary executed, attested
or otherwise officially sealed (as applicable), delivered, and presented this
Request (for Payment, attached to the undersigned Beneficiary's Draft, this
day of _____________________________, 19__.
ADC TELECOMMUNICATIONS, INC.
By:___________________________________________________
Title:___________________________________________
FIBERMUX CORPORATION
By:___________________________________________________
Title:___________________________________________
<PAGE>
EXHIBIT F
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of ___________________________ , 199__, among
GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION (REALTY) PTE. LTD., a Singapore
corporation ("Beneficiary"), GREENVILLE DALLAS DELAWARE, INC., a Delaware
corporation ("Landlord"), ADC TELECOMMUNICATIONS, INC., a Minnesota corporation,
and FIBERMUX CORPORATION, a California corporation (collectively, "Tenant").
WITNESSETH:
WHEREAS, Beneficiary is the beneficiary under that certain deed of
trust dated as of October 3, 1986, recorded January 26, 1988 as Instrument No.
88-109752, Official Records, Office of the County Recorder of Los Angeles, State
of California (said deed of trust, as it may be amended, increased, renewed,
modified, consolidated, replaced, combined, substituted, severed, split, spread
or extended, being hereinafter referred to as the "Deed of Trust"), between
Beneficiary and the trustor described therein (predecessor in interest to the
Landlord described above), which encumbers the land and the buildings located at
21415 and 21605 Plummer Street, Los Angeles, California, and more particularly
described therein (the "Property").
WHEREAS, Tenant and Landlord have entered into a certain agreement
of lease dated December 18, 1992 (such Lease, as it may be hereafter amended
from time to time with the Beneficiary's consent, being referred to as the
"Lease") covering certain premises (the "Demised Premises") in the Property.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Tenant covenants and agrees that the Lease now is and shall at all
times continue to be subject and subordinate in each and every respect to the
Deed of Trust. Tenant, upon request, shall execute and deliver any certificate
or other instrument which the Beneficiary may reasonably request to confirm said
subordination.
2. Tenant certifies that the Lease is presently in full force and effect
and unmodified and no base rent payable thereunder has been paid more than 1
(one) month in advance of its due date, and that no material default by Tenant
exists under the Lease which has continued beyond the expiration of any
applicable grace period.
<PAGE>
3. As long as Tenant is in compliance with the terms of this Agreement
and no default exists under the Lease which has continued beyond the expiration
of any applicable grace period, Beneficiary shall not name Tenant as a party
defendant to any action for foreclosure or other enforcement of the Deed of
Trust (unless required by law), nor shall the Lease be terminated by Beneficiary
in connection with, or by reason of, foreclosure or other proceedings for the
enforcement of the Deed of Trust, or by reason of a transfer of the landlord's
interest under the Lease pursuant to the taking of a deed or assignment in lieu
of foreclosure (or similar device), nor shall Beneficiary interfere with
Tenant's use or possession of the Demised Premises unless the holder of the
landlord's interest under the Lease (the "Landlord") would have had the right to
do so if the Deed of Trust had not been made, provided that the Person (as
defined in the Deed of Trust) acquiring, or succeeding to, the interests of the
Landlord as a result of any such action or proceeding, and such Person's
successors and assigns (any of the foregoing being hereinafter referred to as
the "Successor"), shall not be:
(a) subject to any credits, offsets, defenses or claims which Tenant may
have against any prior Landlord, except as permitted by the Lease or
by statute; or
(b) bound by base rent which Tenant might have paid for more than the
current month to any prior Landlord, unless such prepayment shall have
been made with Beneficiary's prior written consent; or
(c) liable for any act or omission of any prior Landlord; or
(d) bound by any covenant to undertake or complete any improvement to the
Demised Premises or the building forming a part of the Property except
as expressly required of the Landlord pursuant to the Lease; or
(e) required to account for any security deposit other than any security
deposit actually delivered to the Successor; or
(f) liable for any payment to Tenant of any sums, or the granting to
Tenant of any credit, in the nature of a contribution towards the cost
of preparing, furnishing or moving into the Demised Premises or any
portion thereof except as expressly required of the Landlord pursuant
to the Lease.
4. If the interest of the Landlord under the Lease shall be transferred
by reason of foreclosure or other proceedings for enforcement of the Deed of
Trust or pursuant to a taking of a deed in lieu of foreclosure (or similar
device), Tenant shall be bound to the Successor under all of the terms,
covenants and conditions of the Lease for the balance of the term thereof
remaining, with the same force and effect as if the Successor were the Landlord,
and Tenant hereby does (a) agree to attorn to
<PAGE>
the Successor, including Beneficiary if it be the Successor, as its Landlord,
(b) affirm its obligations under the Lease, and (c) agree to make payments of
all sums due under the Lease to the Successor, said attornment, affirmation and
agreement to be effective and self-operative without the execution of any
further instruments, upon the Successor succeeding to the interest of the
Landlord under the Lease. Tenant waives the provisions of any statute or rule
of law now or hereafter in effect that may give or purport to give it any right
or election to terminate or otherwise adversely affect the Lease or the
obligations of Tenant thereunder by reason of any foreclosure or similar
proceeding.
5. Tenant shall not change the terms, covenants, conditions and
agreements of the Lease in a manner which materially reduces the rent or other
charges payable or space demised thereunder or has a material adverse effect
upon the value of the landlord's interest thereunder without the express consent
in writing of the Beneficiary.
6. Tenant shall notify Beneficiary of any default of the Landlord under
the Lease which would entitle Tenant to cancel the Lease or abate the rent or
any additional rent payable thereunder, and agrees that Beneficiary shall have
the same rights to cure any such default as are afforded to the Landlord under
the Lease.
7. Anything herein or in the Lease to the contrary notwithstanding, in
the event that Beneficiary shall acquire title to the Property, Beneficiary
shall have no obligation, nor incur any liability, beyond Beneficiary's then
interest, if any, in the Property and Tenant shall look exclusively to such
interest of Beneficiary, if any, in the Property for the payment and discharge
of any obligations imposed upon Beneficiary hereunder or under the Lease and
Beneficiary is hereby released or relieved of any other liability hereunder and
under the Lease. Tenant agrees that with respect to any money judgment which
may be obtained or secured by Tenant against Beneficiary, Tenant shall look
solely to the estate or interest owned by Beneficiary in the Property and Tenant
will not collect or attempt to collect any such judgment but of any other assets
of Beneficiary.
8. Tenant acknowledges that it has notice that Landlord's interest under
the Lease and the rent and all other sums due thereunder have been assigned to
Beneficiary as part of the security for the note secured by the Deed of Trust.
In the event that Beneficiary notifies Tenant of a default under the Deed of
Trust and demands that Tenant pay its rent and all other sums due under the
Lease to Beneficiary, Tenant and Landlord agree that Tenant shall pay its rent
and all other sums due under the Lease to Beneficiary.
9. This Agreement may not be modified except by an agreement in writing
signed by the parties or their respective successors in interest. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective legal representatives, successors and assigns.
<PAGE>
10. Nothing contained in this Agreement shall in any way impair or affect
the lien created by the Mortgage except as specifically set forth herein.
11. The Tenant agrees that this Agreement satisfied any condition or
requirement in the Lease relating to the granting of a non-disturbance agreement
by Beneficiary. Tenant further agrees that in the event there is any
inconsistency between the terms and provisions hereof and the terms and
provisions of the Lease dealing with non-disturbance by Beneficiary, the terms
and provisions hereof shall be controlling.
12. All notices, demands or requests made pursuant to, under, or by virtue
of this Agreement, must be in writing and mailed to the party to whom the
notice, demand or request is being made by certified or registered mail. For
such purposes, the addresses of the parties shall be as follows:
IF TO BENEFICIARY:
Government of Singapore Investment Corporation (Realty) Pte. Ltd.
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
IF TO LANDLORD:
Greenville Dallas Delaware, Inc.
c/o GSIC Realty Corporation
255 Shoreline Drive
Suite 600
Redwood City, California 94065
IF TO TENANT:
Fibermux Corporation
9310 Topanga Canyon Blvd.
Chatsworth, California 91311
(prior to the Commencement Date under the Lease)
or
Fibermux Corporation
21415 Plummer Street
Chatsworth, California 91311
(after the Commencement Date under the Lease)
With a copy to:
<PAGE>
ADC Telecommunications, Inc.
12501 Whitewater Drive
Minnetonka, Minnesota 55343
(Attn: Chief Financial Officer and Attn: General Counsel)
Any party may change the place that notices and demands are to be sent by
written notice delivered in accordance with this Agreement.
13. This Agreement shall be governed by the laws of the State of
California.
14. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Beneficiary:
GOVERNMENT OF SINGAPORE
INVESTMENT CORPORATION
(REALTY) PTE. LTD.
By_________________________________
Its___________________________
<PAGE>
Tenant:
ADC TELECOMMUNICATIONS, INC.,
a Minnesota corporation
By
--------------------------------
Its
-------------------------------
FIBERMUX CORPORATION,
a California corporation
By
--------------------------------
Steve Y. Kim, President
And By
---------------------------
Frederic T. Boyer, Chief
Financial Officer
Landlord:
GREENVILLE DALLAS DELAWARE, INC.
By
-------------------------------
Its
----------------------------
And By
---------------------------
Its
---------------------------
<PAGE>
State of California )
)SS.
County of Los Angeles )
On _____________________________, before me, _____________________________,
personally appeared Steve Y. Kim and Frederic T. Boyer, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signature on
the instrument the entity on behalf of which the persons acted executed the
instrument.
WITNESS my hand and official seal.
Signature:___________________________ (Seal)
State of California )
)SS.
County of Hennepin )
On ____________________________ , before me, ______________________________
personally appeared Steve Y. Kim and Frederic T. Boyer, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the entity on behalf of which the persons acted executed the
instrument.
WITNESS my hand and official seal.
Signature: ___________________________ (Seal)
<PAGE>
State of California )
)SS.
County of ____________ )
On ________________, before me, _________________________, personally
appeared ______________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the entity on behalf of which the persons acted executed the
instrument.
WITNESS my hand and official seal.
Signature: _________________________ (Seal)
<PAGE>
[Attach Singapore acknowledgment for Beneficiary]
<PAGE>
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE ("Memorandum") is made as of December 18,1992,
among GREENVILLE DALLAS DELAWARE, INC., a Delaware corporation ("Landlord"), and
ADC TELECOMMUNICATIONS, INC., a Minnesota corporation, and FIBERMUX CORPORATION,
a California corporation (collectively, "Tenant").
AGREEMENT:
For valuable consideration, Landlord and Tenant agree as follows:
1. PREMISES. Landlord has leased to Tenant and Tenant has leased from
Landlord the Premises as set forth in the Lease dated as of the date of this
Memorandum, between Landlord and Tenant ("Lease"), such Premises consisting of
the building known as 21415 Plummer Street, Chatsworth, California, and certain
parking areas. Such building and certain of such parking areas are situated,
together with the building known as 21605 Plummer Street, Chatsworth, California
and certain other parking areas, on the land legally described on attached
Exhibit A.
2. INCORPORATION OF LEASE TERMS. This Memorandum is made subject to and
together with all of the terms, covenants and conditions contained in the Lease
and any amendments that may be made from time to time to the Lease. All of the
terms, covenants and conditions of the Lease and any amendments that may be made
from time to time to the Lease are incorporated in this Memorandum by this
reference as fully as if they had been set forth in this Memorandum. All
capitalized words used in this Memorandum that are not defined in this
Memorandum have the definitions given them in the Lease.
3. TERM; EXTENSION RIGHTS. The term of the Lease will commence on the
Commencement Date as defined in the Lease and will end, unless sooner terminated
as provided in the Lease, on the last day of the 72nd month after the
Commencement Date; provided, however, that Tenant has the right to extend the
term for two (2) additional consecutive six year periods, as set forth in the
Lease.
4. OTHER RIGHTS. Tenant has expansion rights and rights of first offer
regarding the building known as 21605 Plummer Street and certain parking areas
on the land legally described on attached Exhibit A, all as set forth in the
Lease.
<PAGE>
EXECUTION:
Landlord and Tenant have executed this Memorandum of Lease as of the date
first written above.
LANDLORD:
GREENVILLE DALLAS DELAWARE,
INC., a Delaware corporation
By /s/ S. Bradford Child
-------------------------------
Its
-------------------------------
And By
---------------------------
Its
------------------------------
TENANT:
ADC TELECOMMUNICATIONS,
INC., a Minnesota corporation
By /s/ LeRoy J. Morgan
-------------------------------
Its Vice President
------------------------------
FIBERMUX CORPORATION, a
California corporation
By /s/ Steve Y. Kim
-------------------------------
Steve Y. Kim, President
And By /s/ Frederic T. Boyer,
---------------------------
Frederic T. Boyer, Chief
Financial Officer
<PAGE>
State of California )
)SS.
County of SAN MATEO )
-----------
On JAN 13, 1993 , before me, ANNE MOK personally
---------------- -----------------------------
appeared S BRADFORD CHILD , personally known to me to be the persons
--------------------------
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacities, and that by their
signatures on the instrument the entity on behalf of which the persons acted
executed the instrument.
WITNESS my hand and official seal.
Signature: Anne Mok (Seal)
-------------------------
State of Minnesota )
)SS.
County of Hennepin )
On ________________, before me, _____________________________ personally
appeared __________________________, personally known to me or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
entity on behalf of which the person acted executed the instrument.
WITNESS my hand and official seal.
Signature: _________________________ (Seal)
State of California )
)SS.
County of Los Angeles )
On 1-4-93 , before me, ____________________________ personally
----------------
appeared Steve Y. Kim and Frederic T. Boyer, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the
<PAGE>
same in their authorized capacities, and that by their signatures on the
instrument the entity on behalf of which the persons acted executed the
instrument.
WITNESS my hand and official seal.
Signature: /s/ Janice S. Parvin (Seal)
-------------------------
1-4-93
THIS INSTRUMENT WAS DRAFTED BY,
AND WHEN RECORDED RETURN TO:
Kenneth T. Tyra
Dorsey & Whitney
2200 First Bank Place East
Minneapolis, Minnesota 55402
<PAGE>
EXHIBIT A
Parcels B and C and the Southerly 111.5 of D of Parcel Map L.A. No. 5336, in the
City of Los Angeles, in the County of Los Angeles, State of California, as per
map filed in Book 168 Pages 61 and 62 of Parcel Maps, in the Office of the
County Recorder of Los Angeles, State of California.
Except 50 percent of all oil, gas, mineral, asphaltum and other hydrocarbon
substances underlying said property or that may be produced thereon or
therefrom, but without the right of entry above the depth of 500 feet below the
surface of said land, as reserved by Frank S. Lombardi, et al. in Deed recorded
March 1, 1956 in Book 50473 Page 258, Official Records.
<PAGE>
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of JANUARY 4 , 1993 among THE
---------------------
DEVELOPMENT BANK OF SINGAPORE LTD., NEW YORK AGENCY ("Beneficiary"), GREENVILLE
DALLAS DELAWARE, INC., a Delaware corporation ("Landlord"), ADC
TELECOMMUNICATIONS, INC., a Minnesota corporation, and FIBERMUX CORPORATION, a
California corporation (collectively, "Tenant").
WITNESSETH:
WHEREAS, Beneficiary is the beneficiary under that certain deed of
trust dated as of May 25,1989, recorded May 31, 1989 as Instrument
No. 89-878400, Official Records, Office of the County Recorder of Los Angeles,
State of California, (said deed of trust, as it may be amended, increased,
renewed, modified, consolidated, replaced, combined, substituted, severed,
split, spread or extended, being hereinafter referred to as the "Deed of
Trust"), between Beneficiary and the trustor described therein (predecessor in
interest to the Landlord described above), which encumbers the land and the
buildings located at 21415 and 21605 Plummer Street, Los Angeles, California,
and more particularly described therein (the "Property").
WHEREAS, Tenant and Landlord have entered into a certain Lease dated
December 18, 1992 (such Lease, as it may be hereafter amended from time to time
with the Beneficiary's consent, being referred to as the "Lease"), covering
certain premises (the "Demised Premises") in the Property.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Tenant covenants and agrees that the Lease now is and shall at all
times continue to be subject and subordinate in each and every respect to the
Deed of Trust. Tenant, upon request, shall execute and deliver any certificate
or other instrument which the Beneficiary may reasonably request to confirm said
subordination.
2. Tenant certifies that the Lease is presently in full force and effect
and unmodified and no base rent payable thereunder has been paid more than 1
(one) month in advance of its due date, and that no material default by Tenant
exists under the Lease which has continued beyond the expiration of any
applicable grace period.
<PAGE>
3. As long as Tenant is in compliance with the terms of this Agreement
and no default exists under the Lease which has continued beyond the expiration
of any applicable grace period, Beneficiary shall not name Tenant as a party
defendant to any action for foreclosure or other enforcement of the Deed of
Trust (unless required by law), nor shall the Lease be terminated by Beneficiary
in connection with, or by reason of, foreclosure or other proceedings for the
enforcement of the Deed of Trust, or by reason of a transfer of the landlord's
interest under the Lease pursuant to the taking of a deed or assignment in lieu
of foreclosure (or similar device), nor shall Beneficiary interfere with
Tenant's use or possession of the Demised Premises unless the holder of the
landlord's interest under the Lease (the "Landlord") would have had the right to
do so if the Deed of Trust had not been made, provided that the Person (as
defined in the Deed of Trust) acquiring, or succeeding to, the interests of the
Landlord as a result of any such action or proceeding, and such Person's
successors and assigns (any of the foregoing being hereinafter referred to as
the "Successor"), shall not be:
(a) subject to any credits, offsets, defenses or claims which Tenant may
have against any prior Landlord, except as permitted by the Lease or
by statute; or
(b) bound by base rent which Tenant might have paid for more than the
current month to any prior Landlord, unless such prepayment shall
have been made with Beneficiary's prior written consent; or
(c) liable for any act or omission of any prior Landlord; or
(d) bound by any covenant to undertake or complete any improvement to the
Demised Premises or the building forming a part of the Property
except as expressly required of the Landlord pursuant to the Lease;
or
(e) required to account for any security deposit other than any security
deposit actually delivered to the Successor; or
(f) liable for any payment to Tenant of any sums, or the granting to
Tenant of any credit, in the nature of a contribution towards the
cost of preparing, furnishing or moving into the Demised Premises or
any portion thereof except as expressly required of the Landlord
pursuant to the Lease.
4. If the interest of the Landlord under the Lease shall be transferred
by reason of foreclosure or other proceedings for enforcement of the Deed of
Trust or pursuant to a taking of a deed in lieu of foreclosure (or similar
device), Tenant shall be bound to the Successor under all of the terms,
covenants and conditions of the Lease for the balance of the term thereof
remaining, with the same force and effect as if the Successor were the Landlord,
and Tenant hereby does (a) agree to attorn to the Successor, including
Beneficiary if it be the Successor, as its Landlord, (b) affirm
<PAGE>
its obligations under the Lease, and (c) agree to make payments of all sums due
under the Lease to the Successor, said attornment, affirmation and agreement to
be effective and self-operative without the execution of any further
instruments, upon the Successor succeeding to the interest of the Landlord under
the Lease. Tenant waives the provisions of any statute or rule of law now or
hereafter in effect that may give or purport to give it any right or election to
terminate or otherwise adversely affect the Lease or the obligations of Tenant
thereunder by reason of any foreclosure or similar proceeding.
5. Tenant shall not change the terms, covenants, conditions and
agreements of the Lease in a manner which materially reduces the rent or other
charges payable or space demised thereunder or has a material adverse effect
upon the value of the landlord's interest thereunder without the express consent
in writing of the Beneficiary.
6. Tenant shall notify Beneficiary of any default of the Landlord under
the Lease which would entitle Tenant to cancel the Lease or abate the rent or
any additional rent payable thereunder, and agrees that Beneficiary shall have
the same rights to cure any such default as are afforded to the Landlord under
the Lease.
7. Anything herein or in the Lease to the contrary notwithstanding, in
the event that Beneficiary shall acquire title to the Property, Beneficiary
shall have no obligation, nor incur any liability, beyond Beneficiary's then
interest, if any, in the Property and Tenant shall look exclusively to such
interest of Beneficiary, if any, in the Property for the payment and discharge
of any obligations imposed upon Beneficiary hereunder or under the Lease and
Beneficiary is hereby released or relieved of any other liability hereunder and
under the Lease. Tenant agrees that with respect to any money judgment which
may be obtained or secured by Tenant against Beneficiary, Tenant shall look
solely to the estate or interest owned by Beneficiary in the Property and Tenant
will not collect or attempt to collect any such judgment but of any other assets
of Beneficiary.
8. Tenant acknowledges that it has notice that Landlord's interest under
the Lease and the rent and all other sums due thereunder have been assigned to
Beneficiary as part of the security for the note secured by the Deed of Trust.
In the event that Beneficiary notifies Tenant of a default under the Deed of
Trust and demands that Tenant pay its rent and all other sums due under the
Lease to Beneficiary, Tenant and Landlord agree that Tenant shall pay its rent
and all other sums due under the Lease to Beneficiary.
9. This Agreement may not be modified except by an agreement in writing
signed by the parties or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns.
<PAGE>
10. Nothing contained in this Agreement shall in any way impair or affect
the lien created by the Deed of Trust except as specifically set forth herein.
11. The Tenant agrees that this Agreement satisfied any condition or
requirement in the Lease relating to the granting of a non-disturbance agreement
by Beneficiary. Tenant further agrees that in the event there is any
inconsistency between the terms and provisions hereof and the terms and
provisions of the Lease dealing with non-disturbance by Beneficiary, the terms
and provisions hereof shall be controlling.
12. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement, must be in writing and mailed to the party to whom the
notice, demand or request is being made by certified or registered mail. For
such purposes, the addresses of the parties shall be as follows:
IF TO BENEFICIARY:
The Development Bank of Singapore, New York Agency
---------------------------------
---------------------------------
---------------------------------
IF TO LANDLORD:
Greenville Dallas Delaware, Inc.
c/o GSIC Realty Corporation
255 Shoreline Drive
Suite 600
Redwood City, California 94065
IF TO TENANT:
Fibermux Corporation
9310 Topanga Canyon Blvd.
Chatsworth, California 91311
(prior to the Commencement Date under the Lease)
or
Fibermux Corporation
21415 Plummer Street
Chatsworth, California 91311
(after the Commencement Date under the Lease)
<PAGE>
With a copy to:
ADC Telecommunications, Inc.
12501 Whitewater Drive
Minnetonka, Minnesota 55343
(Attn: Chief Financial Officer and Attn: General Counsel)
Any party may change the place that notices and demands are to be sent by
written notice delivered in accordance with this Agreement.
13. This Agreement shall be governed by the laws of the State of
California.
14. If any term of this Agreement or the application thereof to any
person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of such term to any person or
circumstances other than those as to which it is invalid or unenforceable shall
not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Beneficiary:
THE DEVELOPMENT BANK OF
SINGAPORE, NEW YORK AGENCY
By _______________________________
Its ____________________________
<PAGE>
Tenant:
ADC TELECOMMUNICATIONS,
INC., a Minnesota corporation
By /s/ LeRoy J. Morgan
-------------------------------
Its Vice President
------------------------------
FIBERMUX CORPORATION, a
California corporation
By /s/ Steve Y. Kim
-------------------------------
Steve Y. Kim, President
And By /s/ Frederic T. Boyer
---------------------------
Frederic T. Boyer, Chief
Financial Officer
Landlord:
GREENVILLE DALLAS DELAWARE,
INC.
By /s/ S Bradford Child
-------------------------------
Its ____________________________
And By ___________________________
Its ____________________________
<PAGE>
State of California )
)SS.
County of Los Angeles )
On 1-4-93 , before me, ____________________________, personally
----------------
appeared Steve Y. Kim and Frederic T. Boyer, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the entity on behalf of which the persons acted executed the
instrument.
WITNESS my hand and official seal.
Signature: /s/ Janice S. Parvin (Seal)
-------------------------
State of Minnesota )
)SS.
County of Hennepin )
On ________________, before me, _____________________________, personally
appeared __________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the entity on
behalf of which the person acted executed the instrument.
WITNESS my hand and official seal.
Signature: _________________________ (Seal)
<PAGE>
State of California )
)SS.
County of SAN MATEO )
-----------
On JAN 13, 1993 , before me, ANNE MOK , personally
---------------- -----------------------------
appeared S. BRADFORD CHILD , personally known to me to be the persons
--------------------------
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacities, and that by their
signatures on the instrument the entity on behalf of which the persons acted
executed the instrument.
WITNESS my hand and official seal.
Signature: Anne Mok (Seal)
-------------------------
<PAGE>
[Attach Singapore acknowledgment for Beneficiary]
<PAGE>
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of JANUARY 4 , 1993 among
--------------------- --
GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION (REALTY) PTE. LTD., a Singapore
corporation ("Beneficiary"), GREENVILLE DALLAS DELAWARE, INC., a Delaware
corporation ("Landlord"), ADC TELECOMMUNICATIONS, INC., a Minnesota corporation,
and FIBERMUX CORPORATION, a California corporation (collectively, "Tenant").
WITNESSETH:
WHEREAS, Beneficiary is the beneficiary under that certain deed of
trust dated as of October 3, 1986, recorded January 26, 1988 as Instrument No.
88-109752, Official Records, Office of the County Recorder of Los Angeles, State
of California (said deed of trust, as it may be amended, increased, renewed,
modified, consolidated, replaced, combined, substituted, severed, split, spread
or extended, being hereinafter referred to as the "Deed of Trust"), between
Beneficiary and the trustor described therein (predecessor in interest to the
Landlord described above), which encumbers the land and the buildings located at
21415 and 21605 Plummer Street, Los Angeles, California, and more particularly
described therein (the "Property").
WHEREAS, Tenant and Landlord have entered into a certain Lease dated
December 18, 1992 (such Lease, as it may be hereafter amended from time to time
with the Beneficiary's consent, being referred to as the "Lease"), covering
certain premises (the "Demised Premises") in the Property.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Tenant covenants and agrees that the Lease now is and shall at all
times continue to be subject and subordinate in each and every respect to the
Deed of Trust. Tenant, upon request, shall execute and deliver any certificate
or other instrument which the Beneficiary may reasonably request to confirm said
subordination.
2. Tenant certifies that the Lease is presently in full force and effect
and unmodified and no base rent payable thereunder has been paid more than 1
(one) month in advance of its due date, and that no material default by Tenant
exists under the Lease which has continued beyond the expiration of any
applicable grace period.
<PAGE>
3. As long as Tenant is in compliance with the terms of this Agreement
and no default exists under the Lease which has continued beyond the expiration
of any applicable grace period, Beneficiary shall not name Tenant as a party
defendant to any action for foreclosure or other enforcement of the Deed of
Trust (unless required by law), nor shall the Lease be terminated by Beneficiary
in connection with, or by reason of, foreclosure or other proceedings for the
enforcement of the Deed of Trust, or by reason of a transfer of the landlord's
interest under the Lease pursuant to the taking of a deed or assignment in lieu
of foreclosure (or similar device), nor shall Beneficiary interfere with
Tenant's use or possession of the Demised Premises unless the holder of the
landlord's interest under the Lease (the "Landlord") would have had the right to
do so if the Deed of Trust had not been made, provided that the Person (as
defined in the Deed of Trust) acquiring, or succeeding to, the interests of the
Landlord as a result of any such action or proceeding, and such Person's
successors and assigns (any of the foregoing being hereinafter referred to as
the "Successor"), shall not be:
(a) subject to any credits, offsets, defenses or claims which Tenant may
have against any prior Landlord, except as permitted by the Lease or
by statute; or
(b) bound by base rent which Tenant might have paid for more than the
current month to any prior Landlord, unless such prepayment shall
have been made with Beneficiary's prior written consent; or
(c) liable for any act or omission of any prior Landlord; or
(d) bound by any covenant to undertake or complete any improvement to the
Demised Premises or the building forming a part of the Property
except as expressly required of the Landlord pursuant to the Lease;
or
(e) required to account for any security deposit other than any security
deposit actually delivered to the Successor; or
(f) liable for any payment to Tenant of any sums, or the granting to
Tenant of any credit, in the nature of a contribution towards the
cost of preparing, furnishing or moving into the Demised Premises or
any portion thereof except as expressly required of the Landlord
pursuant to the Lease.
4. If the interest of the Landlord under the Lease shall be transferred
by reason of foreclosure or other proceedings for enforcement of the Deed of
Trust or pursuant to a taking of a deed in lieu of foreclosure (or similar
device), Tenant shall be bound to the Successor under all of the terms,
covenants and conditions of the Lease for the balance of the term thereof
remaining, with the same force and effect as if the Successor were the Landlord,
and Tenant hereby does (a) agree to attorn to
<PAGE>
the Successor, including Beneficiary if it be the Successor, as its Landlord,
(b) affirm its obligations under the Lease, and (c) agree to make payments of
all sums due under the Lease to the Successor, said attornment, affirmation and
agreement to be effective and self-operative without the execution of any
further instruments, upon the Successor succeeding to the interest of the
Landlord under the Lease. Tenant waives the provisions of any statute or rule
of law now or hereafter in effect that may give or purport to give it any right
or election to terminate or otherwise adversely affect the Lease or the
obligations of Tenant thereunder by reason of any foreclosure or similar
proceeding.
5. Tenant shall not change the terms, covenants, conditions and
agreements of the Lease in a manner which materially reduces the rent or other
charges payable or space demised thereunder or has a material adverse effect
upon the value of the landlord's interest thereunder without the express consent
in writing of the Beneficiary.
6. Tenant shall notify Beneficiary of any default of the Landlord under
the Lease which would entitle Tenant to cancel the Lease or abate the rent or
any additional rent payable thereunder, and agrees that Beneficiary shall have
the same rights to cure any such default as are afforded to the Landlord under
the Lease.
7. Anything herein or in the Lease to the contrary notwithstanding, in
the event that Beneficiary shall acquire title to the Property, Beneficiary
shall have no obligation, nor incur any liability, beyond Beneficiary's then
interest, if any, in the Property and Tenant shall look exclusively to such
interest of Beneficiary, if any, in the Property for the payment and discharge
of any obligations imposed upon Beneficiary hereunder or under the Lease and
Beneficiary is hereby released or relieved of any other liability hereunder and
under the Lease. Tenant agrees that with respect to any money judgment which
may be obtained or secured by Tenant against Beneficiary, Tenant shall look
solely to the estate or interest owned by Beneficiary in the Property and Tenant
will not collect or attempt to collect any such judgment but of any other assets
of Beneficiary.
8. Tenant acknowledges that it has notice that Landlord's interest under
the Lease and the rent and all other sums due thereunder have been assigned to
Beneficiary as part of the security for the note secured by the Deed of Trust.
In the event that Beneficiary notifies Tenant of a default under the Deed of
Trust and demands that Tenant pay its rent and all other sums due under the
Lease to Beneficiary, Tenant and Landlord agree that Tenant shall pay its rent
and all other sums due under the Lease to Beneficiary.
9. This Agreement may not be modified except by an agreement in writing
signed by the parties or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns.
<PAGE>
10. Nothing contained in this Agreement shall in any way impair or affect
the lien created by the Deed of Trust except as specifically set forth herein.
11. The Tenant agrees that this Agreement satisfied any condition or
requirement in the Lease relating to the granting of a non-disturbance agreement
by Beneficiary. Tenant further agrees that in the event there is any
inconsistency between the terms and provisions hereof and the terms and
provisions of the Lease dealing with non-disturbance by Beneficiary, the terms
and provisions hereof shall be controlling.
12. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement, must be in writing and mailed to the party to whom the
notice, demand or request is being made by certified or registered mail. For
such purposes, the addresses of the parties shall be as follows:
IF TO BENEFICIARY:
Government of Singapore Investment Corporation (Realty) Pte. Ltd
---------------------------------
---------------------------------
---------------------------------
IF TO LANDLORD:
Greenville Dallas Delaware, Inc.
c/o GSIC Realty Corporation
255 Shoreline Drive
Suite 600
Redwood City, California 94065
IF TO TENANT:
Fibermux Corporation
9310 Topanga Canyon Blvd.
Chatsworth, California 91311
(prior to the Commencement Date under the Lease)
or
Fibermux Corporation
21415 Plummer Street
Chatsworth, California 91311
(after the Commencement Date under the Lease)
With a copy to:
<PAGE>
ADC Telecommunications, Inc.
12501 Whitewater Drive
Minnetonka, Minnesota 55343
(Attn: Chief Financial Officer and Attn: General Counsel)
Any party may change the place that notices and demands are to by sent by
written notice delivered in accordance with this Agreement.
13. This Agreement shall be governed by the laws of the State of
California.
14. If any term of this Agreement or the application thereof to any
person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of such term to any person or
circumstances other than those as to which it is invalid or unenforceable shall
not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Beneficiary:
GOVERNMENT OF SINGAPORE
INVESTMENT CORPORATION
(REALTY) PTE. LTD.
By _______________________________
Its ____________________________
<PAGE>
Tenant:
ADC TELECOMMUNICATIONS,
INC., a Minnesota corporation
By /s/ LeRoy J. Morgan
-------------------------------
Its Vice President
------------------------------
FIBERMUX CORPORATION, a
California corporation
By /s/ Steve Y. Kim
-------------------------------
Steve Y. Kim, President
And By /s/ Frederic T. Boyer
---------------------------
Frederic T. Boyer, Chief
Financial Officer
Landlord:
GREENVILLE DALLAS DELAWARE,
INC.
By /s/ S. Bradford Child
-------------------------------
Its ____________________________
And By ___________________________
Its ____________________________
<PAGE>
State of California )
)SS.
County of Los Angeles )
On 1-4-93 , before me, ____________________________, personally
----------------
appeared Steve Y. Kim and Frederic T. Boyer, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the persons whose names are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacities, and that by their signatures on the
instrument the entity on behalf of which the persons acted executed the
instrument.
WITNESS my hand and official seal.
Signature: /s/ Janice S. Parvin (Seal)
-------------------------
State of Minnesota )
)SS.
County of Hennepin )
On ________________, before me, _____________________________, personally
appeared __________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the entity on
behalf of which the person acted executed the instrument.
WITNESS my hand and official seal.
Signature: _________________________ (Seal)
<PAGE>
State of California )
)SS.
County of SAN MATEO )
-----------
On JAN 13, 1993 , before me, ANNE MOK , personally
---------------- -----------------------------
appeared S. BRADFORD CHILD , personally known to me to be the persons
--------------------------
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacities, and that by their
signatures on the instrument the entity on behalf of which the persons acted
executed the instrument.
WITNESS my hand and official seal.
Signature: Anne Mok (Seal)
-------------------------
<PAGE>
Exhibit 10-cc
LEASE AGREEMENT
KRAUS-ANDERSON
<PAGE>
TABLE OF CONTENTS
ARTICLE DESCRIPTION PAGE
------ ----------- ----
1 Premises and Term . . . . . . . . . . . . . . . . . . . 1
2 Preparation of Leased Premises. . . . . . . . . . . . . 1
3 Minimum Rent. . . . . . . . . . . . . . . . . . . . . . 1
4 Percentage Rent . . . . . . . . . . . . . . . . . . . . 2
5 Sales Reports . . . . . . . . . . . . . . . . . . . . . 3
6 Common Areas and Common Area Expenditures . . . . . . . 3
7 Use . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8 Utilities . . . . . . . . . . . . . . . . . . . . . . . 5
9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 5
10 Repairs . . . . . . . . . . . . . . . . . . . . . . . . 6
11 Installations, Alterations and Signs. . . . . . . . . . 6
12 Indemnity . . . . . . . . . . . . . . . . . . . . . . . 7
13 Insurance . . . . . . . . . . . . . . . . . . . . . . . 7
14 Fire or Other Casualty. . . . . . . . . . . . . . . . . 8
15 Eminent Domain. . . . . . . . . . . . . . . . . . . . . 8
16 Assignment and Subletting . . . . . . . . . . . . . . . 9
17 Access to Premises. . . . . . . . . . . . . . . . . . . 9
18 Remedies. . . . . . . . . . . . . . . . . . . . . . . . 9
19 Surrender of Possession . . . . . . . . . . . . . . . .10
20 Subordination . . . . . . . . . . . . . . . . . . . . .11
21 Notices . . . . . . . . . . . . . . . . . . . . . . . .11
22 Consents. . . . . . . . . . . . . . . . . . . . . . . .11
23 Merchants' Association. . . . . . . . . . . . . . . . .11
24 Offset Statement. . . . . . . . . . . . . . . . . . . .12
25 Title . . . . . . . . . . . . . . . . . . . . . . . . .12
26 General . . . . . . . . . . . . . . . . . . . . . . . .12
Signatures. . . . . . . . . . . . . . . . . . . . . . .14
EXHIBIT A Shopping Center Site Plan
EXHIBIT B Shopping Center Legal Description
EXHIBIT C Plans and Specifications
EXHIBIT D Additional Provisions
EXHIBIT E Sign Criteria
<PAGE>
KRAUS-ANDERSON
SHOPPING CENTER LEASE AGREEMENT
THIS LEASE, Made this 2nd day of August 19 93 , by and between
------- ---------- ----
Engelsma Limited Partnership, a Minnesota limited partnership at 523 South
- ----------------------------------------------------------------
Eighth Street, Minneapolis, Minnesota 55404, sometimes hereinafter called
"LANDLORD", and ADC Telecommunications, Inc., a Minnesota corporation, at 4900
---------------------------------------------------------------
W. 78th St., Minneapolis, Minnesota 55435 , hereinafter called "TENANT".
- -------------------------------------------
ARTICLE 1
PREMISES AND SECTION 1. LANDLORD hereby leases to TENANT, and TENANT hereby
TERM: leases from LANDLORD, the store unit shown outlined in red on
Exhibit A, attached hereto and made a part hereof. (The premises
outlined in red are hereafter called the "leased premises" and
contain approximately 4,000 square feet.) Said store unit is
---------
situated in the City of Waseca , County of Waseca ,
----------------------------- ----------
and State of Minnesota , located in the Northridge Plaza
--------------- -------------------
Shopping Center, which shopping center is located on land
legally described in Exhibit B attached hereto and made a part
of hereof. The shopping center name is subject to change by
LANDLORD.
SECTION 2. To Have And To Hold the leased premises unto TENANT
for a term of SEE EXHIBIT D years commencing on --- day of
---------------- -----,
--- , 19 -- , and ending on the -- day of
------------------- ---- -----
-- , unless sooner terminated as hereinafter
-------------------
provided.
SECTION 3. In the event the leased premises should not be ready
for occupancy or LANDLORD for any reason is unable to deliver
possession thereof by the commencement date of this lease,
LANDLORD shall not be liable nor responsible for any claims,
damages or liabilities in connection therewith or by reason
thereof and this lease shall remain in full force and effect.
TENANT shall not be liable for rent until LANDLORD delivers
possession of the leased premises to TENANT, but the term shall
not be extended by the delay.
ARTICLE 2
PREPARATION SECTION 1. TENANT takes and accepts the leased premises in their
OF LEASED "as is" condition. "As is" shall mean in tenantable condition so
PREMISES: that the lights, front and rear doors, HVAC, plumbing, water
heater, exhaust fans and roll gates (all as applicable) are in
working or operating condition. Taking of possession of the
leased premises by TENANT shall be conclusive evidence that the
leased premises were, on that date, in good, clean and
tenantable condition as represented by LANDLORD. TENANT
acknowledges that no representations as to the repair of the
leased premises or promises to alter, remodel or improve the
leased premises have been made by LANDLORD.
ARTICLE 3
MINIMUM RENT: SECTION 1. The fixed annual minimum rent shall be payable by
TENANT in equal monthly installments, on or before the first day
of each month in advance, at the office of LANDLORD or at such
other place designated by LANDLORD without prior demand
therefore. Said fixed annual minimum rent shall be Thirteen
------------
Thousand Three Hundred Twenty and No/100 Dollars
-------------------------------------------------------
($13,320.00) payable One Thousand One Hundred Ten and
------------------- -----------------------------------
No/100 Dollars ($1,110.00) per month. Minimum
----------------- -----------------
rent for any partial month at the beginning of the lease term
shall be equitably prorated, and is payable on the commencement
date of the lease term.
SECTION 2. On execution of this lease, TENANT shall pay
$ 2,220.00 to LANDLORD. $ 1,110.00 of the sum shall be the
----------- ------------
minimum monthly rent due for the first full month of the term.
If TENANT is not in default of any of the provisions of this
Lease, $ 1,110.00 of the sum shall be applied toward the
------------
minimum monthly rent due for the last month of the term.
1
<PAGE>
SECTION 3. TENANT waives and disclaims any present or future
right to withhold any rent payment or other payment due under
this lease, or to set off any obligation of LANDLORD against any
such payment, however incurred, and agrees that it will not
claim or assert any right to so withhold or setoff.
SECTION 4. All rental and other sums payable hereunder by TENANT
which are not paid when due shall bear interest from the date
due to the date paid at the rate of eighteen percent (18%) per
annum or the highest rate permitted by law, whichever is less.
In addition to the above, TENANT shall pay LANDLORD a $25.00
service charge for all monthly minimum rent payments not paid by
the 10th day of the month for which they are payable. Said
$25.00 charge is a service charge to cover extra expense
involved in collecting and handling delinquent payments.
ARTICLE 4
(text deleted)
2
<PAGE>
ARTICLE 5
(text deleted)
ARTICLE 6
COMMON AREAS SECTION 1. The term "common areas" shall mean all that portion
AND COMMON of shopping center improvements excepting only that area which
AREA is constructed for lease to tenants or hereafter leased to
EXPENDITURES: tenants. LANDLORD has made no representation as to identity,
type, size or number of other stores or tenancies in the
shopping center, and LANDLORD reserves the unrestricted right to
change the design or size of the building, the driveways,
parking areas, and identity and type of other stores or
tenancies and add buildings and other structures provided only
that the size of the leased premises, reasonable access to the
leased premises and minimum parking facilities as required by
governmental authorities having jurisdiction, shall not be
substantially or materially impaired, subject to the provisions
of Article 15 hereof.
SECTION 2. LANDLORD grants to TENANT, its employees, customers
and invitees, the nonexclusive right during the term of this
lease to use the common areas from time to time constructed,
such use to be common with LANDLORD and all tenants of LANDLORD,
its and their employees, customers, and invitees. TENANT shall
not at any time interfere with the rights of LANDLORD and other
tenants, its and their employees, customers and invitees, to use
any part of the common areas. It is understood and agreed that
LANDLORD may contract for mutual easement rights with adjoining
landowners who shall thereafter along with their employees,
customers, and invitees use the common areas in common with
LANDLORD, TENANT and all tenants of LANDLORD, and their
employees, customers, and invitees to the extent of the
adjoining landowners' contract rights.
SECTION 3. LANDLORD agrees to manage, operate and maintain all
common areas and common facilities within the common areas of
the shopping center. The manner in which such areas and
facilities shall be maintained and the expenditures therefor
shall be at the sole discretion of LANDLORD, who shall have the
right to adopt and promulgate reasonable nondiscriminatory rules
and regulations, from time to time, including the right to
designate parking areas for the use of employees of tenants of
the shopping center and to restrict such employees from parking
areas designated exclusively for customers. Upon reasonable
request by LANDLORD, TENANT shall furnish a complete list of the
name of the TENANT's employees at the leased premises who have
automobiles and of the
3
<PAGE>
license numbers of their automobiles and the license numbers of
all motor vehicles operated by TENANT. LANDLORD shall have the
right to use portions of the common areas for the purpose of
displays, promotions, programs, games, or other uses which may
be of interest to all or part of the general public. LANDLORD
shall have the right to close portions of the common areas from
time to time for repairs, to prevent accruing of public rights
therein and for any other legitimate purpose.
SECTION 4. TENANT agrees to pay as additional rent TENANT's
proportionate share of all expenditures incurred by LANDLORD in
managing, maintaining, repairing, replacing, operating,
insuring, securing, lighting and cleaning the common areas
including, but not limited to, the cost of snow removal, line
and exterior painting, insurance of employees, traffic
regulation, security patrols and security guards for the entire
shopping center, replacement of paving, curbs, sidewalks,
landscaping, drainage, roof and lighting facilities, and
including the cost of heating and air conditioning the shopping
center enclosed mall and walkway areas, if any, (plus fifteen
percent (15%) of the total of the foregoing for overhead) in
monthly payments with the monthly rent payments. TENANT's
proportionate share of such costs shall be based on the
proportion the total square foot area on the ground floor in the
leased premises bears to the total square foot rentable area on
the ground floor in the shopping center. The monthly payments
may be based on LANDLORD's reasonable estimate of the costs
subject hereto made at the beginning of each lease year. At the
end of each lease year, LANDLORD shall furnish a statement of
all costs subject hereto and TENANT's share thereof certified to
by LANDLORD. If, at the end of any lease year, the amount paid
by TENANT is greater than its share as shown on said statement,
the excess shall be credited against the next rent payments due
hereunder. If at the end of any lease year, the amount paid by
TENANT is less than its share as shown on said statement, the
deficiency shall be payable with the next monthly minimum rent
payment due hereunder.
ARTICLE 7
USE: SECTION 1. The leased premises may be used for only office use
------------
for the development and engineering of devices in the
----------------------------------------------------------------
telecommunications industry (subject always to the
----------------------------------------
provisions of Section 2 of this Article 7) and for no other
purpose without the written consent of LANDLORD. TENANT agrees
to occupy the leased premises upon the commencement date of the
term hereof and to operate the entire leased premises during the
term of this lease unless prevented from doing so by strikes,
damage to the premises or other similar cause beyond the
TENANT's control, and to conduct its business at all times in
good faith, in a high grade and reputable manner. TENANT shall
conduct its business in the leased premises during the regular
customary days and hours for such type of business in the city
or trade area in which the shopping center is located. TENANT
shall promptly comply with all laws, ordinances and regulations
affecting the leased premises or TENANT's business therein, plus
insurance company requirements affecting the cleanliness,
safety, use and occupation of the leased premises.
SECTION 2. TENANT shall not, without LANDLORD's prior written
consent, conduct any auction, fire, closing-out or bankruptcy
sales in or about the leased premises nor obstruct the common
areas or use the same for business or display purposes, nor
abuse the building, other improvements, fixtures or personal
property constituting the shopping center (including, without
limitation, walls, ceilings, partitions, floors and wood, stone
and iron work), nor use plumbing for any purpose other than that
for which constructed, nor make or permit any noise or odor
objectionable to the public, to other occupants of the building
or the LANDLORD to emit from the leased premises; nor create,
maintain or permit a nuisance thereon; nor do any act tending to
injure the reputation of the shopping center; nor without
LANDLORD's prior written consent, place or permit any radio or
television antenna, loud speaker or sound amplifier, or any
phonograph or other devices similar to any of the foregoing
outside of the leased premises or at any place where the same
may be seen or heard outside of the leased premises; nor, where
loading and delivery facilities are provided, use or permit to
be used entrances for delivery or pick-up of merchandise or
supplies to or from the leased premises, or permit trucks or
other delivery vehicles while being used for any such purpose to
be parked at any place within the shopping center except such
facilities as are specifically provided for such purpose. TENANT
shall not permit any blinking or flashing light to emit from the
leased premises. TENANT shall keep the leased premises and
loading platform areas allowed for the use of TENANT, clean and
free from rubbish and dirt at all times, and shall store all
trash and garbage within the leased premises and will make the
same available for regular pick-up which TENANT will arrange at
the TENANT's expense. TENANT shall not burn any trash or garbage
at any time in or about the shopping center.
4
<PAGE>
SECTION 3. (text deleted)
SECTION 4. LANDLORD reserves the right, without liability to
TENANT, to refuse admission to the shopping center and the
leased premises outside ordinary business hours to any person
who is not known to any watchman in charge, or who is not
properly identified, to eject any person from the shopping
center whose conduct may be harmful to the safety and interest
of shopping center tenants or to close any part of the shopping
center during any riot or other commotion where person or
property may be imperiled.
SECTION 5. TENANT shall use the shopping center name as its
advertised address when referring to its business in the leased
premises in newspaper and other advertising. The right to use
such name for such purpose for the term of this lease is hereby
licensed by LANDLORD to TENANT. LANDLORD retains all property
rights in such name and TENANT shall not acquire or have any
rights in or to such name other than as are expressly granted by
LANDLORD in this Section 5 or otherwise in writing.
ARTICLE 8
UTILITIES: SECTION 1. TENANT shall pay for all heating, air conditioning,
electricity, gas, water and sewer charges used in the leased
premises throughout the term of this lease.
SECTION 2. If TENANT receives utilities through a meter which
utilities are also supplied to other tenants of the shopping
center, then TENANT shall pay to LANDLORD as additional rent a
sum equivalent to its proportionate share of the total utility
meter charge as TENANT'S portion thereof. TENANT shall pay
LANDLORD, as additional rent, along with TENANT'S payment of
monthly rent a sum equivalent to TENANT'S consumption of said
services as computed by LANDLORD.
SECTION 3. TENANT agrees to keep the air conditioning and
heating systems operating during business hours at levels
sufficient to satisfy the requirements of the leased premises
and that it will not at any time obtain or seek to obtain any
such conditioned or heated air by methods or means which would
draw such conditioned or heated air from the air conditioned and
heated shopping center enclosed mall and walkway areas, if any.
SECTION 4. LANDLORD shall not be liable in damages or otherwise
if the furnishings by LANDLORD or by any other supplier of any
utility or other service to the leased premises shall be
interrupted or impaired by fire, repairs, accident, or by any
causes beyond LANDLORD's reasonable control.
SECTION 5. In compliance with the Federal Energy Policy and
Conservation Act of 1975, LANDLORD has provided within the
leased premises a heating and air conditioning system capable of
maintaining a summer indoor condition of 78 DEG. F, and a winter
indoor condition of 65 DEG. F, such temperatures to be taken
approximately two (2) feet away from any wall.
ARTICLE 9
TAXES: SECTION 1. LANDLORD shall pay all real property taxes and
installments of special assessments payable therewith on the
shopping center land and improvements payable during the lease
term and rental taxes on rentals levied during the term hereof
upon the rentals from the leased premises. TENANT shall
reimburse LANDLORD for TENANT's share of such payments of real
property taxes and installments of special assessments. TENANT's
share of such costs shall be based on the ratio that the total
square foot floor area on the ground floor in the leased
premises bears to the total square foot rentable floor area on
the ground floor in the shopping center except buildings
separately taxed or assessed for which such taxes and
assessments are directly allocated to their tenants. TENANT
shall also reimburse LANDLORD for rental taxes, and gross
receipts taxes, if any, paid by LANDLORD on rentals from the
leased premises. One-twelfth of a full year's taxes,
installments of which are next payable, shall be payable on the
first day of each month and added to the monthly rental. This
amount may be based on LANDLORD's reasonable estimate until the
actual tax amounts are available and when available an
adjustment shall be made and any difference shall be payable
based on TENANT's actual share as determined. TENANT's share of
such taxes payable in the first and last calendar year of the
lease term shall be equitably prorated based on the portion of
the year included in the lease term. TENANT shall pay all
personal property and similar taxes on its property in the
leased premises.
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ARTICLE 10
REPAIRS: SECTION 1. LANDLORD shall keep the foundations, exterior walls
(except plate glass or glass or other special breakable
materials used in structural portions) and roof in good repair,
and (whether or not necessary or required by proper governmental
authority) make modifications or replacements thereof, except
that LANDLORD shall not be required to make any such repairs,
modifications or replacements which become necessary or
desirable by reason of the negligence of TENANT, its agents,
servants or employees.
SECTION 2. (text deleted)
SECTION 3. Except as provided in Section 1 and 2 of this
Article, the LANDLORD shall have the right at TENANT's cost and
expense but shall not be obliged to make repairs, replacements
or improvements of any kind upon the leased premises, or any
equipment, facilities or fixtures therein contained, including
heating and air conditioning equipment or other equipment
serving only the leased premises even if located outside the
leased premises, which at all times TENANT shall repair, replace
and keep in good order and in a clean, sanitary and safe
condition, ordinary wear and tear excepted, in accordance with
all applicable laws, ordinances and regulations of any
governmental authority having jurisdiction. If LANDLORD
exercises its rights pursuant to this Section 3, TENANT shall
reimburse LANDLORD for costs and expenses incurred hereunder
upon demand. TENANT shall permit no waste, damage or injury to
the leased premises.
SECTION 4. TENANT shall forthwith at its own cost and expense
replace with glass of the same quality any cracked or broken
glass, including plate glass or glass or other special breakable
materials used in structural portions, and any interior and
exterior windows and doors in the leased premises. If
specifically required by LANDLORD, TENANT shall maintain a
policy or policies in acceptable companies insuring LANDLORD and
TENANT, as their interests may appear, against breakage of all
such glass in the leased premises.
ARTICLE 11
INSTALLATIONS, SECTION 1. TENANT, at its own expense, shall purchase, install
ALTERATIONS and maintain in good condition its trade fixtures and floor
AND SIGNS: covering, and all interior wall coverings and decorating.
SECTION 2. TENANT shall not make any repairs, alterations or
additions to the leased premises or make any contract therefor
without first procuring LANDLORD's written consent and
delivering to LANDLORD the plans and specifications and copies
of the proposed contracts and necessary permits, and shall
furnish indemnification against liens, costs, damages and
expenses as LANDLORD may require. All alterations, additions,
improvements and fixtures, other than trade fixtures, which may
be made or installed by either of the parties hereto upon the
leased premises and which in any manner are attached to the
floors, walls or ceiling shall, at the termination of the lease,
become the property of LANDLORD, and shall remain upon and be
surrendered with the leased premises as a part thereof, without
damage or injury; any floor covering affixed to the floor or
track lighting affixed to the ceiling shall likewise become the
property of LANDLORD, all without compensation or credit to
TENANT. All fixtures installed by TENANT shall be new or
completely reconditioned. SEE EXHIBIT D.
SECTION 3. TENANT shall promptly pay all contractors and
materialmen, so as to avoid the possibility of a lien attaching
to the leased premises, and should any lien be made or filed,
TENANT shall bond against or discharge the same within ten (10)
days after written request by LANDLORD. Nothing in this lease
contained shall be construed as a consent on the part of the
LANDLORD so as to subject the LANDLORD's estate in the leased
premises to any lien or liability under the lien laws of the
State in which the leased premises are located.
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SECTION 4. Except to the extent permitted by LANDLORD's Sign
Criteria on Exhibit E hereto, TENANT shall not erect or install
any exterior window or door signs, advertising media or window
lettering or placards or other signs or install any interior
window or door signs, advertising media or window or door
lettering or placards or other signs without LANDLORD's prior
written consent. TENANT shall not install any exterior light or
plumbing fixtures, shades or awnings, or make any exterior
decoration or painting, or build any fence, or make any changes
to the store front without LANDLORD's prior written consent. Use
of roof is reserved to LANDLORD.
ARTICLE 12
INDEMNITY: SECTION 1. TENANT agrees to indemnify and save LANDLORD harmless
against any and all claims, demands, damages, costs and
expenses, including reasonable attorneys' fees, arising from the
conduct or management of the business conducted by TENANT or
from any breach or default on the part of TENANT in the
performance of any covenant or agreement on the part of TENANT
to be performed pursuant to the terms of this lease, or from any
act or negligence of TENANT, its agents, contractors, servants,
employees, sublessees, concessionaires or licensees, in or about
the leased premises or the common areas, the sidewalks adjoining
the same, and the loading platform area allocated to the use of
TENANT. LANDLORD shall not be liable and TENANT waives all
claims for damages to person or property sustained by TENANT or
TENANT's employees, agents, servants, contractors, sublessees,
concessionaires, invitees, and customers resulting from the
building in which the leased premises are located or by reason
of the leased premises or any equipment or appurtenances
thereunto appertaining becoming out of repair, or resulting from
any accident in or about the leased premises, the building in
which the same are situated or resulting directly or indirectly
from any act or neglect of any other tenant in the shopping
center. This shall apply especially, but not exclusively, to the
flooding of the leased premises, and to damage caused by steam,
excessive heat or cold, falling plaster, broken glass, sewage,
gas, odors or noise, or the bursting or leaking of pipes or
plumbing fixtures. All property belonging to TENANT or any
occupant of the leased premises or the shopping center shall be
there at the risk of TENANT or such person only, and LANDLORD
shall not be liable for damage thereto or theft or
misappropriation thereof.
ARTICLE 13
INSURANCE: SECTION 1. TENANT shall not carry any stock of goods or do
anything in or about the leased premises which shall in any way
tend to increase insurance rates on the leased premises or the
building in which the same are located without the consent of
LANDLORD. If LANDLORD shall consent to such use, TENANT agrees
to pay as additional rental any increase in premiums for
insurance resulting from the business carried on in the leased
premises by TENANT. If TENANT installs any electrical equipment
that overloads the power lines to the building, TENANT shall, at
its own expense, make whatever changes are necessary to avoid
such overload and to comply with the requirements of insurance
underwriters and insurance rating bureaus and governmental
authorities having jurisdiction.
SECTION 2. TENANT agrees to procure and maintain a policy or
policies of liability insurance, at its own cost and expense,
insuring LANDLORD and TENANT from all claims, demands, or
actions for injury or death sustained by one or more persons as
a result of any one occurrence in the amount of One Million
Dollars ($1,000,000), and for damage to property in an amount of
not less than One Hundred Thousand Dollars ($100,000) made by or
on behalf of any person or persons, firm or corporation arising
from, related to or connected with, the conduct and operation of
TENANT's business in the leased premises. Said insurance shall
not be subject to cancellation except after at least ten
(10) days' prior written notice to LANDLORD, and the policy or
policies, or duly executed certificate or certificates for the
same, shall be deposited with LANDLORD at the commencement of
the term and upon any renewal of said insurance not less than
thirty (30) days prior to the expiration of the term of such
coverage.
SECTION 3. LANDLORD may procure fire and extended coverage
(including coverage for rental loss in connection with damage
and destruction covered by the said fire and extended coverage
insurance) and other reasonably necessary insurance on the
shopping center. Such insurance shall be for the benefit of
LANDLORD and TENANT shall have no interest therein. TENANT shall
reimburse LANDLORD, monthly with its rental payments, for its
share of the actual net cost and expense to LANDLORD of such
insurance. TENANT's share of such costs shall be that fractional
part of the total of such costs as the total area of the leased
premises bears to the total rentable area of all buildings and
structures constituting part of this shopping center.
One-twelfth of the amount due shall be payable on the first day
of each month and added to the monthly rental. This amount may
be based on an estimate until the actual premiums are available
and when available an adjustment shall be made and any
difference shall be payable based on TENANT's actual share as
determined.
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SECTION 4. TENANT shall maintain at its own cost and expense,
fire and extended coverage, vandalism, malicious mischief and
special extended coverage insurance in an amount adequate to
cover the cost of replacement of all alterations, changes, wall
coverings, floors, furnishings, decorations, additions, fixtures
and improvements in the leased premises in the event of a loss,
in companies and in form acceptable to LANDLORD. The insurance
which the TENANT agrees to carry in this Section shall insure
the full insurable value of the improvements and betterments
installed by the TENANT in the leased premises, whether the same
have been paid for entirely or partially by TENANT. TENANT will
further deposit the certificate thereof with LANDLORD.
SECTION 5. If TENANT fails to comply with the requirements of
this Article 13, LANDLORD may obtain such insurance and keep the
same in effect and TENANT shall pay LANDLORD the premium costs
thereof on demand.
ARTICLE 14
FIRE OR SECTION 1. In case the shopping center shall be partially or
OTHER totally destroyed by any fire or other casualty so as to become
CASUALTY: partially or totally untenantable, the same shall be repaired at
the expense of LANDLORD, (unless LANDLORD shall elect not to
rebuild, as hereinafter provided), and the rent shall abate
until the leased premises are repaired and the extent to which
the leased premises are untenantable. SEE EXHIBIT D.
SECTION 2. In case the shopping center buildings, including
common areas, shall be destroyed or so damaged by fire or other
casualty as to render more than fifty percent (50%) thereof
untenantable, or if the unexpired term of this lease is two (2)
years or less on the date of any substantial destruction or
damage, then LANDLORD may, if it so elects by notice in writing
within thirty (30) days after such destruction or damage,
terminate this lease. The above shall apply whether or not any
part of the leased premises is damaged or destroyed. LANDLORD's
obligation to repair or rebuild pursuant to this Article shall
be limited to a basic building and the replacement of any
interior work which may have originally been installed at
LANDLORD's cost. In no event in the case of any such destruction
shall LANDLORD be required to repair or replace TENANT's stock
in trade, leasehold improvements, fixtures, furniture,
furnishings or floor coverings and equipment. TENANT covenants
to make such repairs and replacements and to furnish LANDLORD,
on demand, evidence of insurance assuring its ability to do so.
ARTICLE 15
EMINENT SECTION 1. If the whole of the leased premises shall be taken
DOMAIN: under the power of eminent domain, then the term of this lease
shall cease as of the day possession shall be taken and the rent
shall be paid up to that date.
SECTION 2. In the event more than ten percent (10%) of the land
area in the shopping center is so taken, the LANDLORD shall have
the right to terminate this lease at the time and with the rent
adjustment as provided in Section 1 by giving TENANT written
notice of termination within sixty (60) days after the taking of
possession by such public authority.
SECTION 3. If any of the floor area of the leased premises or
forty percent (40%) or more of the parking area shall be so
taken, then LANDLORD or TENANT shall have the right either to
terminate this lease, or, subject, in the case of TENANT, to
LANDLORD's rights of termination as set forth in this Article,
to continue in possession of the remainder of the leased
premises upon notice in writing to the other party hereto within
thirty (30) days after such taking of possession. In the event
this lease is not terminated, all of the terms herein provided
shall continue in effect except that the rent shall be equitably
abated as to any portion of the leased premises so taken and
LANDLORD shall make all necessary repairs or alterations to the
extent provided in Article 14, Section 2 of this lease.
SECTION 4. All damages awarded for such taking under the power
of eminent domain, whether for the whole or a part of the leased
premises, shall be the property of LANDLORD, whether such
damages shall be awarded as compensation for diminution in value
of the leasehold or to the fee of the leased premises; provided,
however, that LANDLORD shall not be entitled to any separate
award made to TENANT for loss of business, depreciation of or
cost of removal of stock and fixtures.
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ARTICLE 16
ASSIGNMENT SECTION 1. TENANT shall not assign or in any manner transfer
AND SUBLETTING: this lease or any interest therein, nor sublet said leased
premises or any part or parts thereof, nor permit occupancy by
anyone without the prior written consent of LANDLORD. Consent by
LANDLORD to one or more assignments of this lease or to one or
more sublettings of the leased premises shall not operate as a
waiver of LANDLORD's rights under this Article. No assignment
shall release TENANT of any of its obligations under this lease
or be construed or taken as a waiver of any of LANDLORD's rights
hereunder. For the purposes hereof, if TENANT is a corporation
or partnership or other entity, any change in the ownership of
TENANT shall be deemed to be an assignment which shall require
LANDLORD's consent as above set forth. The acceptance of rent
from someone other than TENANT shall not be deemed to be a
waiver of any of the provisions of this lease or consent to any
assignment or subletting of the leased premises. SEE EXHIBIT D.
SECTION 2. TENANT agrees not to change the advertised name of
the place of business operated in the leased premises, which
name shall be ADC Kentrox without prior consent of LANDLORD.
-----------
SECTION 3. Neither this lease nor any interest therein, shall
pass to any trustees or receiver in bankruptcy, or any assignee
for the benefit of creditors, or by operation of law.
ARTICLE 17
ACCESS TO SECTION 1. LANDLORD shall have the right to enter upon the
PREMISES: leased premises during all business hours for the purpose of
inspecting the same or of making repairs, additions or
alterations thereto or to the building in which the same are
located, or for the purpose of exhibiting the same to
prospective tenants, purchasers or others. LANDLORD's exercise
of such right shall not be deemed an eviction or disturbance of
TENANT's use or possession.
ARTICLE 18
REMEDIES: SECTION 1. LANDLORD may terminate TENANT's estate herein demised
and TENANT's right to possession hereunder upon the failure of
TENANT to pay an installment of rent when due or to perform any
other of its covenants under this lease and the continuance of
such default for thirty (30) days (ten (10) days in the case of
the payment of rent or other monetary obligations of TENANT
hereunder) after written notice to TENANT.
SECTION 2. If, at any time during the term of this lease (a) the
TENANT shall file in any court a petition in bankruptcy or
insolvency or for reorganization, or for arrangement or for the
appointment of a receiver or trustee of all or a portion of the
TENANT's property, or (b) an involuntary petition of any kind
referred to in Subdivision (a) of this Section shall be filed
against the TENANT, and such petition shall not be vacated or
withdrawn within thirty (30) days after the date of filing
thereof, or (c) if the TENANT shall make an assignment for the
benefit of creditors, or (d) if the TENANT shall be adjudicated
a bankrupt, or (e) a receiver shall be appointed for the
property of the TENANT by order of a court of competent
jurisdiction (except where such receiver shall be appointed in
an involuntary proceeding, if he shall not be withdrawn within
thirty (30) days from the date of appointment), TENANT's estate
and right to possession hereunder shall terminate ipso facto
upon the happening of any one of such events, and the TENANT
shall then quit and surrender the leased premises to the
LANDLORD, but the TENANT shall remain liable as hereinafter
provided.
SECTION 3. Upon the termination of the estate as aforesaid, the
LANDLORD may re-enter the leased premises by any lawful means,
and remove all persons and chattels therefrom and LANDLORD shall
not be liable for damages or otherwise by reason of lawful
re-entry or termination. Notwithstanding such termination, the
liability of TENANT for the rent provided for hereinabove shall
not be extinguished for the balance of the term remaining after
said termination.
Should termination of TENANT's estate as herein provided, or
should LANDLORD take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either
terminate this lease or it may from time to time without
terminating this lease, make such alterations and repairs as may
be necessary in order to relet the premises, and relet said
premises or any part thereof for such term or terms (which may
be for a term extending beyond the term of this lease) and at
such rental or rentals and upon such other terms and conditions
as LANDLORD in its sole discretion may deem advisable; upon each
such reletting all rentals received by the
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LANDLORD from such reletting shall be applied, first, to the
payment of any indebtedness other than rent due hereunder from
TENANT to LANDLORD; second, to the payment of any costs and
expenses of such reletting, including brokerage fees and
attorneys' fees and of costs of such alterations and repairs;
third, to the payment of rent due and unpaid hereunder, and the
residue, if any, shall be held by LANDLORD and applied in
payment of future rent as the same may become due and payable
hereunder.
If such rentals received from such reletting during any month be
less than that to be paid during that month by TENANT hereunder,
TENANT shall pay any such deficiency to LANDLORD. Such
deficiency shall be calculated and paid monthly. No such
re-entry or taking possession of said premises by LANDLORD shall
be construed as an election on its part to terminate this lease
unless a written notice of such intention be given to TENANT or
unless the termination thereof be decreed by a court of
competent jurisdiction.
Notwithstanding any such reletting without termination, LANDLORD
may at any time thereafter elect to terminate this lease for
such previous breach. Should LANDLORD at any time terminate this
lease for any breach, in addition to any other remedies it may
have, it may recover from TENANT all damages it may incur by
reason of such breach, including the cost of recovering the
leased premises, reasonable attorneys' fees, and including the
worth at the time of such termination of the excess, if any, of
the amount of rent and charges equivalent to rent reserved in
this lease for the remainder of the stated term over the then
reasonable rental value of the leased premises for the remainder
of the stated term, all of which amounts shall be immediately
due and payable from TENANT to LANDLORD.
SECTION 4. In the event of any breach hereunder by TENANT,
LANDLORD may immediately or at any time thereafter, without
notice, cure such breach for the account and at the expense of
TENANT. If LANDLORD at any time by reason of such breach, is
compelled to pay, or elects to pay, any sum of money or do any
act which will require the payment of any sum of money, or is
compelled to incur any expense, including reasonable attorneys'
fees, the sum or sums so paid by LANDLORD, with interest thereon
at the rate of eighteen percent (18%) per annum or the highest
rate permitted by law, whichever is less, from the date of
payment thereof, shall be deemed to be due from TENANT to
LANDLORD on the first day of the month following the payment of
such respective sums or expenses.
SECTION 5. LANDLORD is hereby given a lien upon all property of
TENANT which shall come in or be placed upon the leased premises
and whether acquired by TENANT before or after the date hereof
to secure the payment of rent and the performance of each and
every covenant herein contained to be performed by TENANT. Upon
default by TENANT, and failure to cure as provided in Section 1
of this Article, LANDLORD, with notice or demand, may take
possession of and sell such property with legal process at
public or private sale after one publication of a notice thereof
in a daily newspaper published in the county where the leased
premises are situated, not less than ten (10) days before such
sale or by giving minimum notices required by law. The proceeds
of any such sale shall be applied first to the payment of
expenses thereof, second to the discharge of the rent or other
liability hereunder unpaid, and the balance, if any, shall be
held for the account of the TENANT. TENANT agrees to execute and
record any financing statements and other documents necessary to
perfect of record the lien herein granted.
SECTION 6. Should LANDLORD be in default under the terms of this
lease, LANDLORD shall have reasonable and adequate time in which
to cure the same after written notice to LANDLORD by TENANT.
SECTION 7. TENANT hereby expressly waives, to the full extent
waivable, any and all rights or redemption granted by or under
any present or future laws in the event of TENANT being evicted
or dispossessed for any cause, or in the event of LANDLORD
obtaining possession of the leased premises, by reason of the
violation by TENANT of any of the covenants or conditions of
this lease, or otherwise.
ARTICLE 19
SURRENDER OF SECTION 1. At the expiration of the lease term, whether by lapse
POSSESSION: of time or otherwise, TENANT shall surrender the leased premises
broom clean and in good condition and repair, reasonable wear
and tear and loss by fire or unavoidable, insurable casualty
excepted. If the leased premises are not surrendered at the end
of the term or the sooner termination thereof, TENANT shall
indemnify LANDLORD against loss or liability resulting from
delay by TENANT in so surrendering the premises. TENANT shall
promptly surrender all keys for the leased premises to
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LANDLORD at the place then fixed for payment of rent.
SECTION 2. In the event TENANT remains in possession of the
leased premises after the expiration of the tenancy created
hereunder with the consent of LANDLORD and without execution of
a new lease, it shall be deemed to be occupying the leased
premises as a tenant from month to month, at twice the minimum
rent, subject to all the other conditions, provisions and
obligations of this lease insofar as the same are applicable to
a month-to-month tenancy.
SECTION 3. Upon the expiration of the tenancy hereby created, if
LANDLORD so requires in writing, TENANT shall promptly remove
any alterations, additions, improvements and fixtures other than
trade fixtures placed in the leased premises by TENANT and
designated in said request, and repair any damage occasioned by
such removals at TENANT's expense, and in default hereof.
LANDLORD may effect such removals and repairs, and TENANT shall
pay LANDLORD the cost thereof, with interest at the rate of
eighteen percent (18%) per annum, or the highest rate permitted
by law whichever is less, from the date of payment by LANDLORD.
ARTICLE 20
SUBORDINATION: SECTION 1. TENANT agrees that this lease shall be subordinate to
any mortgages or trust deeds that may hereafter be placed upon
said leased premises and to any and all advances to be made
thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof provided that the mortgagee
or trustee thereunder shall agree to recognize TENANT's rights
hereunder as long as TENANT is not in default hereunder. TENANT
further agrees that upon notification by LANDLORD to TENANT,
this lease shall be or become prior to any mortgages or trust
deeds that may heretofore or hereunder be placed on the said
leased premises. TENANT shall execute and deliver whatever
instruments may be required for the above purposes, and failing
to do so within ten (10) days after demand in writing, does
hereby make, constitute and irrevocably appoint LANDLORD as its
attorney-in-fact and in its name, place and stead so to do.
TENANT shall in the event of the sale or assignment of
LANDLORD's interest in the building of which the leased premises
form a part, or in the event of any proceedings brought for the
foreclosure of, or in the event of exercise of the power of sale
under any mortgage made by LANDLORD covering the leased
premises, attorn to the purchase and recognize such purchaser as
LANDLORD under this lease.
SECTION 2. TENANT shall, upon demand, in the event any
proceedings are brought for the foreclosure of, or in the event
of an exercise of power of sale under any mortgage, trust deed,
or other financing investment, made by the LANDLORD covering the
leased premises, attorn in writing to the purchaser upon any
such foreclosure of sale and recognize such purchase as the
LANDLORD under the lease.
ARTICLE 21
NOTICES: SECTION 1. Whenever under this lease provision is made for
notice of any kind, such notice shall be in writing and shall be
deemed sufficient to TENANT if actually delivered to TENANT or
sent by registered or certified mail, return receipt requested,
postage prepaid, to the last Post Office address of TENANT
furnished to LANDLORD for such purpose, or to the leased
premises; and to LANDLORD if actually delivered to LANDLORD or
if sent by registered or certified mail, return receipt
requested, postage prepaid, to the LANDLORD at the address
furnished for such purpose, or to the place then fixed for the
payment of rent. If the holder of record of any mortgage or
ground lessor's interest covering the leased premises shall have
given prior written notice to TENANT that it is the holder of
said mortgage or lessor's interest and such notice includes the
address at which notices to such mortgagee or ground lessor are
to be sent, then TENANT agrees to give to such party or parties
notice simultaneously with any notice given to LANDLORD to
correct any default of LANDLORD as hereinabove provided and
agrees that such party or parties shall have the right within
thirty (30) days after receipt of said notice, to correct or
remedy such default before TENANT may take any action under this
lease by reason of such default.
ARTICLE 22
CONSENTS: SECTION 1. The parties agree that whenever under this lease
provision is made for securing the written consent, permission
or approval of either that such written consent, permission or
approval shall not be unreasonably withheld or delayed.
ARTICLE 23
(text deleted)
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ARTICLE 24
OFFSET SECTION 1. Within ten (10) days after request therefor by
STATEMENT: LANDLORD, TENANT shall provide an offset statement in recordable
form to any proposed mortgagee or purchaser, or to LANDLORD,
certifying (if such be the case) that this lease is in full
force and effect and there are no defenses or offsets thereto,
or stating those claimed by TENANT and certifying to such other
matters as such party shall reasonably require. In the event
TENANT should refuse to execute and deliver said statement
and/or certificate, LANDLORD shall have the right to, as
attorney-in-fact for TENANT, make such a statement, TENANT
hereby constituting and irrevocably appointing LANDLORD its
attorney-in-fact for such purpose. LANDLORD's mortgage lenders
and purchasers shall be entitled to rely upon any statement so
executed pursuant to t his Article 24.
ARTICLE 25
TITLE: SECTION 1. LANDLORD covenants that it has full right and
authority to enter into this lease for the full term hereof.
LANDLORD further covenants that TENANT, upon performing the
covenants and agreements of this lease to be performed by said
TENANT, will have, hold and enjoy quiet possession of the leased
premises.
ARTICLE 26
GENERAL: SECTION 1. RELATIONSHIP OF PARTIES. Nothing contained herein
shall be deemed or construed by anyone as creating the
relationship of principal and agent or of partnership or of
joint venture between the parties hereto.
SECTION 2. CUMULATIVE REMEDIES AND NON-WAIVER. The various
rights and remedies contained in this lease shall not be
considered as exclusive of any other right or remedy, but shall
be construed as cumulative and shall be in addition to every
other remedy now or hereafter existing at law, in equity, or by
statute. No delay or omission of the right to exercise any power
by either party shall impair any such right or power, or shall
be construed as a waiver of any default or as acquiescence
therein. One or more waivers of any covenant, term or condition
of this lease by either party shall not be construed by the
other party as a waiver of a subsequent breach of the same
covenant, term or condition. The consent or approval by either
party to or of any act by the other party of a nature requiring
consent or approval shall not be deemed to waive or render
unnecessary consent to approval of any subsequent similar act.
SECTION 3. HEADINGS. The headings of the several articles
contained herein are for convenience only and do not define,
limit or construe the contents of such articles.
12
<PAGE>
SECTION 4. BINDING EFFECT OF LEASE. The covenants, agreements
and obligations herein contained, except as herein otherwise
specifically provided, shall extend to, bind and inure to the
benefit of the parties hereto and their respective personal
representatives, heirs, successors and assigns. LANDLORD, at any
time and from time to time may make an assignment of its
interest in this lease, and, in the event of such assignment and
the assumption by the assignee of the covenants and agreements
to be performed by LANDLORD herein, LANDLORD and its successors
and assigns (other than the assignee of this lease) shall be
released from any and all liabilities hereunder.
SECTION 5. FORCE MAJEURE. SEE EXHIBIT D.
SECTION 6. RECORDING OF LEASE. TENANT shall not record this
lease without the written consent of LANDLORD. SEE EXHIBIT D.
SECTION 7. ACCEPTANCE OF PAYMENT. No payment by TENANT or
receipt by LANDLORD of a lesser amount than the amount then due
under this lease shall be deemed to be other than on account of
the earliest portion thereof due, nor shall any endorsement or
statement on any check or any letter accompanying any check or
payment be deemed an accord and satisfaction, and LANDLORD may
accept such check or payment without prejudice to LANDLORD's
right to recover the balance due or pursue any other remedy in
this lease provided.
SECTION 8. NO BROKERAGE. Each of the parties represents and
warrants that there are no claims for brokerage commissions or
finder's fees in connection with the execution of this lease,
except as listed below, and each of the parties agrees to
indemnify the other against, hold it harmless from, all
liabilities arising from any such claim for which such party is
responsible (including, without limitation, the cost of counsel
fees in connection therewith) except as follows.
SECTION 9. UNENFORCEABILITY. Unenforceability of any provision
contained in this lease shall not affect or impair the validity
of any other provision of this lease.
SECTION 10. GOVERNING LAW. The laws of the state in which the
shopping center is located shall govern the validity,
performance and enforcement of this lease.
SECTION 11. ADDITIONAL PROVISIONS. Additional provisions, if
any, are set forth on the attached Exhibit D, which is by
reference made a part hereof.
SECTION 12. EXHIBITS ATTACHED. The following exhibits are part
of this lease agreement: Exhibit A, Shopping Center Site Plan;
Exhibit B, Shopping Center Legal Description; Exhibit C, Plans
and Specifications; Exhibit D, Additional Provisions; and
Exhibit E, Sign Criteria, if any. All said Exhibits are hereby
incorporated herein by reference and are construed as a part of
this lease.
SECTION 13. JOINT AND SEVERAL LIABILITY. In the event that two
or more individuals, corporations, partnerships or other
entities (or any combination of two or more thereof) shall sign
this lease agreement as TENANT, the liability of each such
individual, corporation, partnership or other entity to perform
all obligations hereunder shall be deemed to be joint and
several. In like manner, in the event that the TENANT named in
this lease agreement shall be a partnership or other business
association, the members of which are, by virtue of statute, or
general law, subject to personal liability, then and in that
event, the liability of each such member shall be deemed to be
joint and several.
SECTION 14. RIGHT TO REPAIR. LANDLORD shall have the right to
install, maintain, use, repair and replace pipes, ducts,
conduits, and wires leading through the leased premises and
serving other parts of the building in locations which will not
materially interfere with the TENANT's use thereof.
SECTION 15. TENANT'S CONFLICTS. TENANT hereby covenants,
warrants and represents that by executing this lease and by the
operation of the leased premises under this lease, it is not
violating, has not violated and will not be violating any
restrictive covenant or agreement contained in any other lease
or contract affecting the TENANT or any affiliate, associate or
any other person or entity with whom or with which TENANT is
related or
13
<PAGE>
connected financially or otherwise. TENANT hereby covenants and
agrees to indemnify and save harmless LANDLORD any future owner
of the fee or any part thereof, and any mortgagee thereof
against and from all liabilities, obligations, damages,
penalties, claims, costs and expenses, including attorneys'
fees, paid, suffered or incurred by them or any of them as a
result of any breach of the foregoing covenant. TENANT's
liability under this covenant extends to the acts and omissions
of any sub-tenant, and any agent, servant, employee or licensee
of any sub-tenant of TENANT.
SECTION 16. WAIVER OF SUBROGATION. Anything in this lease to the
contrary notwithstanding, LANDLORD and TENANT each hereby waives
any and all rights of recovery, claim, action or
cause-of-action, against the other, its agents (including
partners, both general and limited), officers, directors,
shareholders or employees, for any loss or damage that may occur
to the leased premises, or any improvements thereto, or said
shopping center of which the leased premises are a part, or any
improvements thereto, or any property of such party therein, by
reason of fire, the elements, or any other cause which could be
insured against under the terms of standard fire and extended
coverage insurance policies, regardless of cause or origin,
including negligence of the other party hereto, its agents,
officers or employees, and covenants that no insurer shall hold
any right of subrogation against such other party.
SECTION 17. EXECUTION OF LEASE BY LANDLORD AND LANDLORD'S
EXCULPATION. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a
reservation of, or option for, the leased premises and this
document becomes effective and binding only upon the execution
and delivery hereof by LANDLORD and TENANT. All negotiations,
considerations, representations and understandings between
LANDLORD and TENANT are incorporated herein and may be modified
or altered only by agreement in writing between LANDLORD and
TENANT and no act or omission of any employee or agent of
LANDLORD or of LANDLORD's broker shall alter, change, or modify
any of the provisions hereof. Further, if the LANDLORD or any
successor in interest shall be an individual, joint venture,
tenancy in common, firm, or partnership, general or limited,
there shall be no personal liability on such individual or on
the members of such joint venture, tenancy in common, firm, or
partnership or on such joint venture, tenancy in common, firm,
or partnership, in respect to any of the covenants or conditions
of this lease, and in the event of any default or breach by
LANDLORD with respect to any of the terms, covenants and
conditions of this lease to be observed, honored or performed by
LANDLORD, TENANT shall look solely to the estate and property of
LANDLORD in the land and buildings owned by LANDLORD comprising
the shopping center for the collection of any judgment (or any
other judicial procedures requiring the payment of money by
LANDLORD) and no other property or assets of LANDLORD shall be
subject to levy, execution, or other procedures for satisfaction
of TENANT's remedies.
IN WITNESS WHEREOF, LANDLORD and TENANT have signed and sealed this lease as of
the day and year first above written.
ENGELSMA LIMITED PARTNERSHIP ADC TELECOMMUNICATIONS, INC. a Minnesota
corporation
By /s/ Lloyd Engelsma By /s/ W.C. Hamer
------------------------------- -------------------------------
Its General Partner Its Vice President, Chief
----------------------------- Technical Officer
-----------------------------
And
------------------------------
Its
-----------------------------
LANDLORD TENANT
14
<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 2nd day of August,
--- ------
1993, by Lloyd Engelsma, the General Partner of Engelsma Limited Partnership, a
-- -------------- --------------- ----------------------------
Minnesota limited partnership on behalf of the corporation. [LANDLORD]
- -----------------------------
/s/ Victoria J. Pease
----------------------------
Victoria J. Pease
NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY
My commission expires 3-8-95
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this 30th day of July,
---- ----
1993, by William C. Hamer, the Vice President and Chief Technical Officer of
-- ---------------- -------------- -----------------------
ADC Telecommunications, Inc., a Minnesota corporation, on behalf of the
- ---------------------------- ---------
corporation. [TENANT]
/s/ JUDITH G. PANKRATZ
----------------------------
JUDITH G. PANKRATZ
NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY
My commission expires July 29, 1997
15
<PAGE>
EXHIBIT A
NORTHRIDGE SHOPPING CENTER
highway 13 & 17th avenue n.e. waseca, minnesota
[MAP]
<PAGE>
EXHIBIT B
SHOPPING CENTER LEGAL DESCRIPTION
Block 2, North Ridge, County of Waseca, State of Minnesota, except the
following:
Beginning at the Northeast corner of Block 2; thence South 0 DEG. 20'30" East,
assumed bearing, 342.86 feet along the east line of said Block 2; thence South
89 DEG. 40'13" West 175 feet along a line parallel with the North line of said
Block 2; thence North 00 DEG. 20'30" West 342.86 feet to the North line of said
Block 2; thence North 89 DEG. 40'13" East 175 feet to beginning. Containing
1.38 acres, or 60,000.5 square feet, more or less. Subject to easements and
restrictions of record, if any; and
except the following:
Commencing at the Southwest corner of Block 2, North Ridge (point of beginning);
thence North 00 DEG. 00'01" West, assumed bearing 127.97 feet along the West
line of said Block 2, thence South 89 DEG. 59'59" West 15 feet along the
boundary line of said Block 2; thence North 00 DEG 00'01" West 12.16 feet along
the West line of said Block 2; thence North 89 DEG. 40'13" East 357 feet;
thence South 00 DEG. 19'47" East 147.33 feet to the South line of said Block 2;
thence Westerly along the South line of said Block 2 and along a nontangential
curve concave to the South central angle 03 DEG. 14'27", radius 533 feet, arc
length 30.15 feet; thence Westerly along the South line of said Block 2 and
along a tangential curve concave to the South, central angle 03 DEG. 22'47",
radius 533 feet, arc length 31.44 feet; thence North 89 DEG. 44'03" West,
assumed bearing, 281.42 feet along the South line of said Block 2 to the point
of beginning; and
except the following:
Commencing at the southwest corner of said Block 2, thence South 89 DEG. 44'03"
East, assumed bearing, 281.42 feet along the South line of said Block 2; thence
Easterly along the South line of said Block 2 and along a tangential curve
concave to the South, central angle 06 DEG. 37'14", radius 533 feet, arc length
61.59 feet to the True Point of Beginning; thence North 00 DEG. 19'47" West 220
feet; thence North 89 DEG. 40'13" East 180 feet; thence South 00 DEG. 19'47"
East 265.57 feet to the South line of said Block 2; thence North 75 DEG. 53'04"
West 128.30 feet along the South line of said Block 2; thence Westerly along the
South line of said Block 2 and along a tangential curve concave to the South,
central angle 03 DEG. 05'28", radius 533 feet, arc length 28.74 feet to said
True Point of Beginning.
TO BE ATTACHED TO AND BECOME A PART OF THAT CERTAIN LEASE AGREEMENT COVERING
SPACE IN THE NORTHRIDGE SHOPPING CENTER.
----------
<PAGE>
EXHIBIT C
PLANS AND SPECIFICATIONS
LANDLORD'S AND TENANT'S CONSTRUCTION:
Tenant hereby acknowledges and agrees that it is aware of the requirements set
forth in the Americans with Disabilities Act 42 U.S.C. Secs. 12101-12213 (the
"ADA") and warrants that all construction done by Tenant in connection with the
terms and conditions of this lease, both in the first instance and subsequently
throughout the term of this Lease, shall be in compliance with the requirements
of the ADA. If the Landlord grants its consent to proposed changes to be made
by the Tenant in the leased premises, the granting of such consent by the
Landlord will not mean that the Tenant's proposed changes necessarily comply
with the ADA; the question of compliance is the Tenant's responsibility.
Tenant shall hold Landlord harmless and shall protect and defend Landlord in any
cause of action brought against Landlord or to which Landlord is a defendant,
arising out of alleged violations of the ADA., wherein, by the provisions of
this Lease, Tenant was obligated to and failed to comply with any provision of
the ADA.
TO BE ATTACHED TO AND BECOME A PART OF THAT CERTAIN LEASE AGREEMENT
COVERING SPACE IN THE SHOPPING CENTER
----------------------
<PAGE>
EXHIBIT D
ADDITIONAL PROVISIONS
ARTICLE 1, SECTION 2 - TERM: The term of this lease shall commence upon the
earlier of (i) the date upon which Tenant opens the leased premises for
business, or (ii) September 1, 1993, and the lease term shall be three years,
plus that period of time, if any, prior to September 1, 1993 that Tenant is open
for business in the leased premises.
Tenant shall have the right to use and occupy the leased premises for the period
from the date upon which the leased premises are turned over to Tenant until the
commencement of the lease term (the "construction period") for purposes of
adapting the premises to Tenant's use under this lease. Tenant's use and
occupancy of the leased premises during the construction period shall be
governed by all the terms and conditions of this lease, including, but not
limited to, the payment by Tenant of all charges for utility services furnished
to the leased premises; provided, however, that Tenant shall not owe or pay
Landlord any sums for minimum rent, real estate taxes, insurance, or common area
maintenance associated with the leased premises during said construction period.
ARTICLE 11, SECTION 2 - INSTALLATIONS AND ALTERATIONS BY TENANT: If Tenant uses
non-union workers to construct installations or alterations to the leased
premises pursuant to this Section 2, and any labor disputes arise as a result
thereof, Tenant shall (i) promptly resolve such dispute; and (ii) indemnify
Landlord from any and all damages suffered by Landlord as a result of Tenant's
use of said non-union labor. Notwithstanding anything in this Section 2 to the
contrary, Tenant shall not be required to obtain Landlord's consent before
Tenant makes repairs, alterations or additions to the leased premises ("Tenant
Changes") if such Tenant Changes do not cost more than $3,000 and do not affect
or change the roof or structure of the building.
ARTICLE 12, INDEMNITY - SECTION 1:
A. TENANT agrees to indemnify and save LANDLORD harmless against any and
all claims, demands, damages, costs and expenses, including reasonable
attorneys' fees, arising from the conduct or management of the business
conducted by TENANT or from any breach or default on the part of TENANT in the
performance of any covenant or agreement on the part of TENANT to be performed
pursuant to the terms of this lease, or from any act or negligence of TENANT,
its agents, contractors, servants, employees, sublessees, concessionaires or
licensees, in or about the leased premises and the loading platform area
allocated to the use of TENANT. TENANT's general liability insurance described
in Article 13, Section 2 hereof insuring LANDLORD and TENANT shall be primary
insurance coverage with no right of contribution as to all claims for damage to
person or property sustained by TENANT's employees, agents, servants,
contractors, sublessees, concessionaires, invitees, and customers resulting from
the building in which the leased premises are located or by reason of the leased
premises or any equipment or
<PAGE>
appurtenances thereunto appertaining becoming out of repair, or resulting from
any accident in or about the leased premises, or resulting directly or
indirectly from any act or neglect of any other tenant in the shopping center.
The terms of the foregoing sentence shall apply especially, but not
exclusively, to the flooding of the leased premises, and to damage caused by
steam, excessive heat or cold, falling plaster, broken glass, sewage, gas, odors
or noise, or the bursting or leaking of pipes or plumbing fixtures. All
property belonging to TENANT or any occupant of the leased premises or the
shopping center shall be there at the risk of TENANT or such person only, and
LANDLORD shall not be liable for damage thereto or theft or misappropriation
thereof.
B. LANDLORD agrees to indemnify and save harmless TENANT from and against
all claims, demands, damages, costs and expenses, including reasonable
attorneys' fees, arising from any property damage or personal injury caused by
the negligent act or misconduct of LANDLORD or LANDLORD's agents, servants, or
employees, where such property damage or personal injury occurs outside of the
leased premises but within the shopping center.
ARTICLE 14, SECTION 1 - FIRE OR OTHER CASUALTY: If Landlord fails to restore
the leased premises to tenantable condition as described in this Article within
ninety (90) days after the date of destruction, then Tenant may elect to
terminate this lease by providing Landlord with ten (10) days' prior written
notice of termination.
ARTICLE 16, SECTION 1 - ASSIGNMENT AND SUBLETTING: Notwithstanding anything
herein to the contrary, Tenant shall have the right, without the consent of
Landlord first obtained, to assign this lease to its parent company, if any, or
to any affiliate or subsidiary corporation, or a corporation into which Tenant
shall be merged or sold, provided, however, that Tenant shall remain liable for
the performance of all Tenant obligations under this lease, and provided further
that such assignee shall agree in writing to assume all of Tenant's obligations
hereunder.
ARTICLE 26, SECTION 5 - FORCE MAJEURE: Whenever a period of time is herein
provided for either party to do or perform any act or thing, that party shall
not be liable or responsible for any delays, and applicable periods for
performance shall be extended accordingly, due to strikes, lockouts, riots, acts
of God, shortages of labor or materials, national emergency, acts of a public
enemy, governmental restrictions, laws or regulations, or any other cause or
causes, whether similar or dissimilar to those enumerated, beyond its reasonable
control, provided the party prevented from performing gives the other party
written notice of such cause promptly after its commencement; however, either
party may terminate this lease by giving the other party written notice thereof
if such cause continues for a period of 45 days, except in the case of the
Landlord's obligation to deliver the leased premises to the Tenant at the
commencement of the initial term of this lease, in which case such right shall
arise after the expiration of 15 days after the commencement of such a cause.
The provisions of this Section 5 shall not operate to excuse TENANT
2
<PAGE>
from prompt payment of rent, percentage rent, additional rent, or other monetary
payments required by the terms of this lease.
ARTICLE 26, SECTION 6 - RECORDING OF LEASE: Either party will, upon the written
request of the other party, execute a short-form lease ("Memorandum of Lease")
regarding this lease, in a form suitable for recording. Such Memorandum of
Lease will be dated as of the date of this lease and will disclose the parties,
the term of the lease, descriptions of the leased premises, Tenant's expansion
and extension rights, if any, and any such other terms and conditions as the
parties agree upon. The party requesting the execution of such Memorandum of
Lease will bear all costs of the Memorandum of Lease, including any recording
fees. Upon the execution of a pertinent amendment to this lease and the written
request of either party, the parties will execute a corresponding amendment to
the Memorandum of Lease, with the party requesting the execution of such
amendment bearing all costs of the amendment, including any recording fees.
Either party will, following any termination of this lease and upon the written
request of the other party, execute a document setting forth the date of such
termination, in a form suitable for recording. Failure of a party to execute
such a document will not affect the termination, and in such event the party
requesting the document may execute and file an affidavit setting forth the date
of termination. The party requesting the execution of such document will bear
all costs thereof, including any recording fees.
ENVIRONMENTAL AUDIT: Tenant shall have the right, at Tenant's sole cost and
expense, to conduct a phase-I environmental audit of the leased premises.
Tenant may terminate this lease before the commencement of the lease term, with
ten (10) days' prior written notice to Landlord, if such audit reveals any
environmental contamination in the leased premises; provided, however, that if
Tenant terminates the lease pursuant to this provision, then (i) Tenant shall,
at Landlord's request, restore the leased premises to the condition existing at
the time of delivery of said premises to Landlord, and (ii) Tenant shall provide
Landlord with a copy of such environmental audit.
RIGHT OF FIRST REFUSAL: If Landlord intends to lease Bay 8 (outlined in green
upon Exhibit "A" attached to this lease) to another lessee during the term of
this lease, Tenant shall have the right to lease said Bay 8 from Landlord
subject to the following terms and conditions:
(a) Landlord shall provide Tenant with written notice of Landlord's intent
to lease Bay 8 to a third-party ("Prospect"), and Tenant shall have
two business days to exercise its rights to lease Bay 8 by written
notice to Landlord. If Tenant fails to deliver written notice of
Tenant's exercise of its right to lease within said two business days,
then Landlord shall have the right to lease Bay 8 to said Prospect,
without any further consent or act by Tenant.
3
<PAGE>
(b) If Tenant exercises its right to lease the Bay 8 as aforesaid, Tenant
shall lease the Bay 8 from Landlord upon the same terms and conditions
as were offered to the Prospect, and said lease shall commence no
later than thirty (30) days after Tenant's written notice to Landlord
exercising Tenant's right to lease.
(c) Notwithstanding anything herein to the contrary, if Landlord leases
Bay 8 to a Prospect pursuant to this Paragraph, Landlord shall have
the right to renew or extend Landlord's lease to said Prospect or that
Prospect's assignee or sublessee without first offering Bay 8 to
Tenant.
RENEWAL OPTION: Tenant shall have the option to renew the term of this lease
for one (1) period of three (3) years upon the same terms and conditions as are
provided herein except that the fixed minimum rent during said renewal term
shall be determined in the manner hereinafter provided, and there shall be no
further options to renew.
The said option shall be exercised by Tenant giving notice by certified mail to
Landlord, return receipt requested, at least one hundred eighty (180) days
before the expiration of the then existing term and not more than 365 days
before the expiration of the then existing term. It shall be a condition of the
exercise of the foregoing option that at the time of the exercise of said
option, Tenant shall not be in default hereunder.
Within thirty (30) days after the receipt by Landlord of Tenant's exercise of
the option herein granted, the Landlord and Tenant shall commence negotiations
with regard to the fixed minimum rent to be paid by Tenant to Landlord during
the option term. Provided, however, that in the event that Landlord and Tenant
are unable to agree on said fixed minimum rent within ninety (90) days from the
date of exercise of the option, then it shall be deemed that Tenant did not
exercise its option and the lease will terminate at the end of the then existing
term.
Notwithstanding the foregoing, Tenant's option to renew this lease may be
terminated by Landlord at any time after receipt of notice of Tenant's exercise
of the option, by notice from Landlord that it is Landlord's intention to no
longer continue to operate the shopping center as a retail shopping center.
Landlord's notice to Tenant must be given to Tenant by certified mail, return
receipt requested, not less than ninety (90) days prior to the end of the then
existing term of this lease.
4
<PAGE>
EXHIBIT E
NORTHRIDGE SHOPPING CENTER
Waseca, Minnesota
SIGNAGE CRITERIA
<PAGE>
NORTHRIDGE SHOPPING CENTER
Waseca, Minnesota
SIGNAGE CRITERIA
Explanation 1
Exterior Sign Criteria - General 2
Exterior Sign Criteria - Lighting 3
Exterior Sign Criteria (cont.) 4
Prohibited Signs 5-6
Sign Approvals 7
<PAGE>
EXPLANATION
1. It is intended that the signing of the stores at the Northridge Shopping
Center shall be developed in an imaginative and varied manner. This
criteria shall govern for all Tenant signing at Northridge.
2. Although previous and current signing practices of the Tenant will be
considered, they will not govern signs to be installed at Northridge.
3. Approval of store design drawings or working drawings and specifications
for Tenant's leased premises does not constitute approval of any sign work.
Landlord's written approval of Tenant's sign drawing and specifications is
required.
4. The furnishing and installation of a sign and the costs incurred shall be
the responsibility of the Tenant. Sign construction is to be completed in
compliance with the instructions contained within this criteria.
5. Each Tenant will be required to identify its premises by a sign.
1
<PAGE>
EXTERIOR SIGN CRITERIA-GENERAL
1. Tenants' signs shall be store identity signs only, and such name shall not
include any item sold therein.
2. Tenants will be allocated an area on the exterior fascia of the shopping
center, directly in front of the occupied store, and proportionately equal
to the lineal footage of the store front.
3. Tenant's sign shall be restricted to the recessed area on the exterior
fascia of the parapet wall. Maximum height of sign letters shall not
exceed four feet (4'), and an 18" border will be required from each end of
the Tenant's allocated sign area.
2
<PAGE>
EXTERIOR SIGN CRITERIA-LIGHTING
1. The parapet fascia of the Shopping Center will be externally illuminated
from the canopy. Therefore, Tenants' signs shall consist of either
individually illuminated or non-illuminated letters per specifications
furnished in this criteria.
2. Sign letters or components that are illuminated shall not have exposed neon
or other lamps. All light source shall be concealed by translucent
material. Maximum brightness, in any event, shall not exceed 100 foot
lamberts.
3
<PAGE>
EXTERIOR SIGN CRITERIA (cont.)
3. Tenants' signs may be fabricated out of the following materials.
A. Marine grade plywoods.
B. Plexiglass edged with silva-trim or equal.
C. Fabricated sheet metal or cast aluminum.
4
<PAGE>
PROHIBITED SIGNS
C. The following type of signs or sign components shall be PROHIBITED.
1. Signs employing exposed raceways, ballast boxes, or transformers.
2. Moving or rotating signs.
3. Signs employing moving or flashing lights.
4. Signs employing luminous, vacuum-formed type, plastic letters.
5. Signs, letters, symbols, or identification of any nature painted directly
on exterior doors or windows, excluding addresses.
6. Cloth, wood, paper, or cardboard signs; stickers or decals on exterior
surfaces (doors and/or windows) of the premises.
7. Signs employing unedged or uncapped plastic letters, or letters with no
returns and exposed fastenings.
8. Free-standing signs.
9. Rooftop signs.
5
<PAGE>
PROHIBITED SIGNS (cont.)
10. Signs employing noise making devices and components.
11. Signs exhibiting the names, stamps, or decals of the sign manufacturer or
installer.
6
<PAGE>
SIGN APPROVALS
1. Tenant shall submit drawings and specifications, including samples of
materials and colors, for all its proposed sign work. Three (3) sets of
drawings will be required by our Sign Consultants. The drawings shall
clearly show location of sign on designated sign area, including graphics,
color, construction, and attachment details. Full information regarding
electrical load requirements and brightness in foot lamberts is also to be
included.
2. The Sign Consultant shall return one (1) set of the sign drawings, as soon
as possible, to the Tenant. The drawing will either be marked "Approved,"
"Approved Based on Landlord's Modifications," or "Disapproved." Sign
drawings that have been "Approved Based on Landlord's Modifications" are to
be returned to the Landlord bearing Tenant's approval, or are to be
redesigned and resubmitted for Landlord's approval within seven (7) days of
receipt by Tenant. Sign drawings that have been "Disapproved" are to be
redesigned and resubmitted to Landlord's Sign Consultant for approval, also
within seven (7) days of receipt by Tenant.
7
<PAGE>
Exhibit 10-dd
LEASE
THIS LEASE, dated as of December 18, 1992, is made by and between
GREENVILLE DALLAS DELAWARE, INC., a Delaware corporation ("Landlord"), and ADC
TELECOMMUNICATIONS, INC.,a Minnesota corporation, and FIBERMUX CORPORATION, a
California corporation (collectively, "Tenant"), upon the following terms and
conditions.
1. LEASE OF PREMISES AND DEFINITIONS.
(a) Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, on an as-is basis except as herein otherwise specifically provided,
that certain building commonly known as 21415 Plummer Street, Los Angeles,
California depicted on the attached EXHIBIT A (hereinafter referred to as the
"Premises" and sometimes as the "Building"), subject, however, to, and together
with, the easements, restrictions and other matters of record and access which
is disclosed by inspection.
(b) The term "Property" shall mean that certain real property, of
which the Premises is a part, legally described on the attached Exhibit B, on
which Property are located the Building and the building commonly known as 21605
Plummer Street ("Rockwell Building").
(c) The term "Tenant's Proportionate Share" shall mean the percentage
from time to time obtained by dividing the rentable area of the Premises
(including any space added to the Premises as provided in this Lease) by the sum
of the rentable area of the Building and the rentable area of the Rockwell
Building. Such rentable areas shall be initially measured, not later than the
Commencement Date, by Tenant's space planner, at Tenant's expense, in accordance
with the National Standard Method for Measuring Floor Area in Office Buildings,
ANSI Z65.1-1980 ("BOMA Standard"), which space planner shall submit such
measurements to Landlord for Landlord's approval (which approval shall be given
or withheld in writing, shall not be unreasonably withheld and shall be deemed
to be not given if not given or withheld in writing within 10 days after a
written request for such approval has been received by Landlord from Tenant).
If the rentable area of the Building, as so measured and approved, is within 1%
of 97,104 square feet, then the rentable area of the Building shall, for
purposes of this Lease, be deemed to be 97,104 square feet. If the rentable
area of the Rockwell Building, as so measured and approved, is within 1% of
130,572 square feet, then the rentable area of the Rockwell Building shall, for
purposes of this Lease, be deemed to be 130,572 square feet. If the Building
and/or the Rockwell Building is/are subsequently altered so as to affect
its/their rentable area(s), Landlord shall, at Landlord's expense, cause the
altered building(s) to be remeasured by a qualified party in accordance with
<PAGE>
the BOMA Standard, which remeasurements shall be submitted top Tenant for
Tenant's approval (which approval shall be given or withheld in writing, shall
not be unreasonably withheld and shall be deemed to be not given if not given or
withheld in writing within 10 days after a written request for such approval has
been received by Tenant from Landlord). If the rentable area of the Building or
of the Rockwell Building, as so remeasured and approved, is within 1% of the
actual or deemed rentable area of the Building or Rockwell Building applicable
under this Lease immediately prior to the alteration(s), then the rentable area
of the Building or of the Rockwell Building shall, for the purposes of this
Lease, be deemed to be the actual or deemed rentable area of the Building or of
the Rockwell Building applicable under this Lease immediately prior to the
alteration(s). If less than all of the Rockwell Building is added to the
Premises pursuant to this Lease, Landlord shall, at Landlord's expense, cause
the added space to be measured by a qualified party in accordance with the BOMA
Standard, which measurement shall be submitted to Tenant for Tenant's approval
(which approval shall be given or withheld in writing, shall not be unreasonably
withheld and shall be deemed to be not given if not given or withheld in writing
within 10 days after a written request for such approval has been received by
Tenant from Landlord). The parties to this Lease shall execute an amendment to
this Lease establishing Tenant's Proportionate Share and the rentable areas of
the Premises, the Building and/or the Rockwell Building, if necessary, at the
time of the initial measurement and each subsequent measurement.
(d) "Appraisal" shall mean an appraisal of Market Rent (as defined in
this Lease below) conducted in accordance with the procedures set forth in
attached Exhibit D.
(e) "Market Rent" shall mean the annual Base Rent (expressed as an
amount per square foot of rentable area) that the Landlord would receive as of
the commencement date of the term in question if it were to lease the space in
question pursuant to the terms of this Lease (except to the extent that this
Lease is inconsistent with the assumptions and requirements set forth below) to
a tenant with a credit standing comparable to that of Tenant; with parking
rights as provided in this Lease; for a term equal to the period in question;
with a commencement date of the date in question; and in an "as is" condition,
except to the extent that Landlord is required under this Lease to make
improvements. In determining the "Market Rent", current conditions in the
marketplace for comparable transactions shall be considered, including without
limitation, tenant inducements, if and to the extent then a part of market
conditions, such as, but not limited to, buildout allowances or work, free rent,
financial inducements and credits for moving expenses. For purposes of
determining Market Rent it shall be assumed that Landlord and Tenant are each
ready, willing and able to enter into such a lease but are under no compulsion
to do so.
- 2 -
<PAGE>
(f) The term "Consumer Price Index" shall mean the Consumer Price
Index issued by the U.S. Department of Labor, Bureau of Labor
Statistics for Urban Wage Earners and Clerical Workers, U.S. City Average
(1982-1984=100), or its successor index
2. TERM. The initial term of this Lease shall commence on the
Commencement Date (defined below) and shall end on the last day of the 72nd
month thereafter.
Landlord agrees to use its best efforts (including appropriate legal
proceedings, if reasonably required) to enforce that certain Agreement dated
December 1, 1992, between Landlord and Symbolics, Inc. and that certain letter
agreement dated November 6, 1992, among Landlord, Rockwell International
Corporation ("Rockwell") and Symbolics, Inc., copies of which have been provided
to Tenant. The Commencement Date shall be the earlier of the date that Tenant
commences business operations in the Premises or the date 180 days following the
date of this Lease, unless Rockwell's vacation of the Premises is delayed beyond
February 28, 1993, in which case the Commencement Date shall be extended by the
number of days (not to exceed 30 days) of such delay. If such delay exceeds 30
days, Tenant shall have the option to (a) terminate this Lease or (b) continue
with the extension of the Commencement Date for such period (not to exceed 30
days) as Tenant shall determine, such option to be exercised by Tenant by
written notice given to Landlord within 10 days after the expiration of the
initial 30-day period of delay referred to above. Tenant shall have full
occupancy of the Premises immediately following Rockwell's vacation of the
Premises until the Commencement Date in order to construct the Tenant
Improvements and move into the Building. Such occupancy shall be subject to each
and every provision of this Lease except that Tenant shall not be obligated to
pay any Base Rent or Impositions applicable to the period prior to the
Commencement Date. Upon determination of the Commencement Date, Landlord and
Tenant will execute an agreement confirming the Commencement Date.
3. RENT. Tenant shall pay to Landlord, in advance, on the
Commencement Date and on the 1st day of each calendar month thereafter during
the initial term of this Lease, the following net monthly rental ("Base Rent"),
over and above the other and additional payments to be made by Tenant as
hereinafter provided, as follows:
- 3 -
<PAGE>
<TABLE>
<CAPTION>
Base Rent to
Months be paid per month
- ---------------------- -----------------
<S> <C>
1st month $77,000.00
2nd through 5th month $ 0
6th through 9th month $38,500.00
10th through 36th month $77,000.00
37th through 72nd month $77,000.00, subject to the following
increase.
</TABLE>
; provided, however, that the Base Rent payable for the first month shall be
reduced by $2,531.50 for each day that Tenant's commencement of business
operations in the Premises is later than the date 150 days after the date of
this Lease (but such reduction shall in no event exceed $77,000). Commencing
with the first day of the 37th month of the initial term hereof, the Base Rent
shall be increased based upon the percentage increase in the Consumer Price
Index, as such Index for the 36th month of the initial term hereof bears to such
Index for the month preceding the first full month of the initial term;
provided, however, that in no event shall the monthly Base Rent commencing on
the 37th month of the initial term be more than $88,550.00 or less than
$83,930.00.
Notwithstanding the foregoing, if the rentable area of the Premises is
deemed, pursuant to paragraph 1(c) of this Lease, to be an amount other than
97,104 square feet, then Tenant shall pay to Landlord, in advance, on the
Commencement Date and on the 1st day of each month thereafter during the initial
term of this Lease, the following Base Rental, rather than the Base Rental set
forth in the immediately preceding grammatical paragraph:
<TABLE>
<CAPTION>
Base Rent to
Months be paid per month
- ---------------------- -----------------
<S> <C>
1st month $.793 per rentable square foot
2nd through 5th month $ 0
6th through 9th month $.3965 per rentable square foot
10th through 36th month $.793 per rentable square foot
37th through 72nd month $.793 per rentable square foot, subject
to the following increase.
</TABLE>
; provided, however, that the Base Rent payable for the first month shall be
reduced by $.02607 per rentable square foot for each day that Tenant's
commencement of business operations in the Premises is later than the date 150
days after the date of this Lease (but such reduction shall in no event exceed
$.793 per rentable square foot for one month). In such case, commencing with the
first day of the 37th month of
- 4 -
<PAGE>
the initial term hereof, the Base Rent shall be increased based upon the
percentage increase in the Consumer Price Index, as such Index for the 36th
month of the initial term hereof bears to such Index for the month preceding the
first full month of the initial term; provided, however, that in no event shall
the monthly Base Rent commencing on the 37th month of the initial term be more
than $.9120 per rentable square foot or less than $.8644 per rentable square
foot.
The foregoing Base Rent schedules refer to calendar months beginning
with the first full calendar month of the initial term of this Lease.
Accordingly, if the Commencement Date is other than the first day of a calendar
month, the Base Rent for the partial month preceding the first full calendar
month of the initial term of this Lease, which is payable on the Commencement
Date, shall be determinated on a prorated basis, using for such determination
the monthly Base Rent stated above with respect to the 10th calendar month.
The term "rent" as used in this Lease shall refer collectively to the
Base Rent and to all additional rent, charges and other sums payable hereunder.
Tenant hereby acknowledges that late payment by Tenant to Landlord of rent and
other sums due hereunder after the expiration of any applicable grace period
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any trust deed covering the Premises.
ACCORDINGLY, IF ANY INSTALLMENT OF RENT OR ANY OTHER SUMS DUE FROM TENANT SHALL
NOT BE RECEIVED BY LANDLORD WHEN DUE OR IF A GRACE PERIOD IS APPLICABLE, PRIOR
TO THE EXPIRATION OF THE GRACE PERIOD, TENANT SHALL PAY TO LANDLORD A LATE
CHARGE EQUAL TO 5% OF SUCH OVERDUE AMOUNT. THE PARTIES HEREBY AGREE THAT SUCH
LATE CHARGE REPRESENTS A FAIR AND REASONABLE ESTIMATE OF THE COSTS LANDLORD WILL
INCUR BY REASON OF LATE PAYMENT BY TENANT BASED UPON THE CIRCUMSTANCES EXISTING
AS OF THE DATE OF THIS LEASE. [INITIALS OF THE PARTIES AS TO THE TWO SENTENCES
SHOWN IN BOLD: _______________________]
4. PARKING. Tenant shall have the right to use 215 parking spaces
on the Property in the Fibermux Area shown on the attached EXHIBIT A ("Fibermux
Area"). Landlord, using reasonable efforts, shall also attempt to obtain
parking for an additional 173 vehicles (the "Additional Parking Spaces"). Any
Additional Parking Spaces not provided within the Fibermux Area shall be
provided first (a) in the Rockwell Area shown on the attached EXHIBIT A
("Rockwell Area"), and (b) then at 21540 Plummer Street (across the street from
the Premises). All Additional Parking Spaces to be provided by Landlord shall
meet applicable governmental requirements and shall be approximately the same
size as the existing spaces in the Fibermux and Rockwell Areas shown on the
attached EXHIBIT A. All parking spaces to be provided by Landlord in the
Fibermux Area and the other areas shall be identified and controlled in a manner
reasonably acceptable to Landlord and Tenant. Such parking spaces shall also be
non-tandem and shall be on the basis of the
- 5 -
<PAGE>
existing stall striping; provided, however, that Tenant may, in its sole
discretion, elect to permit Landlord to provide some or all of the Additional
Parking Spaces on a tandem basis; and provided further, however, that Tenant may
restripe the delivery area of the Premises and/or the parking spaces on any
parking area provided by Landlord for Tenant's use, at Tenant's sole expense,
and in such event the number of additional parking spaces yielded by such areas
after such restriping by Tenant shall be deemed to be "Additional Parking
Spaces" for purposes of this Lease.
For each month after the Commencement Date and continuing through the
initial term of this Lease, so long as 173 Additional Parking Spaces are not so
provided, Landlord shall pay to Tenant on the first day of each such month a sum
equal to $45.00 times the number of such Additional Parking Spaces not so
provided for that month; provided, however, that for the first seven months
following the Commencement Date, the sum due from Landlord for each such
Additional Parking Space not provided shall only be $22.50; and provided
further, however, that, if Tenant adds Additional Parking Spaces as a result of
its restriping of the Fibermux Area as provided above, Landlord shall have no
obligation to make such payments with respect to such added spaces from and
after the date that they are added to the Fibermux Area. Tenant shall deduct
such amounts due for each month of the initial Lease term from the monthly
rental payment for such month; provided, however, that, as to the 1st through
5th full calendar months following the Commencement Date, the sums due from
Landlord shall be deducted by Tenant from the payment of Base Rent due for the
6th full calendar month following the Commencement Date (and, if necessary, the
Base Rent payments due in subsequent months) under this Lease.
From and after the date Tenant has more than 215 parking spaces on the
Property (except to the extent that such excess parking spaces are leased to
Tenant as a result of Tenant's exercise of the Expansion Option), such payments
of $45.00 per month or $22.50 per month, as the case may be, shall cease with
respect to each such space in excess of 215 spaces. For each Additional Parking
Space provided by Landlord in the locations described in subparagraphs (a) and
(b) above after the date of this Lease, the amount otherwise payable by Landlord
hereunder shall be reduced by $30.00 per month for each such Additional Parking
Space so provided.
Tenant may enter into a lease or leases for parking at other than the
sites described in subparagraphs (a) and (b) above for: those Additional Parking
Spaces which Landlord does not commit by a written notice delivered to Tenant by
February 1, 1993 to provide to Tenant as of the Commencement Date; or any
Additional Parking Spaces that are provided by Landlord at any time during the
initial term of this Lease and are thereafter, during such initial term,
terminated by any landlord(s) thereof. Landlord shall provide at least 75 days'
prior written notice to Tenant if Landlord will be providing Additional Parking
Spaces after the
- 6 -
<PAGE>
Commencement Date. Landlord shall provide at least 75 days' prior written
notice to Tenant if Landlord will cease to provide any Additional Parking
Spaces, in which case Tenant shall be entitled to enter into parking leases to
replace such Additional Parking, as provided above. Notwithstanding the
foregoing, notices from Landlord to Tenant of either the provision or cessation
of Additional Parking Spaces which result from the elimination of any parking
permitted by the City of Los Angeles upon its easement area shall be the 75 days
notice specified above or the number of days of notice of elimination of parking
Landlord receives from the City of Los Angeles, whichever is less. Within ten
(10) days after entering into any parking lease, Tenant shall provide a copy
thereof to Landlord. If Landlord thereafter provides to Tenant the Additional
Parking Spaces required on either of the sites described in subparagraphs (a) or
(b) above, and Tenant consequently cancels its parking lease(s), Landlord shall,
at Landlord's election made by written notice to Tenant at the time such
Additional Parking Spaces are delivered to Tenant, either reimburse Tenant for
the lease cancellation charge for each such canceled parking space or pay Tenant
$15 per month for the remainder of the initial term of this Lease for each
parking space as to which Landlord has elected not to pay the such cancellation
charge. Such reimbursement by Landlord to Tenant for lease cancellation charges
shall include Tenant's unamortized costs of improving such parking site, based
on a six-year amortization period.
Notwithstanding the foregoing provisions of this paragraph 4, if
Rockwell ceases to lease all or any portion of the Rockwell Building, then the
following shall apply:
(1) If Rockwell at any time no longer leases any space in the Rockwell
Building, then a portion of the parking spaces in the Rockwell Area will be
added, at no cost to Tenant, to the parking spaces already available to Tenant,
which portion shall be determined by adding together the parking spaces then in
the Rockwell Area and the Fibermux Area, dividing such sum by the total rentable
square footage of the Rockwell Building and of the Building, multiplying such
dividend (the "Dividend") by the rentable area of the Building and subtracting
the number of parking spaces in the Fibermux Area from the result. The
resulting figure will be rounded to the nearest whole number. If Tenant has then
exercised or subsequently exercises the Expansion Option, then another portion
of the parking spaces in the Rockwell Area will be provided to Tenant, at no
cost to Tenant, which portion shall be determined by multiplying the Dividend by
the rentable area of the Expansion Space, the resulting figure to be rounded to
the nearest whole number.
(2) If Rockwell continues to lease a part of the Rockwell Building,
then a portion of the parking spaces in the Rockwell Area will be added, at no
cost to Tenant, to the parking spaces available to Tenant in the Fibermux Area,
which portion shall be determined as follows:
- 7 -
<PAGE>
[total parking spaces in the Rockwell Area] - [(total parking
spaces in the Rockwell Area) x (rentable area of the portion of
Rockwell Building being leased by Rockwell) divided by rentable
area of Rockwell Building] - [(total parking spaces on the
Property) x (rentable area of the portion of the Rockwell
Building that is not being leased by Rockwell) divided by (total
rentable area of the Building and the Rockwell Building)],
rounded to the nearest whole number
PLUS, IF TENANT HAS THEN EXERCISED OR
SUBSEQUENTLY EXERCISES THE EXPANSION OPTION:
[total parking spaces on the Property x (rentable area of the
Expansion Space) divided by (total rentable area of the Building
and the Rockwell Building)], rounded to the nearest whole number
If Rockwell at any time no longer leases any portion of the Rockwell Building,
spaces shall be reallocated as provided in subparagraph (1) above,
notwithstanding that parking spaces may have been previously allocated pursuant
to subparagraph (2) above. The parking spaces made available to Tenant under
subparagraphs (1) and (2) above shall be as close as possible to the space
leased by Tenant and served by such parking. Such added parking spaces shall be
deemed to be Additional Parking Spaces as follows:
(A) if Tenant does not elect to lease any Expansion Space
pursuant to paragraph 55 of this Lease, then all such added
parking spaces shall be deemed to be Additional Parking Spaces; or
(B) if Tenant elects to lease any Expansion Space pursuant to
paragraph 55 of this Lease, then all such added parking spaces shall
be deemed to be Additional Parking Spaces, except for the portion of
such added parking spaces leased to Tenant with respect to the
Expansion Space as provided above.
If any of the approximately 97 parking spaces in the Rockwell Area that are
located upon an easement granted by the City of Los Angeles are eliminated
because such easement is revoked in whole or in part by the City of Los Angeles,
and if such elimination results in a reduction in the number of parking spaces
that would otherwise have been provided to Tenant as set forth above, then
Landlord shall for the remainder of the initial term of this Lease pay to
Tenant, on the first day of each month during which such parking spaces would
otherwise have been provided to Tenant as set forth above, a sum equal to $45.00
times the number of parking spaces that would otherwise have been provided to
Tenant as set forth above.
- 8 -
<PAGE>
5. FULL NET LEASE. Landlord shall receive the rent free and clear
of any and all other impositions, taxes, liens, charges, or expenses of any
nature whatsoever in connection with the ownership and operation of the
Premises, except as herein expressly provided. In addition to the rent reserved
above, Tenant shall pay to the parties respectively entitled thereto all
impositions, insurance premiums, operating charges, maintenance charges,
construction costs, and any other charges, costs, and expenses that arise or may
be contemplated under any provisions of this Lease during the term hereof. It is
the intention of the parties that this Lease shall not be terminable for any
reason by Tenant, and that Tenant shall in no event be entitled to any set-off
against, abatement of, or reduction in rent payable under this Lease, except as
herein otherwise expressly provided (including, without limitation, the
provisions of paragraph 43 of this Lease).
6. USE. The Premises shall be used and occupied only for the
businesses of testing, assembly, fabrication, warehousing and/or shipping of
electronic components, circuit boards and/or cabinets, and for sales and/or
general office uses related to such types of businesses and for other uses
incidental to the foregoing and for no other use or purpose.
7. QUIET ENJOYMENT. Provided Tenant performs its obligations
hereunder, Tenant shall lawfully and quietly occupy the Premises during the term
of this Lease without hindrance or molestation by Landlord, subject, however, to
the matters herein set forth; provided, however, that, if Tenant is dispossessed
of all or part of the Premises by any party who or which does not claim such
possession through Tenant, Tenant shall be entitled to an equitable abatement of
Base Rent, Impositions, Insurance Costs and other charges under this Lease from
the date of Tenant's dispossession until Tenant's possession is restored and, if
Tenant's possession is not restored within 60 days after Tenant was
dispossessed, Tenant may terminate this lease by written notice given to
Landlord within ten (10) days after the expiration of such 60-day period and
before Tenant's possession is restored.
8. PAYMENT OF IMPOSITIONS. Tenant covenants and agrees to pay to
Landlord Tenant's Proportionate Share (as defined in paragraph 1(c) of this
Lease) of all "Impositions" upon or with respect to the Property. As used
herein, the term "Impositions" shall include any form of real estate tax,
assessment, license fee, commercial rental tax, improvement bond or bonds, levy,
or other tax, general and special, ordinary and extraordinary, foreseen as well
as unforeseen, of any kind or nature whatsoever, imposed by any authority having
the power to tax (including any city, state, or federal government, or any
school, agricultural, sanitary, water, fire, street, drainage, or other
improvement district thereof ) against any legal or equitable interest of
Landlord in the Premises or in the Property, against Landlord's right to rent or
other income therefrom, and against Landlord's business of leasing the Premises
or the Property; provided, however, that "Impositions" shall not include
inheritance, personal or corporate income, or estate taxes. The term
- 9 -
<PAGE>
"Impositions" shall also include any tax, fee, levy, assessments, or charge: (a)
in substitution of, partially or totally, any of the above-listed Impositions,
or (b) that is imposed by reason of this transaction, any modifications or
changes hereto, or any transfers hereof. Except as otherwise provided in this
Lease, all such payments shall be made at least fifteen (15) days prior to the
delinquency date. Tenant shall have the right to contest Impositions if there
are reasonable grounds to do so or, if Tenant may not legally do so, to cause
Landlord to do so at Tenant's expense.
9. PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency
all taxes assessed against and levied upon trade fixtures, furnishings,
equipment, and all other personal property of Tenant contained in the Premises
or elsewhere.
10. UTILITIES. Tenant shall pay all utility deposits and fees, and
all monthly service charges for heat, water, gas, electricity, sewer service,
elevator (if there be any) and cleaning service, telephone service, and any
other utilities or services whatsoever furnished to the Premises during the term
of this Lease.
11. PROPERTY INSURANCE. Landlord shall procure and maintain
throughout the terms of this Lease all-risk property and liability insurance
insuring the Property (including improvements and betterments, boilers and
machinery owned by Landlord, but excluding all equipment, trade fixtures,
inventory, machinery and other personal property of the Tenant); provided,
however, that Tenant shall maintain builder's risk insurance reasonably
satisfactory to Landlord effective from the commencement of construction of the
Tenant Improvements until the Commencement Date and Landlord's all-risk
insurance shall insure the Tenant Improvements from and after the Commencement
Date. Landlord's all-risk insurance shall insure the Property against risk of
direct physical loss (including loss caused by the perils of earthquake and, if
the Property is in an officially designated flood hazardous area, flood).
Landlord's insurance shall be in an amount equal to the actual replacement cost
of the Property (exclusive of foundations and excavations) without deduction for
physical depreciation, without a coinsurance clause and with a deductible not in
excess of $50,000. The property insurance carrier shall have an A. M. Best
Company rating of A:VII or better. Tenant agrees not to do, or fail to do,
anything which will violate the reasonable and customary terms of any such
insurance to the extent such terms are set forth in policies, copies of which
are delivered to Tenant, or otherwise disclosed to Tenant, increase the cost of
such insurance beyond a reasonable level (unless Tenant agrees to pay such
increase) or prevent Landlord from procuring policies reasonably satisfactory to
Landlord. Within ten days of billing by Landlord, Tenant will reimburse Landlord
for Tenant's Proportionate Share of the lesser of (a) all costs of such property
insurance carried by Landlord with respect to the Property, and (b) all costs
which would have been charged by an identically rated carrier (other than
Landlord's carrier) for the same coverage ("Insurance Costs"). Certificates
evidencing all such insurance coverages shall be delivered to Tenant by the date
of this Lease. Such certificates of insurance
- 10 -
<PAGE>
will provide for thirty (30) days advance notice to Tenant and Landlord in the
event of cancellation or nonrenewal of such insurance.
12. OTHER INSURANCE. Tenant agrees to maintain in full force and
from the Date of this Lease and in effect at all times during the term of this
Lease, at no expense to Landlord, for the protection of Tenant and Landlord, as
their interest may appear, policies of insurance issued by a responsible carrier
or carriers reasonably acceptable to Landlord which afford the following
coverages:
(a) Worker's Compensation - Statutory limits;
(b) Employer's liability - Not less than:
Bodily Injury by Accident - $250,000 each accident
Bodily Injury by Disease - $250,000 policy limit
Bodily Injury by Disease - $250,000 each employee; and
(c) Commercial General Liability Insurance on a coverage form at
least as broad as the most recent edition of Commercial General Liability
Coverage Form (CG0001) published by the Insurance Services Office, Inc. naming
the Landlord as Additional Insured using an endorsement form at least as broad
as the most recent edition of Additional Insured-Managers or Lessors of Premises
Endorsement Form (CG2011) as published by the Insurance Services Office, Inc.
The limits of such insurance shall be no less than:
<TABLE>
<S> <C>
Each Occurrence Limit $2,000,000
General Aggregate Limit $2,000,000
Products/Completed Operations
Aggregate Limit $2,000,000
Personal Injury and Advertising
Injury Limit $1,000,000
Fire Damage (Any One Fire) $50,000
Medical Expense (Any One Person) $5,000
</TABLE>
Such Commercial General Liability Insurance shall cover Bodily Injury, Personal
Injury and Property Damage Liability occasioned by or arising out of or in
connection with the use, operation and occupancy of the Premises. Such
Commercial General Liability Insurance policy must cover events that occur
during the policy period regardless of when the claim is made. Such insurance
shall be primary insurance to any other insurance that may be available to
Landlord. Any other insurance available to Landlord shall be non-contributing
with and excess to this insurance.
- 11 -
<PAGE>
Certificates evidencing all such insurance coverages shall be
delivered to Landlord by the date of this Lease. Such certificates of insurance
will provide for thirty (30) days advance notice to Tenant and Landlord in the
event of cancellation or nonrenewal of such insurance.
13. LOSS PAYABLE REQUIREMENTS. All policies of insurance required
hereunder shall provide that the proceeds thereof shall be payable to Tenant and
Landlord, as their respective interests may appear, and, if Landlord so elects,
the policies referenced in paragraph 11 may be payable also to the holder of any
mortgage or deed of trust on the Premises as the interest of such holder may
appear, pursuant to a standard mortgagee clause or a loss payable clause.
14. WAIVER OF CLAIMS. Each party to this Lease hereby releases the
other from any and all claims, and waives its entire right of recovery against
the other, for loss or damage arising out of or incident to the perils insured
against under the policies specified in paragraphs 11 and 12 above to the extent
such loss or damage is insured against under such policies, whether due to the
negligence of such parties or the agents, employees, contractors, or invitees of
either of them. Tenant also waives all claims against Landlord with respect to
Tenant's personal property in the Premises.
15. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS. Tenant agrees
that, if Tenant shall at any time fail to make any payment or perform any other
act to be made or performed by it under this Lease, Landlord may, but shall not
be obligated to, make such payment or perform such other act to the extent
Landlord may deem desirable, with full rights of offset, and without waiving or
releasing Tenant from any obligation under this Lease. All sums so paid by
Landlord and all expenses paid in connection therewith, including without
limitation attorneys' fees, together with interest thereon at the Default
Interest Rate (defined in the paragraph of this Lease entitled "Miscellaneous")
from the date of such payment, shall be paid by Tenant to Landlord on demand.
16. MAINTENANCE AND REPAIR. Except as otherwise set forth in this
Lease, Tenant shall, at Tenant's sole cost and expense, keep the entire Premises
(and every part thereof, including, without limitation, the roof membrane)
secure, clean and in good order, condition, and repair, and shall make promptly
all necessary repairs, interior and exterior, ordinary as well as extraordinary,
foreseen as well as unforeseen, casualty and condemnation excepted; provided,
however, that Landlord shall be responsible for maintaining and repairing the
foundation, the structure of the exterior walls and of the roof and the other
structural members of the Building in accordance with prudent property
management standards, unless the need for such maintenance and repair results
from Tenant's failure to satisfy its maintenance and repair obligations with
respect to the remainder of the Premises or (subject to
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the provisions of paragraphs 11 and 14 of this Lease) the negligence or
intentional acts of Tenant, its employees, agents, contractors or invitees.
Tenant shall also, at Tenant's sole cost and expense, keep the entire Fibermux
Area and any portions of the Rockwell Area provided by Landlord to Tenant for
parking pursuant to paragraph 4 of this Lease or any other provision of this
Lease (including, but not limited to, all paving, striping, landscaping and
attendant driveways, entrances, walkways, curbs, gutters, drains and the like)
clean and in good order, condition and repair, and shall make promptly all
necessary repairs, ordinary as well as extraordinary, foreseen as well as
unforeseen. When used in this paragraph, the term "repair(s)" shall include
alterations, replacements, and renewals. All repairs shall be equal in quality
and class to the original work. Landlord shall have no obligation, in any
manner whatsoever, to repair or maintain the Premises, except as specifically
otherwise provided in this Lease. Landlord may, at its option, perform Tenant's
repair obligations under this Lease at Tenant's expense if Tenant does not do so
within the applicable cure period provided for in this Lease.
17. SURRENDER OF PREMISES. Upon expiration or any sooner termination
of this Lease, Tenant shall surrender to Landlord the entire Premises, together
with all Alterations (as defined in paragraph 25 of this Lease), in the same
condition as when received or installed (unless such Alterations are to be
removed pursuant to paragraph 24 of this Lease), ordinary wear and tear and
casualty and condemnation excepted, and clean and free of debris and free of any
liens created or suffered to be created by Tenant and (b) Tenant shall properly
remove from the Premises all Hazardous Materials for which it has responsibility
under this Lease. Tenant may, and upon Landlord's request shall, remove any
Trade Fixtures or personal property belonging to Tenant, provided that Tenant
shall perform prior to expiration of the term of this Lease all restoration made
necessary by such removal. Landlord may, at Tenant's expense, retain or dispose
of in any manner any Trade Fixtures or personal property of Tenant that Tenant
does not remove from the Premises upon expiration or termination of the term of
this Lease, in which case title thereto shall vest in Landlord. The term "Trade
Fixtures" as used herein shall mean all fixtures, equipment, and personal
property owned by Tenant and used in connection with the operation of any
business on the Premises, whether or not affixed to the Premises.
18. SERVICE CONTRACTS. Tenant shall, at Tenant's sole cost and
expense, either (a) enter into a regularly scheduled preventive
maintenance/service contract with a maintenance contractor for servicing all hot
water, heating, and air conditioning systems, elevators (if there be any) and
building equipment within the Premises or (b) provide similar services through
the use of its own qualified employees. The maintenance contractor and the
contract, or the employees of Tenant, as the case may be, shall be subject to
the approval of Landlord (which approval shall be given or withheld in writing,
shall not be unreasonably withheld and shall be deemed to be not given if not
given or withheld in writing within 10
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days after a written request for such approval has been received by Landlord
from Tenant). The contract or employee-provided services shall include all
services suggested by the equipment manufacturers and shall become effective,
and a copy thereof shall be delivered to Landlord, within thirty (30) days of
the date Tenant takes possession of the Premises. Landlord shall deliver to
Tenant the service manuals for the items to be serviced as provided in this
paragraph and shall deliver and assign to Tenant all warranties covering such
items.
19. WASTE. Tenant shall not do or suffer any waste or damage,
disfigurement, or injury to the Premises or permit or suffer any overloading of
the floors of the Premises.
20. ADA. During the construction of the Tenant Improvements
specified in paragraph 53 of this Lease, Tenant shall also alter and renovate
the Premises to meet the standards established under the provisions of the
Americans With Disabilities Act ("ADA"), and, for such alterations and
additions, Landlord will pay Tenant the sum of $38,000.00 ("ADA Payment"),
regardless of the actual cost of such alterations and renovations. During the
full term of this Lease, Tenant shall also promptly, at its expense (except for
the ADA Payment), comply with the requirements of the ADA applicable to the
Premises, to the construction of the Tenant Improvements, to all other
alterations of the Premises by Tenant and to Tenant's use of the Premises.
21. WAIVER OF REPAIR AND DEDUCT. Tenant hereby waives any and all
rights it may have to make repairs at Landlord's expense or in lieu thereof to
vacate the Premises as provided in California Civil Code Section 1942 or any
other law, statute, or ordinance now or hereafter in effect; provided, however,
that such waiver does not constitute a waiver of any of Tenant's specific
self-help or setoff rights expressly set forth in this Lease.
22. COMPLIANCE WITH LAWS. Tenant shall, at Tenant's sole cost and
expense, comply promptly with all laws, ordinances, orders, regulations, and
requirements of all federal, state, and local governmental agencies, and with
the reasonable recommendations of any insurer under any policies required under
this Lease, that may be applicable to the Premises or the use thereof; provided,
however, that: (a) Tenant shall not be obligated to make any repairs,
alterations or improvements to the Premises that are required by governmental
authorities pursuant to requirements that were in effect on the date of this
Lease to the extent that the Building was not in compliance with such
requirements on the date of this Lease, except for ADA requirements; and (b)
Tenant shall not be responsible for any matters for which Landlord is
responsible under paragraph 23 of this Lease. Landlord shall be responsible for
the costs of compliance described in subparagraphs (a) and (b) of this paragraph
22. Tenant shall be obligated to make any repairs, alterations or improvements
to the Premises that are required by governmental
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authorities to comply with requirements enacted after the day of this Lease;
provided, however, that, with respect to such requirements that apply generally
to buildings similar to the Building, (1) Tenant will be obligated to cause such
compliance to occur and to pay the cost of such compliance only to the extent
such the cost of such compliance is equal to or less than $25,000 in any
calendar year and (2) Landlord will be obligated to cause such compliance to
occur and to pay the cost of such compliance only to the extent that the cost of
such compliance is in excess of $25,000 per calendar year. If Landlord pays any
cost under subparagraph (2) of this paragraph 22, then monthly Base Rent shall
be increased thereafter by an amount equal to the monthly amortization of such
cost paid by Landlord, determined using an interest rate equal to the Reference
Rate and a period equal to the manufacturer's estimated useful life of the
improvement, alteration and/or replacement to which such cost relates.
23. HAZARDOUS MATERIALS. Tenant agrees not to cause or permit the
presence, use, generation, release, discharge, storage, disposal, or
transportation of any Hazardous Materials (as defined below) on, under, in,
above, to, or from the Property other than presence, use, storage and
transportation which is both (a) required for and solely incidental to Tenant's
principal use and operation of the Premises, and (b) in strict compliance with
all applicable federal, state, and local laws, regulations, and orders (such
obligations of Tenant being referred to below as "Tenant's Environmental
Obligations"). For the purposes of this Lease the term "Hazardous Materials"
shall refer to any substances, materials, and wastes that are or become
regulated as hazardous or toxic substances under any applicable local, state, or
federal law, regulation, or order ("Environmental Laws"). Tenant shall
indemnify, defend, and hold Landlord harmless from and reimburse Landlord for
any breach of Tenant's Environmental Obligations and all of the following which
may result from such a breach: (1) any loss, cost, expense, claim, or liability
arising out of any investigation, reporting, monitoring, clean-up, containment,
removal, storage, or restoration work required by any applicable federal, state,
or local law, governmental agency, or political subdivision or prudent standards
of real estate ownership and management; and (2) any claims of third parties for
loss, injury, expense, or damage arising out of the presence, release, or
discharge of any Hazardous Materials on, under, in, above, to, or from the
Premises during the term of this Lease.
Landlord shall indemnify, defend, and hold Tenant harmless from and
reimburse Tenant as to the presence, use, generation, release, discharge,
storage, disposal, or transportation of any Hazardous Materials on, under, in,
above, to, or from the Property prior to the Commencement Date, other than as a
result of the breach of Tenant's Environmental Obligations, and all of the
following which may result therefrom: (A) any loss, cost, expense, claim, or
liability arising out of any investigation, reporting, monitoring, clean-up,
containment, removal, storage, or restoration work required by any applicable
federal, state, or local law (which
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requirements Landlord agrees to satisfy at its sole expense), governmental
agency, or political subdivision or prudent standards of real estate ownership
and management; and (B) any claims of third parties for loss, injury, expense,
or damage arising out of such presence, release, or discharge of any Hazardous
Materials on, under, in, above, to, or from the Premises ("Landlord's
Environmental Indemnity"). Landlord will deliver to Tenant, not later than the
date required by paragraph 59 of this Lease, an irrevocable Standby Letter of
Credit ("Letter of Credit") in the initial amount of $2,000,000, issued to
Tenant (but not its assigns) by The Development Bank of Singapore Ltd. (New York
Agency), or another bank of Landlord's selection which is reasonably
satisfactory to Tenant, as security for the performance of Landlord's
Environmental Indemnity. Such Letter of Credit shall be in substantially the
form attached to this Lease as EXHIBIT E.
If Landlord defaults at any time during the initial term in the
performance of Landlord's Environmental Indemnity and such default continues
uncured for 30 days after written notice to Landlord, Tenant may draw upon the
Letter of Credit for the full amount paid by Tenant to cure a breach of
Landlord's Environmental Indemnity. Landlord will, at Landlord's expense, keep
the Letter of Credit in effect in the initial amount, less such draws, until the
31st day after the end of the initial term of this Lease (or, if Hazardous
Materials as to which Landlord has indemnified the Tenant pursuant to this Lease
are present or have been used, generated, released, discharged, stored, disposed
of or transported on, in, above, to or from the Property during the initial term
of this Lease, then until such later date as (i) all governmental agencies
having jurisdiction under Environmental Laws make final determinations that all
of the proper actions have been taken or that no actions are required with
respect to such Hazardous Materials and such determinations have been delivered
to Tenant or (ii) a court having jurisdiction over such matters determines that
Landlord has no indemnification responsibilities to Tenant regarding such
Hazardous Materials under the terms of this Lease and all appeals or the time
periods therefor have been exhausted with no change in such determination);
provided, however, that Tenant may waive such requirement at any time by express
written notice.
Tenant will have the right to draw on the Letter of Credit for the
then full amount of the Letter of Credit if Landlord fails to renew the Letter
of Credit in an amount equal to the original amount thereof, less any amounts
drawn by Tenant to date, and for a period equal to the shorter of (x) 1 year or
more or (y) the remaining portion of the period with respect to which Landlord
is required to maintain the Letter of Credit, if such period can be determined
with certainty, and accomplish such renewal and deliver the renewed Letter of
Credit to Tenant at least 15 days before any expiration date, time being of the
essence. If Tenant draws upon the Letter of Credit because Landlord has failed
to renew the Letter of Credit as required above, Tenant shall hold the proceeds
of such draw in a separate interest-
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bearing account (in Tenant's name) of Tenant's choosing. The proceeds and
interest in such account shall be paid to Tenant or Landlord as follows:
(AA) to Landlord, upon receipt by Tenant of a renewed Letter of
Credit conforming to the requirements of this Lease;
(BB) to Tenant, if and to the extent that Tenant would have been
entitled to draw upon the Letter of Credit if it had been renewed; and/or
(CC) to Landlord, if and when Landlord is no longer required to
provide the Letter of Credit under the terms of this Lease.
Tenant agrees that, upon termination of Landlord's obligation to
provide the Letter of Credit, Tenant will surrender the Letter of Credit to
Landlord and will execute all such certificates as Landlord reasonably requests
in connection with the termination of the Letter of Credit.
Landlord represents and warrants to Tenant that Landlord has no
knowledge of the presence of any Hazardous Materials on, in, or under the
Property in violation of an Environmental Law or of the escape, seepage,
leakage, spillage, discharge, deposit, disposal, emission or release of any
Hazardous Materials on, in, under or from the Premises in violation of an
Environmental Law, except if set forth in (a) that certain Environmental
Assessment for 21605 Plummer Street, Chatsworth (Symbolic II), prepared by
Rockwell, or (b) that certain draft soil and groundwater assessment report for
21415 and 21605 Plummer Street, Chatsworth, California, dated November 23, 1992,
prepared by Groundwater Technology, or (c) that certain letter prepared by
Clayton Environmental Consultants dated November 10, 1992 (collectively, the
"Environmental Assessments"). Tenant represents and warrants to Landlord that
Tenant has no knowledge of the presence of any Hazardous Materials on, in, or
under the Property in violation of an Environmental Law or of the escape,
seepage, leakage, spillage, discharge, deposit, disposal, emission or release of
any Hazardous Materials on, in, under or from the Premises in violation of an
Environmental Law, except if set forth in the Environmental Assessments.
Tenant agrees to provide to Landlord, within 10 days of receipt, a
copy of any notice regarding violation of any Environmental Law on or about the
Premises arising out of Tenant's operations on the Premises, a copy of any
report required by an Environmental Law regarding violation of the Environmental
Law on or about the Premises arising out of Tenant's operations on the Premises
and a copy of any notice of the emission or release of Hazardous Materials in
violation of an Environmental Law or arising out of Tenant's operations on the
Premises. Each Party agrees to provide to the other, within 10 days of receipt,
a copy of all test reports and correspondence associated with the investigation,
monitoring and
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remediation of soil and groundwater on, in or under the Property and a copy of
any notice regarding the presence of any Hazardous Materials on, in, or under
the Property or the escape, seepage, leakage, spillage, discharge, deposit,
disposal, emission or release of any Hazardous Materials on, in, under or from
the Property in violation of any Environmental Law.
If (aa) there is any Hazardous Material on, in, or under the Premises
in violation of an Environmental Law (other than those arising out of a breach
of Tenant's Environmental Obligations) and (bb) as a result thereof, there is,
in the reasonable opinion of Tenant, a danger of harm to the employees or
invitees of Tenant, and a governmental agency having jurisdiction orders Tenant
to vacate the Premises or any affected portion of the Premises and Tenant does
so, then all Base Rent, Impositions, Insurance Costs and other amounts due under
this Lease will abate from the date of such vacation, in proportion to the space
vacated, until the governmental agency which ordered the vacation rescinds or
terminates its order. If such governmental order is not rescinded or
terminated within ninety (90) days after such vacation of all or part of the
Premises by Tenant, either Landlord or Tenant may, within 30 days after the
expiration of such 90 day period, terminate this Lease by written notice to the
other party.
Tenant shall have the right during the term of this Lease to conduct
such environmental testing and monitoring of the Premises as Tenant deems
appropriate, including the installation of ground water monitoring wells and/or
such other testing and monitoring as might be included in a Phase II
environmental assessment. Such testing and monitoring shall be conducted in
accordance with applicable laws and regulations and only after not less than
thirty (30) days prior written notice to Landlord.
The obligations of Landlord and Tenant under this paragraph shall
survive the assignment, termination or cancellation of this Lease. The rights
of Landlord and Tenant under this paragraph shall be in addition to any other
rights and remedies which Landlord or Tenant may have against the Property, each
other or any other person under any other document or any Environmental Law.
24. ALTERATIONS. Except for non-structural alterations costing less
than $25,000, Tenant shall not alter the Premises or any part of the Property
without the prior written consent of Landlord (which consent shall be given or
withheld in writing, shall not be unreasonably withheld and shall be deemed to
be not given if not given or withheld in writing within 10 days after a written
request for such consent has been received by Landlord from Tenant), which
consent may be granted upon the condition that such alterations be removed (and
the affected portion of the Premises restored), at Tenant's expense, at the
expiration or earlier termination of this Lease. Each written request for such
consent shall contain a paragraph to be
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signed by Landlord indicating whether or not the alteration in question must be
removed by Tenant at the expiration or earlier termination of this Lease.
25. PROPERTY OF LANDLORD. Unless otherwise provided in this Lease,
all repairs, improvements, changes, alterations, and building equipment and
machinery (other than Trade Fixtures, Tenant's telephone switch and equipment,
air compressors and auxiliary air conditioners) made or installed by Tenant
(collectively, "Alterations") shall immediately upon completion or installation
thereof be and become the property of Landlord without payment therefor by
Landlord.
26. DAMAGE OR DESTRUCTION. Subject to the other provisions of this
Lease, if the Premises or any portion thereof becomes damaged or wholly or
partially untenantable because of fire, earthquake, act of God, the elements or
other casualty, Landlord shall repair such damage with and to the extent of the
insurance proceeds made available to Landlord for such purpose. However, if in
Landlord's opinion such repairs cannot be made within one hundred eighty (180)
days, Landlord shall so notify Tenant in writing within thirty (30) days of the
date of such damage. In such event, either Tenant or Landlord may terminate
this Lease within thirty (30) days after Landlord's notice. Termination shall
be effected by written notice delivered to the other party within said thirty
(30) day period. If this Lease is not so terminated, it shall remain in full
force and effect except that an abatement of Base Rent, Impositions, Insurance
Costs and other amounts due under this Lease shall be allowed Tenant for such
part of the Premises as shall be rendered unusable by Tenant in the conduct of
its business during the time such part is so unusable.
27. WAIVER. Tenant hereby waives California Civil Code Sections
1932, 1933, 1941 and 1942, and the provisions of any other law now or hereafter
in effect that would relieve Tenant from any obligation to pay rent under this
Lease except to the extent expressly provided in this Lease.
28. CONDEMNATION. If the Premises or any portion thereof is taken
under the power of eminent domain (hereinafter referred to as "Condemnation"),
this Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever occurs first. If more than 10% of
the floor area of the Premises is taken by Condemnation, then at Tenant's
option, exercisable only in writing and within ten (10) days after Landlord
shall have given Tenant written notice of such taking (or, in the absence of
such notice, within ten (10) days after the condemning authority shall have
taken possession), and provided that Tenant is not in default under this Lease,
Tenant may terminate this Lease as of the date the condemning authority takes
possession. If Tenant does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Basic Rent shall be
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reduced in the proportion that the floor area of the portions of the Premises
taken bears to the total floor area of the Premises.
29. CONDEMNATION AWARD. In the event any portion of the Premises is
taken by Condemnation, Landlord shall be entitled to and shall receive the total
award made in such Condemnation, which award Tenant hereby assigns to Landlord,
except that Tenant shall be entitled to receive such portion of the award as may
be specifically allocated in such proceedings to compensation for Tenant's Trade
Fixtures, for improvements paid for by Tenant and not reimbursed out of the
Tenant Improvement Allowance and for Tenant's relocation expenses.
30. RESTORATION. If less than the entire Premises shall be taken by
Condemnation, and this Lease is not terminated pursuant to paragraph 28, with
the net amount of any award received by Landlord in any proceeding for physical
damage to the Premises after deducting all of Landlord's costs and expenses of
collection, including without limitation attorneys' fees, Landlord shall
promptly restore that portion of the Premises not so taken to a complete
architectural unit.
31. TENANT'S WORK. All work done by Tenant, its agents and
contractors, in or about the Premises or the Property (hereinafter called the
"Work") shall be done in all cases subject to the following conditions, each of
which Tenant covenants to observe and perform:
(a) No Work involving any structural change and no Work
involving any alteration, restoration, or rebuilding costing more than $25,000
shall be undertaken until detailed plans and specifications have first been
submitted to and approved in writing by Landlord (which approval shall be given
or withheld in writing, shall not be unreasonably withheld and shall be deemed
to be not given if not given or withheld in writing within 10 days after a
written request for such approval has been received by Landlord from Tenant).
(b) No Work involving a cost, as reasonably estimated by Tenant,
of more than $25,000 shall be undertaken except under the supervision of an
architect or engineer approved in writing by Landlord (unless such requirement
is waived by Landlord in writing).
(c) All Work shall be (i) commenced only after Landlord has
received 10 days' prior notice of such Work or Landlord has approved such Work
and only after all required local and other governmental permits and
authorizations have been obtained, (ii) done in a good and workmanlike manner,
(iii) performed in compliance with the building and zoning laws and with all
other laws, ordinances, regulations, and requirements of all federal, state, and
local governmental agencies, and in accordance with the recommendations of any
insurer under any policies required by this Lease, and (iv) completed promptly
and
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free of liens. Approval of any Work by Landlord shall not imply or be construed
to indicate compliance with above requirements.
32. MECHANICS' LIENS. Tenant shall not suffer or permit any
mechanics' or other liens (or claims thereof) to be filed against the Premises
(or Tenant's leasehold interest therein or hereunder) or the Property by reason
of work, labor, services, or materials supplied or claimed to have been supplied
to Tenant or anyone holding the Premises or any part thereof through or under
Tenant; provided, however, that Tenant shall have the right to contest any such
liens so long as Tenant provides Landlord with reasonable security (by bond,
escrow or otherwise) during such contest. Landlord shall have the right at all
reasonable times to post and keep posted on the Premises any notices that
Landlord may deem necessary or advisable for the protection of Landlord, the
Premises and the Property from mechanics' liens. If any such liens (or claims
thereof) shall at any time be filed against the Premises or the Property, Tenant
shall contest the liens or claims as provided above or shall cause the same to
be discharged of record within forty-five (45) days after the date of filing.
33. FINANCIAL STATEMENTS. Upon the request of Landlord, Tenant shall
provide to Landlord, at no expense to Landlord, copies of the most recent
quarterly and annual financial reports with respect to Tenant as have been made
available by Tenant to its shareholders.
34. LANDLORD'S ENTRY. Tenant agrees to permit Landlord and any
authorized representatives of Landlord, upon reasonable prior notice to Tenant,
to enter the Premises with reasonable frequency during usual business hours, or
at any other time in case of emergency, (a) to inspect (which may include
environmental audits) the Premises and, if Landlord so desires, but without
implying any obligation of Landlord to do so, to make any repairs deemed
necessary or desirable by Landlord and to perform any work in the Premises
deemed necessary by Landlord to comply with any laws or the recommendations of
any insurer, and (b) during the final twelve months of the term of this Lease,
for the purpose of leasing the Premises, during which twelve-month period
Landlord may display on the Premises, in such manner as not to interfere
unreasonably with Tenant's business, usual "For Sale" or "To Let" signs.
35. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not, without the prior consent of Landlord
(which consent shall be given or withheld in writing, shall not be unreasonably
withheld and shall be deemed to be not given if not given or withheld in writing
within 10 days after a written request for such consent has been received by
Landlord from Tenant), assign this Lease or any interest herein, sublet the
Premises or any part thereof, or permit the use of the Premises by any party
other than Tenant. This
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Lease shall not, nor shall any interest herein, be assignable as to the interest
of Tenant by operation of law except as herein otherwise provided. Any of the
foregoing acts without such consent shall be void and shall, at the option of
Landlord, terminate this Lease. In connection with each consent requested by
Tenant, Tenant shall submit to Landlord the terms of the proposed transaction,
the identity of the parties to the transaction, the proposed documentation for
the transaction, and all other information reasonably requested by Landlord
concerning the proposed transaction and the parties involved.
(b) If the Tenant is a privately held corporation, the transfer
(except pursuant to a public offering), assignment, or hypothecation of any
stock or interest in such corporation in excess of fifty percent (50%) in the
aggregate of the voting stock or interest in Tenant shall be deemed an
assignment or transfer within the meaning and provisions of this paragraph. If
Tenant is a publicly held corporation, the public offering or trading of stock
in Tenant shall not be deemed an assignment or transfer within the meaning of
this paragraph.
(c) Without limiting the other instances in which it may be
reasonable for Landlord to withhold its consent to an assignment or subletting,
Landlord and Tenant acknowledge that it shall be reasonable for Landlord to
withhold its consent in the following instances:
(1) if at the time consent is requested or at any time
prior to the granting of consent, Tenant is in default under this Lease or would
be in default under this Lease but for the pendency of any grace or cure period
specified in this Lease; or
(2) if the proposed assignee or sublessee is a governmental
agency; or
(3) if, in Landlord's reasonable judgment, the use of the
Premises by the proposed assignee or sublessee would involve occupancy in
violation of this Lease.
(d) If at any time during the term of this Lease Tenant desires
to assign its interest in this Lease or sublet all or any part of the Premises,
Tenant shall give notice to Landlord setting forth the terms of the proposed
assignment or subletting ("Tenant's Request"). If the consummation of the
assignment or sublease would cause Tenant to occupy less than 50% of the
rentable area of the Premises, Landlord shall have the option, exercisable by
written notice given to Tenant within thirty (30) days after Tenant's Request is
given ("Landlord's Option Period"), either (1) to consent to the assignment
(which consent shall not be unreasonably withheld and shall be deemed to be not
given if not given or withheld in writing within such 30-day period), in which
event the provisions of subparagraph (g) shall be applicable,
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or to consent to the subletting in which event the provisions of subparagraph
(h) shall be applicable; (2) to become the assignee or sublessee of Tenant
(instead of the entity specified in Tenant's Request) upon the terms set forth
in Tenant's Notice; (3) in the event of (A) a proposed assignment, or (B) a
proposed subletting of the entire Premises, or a portion of the Premises for all
or substantially all of the remainder of the term, to terminate this Lease with
respect to, and to retake possession of, the space in question, together with,
if only a portion of the Premises is involved, such rights of access to and from
such portion as may be reasonably required for its use and enjoyment. If the
foregoing sentence is applicable and Landlord does not exercise one of such
options, or if Landlord consents or is deemed to consent to the proposed
assignment or sublease, Tenant shall be free for a period of one hundred twenty
(120) days after giving Tenant's Request, or one hundred twenty (120) days after
the date Landlord's consent (if such consent is required) is given to Tenant, or
one hundred twenty (120) days after the expiration of Landlord's Option Period
(if applicable), to assign its entire interest in this Lease or to sublet such
space to the entity specified in Tenant's Request upon the terms set forth
therein or to any third party upon the same terms set forth in Tenant's Request,
subject to obtaining Landlord's prior consent as hereinabove provided.
(e) Notwithstanding the provisions of subparagraphs (a) and (b)
above, Tenant may assign this Lease or sublet the Premises or any portion
thereof, with prior notice to Landlord but without the necessity of Landlord's
consent and without extending any option to Landlord pursuant to subparagraph
(d) above, to any corporation which controls, is controlled by or is under
common control with Tenant, or to any corporation resulting from the merger or
consolidation with Tenant ("Affiliate").
(f) No sublease, once consented to by Landlord, shall be
modified or terminated by Tenant without Landlord's prior consent (which consent
shall be given or withheld in writing, shall not be unreasonably withheld and
shall be deemed to be not given if not given or withheld in writing within 10
days after a written request for such consent has been received by Landlord from
Tenant).
(g) In the case of an assignment to an entity other than
Landlord or an Affiliate, 50% of all sums and other economic consideration
received by Tenant as a result of such assignment shall be paid to Landlord
after first deducting 50% of: (1) the unamortized cost of leasehold improvements
paid for by Tenant, (2) the cost of any concessions and inducements given to the
assignee by Tenant and (3) the cost of any real estate commissions and other
marketing costs incurred by Tenant in connection with such assignment.
(h) In the case of a subletting to an entity other than Landlord
or an Affiliate, 50% of all sums and economic consideration received by Tenant
as a result of such subletting shall be paid to Landlord after first deducting
50% of (1) the
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rental due hereunder, prorated to reflect only rental allocable to the sublet
portion of the Premises, (2) the cost of leasehold improvements made to the
sublet portion of the Premises at Tenant's cost, amortized over the term of this
Lease except for leasehold improvements made for the specific benefit of the
sublessee, and the cost of any concessions and inducements given to the
subtenant by Tenant, all of which shall be amortized over the term of the
sublease, and (3) the cost of any real estate commissions and other marketing
costs incurred by Tenant in connection with such subletting, amortized over the
term of the sublease.
(i) Regardless of Landlord's consent, no subletting or
assignment (except to Landlord pursuant to the provisions of subparagraph (d)
above) shall release Tenant of Tenant's obligation or alter the primary
liability of Tenant to pay the rent and to perform all other obligations to be
performed by Tenant hereunder. The acceptance of rent by Landlord from any
other person shall not be deemed to be a waiver by Landlord of any provision
hereof. Consent to one assignment or subletting shall not be deemed consent to
any subsequent assignment or subletting. In the event of default by any
assignee of Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against such assignee or successor. Landlord may consent
to subsequent assignments or subletting of this Lease or amendments or
modifications to this Lease with assignees of Tenant, without notifying Tenant,
or any successor of Tenant, and without obtaining its or their consent thereto,
and such action shall not relieve Tenant of liability under this Lease.
(j) In the event Tenant shall once request the consent of
Landlord to any assignment or subletting, then as to each request for consent to
a further assignment or subletting Tenant shall pay Landlord's then reasonable
and standard processing fee and Landlord's reasonable attorneys' fees incurred
in connection therewith; provided, however, that Tenant shall not be required to
pay Landlord in excess of $500 for Landlord's processing fee or attorney's fees
in connection with any such request.
(k) In the event of an assignment of this Lease by Tenant to an
Affiliate, if Tenant returns the Letter of Credit to Landlord and requests
Landlord to do so in writing, Landlord shall promptly cause the Letter of Credit
to be reissued in the name of the assignee as Beneficiary. In the event of any
other assignment of this Lease by Tenant, the Letter of Credit will not be
issued in the name of the assignee and the assignee will have no right to draw
upon or have the benefits of the Letter of Credit.
(l) If the initial Tenant assigns this Lease to an Affiliate and
does not request that the Letter of Credit be reissued in the name of the
Affiliate as Beneficiary pursuant to subparagraph 35(k) above, the Letter of
Credit shall be
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maintained by Landlord as required by this Lease for the remainder of the
initial term of this Lease and the initial Tenant shall be entitled to draw upon
the Letter of Credit on its own behalf or on behalf of such Affiliate.
36. SUBORDINATION. At Landlord's option, this Lease shall be
subordinate to any ground lease, mortgage, deed of trust, or any other
hypothecation or security now or hereafter placed upon the Premises and to any
and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements, and extensions thereof.
Notwithstanding such subordination, Tenant's right to a quiet possession of the
Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee, or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust, or ground lease, and shall give written
notice thereof to Tenant, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of such mortgage, deed of trust, or ground lease or the date of the
recording thereof.
37. ATTORNMENT. In the event any proceedings are brought for the
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage or deed of trust now or hereafter on the Premises or any part thereof,
Tenant shall, if so requested by the purchaser upon such foreclosure or sale or
the grantee under a deed in lieu of foreclosure, attorn to such purchaser or
grantee and recognize such purchaser or grantee as the Landlord under this
Lease.
38. INDEMNIFICATION. Tenant agrees to indemnify, defend, and save
Landlord harmless from and to reimburse Landlord for any and all claims arising
from (a) the conduct or management of, or any work or thing whatsoever done by
or for Tenant in or about the Premises or the Property during the term of this
Lease, (b) any condition existing during the term of this Lease of (i) the
Premises, (ii) any street, curb, or sidewalk adjoining the Premises, or (iii)
any vaults, passageways, or spaces therein or appurtenant thereto, (c) any
breach or default on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed pursuant to the terms of this
Lease, (d) any act or negligence of Tenant or any of its agents, contractors,
servants, employees, or licensees occurring about the Premises, (e) any
accident, injury, or damage whatsoever caused to any person, firm, or
corporation occurring during the term of this Lease in or about the Premises or
upon or under the sidewalks or the land adjacent thereto, and (f) any and all
costs, counsel fees, expenses, and liabilities reasonably incurred in connection
with the such claim or action or proceeding brought thereon, except to the
extent that any of the above-described claims arise out of the negligence or
willful misconduct of Landlord, in which case Landlord agrees to indemnify,
defend, and save Tenant harmless from and to reimburse Tenant for any and all
claims arising from such
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negligence or wilful misconduct. In case any action or proceedings be brought
against an indemnified party by reason of an indemnified claim, the indemnifying
party, upon notice from the indemnified party, covenants to resist or defend
such action or proceeding by counsel satisfactory to the indemnified party.
39. ATTORNEYS' FEES. If any action arising out of this Lease is
brought by either party hereto against the other, then and in that event the
unsuccessful party to such action shall pay to the prevailing party all costs
and expenses, including reasonable attorneys' fees, incurred by such prevailing
party, and if the prevailing party shall recover judgment in such action, such
costs, expenses and attorneys' fees (at trial and on appeal) shall be included
in and as part of such judgment.
40. LANDLORD'S CORRECTION OF DEFECTS; REPRESENTATIONS. Tenant shall,
within 30 days after commencing construction of the Tenant Improvements, provide
Landlord with a written list of operating defects, if any, observed by Tenant in
the Building's systems or the portions of the Premises for which Landlord has
maintenance responsibility under paragraph 16 of this Lease. Landlord will, not
later than the Commencement Date (or such earlier date as may be reasonably
required by Tenant in order for Tenant to complete the Tenant Improvements on or
before the Commencement Date), correct such defects. Except as otherwise
expressly provided in this Lease, Landlord has made no representations of any
nature whatsoever in connection with the condition of the Premises or the
Property or any part thereof, and Landlord shall not be liable for any defects
therein.
41. EVENTS OF DEFAULT. The following events shall be deemed to be
events of default by Tenant under this Lease:
(a) The failure of Tenant to pay any installments of Base Rent
or additional rent when due, or any other payment or reimbursement to Landlord
required herein when due, where such failure shall continue for a period of five
(5) days after written notice of such failure.
(b) (i) The application by Tenant for, or Tenant's consent to
the appointment of, a receiver, trustee, or liquidator of Tenant or of all or a
substantial part of Tenant's assets, (ii) the making by Tenant of any general
arrangement or assignment for the benefit of creditors, (iii) Tenant becoming a
"debtor" as defined in 11 U.S.C. Section 101 or any successor statute thereto
(unless, in the case of a petition filed against Tenant, the same is dismissed
within sixty (60) days), (iv) the appointment of a trustee or receiver to take
possession of all or substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease (unless possession is restored to
Tenant within ninety (90) days) or (v) the attachment, execution, or other
judicial seizure of all or substantially all of Tenant's
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assets located at the Premises or of Tenant's interest in this Lease (unless
such seizure is discharged within ninety (90) days).
(c) Tenant shall fail to comply with any other term, provision,
or covenant of this Lease, where such failure shall continue for a period of
twenty (20) days after written notice thereof to Tenant, provided, however, that
if such failure cannot reasonably be cured within twenty (20) days, Tenant shall
not be deemed in default with respect to such failure if Tenant commences to
cure such default within said twenty (20) day period and thereafter diligently
and continuously prosecutes such cure to a prompt completion. In the event
Landlord serves Tenant with a "Notice to Perform or Quit" pursuant to applicable
unlawful detainer statutes, such notice shall also constitute the notice
required by this subparagraph, provided that such notice gives Tenant at least
twenty (20) days in which to perform or quit.
42. LANDLORD'S REMEDIES. Upon the occurrence of any event of default
by Tenant, Landlord may, at its option and without any further notice or demand
(in addition to any other rights and remedies under this Lease, at law or in
equity) do any of the following:
(a) Landlord shall have the right, so long as such default
continues, to give notice of termination to Tenant. On the date specified in
such notice (which shall not be less than three (3) days after the giving of
such notice) this Lease shall terminate.
(b) In the event of any such termination of this Lease, Landlord
may then or at any time thereafter re-enter the Premises and remove therefrom
all persons and property and again repossess and enjoy the Premises, without
prejudice to any other remedies that Landlord may have by reason of Tenant's
default or of such termination.
(c) The amount of damages that Landlord may recover in the event
of such termination shall include, without limitation: (1) the amount at the
time of award (computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent) of
(A) unpaid rent earned at the time of termination, (B) the amount by which the
unpaid rent that would have been earned during the period from termination until
the award exceeds the amount of such rent loss that Tenant proves could have
been reasonably avoided, and (C) the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rent loss
that Tenant proves could be reasonably avoided; (2) all legal expenses and other
related costs incurred by Landlord following Tenant's default; (3) all costs
incurred by Landlord in restoring the Premises to good order and condition, or,
to the extent reasonably necessary to accomplish such reletting, in remodeling,
renovating, or otherwise
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preparing the Premises for reletting; and (4) all other costs (including without
limitation any brokerage commissions) incurred by Landlord in
reletting the Premises.
(d) Following the termination of this Lease (or upon Tenant's
failure to remove its personal property from the Premises after the expiration
of the term of this Lease), Landlord may remove any and all personal property
located in the Premises and sell or place such property in a public or private
warehouse or elsewhere at the sole cost and expense of Tenant in accordance with
applicable law. Tenant waives all claims for damages that may be caused by
Landlord's removing, storing, or selling the property as herein provided.
(e) Landlord shall have the right to cause a receiver to be
appointed in any action against Tenant to take possession of the Premises and to
collect the rents or profits derived therefrom. The appointment of such
receiver shall not constitute an election on the part of Landlord to terminate
this Lease unless notice of such intention is given to Tenant.
(f) Landlord shall have the remedy described in California Civil
Code Section 1951.4 (i.e. Landlord may continue this Lease in effect after
Tenant's abandonment and recover rent as it becomes due, because Tenant has the
right to sublet or assign, subject only to reasonable limitations). Even though
Tenant has breached this Lease and abandoned the Premises, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's right to
possession, and Landlord may enforce all its rights and remedies under this
Lease, including the right to recover rent in periodic actions as it becomes due
under this Lease. In such event, Landlord may re-enter the Premises and remove
all persons and property if the Premises have not been vacated, using any
available summary proceedings, without such re-entry or removal being deemed a
termination or acceptance of surrender of this Lease. Landlord may then elect to
relet the Premises for the account of Tenant for a period that may extend beyond
the term hereof, and upon such other terms as Landlord may reasonably deem
appropriate. Tenant shall reimburse Landlord upon demand for all costs incurred
by Landlord in connection with such reletting, including without limitation
necessary restoration, renovation, or improvement costs, attorneys' fees, and
brokerage commissions. The proceeds of such reletting shall be applied first to
any sums then due and payable to Landlord from Tenant, including the
reimbursement described above. The balance, if any, shall be applied to the
payment of future rent as it becomes due hereunder.
43. TENANT'S SETOFF RIGHTS. If (a) Landlord fails to perform any
repair or maintenance obligation of Landlord under this Lease, and fails to cure
such default within 30 days after receipt of notice of such default from Tenant
(or, if Landlord's repair or maintenance obligation cannot be reasonably
performed within 30 days, Landlord fails to commence to perform it within such
30-day period and to
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thereafter diligently prosecute it to a prompt conclusion), or (b) Landlord
fails to pay Tenant the Tenant Improvement Allowance when required to do so
under this Lease, and fails to cure such default within one year after receipt
of notice of such default from Tenant, Tenant may cure such default and charge
the costs to Landlord (plus interest on such charges from the date the charges
are incurred by Tenant, at the Default Interest Rate), and may set off such
costs and interest, and/or any portion of the Tenant Improvement Allowance that
has not been made to Tenant by Landlord (plus interest on such portion from the
date it was due to Tenant, at the Default Interest Rate), against installments
of Base Rent due under this Lease; provided, however, that Tenant shall not
set-off against more than 25% of the Base Rent due in any month (but such
limitation shall not apply to the final 6 months of this Lease). Tenant shall
be permitted to continue to set off against succeeding installments of Base Rent
due under this Lease until the total amount of such costs or payment and
interest thereon have been recovered by Tenant.
44. CUMULATIVE REMEDIES. The specified remedies to which Landlord
may resort under the terms of this Lease are cumulative and are not intended to
be exclusive of any other remedies or means of redress to which Landlord may be
entitled, either at law or in equity, in case of any breach or threatened breach
by Tenant of any covenant, agreement, or condition of this Lease.
45. NO WAIVERS. The failure of Landlord to insist in any one or more
instances upon the strict performance or observance of any of the covenants,
agreements, or conditions of this Lease or to exercise any option herein
contained shall not be construed as a waiver or a relinquishment of future
performance or observance of such covenant, agreement, or condition or exercise
of such option.
46. HOLDING OVER. Tenant covenants that it will vacate the Premises
immediately upon the expiration or sooner termination of this Lease. If, with
Landlord's consent, Tenant retains possession of the Premises or any part
thereof after the expiration or termination hereof, Tenant shall pay Landlord
200% of the Base Rent due under this Lease immediately before such expiration or
termination, for the time Tenant thus remains in possession. The provisions of
this paragraph do not exclude Landlord's rights of re-entry or any other right
hereunder, including without limitation the right to refuse 200% Base Rent and
instead to remove Tenant through summary proceedings for holding over beyond the
expiration of the term of this Lease.
47. NOTICES. All notices, demands, and requests that may or are
required to be given by either party to the other shall be in writing and shall
be deemed given when sent by United States Certified Mail, postage prepaid, (a)
if for Tenant, addressed to Tenant (Attn: Chief Financial Officer), prior to
Commencement Date at 9310 Topanga Canyon Boulevard, Chatsworth, California 91311
and after the Commencement Date at the address of the Premises, in either
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case with a copy to ADC Telecommunications, Inc., 12501 Whitewater Drive,
Minnetonka, Minnesota 55343 (Attn: Chief Financial Officer and Attn: General
Counsel), or at such other address or addresses as Tenant may from time to time
designate by written notice to Landlord, or (b) if for Landlord, addressed to
Landlord, c/o GSIC Realty Corporation, 255 Shoreline Drive, Suite 600, Redwood
City, California 94065 or at such other places as Landlord may from time to time
designate by written notice to Tenant.
48. LIMITATION OF LANDLORD'S LIABILITY. In the event of a sale or
transfer by Landlord of its interest in the Premises or this Lease, such sale or
transfer shall operate to release the transferor from all liability for the
performance of the obligations of Landlord hereunder, expressed or implied, from
and after the date of such transfer, and Tenant agrees thereafter to look solely
to the successor in interest of Landlord in and to this Lease for the
performance of Landlord's obligations hereunder accruing after the date of such
transfer (including the return of the Security Deposit) and thereupon Landlord
shall be discharged from any further liability with respect thereto.
49. ESTOPPEL CERTIFICATES. At any time and from time to time upon
not less than ten (10) days' prior request by Landlord, Tenant agrees to
execute, acknowledge, and deliver to Landlord a statement in writing certifying
(a) that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the same is in full force and effect as modified and
identifying the modifications), (b) the dates to which Base Rent, Impositions,
Insurance Costs and other amounts due under this Lease have been paid, and (c)
whether there is then existing any claim by Tenant of default hereunder by
Landlord and, if so, specifying the nature thereof. It is intended that any such
statement may be relied upon by any person proposing to acquire Landlord's
interest in this Lease or any prospective mortgagee of, or assignee of any
mortgage upon, such interest. At any time and from time to time upon not less
than ten (10) days' prior request by Tenant, Landlord agrees to execute,
acknowledge, and deliver to Tenant a statement in writing certifying (a) that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and
identifying the modifications), (b) the dates to which Base Rent, Impositions,
Insurance Costs and other amounts due under this Lease have been paid, and (c)
whether there is then existing any claim by Landlord of default hereunder by
Tenant and, if so, specifying the nature thereof. It is intended that any such
statement by Landlord may be relied upon by any person proposing to receive a
mortgage or assignment of Tenant's interest in this Lease or to enter into any
sublease of all or part of the Premises.
50. BROKERAGE. Each party represents and warrants to the other that
it has not dealt with any broker, agent, or other person in connection with this
transaction and that no other broker, agent, or other person brought about this
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transaction through it, other than CB Commercial Real Estate, Mel Goldstein, Bob
Shafer, The Johnston Group and Cal Johnston (whose commissions shall be paid by
Landlord), and each party agrees to indemnify and hold the other party harmless
from and to reimburse the other party for any and all claims by any other
broker, agent, or person claiming a commission or other form of compensation by
virtue of having dealt with it with respect to this leasing transaction. The
provisions of this paragraph shall survive the termination of this Lease.
51. SECURITY DEPOSIT. Tenant shall, upon execution of this Lease,
deposit with Landlord the sum of $77,000.00 as security for the full and
faithful performance of every provision of this Lease to be performed by Tenant
during the full term of this Lease (the "Security Deposit"). If Tenant defaults
with respect to any provision of this Lease during the term of this Lease and
such default continues beyond the applicable grace period, Landlord may use,
apply, or retain all or any part of the Security Deposit for the payment of Base
Rent or any other sum in default, for the payment of any other amount that
Landlord may spend or become obligated to spend by reason of Tenant's default,
or to compensate Landlord for any other loss, cost, or damage that Landlord may
suffer by reason of Tenant's default. If any portion of the Security Deposit is
so used or applied, Tenant shall, within five (5) days after written demand
therefor, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Landlord shall not be required to keep
the Security Deposit separate from its general funds and Tenant shall not be
entitled to interest on such deposit. Landlord shall refund the Security Deposit
to Tenant within 10 days after the expiration of the term of this Lease. If (a)
Tenant has reasonable grounds, valid as of a date not more than 30 days prior to
the date that the final full monthly Base Rent payment is due under this Lease,
to believe that the then Landlord is unlikely to be in a financial position to
return the Security Deposit during the required refund period (the then pendency
of bankruptcy proceedings with regard to such Landlord or any general partner
thereof being absolute and unrebuttable evidence of reasonable grounds for such
belief), and/or (b) the then Landlord is a successor to the initial Landlord
under this Lease and has failed to enter into a written agreement running to the
benefit of and enforceable by Tenant whereby the then Landlord unconditionally
assumes all of the Landlord's obligations under this Lease with respect to the
Security Deposit or an original copy of such agreement has not been delivered to
Tenant (provided, however, that the then Landlord may in the alternative provide
Tenant with an opinion of counsel reasonably satisfactory to Tenant that, under
California law then in effect, Tenant shall have the same rights with respect to
the then Landlord without such a written agreement that it would have had if
such a written agreement were executed and delivered to Tenant) and/or (c) if
Landlord is a lender who shall have acquired title to the Premises without
personal obligation to refund the Security Deposit to Tenant within the required
refund period, Tenant shall give notice of such fact(s) to Landlord on or before
the date 15 days prior to the date that the final full monthly Base Rent payment
is due under this Lease. If Landlord
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receives such notice and does not, prior to the date 5 days before the date that
the final full monthly Base Rent payment is due under this Lease, (i) if
subparagraph (a) above applies, provide Tenant with reasonable security for the
performance of Landlord's obligation to refund the Security Deposit and/or (ii)
if subparagraph (b) above applies, provide Tenant with the written agreement or
opinion described in such subparagraph (b) and/or (iii) if subparagraph (c)
above applies, provide to Tenant the lender-Landlord's written personal
commitment to Tenant to refund the Security Deposit during the required refund
period, Tenant may setoff such Security Deposit against the payment of Base Rent
and any other sums due Landlord under this Lease that are due on such payment
date or any subsequent date.
52. SIGNAGE. Tenant shall not place or permit on the exterior or
roof of the Premises or on the balance of the real property constituting the
Premises or on the balance of the Property any sign, advertisement,
illumination, projection, or similar thing (a "Sign"), unless (a) Landlord has
given its prior written consent thereto (which consent shall be given or
withheld in writing, shall not be unreasonably withheld and shall be deemed to
be not given if not given or withheld in writing within 10 days after a written
request for such consent has been received by Landlord from Tenant), and (b)
such Sign complies with applicable law. Subject to the foregoing, Tenant may
place a monument sign in front of the Premises, Tenant may place a directional
delivery sign at the delivery driveway shown on the attached EXHIBIT A, and may
place a sign or signs on the exterior of the Premises.
53. TENANT IMPROVEMENTS.
(a) Tenant shall construct the improvements to the Premises
described on the attached EXHIBIT C (collectively, the "Tenant Improvements").
Tenant shall promptly commence the work for Tenant Improvements and shall
diligently pursue such work to completion, as described in subparagraph (e)
below.
(b) Tenant shall submit to Landlord complete, finished drawings
and specifications (the "Plans") for the Tenant Improvements. The Plans shall
be subject to Landlord's approval (which approval shall be given or withheld in
writing, shall not be unreasonably withheld and shall be deemed to be not given
if not given or withheld in writing within 10 days after a written request for
such approval has been received by Landlord from Tenant). Within ten (10)
business days after its receipt of the Plans, Landlord shall notify Tenant of
its approval or disapproval of the Plans, and if Landlord disapproves the Plans,
the revisions that Landlord requires in order to obtain such approval. Tenant
and Tenant's architect or engineer shall meet with Landlord and its agents
within a reasonable period of time after any request for such meeting by
Landlord to answer questions or provide additional information with respect to
the Plans. As promptly as reasonably possible thereafter, Tenant shall submit
to Landlord modified Plans incorporating the revisions required by Landlord.
The modified Plans shall be subject to
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Landlord's approval (which approval shall be given or withheld in writing, shall
not be unreasonably withheld and shall be deemed to be not given if not given or
withheld in writing within 10 days after a written request for such approval has
been received by Landlord from Tenant). The final Plans and specifications
approved by Landlord are hereinafter referred to as the "Final Plans." If
appropriate, Tenant shall cause two sets of reproducible Final Plans, marked for
pricing and construction to be delivered to Landlord within 5 days after
Landlord's approval of the Final Plans. Tenant shall engage an architectural
firm, duly licensed in the State of California, for preparation of the Plans and
supervision of the construction of the Tenant Improvements. Such firm shall be
subject to Landlord's approval (which approval shall be given or withheld in
writing, shall not be unreasonably withheld and shall be deemed to be not given
if not given or withheld in writing within 10 days after a written request for
such approval has been received by Landlord from Tenant). Tenant shall not
commence any work in the Premises until Landlord has finally approved the Plans
(which approval shall be given or withheld in writing, shall not be unreasonably
withheld and shall be deemed to be not given if not given or withheld in writing
within 10 days after a written request for such approval has been received by
Landlord from Tenant).
(c) Tenant shall pay all the Tenant Improvement Costs (as
defined below) and, provided there are no events of default by Tenant, Landlord
will provide the Tenant Improvement Allowance specified in subparagraph (e)
below. Tenant Improvement Costs shall include, but not be limited to, the cost
of the work described on the attached EXHIBIT C to the extent included in the
Final Plans, and the following with respect to the Final Plans: hard costs of
construction (including builder's risk insurance and the Performance and Payment
Bonds hereinafter specified), permitting fees and the fees of Tenant's architect
and engineer, and of Tenant's construction manager, if any. Tenant Improvement
Costs shall not include any of Tenant's equipment or other personal property or
trade fixtures.
(d) Tenant shall employ a general contractor for the Tenant
Improvements duly licensed in the State of California and approved by Landlord
(which approval shall be given or withheld in writing, shall not be unreasonably
withheld and shall be deemed to be not given if not given or withheld in writing
within 10 days after a written request for such approval has been received by
Landlord from Tenant). Upon request by Landlord, Tenant shall deliver to
Landlord a copy of the construction contract entered into by Tenant and the
general contractor. Before any work commences, the general contractor shall
obtain and deliver to Landlord Performance and Payment Bonds in form and amount
approved by Landlord (which approval shall be given or withheld in writing,
shall not be unreasonably withheld and shall be deemed to be not given if not
given or withheld in writing within 10 days after a written request for such
approval has been received by Landlord from Tenant). Such Bonds shall name
Landlord as the
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obligee and shall be written by surety companies which have been approved by
Landlord (which approval shall be given or withheld in writing, shall not be
unreasonably withheld and shall be deemed to be not given if not given or
withheld in writing within 10 days after a written request for such approval has
been received by Landlord from Tenant) and are either on the United States
Department of the Treasury's list of sureties acceptable to the United States
Government or have at least a BB+ rating by Bests. The Tenant Improvements
shall be constructed in a good and workmanlike manner and shall comply with all
laws, codes and ordinances applicable to the Premises. Not less than five (5)
days prior to the date Tenant desires to commence the Tenant Improvements,
Tenant shall give written notice to Landlord setting forth or accompanied by all
of the following:
(i) A description and schedule for the work to be
performed;
(ii) The names and addresses of all contractors,
subcontractors and material suppliers who have then been engaged to construct or
supply the Tenant Improvements;
(iii) Copies of all licenses and permits which may be
required in connection with the Tenant Improvements and which can then be
obtained; and
(iv) Certificates of builder's risk insurance
reasonably satisfactory to Landlord.
As additional rent under this Lease, Tenant shall make, at its expense, any
repairs to the Premises and any corrections to the Tenant Improvements, the need
for which arise from the actions or omissions of anyone constructing the Tenant
Improvements. During the progress of the work to be done by Tenant, such work
shall be subject to inspection by representatives of Landlord who shall be
permitted access and the opportunity to inspect, at all reasonable times upon
reasonable advance notice, in compliance with any safety and work rules then
imposed at the Premises by Tenant or its contractors, but this provision shall
not in any way whatsoever create any obligation on Landlord to conduct any such
inspection.
(e) Upon completion of the Tenant Improvements in accordance
with the Final Plans and the requirements of the ADA, Landlord shall pay to
Tenant an amount (the "Tenant Improvement Allowance") equal to the sum of (1)
the lesser of the Tenant Improvement Costs or $600,000, plus (2) the ADA
Payment, upon receipt of all of the following: (i) unconditional lien waivers
from all contractors, subcontractors and suppliers of materials and equipment,
(ii) an affidavit executed by the general contractor certifying the cost of the
Tenant Improvements and stating that it has delivered to Landlord lien waivers
from all
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subcontractors and suppliers and that the contractor has paid all debts or
settled all claims for labor and materials in connection with the Tenant
Improvements, (iii) an affidavit executed by Tenant that it accepts and is
satisfied with the Tenant Improvements and that all contractors and suppliers in
connection with the Tenant Improvements have been paid, (iv) a certification of
completion executed by the Tenant's architect confirming that the Tenant
Improvements have been completed in accordance with the Final Plans and that, if
required, a Certificate of Occupancy (temporary or permanent) has been issued
with respect to the Premises by the local authority having jurisdiction thereof,
and (v) if required by Landlord, a complete set of "as-built" plans and
specifications for the Tenant Improvements. The Tenant Improvements shall be
deemed completed upon satisfaction of all of the foregoing. Tenant's obligation
to pay the rent under this Lease shall not be postponed due to delay of any
nature, however arising, in completion of the Tenant Improvements, except for
delays caused by Landlord's failure to perform its repair and maintenance
obligations under paragraphs 16 and 40 of this Lease, in which case the
Commencement Date shall, at Tenant's option to be exercised by written notice to
Landlord, be extended by the number of days of delay so caused by Landlord.
(f) Tenant agrees to expend at least $400,000 in excess of the
Tenant Improvement Allowance for the Tenant Improvements, including costs of
Tenant's internal space planners and internal environmental review.
54. OPTIONS TO EXTEND TERM. Tenant shall have two options
(collectively the "Options" and individually an "Option") to extend the term of
this Lease for two additional consecutive six (6) year periods, the first of
which shall commence on the expiration of the initial term of this Lease (the
"First Renewal Option") and the second of which shall commence six (6) years
thereafter (the "Second Renewal Option"), provided that:
(a) The First Renewal Option shall be exercised by written
notice of exercise delivered to Landlord no later than nine (9) months before
the expiration of the initial term of this Lease, and the Second Renewal Option
shall be exercised by written notice of exercise delivered to Landlord no later
than nine (9) months before the expiration of the term of the First Renewal
Option. If Tenant fails to so exercise the First Renewal Option, both of the
Options shall terminate. If Tenant so exercises the First Renewal Option but
fails to so exercise the Second Renewal Option, the Second Renewal Option shall
terminate;
(b) At the time each Option is exercised and at the commencement
of the term of each Option, this Lease must be in full force and effect and
Tenant must not then be in default under this Lease. The foregoing conditions
are for the benefit of and may be waived by Landlord; and
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(c) All of the terms, covenants and conditions of this Lease
shall remain in effect during the term of each Option except that (i) the Base
Rent commencing with the first day of the first month for each month of the
first thirty-six (36) months of the First Renewal Option shall be increased
based upon the percentage increase in the Consumer Price Index as such Index for
the 37th month of the initial term of this Lease bears to such Index for the
last month of the initial term; provided, however, that in no event shall the
Base Rent commencing with the first month of such term be more than 115% or less
than 109% of the Base Rent payable for the last month of the initial term of
this Lease; and (ii) commencing with the first day of the 37th month of the term
of the First Renewal Option, the Base Rent shall be increased based upon the
percentage increase in the Consumer Price Index as such Index for the 36th month
of such term bears to such Index for the last month of the initial term;
provided, however, that in no event shall the Base Rent commencing with the 37th
month of such term be more than 115% or less than 109% of the Base Rent payable
for the 36th month of the term of the First Renewal Option, and (iii) the Base
Rent for each month of the term of the Second Renewal Option shall be the Market
Rent for the Premises for the term of the Second Renewal Option (determined by
Appraisal if the parties cannot agree upon the Market Rent within 30 days after
Tenant's exercise of the Second Renewal Option); except that commencing with the
first day of the 37th month of the term of the Second Renewal Option, the Base
Rent shall be increased based upon the percentage increase in the Consumer Price
Index as such Index for the 36th month of such term bears to such Index for the
last month of the term of the First Renewal Option; provided, however, that in
no event shall the Base Rent commencing with the 37th month of such term be more
than 115% or less than 109% of the Base Rent payable for the 36th month of the
term of the Second Renewal Option.
55. EXPANSION SPACE. Rockwell presently occupies that portion of the
Property commonly known as 21605 Plummer Street (the "Rockwell Building") which
contains approximately 130,572 rentable square feet of space. Rockwell has the
right to park 410 cars in the Rockwell Area. The term of the lease agreement for
the Rockwell Building expires on June 30, 1997, but Rockwell has the option to
cancel on one-year's prior written notice. If Rockwell cancels its tenancy and
Landlord determines not to grant Rockwell rights to occupy the Rockwell Building
(or any portion thereof in excess of 105,000 square feet of rentable area) on
some basis, then, subject to the terms of this paragraph, Tenant shall have one
option (the "Expansion Option") to add to the Premises demised under this Lease,
the "Expansion Space" which shall be (i) the Rockwell Building, or (ii) a
portion thereof which shall consist of not less than 25,000 rentable square feet
and shall be configured (as mutually agreed upon by Landlord and Tenant in
writing) in such a manner as to meet Tenant's reasonable requirements and
applicable codes and any reasonable objections of Landlord set forth in written
notice to Tenant within ten (10) days after Landlord's receipt of Tenant's
Notice (as hereinafter defined), as follows:
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(a) Tenant agrees to accept the Expansion Space in its "as is"
condition on the Availability Date (hereinafter defined) except as in this
paragraph otherwise provided;
(b) Landlord shall give Tenant written notice ("Landlord's
Notice") of the date upon which the Expansion Space shall be available (the
"Availability Date") and of the location and size of the Expansion Space. Tenant
shall have one option to have the Expansion Space added to the Premises demised
under this Lease on the Availability Date upon all the terms, covenants and
conditions contained in this Lease except that (i) the Base Rent for the
Expansion Space for the balance of the term of this Lease shall be Market Rent
with an $8.00 per net rentable square foot improvement allowance and without
reduction for the cost of creating all demising walls and related improvements
necessary for the Expansion Space to function separately from the remainder of
the Rockwell Building, which demising walls and related improvements Tenant
shall cause to be constructed and the costs of which shall be paid one-half by
Tenant and one-half by Landlord (which improvement allowance and other Landlord
reimbursements shall be paid to Tenant in accordance with disbursing procedures
similar to those provided for in paragraph 53 of this Lease), (ii) Tenant shall
be permitted to take occupancy of the Expansion Space on the Availability Date
in order to construct improvements therein, subject to each and every provision
of this Lease except that Tenant shall not be obligated to pay Base Rent with
respect to the Expansion Space until the "Rent Start Date" (defined below), and
(iii) the Rent Start Date shall be the 180th day after the Availability Date or
the date Tenant substantially completes its improvements in and occupies the
Expansion Space for business purposes, whichever is the earlier;
(c) The Expansion Option shall be exercised, if at all, by
written notice ("Tenant's Notice") of exercise given to Landlord not later than
twenty (20) days after Tenant's receipt of the Landlord's Notice. If Tenant
fails to so exercise the Expansion Option it shall terminate;
(d) If Landlord and Tenant cannot agree upon the determination
of Market Rent on or before the date that Tenant is required to give Landlord
Tenant's Notice, and Tenant nonetheless elects to give Tenant's Notice, the
determination of Market Rent as to such Expansion Space will be submitted to
Appraisal in accordance with attached EXHIBIT D. If on the date Base Rent as to
such Expansion Space is scheduled to commence pursuant to this Lease the
Appraisal has not been completed, Tenant will pay Base Rent based on Landlord's
reasonable estimate of Market Rent. Upon determination of Market Rent by
Appraisal, Landlord will pay to Tenant or Tenant will pay to Landlord, as
appropriate, the amount equal to the overpayment or underpayment of Base Rent
from such commencement until the determination of Market Rent by Appraisal,
together with interest accrued thereon during such period at the Default
Interest Rate. Upon
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establishment of the Base Rent for the Expansion Space, the parties agree to
execute an appropriate amendment to this Lease to reflect, as of the
Availability Date (i) the increase in the net rentable area of the Premises,
(ii) the increase in the Base Rent, and (iii) the increased Tenant's
Proportionate Share;
(e) As conditions precedent to Tenant's right to the Expansion
Option, at the time the Expansion Option is exercised and on the Availability
Date, this Lease must be in full force and effect, Tenant must not then be in
default thereunder and Tenant's interest under this Lease must not have been
assigned by operation of law or otherwise (except pursuant to an assignment with
respect to which Landlord has agreed in this Lease to give its consent or as to
which Landlord's consent is not required under this Lease). The foregoing
conditions are for the benefit of and may be waived by Landlord; and
(f) Landlord shall not be liable to Tenant for any loss or
damage for any failure to deliver possession of the Expansion Space to Tenant by
reason of the holding over or retention of possession by a tenant or occupant of
the Expansion Space and no such failure shall impair the validity of this Lease
or extend its term. Landlord will, however, exert reasonable efforts (including
legal proceedings to the full extent permitted under applicable laws) to cause
the other tenant to deliver possession of the Expansion Space.
(g) Tenant shall have the right to receive additional parking
with respect to the Expansion Space, at no cost to Tenant, as provided in
paragraph 4 of this Lease.
56. RIGHTS OF FIRST OFFER. Tenant will have rights of first offer to
lease additional space in the Rockwell Building in accordance with the following
provisions:
(a) ANNUAL NOTICES. No earlier than August 1 and no later than
October 1 of each calendar year during the term, Landlord will notify Tenant in
writing ("Annual Notice") of any rentable space within the Rockwell Building
that Landlord does not intend to warehouse, use or occupy and that is then
unleased or that will become unleased during the following calendar year in the
absence of the exercise of a Superior Right (as defined below). The Annual
Notice will include the following:
(1) identification of the configurations of such space that
Landlord intends to use in marketing such space
"Configurations");
(2) the date on which each such Configuration that is then
leased will become unleased if no Superior Right (as defined
below) is exercised;
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(3) identification of the rights of other tenants in the
Rockwell Building to lease any such Configuration pursuant
to right of first offer, right of first refusal, renewal,
extension or expansion provisions in their leases ("Superior
Rights"), together with identification of the date on which
each such Superior Right terminates; and
(4) Landlord's reasonable determination of Market Rent as to
each Configuration.
Landlord will not be required to give an Annual Notice (or any Interim Notices
or Reconfiguration Notices, as provided below, as to the calendar year to be
covered by the Annual Notice) unless, on or before July 1 of the year in which
such Annual Notice is to be given, Tenant has notified Landlord in writing of
Tenant's request that Landlord do so.
(b) INTERIM NOTICES. If any rentable space within the Rockwell
Building that was not required to be included in the previous Annual Notice,
subject to the exercise of a Superior Right, becomes unleased during the
calendar year following the date that the previous Annual Notice was given to
Tenant, Landlord will notify Tenant in writing ("Interim Notice") of such fact
within 20 days after Landlord first has knowledge of such fact. The Interim
Notice will include the following:
(1) the Configurations for such space;
(2) the date on which each such Configuration that is then
leased will become unleased if no Superior Right is
exercised;
(3) identification of each Superior Right applicable to each
such Configuration and the date on which each such Superior
Right terminates; and
(4) Landlord's reasonable determination of Market Rent as to
each Configuration.
(c) RECONFIGURATION NOTICES. If Tenant has failed to exercise
its rights of first offer with respect to a particular Configuration identified
in an Annual Notice, as provided in this paragraph, and if Landlord subsequently
reconfigures such Configuration so that the area of such Configuration increases
or decreases by 20% or more, Landlord will, prior to such reconfiguration,
notify Tenant of such reconfiguration ("Reconfiguration Notice"). The
Reconfiguration Notice will include the following:
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(1) the new Configurations resulting from such reconfiguration;
(2) the date on which each such new Configuration that is then
leased will become unleased if no Superior Right is
exercised;
(3) identification of each Superior Right applicable to each
such new Configuration and the date on which each such
Superior Right terminates; and
(4) Landlord's reasonable determination of Market Rent as to
each such new Configuration.
(d) TENANT'S ELECTION TO LEASE. Tenant may elect to lease all
(and not part) of any Configuration set forth in an Annual
Notice, an Interim Notice or a Reconfiguration Notice as
follows:
(1) Tenant's election to lease such Configuration must be made,
if at all, by written notice to Landlord ("Election Notice")
not later than (A) the November 1 following an Annual Notice
and (B) 15 days after an Interim Notice or Reconfiguration
Notice is given to Tenant. Tenant will be deemed to have
elected not to lease such Configuration if the Election
Notice is not given to Landlord within the applicable
response period.
(2) Tenant must have first elected to lease all Configurations
that are then unleased before Tenant may elect to lease any
Configurations that are then leased.
(3) Tenant may not elect to lease any space under this paragraph
during the last two years of the initial term of this Lease
or any Extended Term, unless Tenant has then exercised its
next available option to extend the term of this Lease.
(e) SUPERIOR RIGHTS. Any election by Tenant to lease a
Configuration will be subject to the rights of other
tenants having applicable Superior Rights as identified
in the Annual Notice, Interim Notice or Reconfiguration
Notice.
(f) COMMENCEMENT OF LEASE REGARDING CONFIGURATION. A
Configuration will become a part of the Premises, upon the
same terms and conditions as are provided in this Lease
(except as expressly modified in this paragraph), upon
the later of (1) the date that all holders of Superior
Rights applicable to such Configuration have relinquished
their rights or the date all of such Superior Rights have
terminated in accordance with their terms, whichever is
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earlier, or (2) the date such Configuration is delivered to Tenant, free from
rights of others.
(g) RENT. Base Rent for any space added to the Premises under this
paragraph will be equal to the Market Rent, determined as of the date of the
commencement of the term of this Lease with respect to such space. If Landlord
and Tenant cannot agree upon the determination of Market Rent on or before the
date that Tenant is required to give Landlord an Election Notice, and Tenant
nonetheless elects to lease such space, the determination of Market Rent as to
such space will be submitted to Appraisal in accordance with attached EXHIBIT D.
If on the date Base Rent as to such space is scheduled to commence pursuant to
this Lease the Appraisal has not been completed, Tenant will pay Base Rent based
on Landlord's reasonable estimate of Market Rent. Upon determination of Market
Rent by Appraisal, Landlord will pay to Tenant or Tenant will pay to Landlord,
as appropriate, the amount equal to the overpayment or underpayment of Base Rent
from such commencement until the determination of Market Rent by Appraisal,
together with interest accrued thereon during such period at the Default
Interest Rate.
(h) CONDITION OF SPACE. Any space leased by Tenant under this
paragraph will be delivered to Tenant in its "as is" condition as of the
commencement of the term of this Lease as applied to such space.
(i) AMENDMENT TO LEASE AND MEMORANDUM OF LEASE. Within ten (10) days
after request by Landlord or Tenant, the parties shall execute an amendment to
this Lease and to any Memorandum of Lease adding to the Premises any space which
Tenant has elected to lease pursuant to this paragraph, as of the commencement
date specified in this paragraph with respect to such space, and upon the terms
and conditions of this Lease.
(j) EFFECT OF DEFAULT. If any default exists by Tenant under this
Lease that has not been cured or is being cured by Tenant within the applicable
grace period at the time the Election Notice is given or at the commencement of
the term of this Lease as to the space in question, Tenant will have no right to
exercise its option as to the applicable space and/or to lease such space.
The time limitations with respect to Tenant's election to lease space
under this paragraph set forth in subparagraph (d) above and the condition set
forth in subparagraph (j) above are solely for the benefit of Landlord, and
Landlord may at its option waive any such limitation or condition.
57. ADDITIONAL ENVIRONMENTAL ASSESSMENTS; ASBESTOS REMOVAL. Landlord
will promptly obtain and provide to Tenant, in sufficient time to allow Tenant
to prepare for construction of the Tenant Improvements, the additional
environmental investigation and assessment work requested by Dana Wagner of
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Bruce A. Liesch Associates, Inc. pursuant to a letter to Brad Childs (sic) dated
December 1, 1992 and a letter to Che Hsien Chang dated November 20, 1992, and
Landlord shall complete such governmental environmental reporting as shall be
required by applicable laws. Tenant will pay Landlord 50% of the reasonable cost
of such work, within 10 days of written demand. Landlord agrees that Landlord
will, at Landlord's sole expense, remove, encapsulate or otherwise address any
asbestos situated in any space leased by Tenant pursuant to this Lease when such
space is first made available by Landlord to Tenant in accordance with
applicable laws and in such a time frame (to the extent reasonably possible) as
not to interfere with the timely completion of improvements to be constructed in
such space by Tenant.
58. ROOF ANTENNAS. Subject to the terms of paragraph 31 of this
Lease, Tenant may install on the roof of the Premises antenna and satellite
dishes for use in connection with its business, so long as such installation
does not interfere with the use and operation of (a) any television, radio,
communications or other equipment in any adjoining structure, or (b) any
electronic control system or elevators in any adjoining structure, or (c) any
other transmitting, receiving or master TV antenna on any adjoining structure.
59. CONTINGENCIES. Tenant's obligations under this Lease shall be
contingent upon the following occurring or being satisfied on or before the
dates set forth below:
(a) Tenant shall receive the Letter of Credit on or before the
date 15 business days after the date of this Lease.
(b) Tenant shall receive, on or before the date 25 business days
after the date of this Lease, Subordination, Non-disturbance and Attornment
Agreements, in the form attached to this Lease as Exhibit F, executed by each
holder of any deed of trust that has priority over this Lease (which agreements
Landlord agrees to use its best efforts to provide to Tenant on or before the
date 25 business days after the date of this Lease and which agreements Landlord
and Tenant agree to execute).
Tenant may waive such contingencies by written notice given to
Landlord on or before the applicable contingency date. Tenant's failure to so
waive any such contingency on or before the applicable contingency date shall be
deemed to be an exercise of Tenant's right to terminate this Agreement based
upon the failure of such contingency.
60. MEMORANDUM OF LEASE; RECORDABLE TERMINATION. Either party will,
upon the written request of the other party, execute a short form lease
("Memorandum of Lease") regarding this Lease, in a form suitable for recording
in the Los Angeles County Records. Such Memorandum of Lease will be dated as of
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the date of this Lease and will disclose the parties; the term of this Lease,
descriptions of the Premises, Tenant's extension and expansion rights and rights
of first refusal and such other terms and conditions as the parties agree upon.
The party requesting the execution of such Memorandum of Lease will bear all
costs of the Memorandum of Lease, including any recording fees. Upon the
determination of the Commencement Date and the written request of either party,
the parties will execute an amendment to the Memorandum of Lease setting forth
the Commencement Date, with the party requesting the execution of such amendment
bearing all costs of the amendment, including any recording fees. Upon the
execution of a pertinent amendment to this Lease and the written request of
either party, the parties will execute a corresponding amendment to the
Memorandum of Lease, with the party requesting the execution of such amendment
bearing all costs of the amendment, including any recording fees. Either party
will, following any termination of this Lease and upon the written request of
the other party, execute a document setting forth the date of such termination,
in a form suitable for recording in the Los Angeles County Records. Failure of
a party to execute such a document will not affect the termination, and in such
event the party requesting the document may execute and file an affidavit
setting forth the date of termination. The party requesting the execution of
such document will bear all costs thereof, including any recording fees.
61. MISCELLANEOUS. This Lease cannot be changed orally, but only by
agreement in writing signed by the party against whom, or against whose
successors and assigns, enforcement of the change is sought. The voluntary or
other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall
not work a merger as to any existing subtenancies and shall, at the option of
Landlord, terminate any and all such existing subtenancies or, at Landlord 's
option, operate as an assignment to it of any and all such subtenancies. The
words "Landlord" and "Tenant" as used herein shall include the plural as well as
the singular. If there is more than one tenant, the obligations hereunder
imposed upon the Tenant shall be joint and several. Time is of the essence of
this Lease and each and all of its provisions. This Lease shall be construed
and enforced in accordance with the laws of the State of California. The term
"Default Interest Rate" shall mean an annual rate equal to the reference or
prime rate of Bank of America ("Reference Rate"), or the successor to such rate,
plus 2 percentage points per annum, or the maximum interest rate permitted by
law, whichever is less. Any amount due from Tenant, if not paid when first due,
shall bear interest at the Default Interest Rate from the date due until paid.
If any covenant, agreement, or condition of this Lease or the application
thereof to any person, firm, corporation, or circumstance is or becomes to any
extent invalid or unenforceable, the remainder of this Lease, or the application
of such covenant, agreement, or condition to persons, firms, corporations, or
circumstances other than.those as to which it is invalid or unenforceable, shall
not be affected thereby, and in lieu of each clause or provision of this Lease
that is illegal, invalid, or unenforceable, there shall be added as a part of
this Lease a clause or provision as
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similar in terms to such clause or provision as is possible and as may be legal,
valid, and enforceable. If any excavation or other building operation shall be
made, or is about to be made, upon any adjoining property or streets, upon the
request of Landlord, Tenant shall permit the owner or lessee of such adjoining
property and their respective representatives to enter the Premises and shore
the foundations and walls thereof, and to do any other act or thing reasonably
necessary, in Landlord's opinion, for the safety or preservation of the
Premises. Landlord's acceptance of a partial rent payment shall not constitute
a waiver of any rights of Tenant or Landlord, including, without limitation, any
right Landlord may have to recover possession of the Premises, in unlawful
detainer, or otherwise. The parties agree that, except as in this Lease
otherwise provided, and subject to the provisions of paragraph 35 of this Lease,
the covenants and agreements herein contained shall bind and inure to the
benefit of the successors and assigns of the parties.
Exhibits A through F are attached hereto and become part of
this Lease.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.
LANDLORD:
GREENVILLE DALLAS DELAWARE, INC., a Delaware corporation
By /s/ S. Bradford Child
------------------------------------------------------
Its
--------------------------------------------------
And By
---------------------------------------------------
Its
-------------------------------------------------
TENANT:
ADC TELECOMMUNICATIONS, INC., a Minnesota corporation
By /s/ LeRoy Morgan
------------------------------------------------------
Its Vice President
------------------------------------------------
FIBERMUX CORPORATION, a California corporation
By /s/ Steve Kim
------------------------------------------------------
Steve Y. Kim, President
And By /s/ Frederic T. Boyer
----------------------------------------------
Frederic T. Boyer, Chief Financial Officer
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<PAGE>
EXHIBIT A
INSIDE OF SHADED AREA = "ROCKWELL AREA"
410 SPACES
BALANCE IS "FIBERMUX/AREA"
<PAGE>
EXHIBIT B
LEGAL DESCRIPTION
Parcels B and C and the Southerly 111.5 of D of Parcel Map L.A. No. 5336, in the
City of Los Angeles, in the County of Los Angeles, State of California, as per
map filed in Book 168 Pages 61 and 62 of Parcel Maps, in the Office of the
County Recorder of Los Angeles, State of California.
Except 50 percent of all oil, gas, mineral, asphaltum and other hydrocarbon
substances underlying said property or that may be produced thereon or
therefrom, but without the right of entry above the depth of 500 feet below the
surface of said land, as reserved by Frank S. Lombardi, et al. in Deed recorded
March 1, 1956 in Book 50473 Page 258, Official Records.
<PAGE>
OFFICE -- ASSEMBLY/WAREHOUSE
FIBERMUX BLOCK PLAN
FIRST FLOOR
21415 PLUMMER ST CHATSWORTH, CA
12/7/92
<PAGE>
FIBERMUX BLOCK PLAN
SECOND FLOOR
21415 PLUMMER ST CHATSWORTH, CA
12/7/92
<PAGE>
EXHIBIT C
December 9, 1992
VER. B
SCOPE STATEMENT
FIBERMUX PROJECT
21415 PLUMMER STREET
OFFICE
ARCHITECTURAL
A. Reuse existing walls to extent possible.
B. All walls to receive paint (some graphics may be used). VP and
President's offices to receive grade 1 vinyl. Restrooms to receive grade
2 vinyl.
C. Reuse existing ceiling tile and grid replacing damaged tile as required.
D. Reuse existing doors and frames. Replace existing hardware with Schlage
L series. Any new doors and frames to match existing. A master key
system for the building is desirable.
E. Office areas will be carpeted reusing existing to the extent possible.
All new carpet will be broadloom. Reused carpet will be thoroughly
cleaned before occupancy.
F. Provide alternate cost to install dissipative tile, Armstrong Excelon
SDT, in the lab areas.
G. Major corridor walls to receive grade 2 vinyl.
H. Reuse existing window treatments. Replace missing and repair
nonfunctional window treatment items.
I. All construction will be in accordance with all laws, codes, and
regulations including ADA.
ALTERNATES
A. Provide cost to upgrade ceiling tile to USG Glacier 2'x 2' with shadow
reveal as an alternate.
B. Provide cost to upgrade all doors to solid core oak doors.
C. Provide alternative cost for multispec (Zolatone) paint on major corridor
walls.
<PAGE>
E. Director, VP offices and conference room walls will extend to the deck
and receive sound batt insulation. All other walls shall extend to the
dropped ceiling unless otherwise required by code.
ELECTRICAL
A. Reuse existing light fixtures. Provide Lithonia Optimax 2'x 4' fixtures
in the CADD drafting area.
B. Convenience power and communications wiring to be supplied to panel
workstations through power poles. Three duplex outlets and one
communications outlet box to be provided in each private office.
Communication outlets will be piped in the wall to the plenum space.
C. Tenant has a LAN that will require wiring.
D. All communication and computer wiring to be performed by the
communication contractor.
E. Re configure the emergency lighting to support the new room layout.
F. General Contractor will remove all workstation communication cabling.
The house and entrance cabling will remain.
ALTERNATES
A. Provide cost to upgrade light fixtures to Lithonia Optimax in the open
office areas as an alternate. Recessed can fixtures will be utilized
along one long wall of each room with the Optimax fixtures to eliminate
the "cave" effect.
B. Develop alternate cost to add Leviton occupancy sensing switches to all
private offices and conference rooms.
MECHANICAL
A. HVAC system to be re configured as necessary to provide comfort to new
room layout. Existing HVAC heat pumps will be reused with new
distribution provided. Any new diffusers to match existing. HVAC system
to be tested and balanced before occupancy.
B. Provide additional HVAC capacity as required to meet comfort
requirements.
2
<PAGE>
C. Review the possibility of moving the air handlers (one or more on the
lower floor) to improve the layout and flow of the assembly process.
Develop a cost alternative associated with the scheme along with detailed
drawings.
FURNISHINGS
A. Tenant will provide office furniture and all labor and equipment to move
furniture and furnishings to the building.
B. Contractor will provide electricians to make connections to the furniture
panels during the move.
C. Tenant will provide A/V equipment (except screens) and white boards.
ALTERNATES
A. Provide a recessed aluminum framed bulletin board with sliding, lockable
glass doors (4'x 6') next to the lunch room entrance.
3
<PAGE>
LUNCH ROOM
ARCHITECTURAL
A. Walls will receive grade 2 vinyl. More than one type of vinyl
incorporating graphics will likely be used.
B. Floors will be carpeted except in vending and serving areas which will be
VCT tile.
C. Casework in the lunch room will be new. Provide pigeonhole unit for bag
lunches.
ALTERNATES
A. Provide alternate price for ceramic tile in place of VCT in vending and
serving areas.
ELECTRICAL
A. Provide necessary power and water to vending machines. Estimate 6
vending machines at 20A each plus two additional 20A outlets for
microwaves. The coffee machine will require a 3/8" water line.
B. Provide utility connections required for future soup and salad bar
including drain (note: the drain could be handled with an integral sump
and pump in the salad bar).
B. Lighting will be a combination of recessed cans and accent lighting.
MECHANICAL
A. Provide adequate ventilation including air changes in lunch room. Note
there is a concern regarding food odors in the eating areas.
ALTERNATES
A. Provide the cost to add activated charcoal filtration to the lunch room
air handlers.
FURNISHINGS
A. Tenant will provide new furniture for the lunch room.
4
<PAGE>
TRAINING CENTER/CONFERENCE ROOMS/DEMO ROOM/BOARD ROOM
ARCHITECTURAL
A. Wall covering to be grade 2 vinyl.
B. Doors to have sound gaskets and threshold seals.
C. Each room will have an AV screen.
D. Provide blocking to support white boards.
E. Provide tack strips (2 walls) in the Training Room.
F. One conference room will be configured to support video conferencing and
will require acoustic panels on all the walls.
ALTERNATES
A. Provide cost to extend all drywall partitions to the deck and receive
sound batt insulation.
B. Provide alternate cost for 2'x 2' USG Glacier tile with shadow reveal
edge and foil backing.
ELECTRICAL
A. Lighting must support A/V presentations as well as good general lighting.
Must be able to dim lighting or provide various lighting levels through
light types.
B. Provide wall mounted raceways along the two longest walls to furnish
power and communication connection in the Training Room.
C. Provide five boxes piped to the plenum in one conference room to support
video teleconferencing.
D. Each conference room will have one communication box piped to the plenum
to provide network connection.
MECHANICAL
A. Separate HVAC control for these spaces to be provided.
B. HVAC to be sized to provide comfort at maximum room occupancy and
equipment load (e.g. computer training).
5
<PAGE>
COMPUTER ROOM
ARCHITECTURAL
A. Walls will extend to the deck
B. Install 2' x 4' vinyl coated ceiling tile.
C. Floor will receive dissipative VCT tile.
D. This room is a secured area and will minimally require a secure lock
(e.g. Medico) or a card reader station if such a system is installed by
the Tenant.
E. The existing computer room will be relocated.
ALTERNATES
A. Provide cost for access flooring including ramp and railing in one-half
of the room.
B. Provide cost of viewing window in hallway wall (4' x 6') if allowable by
code.
ELECTRICAL
A. Reuse existing lighting, if possible.
B. Power requirements will be identified on separate attached list.
C. Provide EPO switch at the door for the computer equipment as required by
code.
MECHANICAL
A. Room shall have separate HVAC control including humidity control. Reuse
existing equipment, if possible.
ALTERNATES
A. Provide a separate zone pre-action sprinkler system coordinated with the
EPO system.
6
<PAGE>
ASSEMBLY AREA
ARCHITECTURAL
A. All walls to receive paint and possibly graphics.
B. Floor to be VCT tile. Floor to receive static dissipative wax before
occupancy.
C. Reuse existing ceiling tile and lighting.
D. Warehouse floors will be sealed with gray urethane.
E. All warehouse walls to receive paint.
F. Provide capability to load/unload trucks at the grade level doors. This
may require a lift which might be recessed into the floor.
G. Provide a strip curtain enclosure for the water wash machine. Note: a
frame to support the curtain will have to be fabricated.
H. Provide a curb around the water wash machine (suggest a painted flange
curb, gasketed and bolted to the floor).
I. Fencing could be used to secure the stock areas.
J. Provide the capability to handle and properly dispose of trash. Design
must comply with existing laws and regulations.
ALTERNATES
A. Provide alternate cost to remove dropped ceiling and provide lighting
using fluorescent industrial fixtures. This alternate would include
using spiral duct for HVAC which would be painted. Exposed ceiling would
be reviewed for finish.
B. Provide the cost for corner protectors and wall protection on walls in
the high traffic areas of the warehouse and assembly areas.
ELECTRICAL
A. Provide convenience power to benches via drop cords. See the layout for
locations.
B. Electrical power and utility connections for assembly equipment are
provided in the attached equipment list.
7
<PAGE>
MECHANICAL
A. Provide a compressed air distribution system. Air compression system
will include a compressor, dryer and coalescing filter furnished by the
Tenant.
B. Recommendations for compressed air system are attached.
C. Provide vacuum system piping from the vacuum pump (by Tenant) to required
equipment (see equipment schedule).
8
<PAGE>
OTHER
FIRE PROTECTION
A. Revise the sprinkler system to accommodate the new room layout and meet
code and insurance requirements.
B. Revise the fire alarm system as required to provide the required pull
stations and alarm coverage for all areas of the building.
SECURITY
A. A card access security system will be reviewed for incorporation. Such a
system will include card readers at primary entrances, electric strikes
in those entrance doors and release switches in panic hardware.
B. All door locks will be organized to a building master system.
LIFE SAFETY
A. Provide required fire extinguishers.
ALTERNATES
A. Provide recessed fire extinguisher and first aid cabinets.
PAGING
A. Provide a paging system for the assembly and warehouse areas.
PLUMBING
A. All existing restroom and drinking fountain fixtures to remain.
B. See lunch room and assembly area equipment lists for other plumbing
requirements.
C. Provide an eyewash and emergency shower near the water wash machine.
9
<PAGE>
EXHIBIT D
APPRAISAL PROCEDURES
The parties to this Lease will initially attempt to agree upon the
Market Rent. If they have been unable to so agree within the period that they
are required to agree as to such matter under the Lease, then either party may
request by written notice to the other party ("Appraisal Request") that the
matter be determined by an appraisal board consisting of three appraisers who
are members of the Appraisers Institute (or a successor or similar organization,
if such organization no longer exists) and have at least five (5) years'
experience appraising commercial real estate in the Chatsworth, California area.
One appraiser will be appointed by each party, and each such appraiser will have
no material financial or other business interest in common with the party
selecting such appraiser. If a party fails to appoint an appraiser and notify
the other party of such appointment within 30 days after the Appraisal Request
is made, then the appraiser that was appointed by such other party within such
30 day period will be the sole appraiser. If two appraisers are properly
appointed and such first two appraisers are unable to agree on a third appraiser
within thirty (30) days after the appointment of the second appraiser, then such
third appraiser will be appointed by the presiding judge of the Los Angeles
County Superior Court, or by any person to whom such presiding judge formally
delegates the matter, or, if such methods of appointment fail, by the American
Arbitration Association.
The parties will submit a copy of this Lease to the sole appraiser or
the three appraisers, as the case may be. If the appraisal is conducted by a
sole appraiser, such sole appraiser will render to Landlord and Tenant his or
her determination of the Market Rent applicable during the period in question to
the parties by the 60th day after the Appraisal Request was made. If the
appraisal is conducted by three appraisers, each appraiser will submit his or
her determination(s) of the Market Rent applicable during the period in question
in a sealed envelope by the 30th day following appointment of the last
appraiser, and any determinations not submitted by such time shall be
disregarded. In such cases, the parties will meet on such 30th day (or if it is
not a business day, on the first business day thereafter) at 11:00 a.m. at the
office of Landlord, or such other place as the parties may agree, and
simultaneously deliver the determinations. If the determinations of at least
two of the appraisers are identical in amount, such amount will be deemed the
decision of the appraisers. If the determination of the three appraisers are
different in amount, the decision as to the Market Rent will be independently
determined as follows:
(a) If neither the highest nor lowest determination differs from
the middle determination by more than 15% of such middle
determination, then the decision will be deemed to be the average of
the three determinations; and
<PAGE>
(b) If clause (a) does not apply, then the decision will be
deemed to be the average of the middle determination and the
determination closest in amount to such middle determination.
The decision of the appraisers, determined as above set forth, will be
final and non-appealable. The fees and expenses of the appraiser or appraisers
will be shared equally by Landlord and Tenant.
During the period of time that any appraisal is pending under this
Lease, Tenant shall pay Base Rent at the rate that was last in effect under the
Lease and the appropriate retroactive adjustment shall be made between the
parties within 10 days after the appraisers have made their determination.
<PAGE>
EXHIBIT E
[Issuer's Letterhead]
IRREVOCABLE STANDBY LETTER OF CREDIT
To Beneficiaries:
ADC Telecommunications, Inc. Letter of Credit No.
__________________________________ Issue Date:_______________, 199_
__________________________________
Fibermux Corporation
__________________________________
__________________________________
Gentlemen:
For the account of GREENVILLE DALLAS DELAWARE, INC. ("Customer"), with
an address at 255 Shoreline Drive, Ste. 600, Redwood City, California 94065, THE
DEVELOPMENT BANK OF SINGAPORE, LTD. ("Issuer") hereby establishes in your favor
as "Beneficiary" this IRREVOCABLE STANDBY LETTER OF CREDIT (the "Standby
Letter"), available for payment in the manner and on the terms following:
1. This Standby Letter authorizes Beneficiary to draw one or more
drafts upon Issuer, at sight, in the full amount then due and payable to
Beneficiary after Customer's default under the terms of paragraph 23 of that
certain Lease dated as of ______________, 1992, between Greenville Dallas
Delaware, Inc., as Landlord, and ADC Telecommunications, Inc. and Fibermux
Corporation, jointly as Tenant (the "Lease").
2. Beneficiary's Draft(s) must:
(a) not exceed, in the aggregate,_______________Dollars
(US$___________) (the "Drawing Amount");
(b) not be dated later than the Expiry Date specified in
paragraph 6 of this Standby Letter;
(c) quote upon its face, "Drawn under Irrevocable Standby Letter
of Credit No.________________, dated_____________,199_, and
issued by THE DEVELOPMENT BANK OF SINGAPORE, LTD. (NEW YORK
AGENCY), [insert address] ; and
-------------------------
<PAGE>
(d) be duly completed and signed in the form of EXHIBIT SL.1
attached to this Standby Letter and incorporated by
reference as though repeated here verbatim.
3. This Standby Letter has the sole purpose of making payment
available against the monetary sum due and owing from Customer to Beneficiary
after Customer's default under paragraph 23 of the Lease, all as certified by
Beneficiary in the Request for Payment (described under paragraph (4) of this
Standby Letter).
4. To receive payment under this Standby Letter, Beneficiary must
present the following documents (the "Required Documents"):
(a) Beneficiary's original Draft as detailed in paragraph 2 of
this Standby Letter;
(b) the original of a Request for Payment Under Irrevocable
Standby Letter of Credit (the "Request For Payment") written
on Beneficiary's letterhead, duly completed and signed by
persons who certify their authority to bind Beneficiary, all
in the form of EXHIBIT SL.2 attached to this Standby Letter
and incorporated by reference as though repeated here
verbatim; and
(c) the original of this Standby Letter.
5. Reference in this Standby Letter to the Lease Agreement or to any
other aspect of the underlying bargain between Beneficiary and Customer is for
identification purpose only. No intent exists to incorporate into this Standby
Letter any term of the Lease or any aspect of such underlying bargain.
6. This Standby Letter shall stay in force until 11.59 p.m., New
York, New York time on the ______ day of __________________, 199__ (as may be
extended from time to time, the "Expiry Date") and shall be deemed automatically
extended without amendment for additional periods of not less than one (1) year
from the then effective Expiry Date until __________________, 199__ , unless not
later than sixty (60) days prior to the then effective Expiry Date Issuer shall
present to Beneficiary a notice that this Standby Letter will not be renewed or
that this Standby Letter will be renewed for an additional period of less than
one (1) year.
7. Beneficiary must present all the Required Documents on or before
the Expiry Date to Issuer at Issuer's letter of credit department, [Insert
address]. The word "present" (or "presentation" for purposes of this Standby
Letter) means actual receipt through registered mail, through a professional
overnight courier service, or through personal hand delivery.
<PAGE>
8. The right to draw under this Standby Letter may not be assigned
and shall not be transferable.
9. The amount available under this Standby Letter should be
irrevocably decreased from time to time by the amount of each Draft honored by
Issuer. In the spaces provided below in this paragraph, Issuer shall note the
amount of each such Draft so honored, the date it paid such Draft and the
reduced amount available under this Standby Letter as consequence of each such
payment.
Reduced amount of this
Draft Amount Date Paid Standby Letter
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
- --------------- -------------------- ------------------------
10. This Standby Letter shall be governed by the Uniform Customs and
Practice for Documentary Credits (1983 Revision) Publication No. 400 of the
International Chamber of Commerce (the "Uniform "Customs") and, as to matters
not governed by the Uniform Customs, the laws of the State of New York.
11. Issuer engages with Beneficiary that each Draft and other
Required Documents related thereto shall be duly honored upon presentation to
the Issuer of such Required Documents if drawn and presented in strict
compliance with the terms of this Standby Letter.
THE DEVELOPMENT BANK OF SINGAPORE,
LTD. (NEW YORK AGENCY)
By________________________________
Its__________________________
PLEASE EXAMINE THIS STANDBY LETTER AT ONCE. IF
YOU FEEL UNABLE TO MEET ANY OF ITS REQUIREMENTS,
PLEASE CONTACT CUSTOMER IMMEDIATELY TO SEE IF THE
STANDBY LETTER CAN BE AMENDED. OTHERWISE, YOU RISK
LOSING PAYMENT UNDER THIS STANDBY LETTER FOR
FAILURE TO COMPLY STRICTLY WITH ITS TERMS AS
WRITTEN.
<PAGE>
EXHIBIT SL.1
DRAFT
Drawn under Irrevocable Standby Letter or Credit No.________, dated
_____________________________, 199__, and issued by THE DEVELOPMENT BANK OF
SINGAPORE. LTD. (NEW YORK AGENCY)
$______________________ ___________________ __, _____
On sight, pay_______________________________________________DOLLARS
(US$________________________) by a single check payable to the following two (2)
payees: ADC Telecommunications, Inc. and Fibermux Corporation.
TO: The Development Bank of Singapore (New York Agency)
[Address of Bank]
Attn: Letter of Credit Department
ADC TELECOMMUNICATIONS, INC.
By_________________________________
Title_________________________
FIBERMUX CORPORATION
By_________________________________
Title_________________________
<PAGE>
EXHIBIT SL.2
[Beneficiary's Letterhead]
REQUEST FOR PAYMENT
UNDER
IRREVOCABLE STANDBY LETTER OF CREDIT
[Date]
Letter of Credit No._____________
Issue Date:_______________, 19___
To Issuer:
The Development Bank of Singapore, Ltd. (New York Agency)
[Address of Bank]
Attn: Letter of Credit Department
Gentlemen:
The undersigned are, collectively, the "Beneficiary" of the captioned
IRREVOCABLE STANDBY LETTER OF CREDIT (the "Standby Letter"). As the "Issuer,"
you established the Standby Letter in Beneficiary's favor for the account of the
"Customer," GREENVILLE DALLAS DELAWARE, INC. Beneficiary hereby draws on the
Standby Letter in the amount of________________________________________________
Dollars (US$________________________).
In support of this drawing, Beneficiary hereby certifies and warrants:
1. The Standby Letter was issued to back up certain of Customer's
obligations under a lease (the "Lease"), as more particularly described in the
Standby Letter.
2. The Customer has defaulted on one or both of the following obligations
(Beneficiary must so indicate below) imposed upon Customer by the Lease:
(a) Customer has failed to keep the Standby Letter in effect for the
period of time required by paragraph 23 of the Lease [yes ____];
or
(b) Customer has defaulted in the performance of Landlord's
Environmental Indemnity in a manner and as defined in paragraph
23 of the Lease [yes ____].
Such default(s) have not only occurred but are continuing without cure.
Beneficiary has not transferred or otherwise assigned, in whole or in part, its
rights under the Lease.
<PAGE>
3. This Request For Payment is attached to a Draft for the sum of
________________________________________________________________Dollars
(US$________________). That Draft, this Request For Payment and the original
copy of the Standby Letter constitute the "Required Documents" referred to in
paragraph (4) in the Standby Letter.
4. If paragraph 2 (b) of this Request for Payment is applicable, under
the terms of the Lease the sum of such Draft is presently due and payable from
Customer to Beneficiary, but Customer has wrongfully failed to pay such sum.
Beneficiary served upon Customer and other parties all demands, notices, and the
like as required (if any) under the Lease.
5. The terms of the Lease presently entitle Beneficiary to draw upon the
Standby Letter for the full sum of the Draft to which this Request For Payment
is attached.
6. Each individual who has signed this Request for Payment and
accompanying Draft:
(i) is an officer of the Beneficiary for which such individual
signed, and
(ii) has authority to bind such Beneficiary in all matters
concerning the Standby Letter.
IN WITNESS WHEREOF, the undersigned Beneficiary executed, attested
or otherwise officially sealed (as applicable), delivered, and presented this
Request (for Payment, attached to the undersigned Beneficiary's Draft, this
day of _____________________________, 19__.
ADC TELECOMMUNICATIONS, INC.
By:___________________________________________________
Title:___________________________________________
FIBERMUX CORPORATION
By:___________________________________________________
Title:___________________________________________
<PAGE>
EXHIBIT F
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of ___________________________ , 199__, among
GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION (REALTY) PTE. LTD., a Singapore
corporation ("Beneficiary"), GREENVILLE DALLAS DELAWARE, INC., a Delaware
corporation ("Landlord"), ADC TELECOMMUNICATIONS, INC., a Minnesota corporation,
and FIBERMUX CORPORATION, a California corporation (collectively, "Tenant").
WITNESSETH:
WHEREAS, Beneficiary is the beneficiary under that certain deed of
trust dated as of October 3, 1986, recorded January 26, 1988 as Instrument No.
88-109752, Official Records, Office of the County Recorder of Los Angeles, State
of California (said deed of trust, as it may be amended, increased, renewed,
modified, consolidated, replaced, combined, substituted, severed, split, spread
or extended, being hereinafter referred to as the "Deed of Trust"), between
Beneficiary and the trustor described therein (predecessor in interest to the
Landlord described above), which encumbers the land and the buildings located at
21415 and 21605 Plummer Street, Los Angeles, California, and more particularly
described therein (the "Property").
WHEREAS, Tenant and Landlord have entered into a certain agreement
of lease dated December 18, 1992 (such Lease, as it may be hereafter amended
from time to time with the Beneficiary's consent, being referred to as the
"Lease") covering certain premises (the "Demised Premises") in the Property.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Tenant covenants and agrees that the Lease now is and shall at all
times continue to be subject and subordinate in each and every respect to the
Deed of Trust. Tenant, upon request, shall execute and deliver any certificate
or other instrument which the Beneficiary may reasonably request to confirm said
subordination.
2. Tenant certifies that the Lease is presently in full force and effect
and unmodified and no base rent payable thereunder has been paid more than 1
(one) month in advance of its due date, and that no material default by Tenant
exists under the Lease which has continued beyond the expiration of any
applicable grace period.
<PAGE>
3. As long as Tenant is in compliance with the terms of this Agreement
and no default exists under the Lease which has continued beyond the expiration
of any applicable grace period, Beneficiary shall not name Tenant as a party
defendant to any action for foreclosure or other enforcement of the Deed of
Trust (unless required by law), nor shall the Lease be terminated by Beneficiary
in connection with, or by reason of, foreclosure or other proceedings for the
enforcement of the Deed of Trust, or by reason of a transfer of the landlord's
interest under the Lease pursuant to the taking of a deed or assignment in lieu
of foreclosure (or similar device), nor shall Beneficiary interfere with
Tenant's use or possession of the Demised Premises unless the holder of the
landlord's interest under the Lease (the "Landlord") would have had the right to
do so if the Deed of Trust had not been made, provided that the Person (as
defined in the Deed of Trust) acquiring, or succeeding to, the interests of the
Landlord as a result of any such action or proceeding, and such Person's
successors and assigns (any of the foregoing being hereinafter referred to as
the "Successor"), shall not be:
(a) subject to any credits, offsets, defenses or claims which Tenant may
have against any prior Landlord, except as permitted by the Lease or
by statute; or
(b) bound by base rent which Tenant might have paid for more than the
current month to any prior Landlord, unless such prepayment shall have
been made with Beneficiary's prior written consent; or
(c) liable for any act or omission of any prior Landlord; or
(d) bound by any covenant to undertake or complete any improvement to the
Demised Premises or the building forming a part of the Property except
as expressly required of the Landlord pursuant to the Lease; or
(e) required to account for any security deposit other than any security
deposit actually delivered to the Successor; or
(f) liable for any payment to Tenant of any sums, or the granting to
Tenant of any credit, in the nature of a contribution towards the cost
of preparing, furnishing or moving into the Demised Premises or any
portion thereof except as expressly required of the Landlord pursuant
to the Lease.
4. If the interest of the Landlord under the Lease shall be transferred
by reason of foreclosure or other proceedings for enforcement of the Deed of
Trust or pursuant to a taking of a deed in lieu of foreclosure (or similar
device), Tenant shall be bound to the Successor under all of the terms,
covenants and conditions of the Lease for the balance of the term thereof
remaining, with the same force and effect as if the Successor were the Landlord,
and Tenant hereby does (a) agree to attorn to
<PAGE>
the Successor, including Beneficiary if it be the Successor, as its Landlord,
(b) affirm its obligations under the Lease, and (c) agree to make payments of
all sums due under the Lease to the Successor, said attornment, affirmation and
agreement to be effective and self-operative without the execution of any
further instruments, upon the Successor succeeding to the interest of the
Landlord under the Lease. Tenant waives the provisions of any statute or rule
of law now or hereafter in effect that may give or purport to give it any right
or election to terminate or otherwise adversely affect the Lease or the
obligations of Tenant thereunder by reason of any foreclosure or similar
proceeding.
5. Tenant shall not change the terms, covenants, conditions and
agreements of the Lease in a manner which materially reduces the rent or other
charges payable or space demised thereunder or has a material adverse effect
upon the value of the landlord's interest thereunder without the express consent
in writing of the Beneficiary.
6. Tenant shall notify Beneficiary of any default of the Landlord under
the Lease which would entitle Tenant to cancel the Lease or abate the rent or
any additional rent payable thereunder, and agrees that Beneficiary shall have
the same rights to cure any such default as are afforded to the Landlord under
the Lease.
7. Anything herein or in the Lease to the contrary notwithstanding, in
the event that Beneficiary shall acquire title to the Property, Beneficiary
shall have no obligation, nor incur any liability, beyond Beneficiary's then
interest, if any, in the Property and Tenant shall look exclusively to such
interest of Beneficiary, if any, in the Property for the payment and discharge
of any obligations imposed upon Beneficiary hereunder or under the Lease and
Beneficiary is hereby released or relieved of any other liability hereunder and
under the Lease. Tenant agrees that with respect to any money judgment which
may be obtained or secured by Tenant against Beneficiary, Tenant shall look
solely to the estate or interest owned by Beneficiary in the Property and Tenant
will not collect or attempt to collect any such judgment but of any other assets
of Beneficiary.
8. Tenant acknowledges that it has notice that Landlord's interest under
the Lease and the rent and all other sums due thereunder have been assigned to
Beneficiary as part of the security for the note secured by the Deed of Trust.
In the event that Beneficiary notifies Tenant of a default under the Deed of
Trust and demands that Tenant pay its rent and all other sums due under the
Lease to Beneficiary, Tenant and Landlord agree that Tenant shall pay its rent
and all other sums due under the Lease to Beneficiary.
9. This Agreement may not be modified except by an agreement in writing
signed by the parties or their respective successors in interest. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective legal representatives, successors and assigns.
<PAGE>
10. Nothing contained in this Agreement shall in any way impair or affect
the lien created by the Deed of Trust except as specifically set forth herein.
11. The Tenant agrees that this Agreement satisfied any condition or
requirement in the Lease relating to the granting of a non-disturbance agreement
by Beneficiary. Tenant further agrees that in the event there is any
inconsistency between the terms and provisions hereof and the terms and
provisions of the Lease dealing with non-disturbance by Beneficiary, the terms
and provisions hereof shall be controlling.
12. All notices, demands or requests made pursuant to, under, or by virtue
of this Agreement, must be in writing and mailed to the party to whom the
notice, demand or request is being made by certified or registered mail. For
such purposes, the addresses of the parties shall be as follows:
IF TO BENEFICIARY:
Government of Singapore Investment Corporation (Realty) Pte. Ltd.
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
IF TO LANDLORD:
Greenville Dallas Delaware, Inc.
c/o GSIC Realty Corporation
255 Shoreline Drive
Suite 600
Redwood City, California 94065
IF TO TENANT:
Fibermux Corporation
9310 Topanga Canyon Blvd.
Chatsworth, California 91311
(prior to the Commencement Date under the Lease)
or
Fibermux Corporation
21415 Plummer Street
Chatsworth, California 91311
(after the Commencement Date under the Lease)
With a copy to:
<PAGE>
ADC Telecommunications, Inc.
12501 Whitewater Drive
Minnetonka, Minnesota 55343
(Attn: Chief Financial Officer and Attn: General Counsel)
Any party may change the place that notices and demands are to by sent by
written notice delivered in accordance with this Agreement.
13. This Agreement shall be governed by the laws of the State of
California.
14. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Beneficiary:
GOVERNMENT OF SINGAPORE
INVESTMENT CORPORATION
(REALTY) PTE. LTD.
By_________________________________
Its___________________________
<PAGE>
Tenant:
ADC TELECOMMUNICATIONS, INC.,
a Minnesota corporation
By
--------------------------------
Its
-------------------------------
FIBERMUX CORPORATION,
a California corporation
By
--------------------------------
Steve Y. Kim, President
And By
---------------------------
Frederic T. Boyer, Chief
Financial Officer
Landlord:
GREENVILLE DALLAS DELAWARE, INC.
By
-------------------------------
Its
----------------------------
And By
---------------------------
Its
---------------------------
<PAGE>
State of California )
)SS.
County of Los Angeles )
On _____________________________, before me, _____________________________,
personally appeared Steve Y. Kim and Frederic T. Boyer, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signature on
the instrument the entity on behalf of which the persons acted executed the
instrument.
WITNESS my hand and official seal.
Signature:___________________________ (Seal)
State of Minnesota )
)SS.
County of Hennepin )
On ____________________________ , before me, ______________________________
personally appeared __________________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in this authorized capacity, and that by his signature
on the instrument the entity on behalf of which the person acted executed the
instrument.
WITNESS my hand and official seal.
Signature: ___________________________ (Seal)
<PAGE>
State of California )
)SS.
County of ____________ )
On ________________, before me, _________________________, personally
appeared ______________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the entity on behalf of which the persons acted executed the
instrument.
WITNESS my hand and official seal.
Signature: _________________________ (Seal)
<PAGE>
[Attach Singapore acknowledgment for Beneficiary]
<PAGE>
Exhibit 10-ee
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
FOR
WILLIAM J. CADOGAN
First Effective November 1, 1990
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
FOR
WILLIAM J. CADOGAN
TABLE OF CONTENTS
PAGE
SECTION 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Basis of Agreement
1.2. Definitions
1.2.1. Accrued Benefit
1.2.2. Actuarial Equivalent
1.2.3. Average Monthly Compensation
1.2.4. Board of Directors
1.2.5. Change in Control
1.2.6. Compensation
1.2.7. Disability, Disabled
1.2.8. Effective Date
1.2.9. Employer
1.2.10. Qualified Plans Benefit
1.2.11. Single Life Annuity
1.2.12. Social Security Benefit
1.2.13. Supplemental Retirement Benefit
1.2.14. Termination of Employment
1.3. Rules of Interpretation
SECTION 2. SUPPLEMENTAL RETIREMENT INCOME BENEFIT . . . . . . . . . . 5
2.1. Supplemental Retirement Benefit
2.1.1. When Available
2.1.2. Amount
2.1.3. Form of Pension
2.2. No Other Benefits
2.3. Facility of Payment
2.4. Forfeiture of Benefits
SECTION 3. DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . 7
3.1. Death Before Benefit Commencement
3.1.1. When Available
3.1.2. Amount
3.1.3. Form of Benefit
SECTION 4. FUNDING OF PLAN . . . . . . . . . . . . . . . . . . . . . 7
4.1. Unfunded Agreement
4.2. Spendthrift Provisions
SECTION 5. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . 8
SECTION 6. DETERMINATIONS - RULES AND REGULATIONS . . . . . . . . . . 8
6.1. Determinations
6.2. Rules and Regulations
6.3. Method of Executing Instruments
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<PAGE>
6.4. Claims Procedure
6.4.1. Original Claim
6.4.2. Claims Review Procedure
6.4.3. General Rules
SECTION 7. PLAN ADMINISTRATION. . . . . . . . . . . . . . . . . . . . 9
7.1. Employer
7.1.1. Officers
7.1.2. Delegation By Board
7.1.3. Non-Delegable Functions
7.2. Administrator
7.3. Service of Process
SECTION 8. MISCELLANEOUS RULES . . . . . . . . . . . . . . . . . . . 10
APPENDIX A. DETERMINATION OF ACTUARIAL EQUIVALENT
TO SINGLE LIFE ANNUITY . . . . . . . . . . . . . . . . . . . . . A-1
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<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
FOR
WILLIAM J. CADOGAN
This Agreement made and entered into as of November 1, 1990 by and
between WILLIAM J. CADOGAN and ADC TELECOMMUNICATIONS, INC., a Minnesota
corporation, (hereinafter the "Employer").
SECTION 1
INTRODUCTION
1.1 BASIS OF AGREEMENT. In consideration of the services performed by WILLIAM
J. CADOGAN for the Employer in the past and to be performed in the future, the
Employer hereby agrees to pay, in addition to other consideration to be provided
by the Employer, deferred compensation to him under the terms and conditions
hereinafter set forth. This Agreement creates an unfunded, nonqualified plan
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees as contemplated by
the Employee Retirement Income Security Act of 1974 ("ERISA") and shall be
construed and administered accordingly.
1.2. DEFINITIONS. When used herein with initial capital letters, the following
words have the following meanings:
1.2.1. ACCRUED BENEFIT - the dollar amount determined for WILLIAM J.
CADOGAN as of the date of his Termination of Employment (and payable monthly to
him in the Single Life Annuity form, beginning on the first day of the calendar
month following his Termination of Employment or age sixty (60) years, if later)
equal to the product of (a) multiplied by (b):
(a) FULL SUPPLEMENT. A dollar amount equal to:
(i) Fifty percent (50%) of his Average Monthly Compensation
determined as of the date of his Termination of Employment, minus
(ii) The sum of: (A) his Qualified Plans Benefit determined as of one
day before the date of his Termination of Employment, and (B)
fifty percent (50%) of the monthly amount of his Social Security
Benefit determined as of one day before the date of his
Termination of Employment.
(b) SERVICE RATIO. A fraction, not greater than one (1):
(i) The numerator of which is the total years and fractions of years
of his service with the Employer from the Effective Date through
and including the date of his Termination of Employment, and
(ii) The denominator of which is eight (8).
1.2.2. ACTUARIAL EQUIVALENT - a benefit of equivalent value computed on
the basis of actuarial tables, factors and assumptions set forth in this
Agreement (including the Appendix A to this Agreement).
<PAGE>
1.2.3. AVERAGE MONTHLY COMPENSATION - one-sixtieth (1/60th) of the total
dollar amount of Compensation attributable to the sixty (60) consecutive
calendar months ending immediately before WILLIAM J. CADOGAN'S Termination of
Employment subject, however, to the following:
(a) LESS THAN 5 YEARS. If he shall have received Compensation
attributable to less than all of the sixty (60) consecutive calendar
months ending immediately before the Termination of Employment, his
Average Monthly Compensation shall be equal to the total of all the
Compensation attributable to all calendar months to which any of his
Compensation is attributable divided by the greatest number of
consecutive calendar months to which any of his Compensation is
attributable.
(b) FIVE-YEAR LIMIT. In determining his Average Monthly Compensation,
there shall be disregarded all Compensation attributable any calendar
months other than the sixty (60) consecutive calendar months ending
immediately before the Termination of Employment.
(c) NO COMPENSATION. The absence of Compensation in any calendar month
shall not affect the requirement that only sixty (60) consecutive
calendar months ending immediately before the Termination of
Employment be considered in determining Average Monthly Compensation.
1.2.4. BOARD OF DIRECTORS - the Board of Directors of the Employer or a
duly authorized committee of less than all the Directors.
1.2.5. CHANGE IN CONTROL - an event defined as a Change in Control in
section 7.6.2 of the ADC TELECOMMUNICATIONS, INC. PENSION PLAN (1885
Restatement), as that document and that definition may exist from time to time.
1.2.6. COMPENSATION - amounts paid to WILLIAM J. CADOGAN by the Employer
and all affiliates for services rendered, reported as income subject to federal
income taxes on Treasury Form W-2 for the applicable year; subject, however, to
the following:
(a) EXCLUDED ITEMS. In determining his Compensation, there shall be
(i) all discretionary bonuses not paid pursuant to a formal plan, and
(ii) all foreign service allowances, foreign tax equalization
payments, expense reimbursements, moving expense payments or other
similar extra compensation, and (iii) all noncash remuneration and
(iv) all deferred compensation (except as provided in (b) below),
excess life insurance premiums, the value of stock options (whether or
not exercised), and (iv) the value of restricted stock or similar
awards and any cash payments made in connection with any such
restricted stock award.
(b) ADDED ITEMS. Remuneration which would have been paid by the Employer
or an affiliate but which was not paid because he entered into an
agreement to reduce earnings as a condition of participation in a plan
established under section 125 or section 401(k) of the Internal
Revenue Code, shall be considered to have been paid at the time when
it would have been paid but for such agreement to reduce earnings.
Remuneration which would have been paid by the Employer or an
Affiliate but which was not paid because he entered into an agreement
to defer compensation under a nonqualified plan of deferred
compensation shall be considered to have been paid at the time it
would have been paid but for such agreement to defer earnings.
(c) ATTRIBUTION TO PERIODS. His Compensation shall be considered
attributable to the calendar month in which it is actually paid (and
not when earned or accrued) except that annual incentive payments
shall be considered attributable
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<PAGE>
to the last day of the last calendar month in the fiscal period with
respect to which they are paid.
(d) EXCLUDED PERIODS. Amounts attributable to calendar months commencing
after the earliest of the date he became Disabled or had a Termination
of Employment shall not be taken into account in determining his
Compensation.
(e) FINAL PAYMENTS. Final payments on account of Termination of
Employment (I.E., severance payments) and settlement for accrued but
unused vacation and sick leave shall not be taken into account in
determining his Compensation.
1.2.7. DISABILITY, DISABLED - a medically determinable physical or
mental impairment which constitutes disability under the Employer's separate
long term disability plan.
1.2.8. EFFECTIVE DATE - November 1, 1990.
1.2.9. EMPLOYER - ADC TELECOMMUNICATIONS, INC., a Minnesota corporation,
and any successor thereof that adopts this Agreement.
1.2.10. QUALIFIED PLANS BENEFIT - a dollar amount determined for WILLIAM
J. CADOGAN as of the last day of the calendar month in which his Termination of
Employment occurs or, if later, the last day of the calendar month in which he
would attain age sixty (60) years (and expressed in terms of a monthly annuity
payable to him in the Single Life Annuity form beginning on the first day of the
calendar month following his Termination of Employment or, if later, the first
day of the calendar month following the date he would attain age sixty years)
which is the sum of the:
(a) accrued benefit developed for him as of the date of his Termination of
Employment under all qualified defined benefit pension plans
maintained by the Employer when expressed in the form of a Single Life
Annuity first payable on the first day of the first calendar month
following his Termination of Employment or, if later, the first day of
the calendar month following the date he would attain age sixty (60)
years; and
(b) the Actuarial Equivalent monthly amount of annuity payable to him when
expressed in the form of a Single Life Annuity beginning on the first
day of the first calendar month following his Termination of
Employment or, if later, the first day of the calendar month following
the date he would attain age sixty (60) years to the extent such
benefits are attributable to contributions of the Employer (and
exclusive of any benefits attributable to contributions directly or
indirectly made by him) under all qualified defined contribution
pension, profit sharing or stock bonus plans maintained by the
Employer; and
(c) the Actuarial Equivalent monthly amount of annuity payable to him when
expressed in the form of a Single Life Annuity beginning on the first
day of the first calendar month following his Termination of
Employment or, if later, the first day of the calendar month following
the date he would attain age sixty (60) years to the extent such
benefits are Employer-provided benefits payable from a nonqualified
plan maintained by the Employer for the purpose of providing benefits
which cannot be provided from qualified pension, profit sharing or
stock bonus plans maintained by the Employer because of limitations on
such plans under section 401(a)(17), section 401(k), section 401(m),
section 402(g), section 415 and other similar provisions of the
Internal Revenue Code.
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<PAGE>
1.2.11. SINGLE LIFE ANNUITY - a form of annuity that is payable monthly
to and for the lifetime of WILLIAM J. CADOGAN, the first such payment to be due
on the date specified in Section 2 hereof and the last such payment due on the
first day of the calendar month in which his death occurs.
1.2.12. SOCIAL SECURITY BENEFIT - the monthly amount available for the
benefit of WILLIAM J. CADOGAN at:
(a) at age sixty-two (62) years if his Termination of Employment is before
age sixty-two (62) years (calculated on the assumption that he will
have no additional earnings from his Termination of Employment until
age sixty-two (62) years); or
(b) the date of his Termination of Employment if his Termination of
Employment is after age sixty-two (62) years but before age sixty-five
(65) years; or
(c) age sixty-five (65) years, if his Termination of Employment is at or
after age sixty-five (65) years;
(excluding amounts available for spouse and dependents) as an old age benefit
under the provisions of Title II of the federal Social Security Act in effect on
the date of the Termination of Employment (or age sixty-five, if earlier),
whether or not payment of such amount is delayed, suspended or forfeited because
of failure to apply, acceptance of other work, or any other similar reason
within his control. For this purpose, unless he shall have furnished verified
proof of wages before his Termination of Employment, he shall be deemed to have
had taxable wages at or above the taxable wage base in all years prior to the
year of his Termination of Employment.
1.2.13. SUPPLEMENTAL RETIREMENT BENEFIT - the benefit payable under this
Plan upon the Termination of Employment of WILLIAM J. CADOGAN, subject to the
conditions and limitations set forth in this Plan Statement.
1.2.14. TERMINATION OF EMPLOYMENT - a complete severance of WILLIAM J.
CADOGAN'S employment relationship with the Employer and its subsidiaries or
affiliates, if any, for any reason other than his death. A transfer from
employment with the Employer to employment with an affiliate of the Employer
shall not constitute a Termination of Employment.
1.3. RULES OF INTERPRETATION. An individual shall be considered to have
attained a given age on his birthday for that age (and not on the day before).
The birthday of any individual born on a February 29 shall be deemed to be
February 28 in any year that is not a leap year. Notwithstanding any other
provision of this Agreement or any election or designation made under this
Agreement, any individual who feloniously and intentionally kills WILLIAM J.
CADOGAN or any surviving spouse shall be deemed for all purposes of this
Agreement and all elections and designations made under this Agreement to have
died before him or his surviving spouse. A final judgment of conviction of
felonious and intentional killing is conclusive for the purposes of this
Section. In the absence of a conviction of felonious and intentional killing,
the Board of Directors shall determine whether the killing was felonious and
intentional for the purposes of this Section. Whenever appropriate, words used
herein in the singular may be read in the plural, or words used herein in the
plural may be read in the singular; the masculine may include the feminine; and
the words "hereof," "herein" or "hereunder" or other similar compounds of the
word "here" shall mean and refer to the entire Agreement and not to any
particular paragraph or section of this Agreement unless the context clearly
indicates to the contrary. The titles given to the various sections of this
Agreement are inserted for convenience of reference only and are not part of
this Agreement, and they shall not be considered in determining the purpose,
meaning or intent of any provision hereof. Any reference in this Agreement to a
statute or regulation shall be considered also to mean and refer to any
subsequent amendment or replacement of that statute or regulation. This
instrument has been executed and delivered in the State of Minnesota and has
been drawn in
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<PAGE>
conformity to the laws of that State and shall, except to the extent that
federal law is controlling, be construed and enforced in accordance with the
laws of the State of Minnesota.
SECTION 2
SUPPLEMENTAL RETIREMENT INCOME BENEFIT
2.1. SUPPLEMENTAL RETIREMENT BENEFIT.
2.1.1. WHEN AVAILABLE. Upon the Termination of Employment of
WILLIAM J. CADOGAN:
(a) at or after his attainment of age fifty (50) years; or
(b) at the written request of the Board of Directors; or
(c) within six (6) months after a Change in Control; or
(d) after, and on account of, his Disability.
and upon the filing of a written application with the Board of Directors, he
shall receive a Supplemental Retirement Benefit.
2.1.2. AMOUNT. The amount of WILLIAM J. CADOGAN'S Supplemental
Retirement Benefit shall be the Actuarial Equivalent single lump sum of his
Accrued Benefit determined as of his Termination of Employment reduced, however,
five-twelfths of one percent (5/12%) for each month by which the payment of the
Supplemental Retirement Benefit precedes the last day of the calendar month in
which he attains age sixty (60) years.
2.1.3. FORM OF PENSION. For the purpose of defining the amount of the
Supplemental Retirement Benefit in Section 2.1.2, the benefit is derived from a
Single Life Annuity, the first payment of which is due on the first day of the
calendar month which follows his Termination of Employment or, if later, the
first day of the calendar month which follows the date he would attain age sixty
(60) years. Notwithstanding the foregoing, this annuity shall be, in all cases,
converted to and paid in the form of an Actuarial Equivalent single lump sum
benefit on the first day of the calendar month following his Termination of
Employment. Such payment shall be in full and complete discharge of all benefits
payable to, or with respect to him under this Agreement including, but not
limited to, all survivor benefits and all optional forms of benefit to which he
or his spouse might otherwise have been entitled. The consent of a spouse,
joint annuitant or beneficiary shall not be required before making the single
lump sum payment herein described.
2.2. NO OTHER BENEFITS. No benefits are available under this Plan upon the
Termination of Employment of WILLIAM J. CADOGAN before he is entitled to the
Supplemental Retirement Benefit specifically enumerated herein.
2.3. FACILITY OF PAYMENT. In case of the legal disability, including minority,
of WILLIAM J. CADOGAN, joint annuitant or beneficiary entitled to receive any
distribution under the Agreement, payment shall be made, if the Board of
Directors shall be advised of the existence of such condition:
(a) to his or her duly appointed guardian, conservator or other legal
representative, or
(b) to a person or institution entrusted with the care or maintenance of
the incompetent or disabled person, provided such person or
institution has satisfied the Board of Directors that the payment will
be used for the best
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<PAGE>
interest and assist in the care of such person, and provided further,
that no prior claim for said payment has been made by a duly appointed
guardian, conservator or other legal representative of such person.
Any payment made in accordance with the foregoing provisions of this section
shall constitute a complete discharge of any liability or obligation of the
Employer and the Board of Directors.
2.4. FORFEITURE OF BENEFITS. All unpaid benefits under this Plan payable to or
with respect to WILLIAM J. CADOGAN, including without limiting the generality of
the foregoing, undistributed commuted values, shall be immediately and
permanently forfeited upon the determination by the Board of Directors that he,
either before or after Termination of Employment:
(i) engaged in a felonious or fraudulent conduct resulting in
material harm to the Employer or an affiliate; or
(ii) made an unauthorized disclosure to a competitor of any
material confidential information, trade information, or
trade secrets of the Employer or an affiliate; or
(iii) provided the Employer or an affiliate with materially false
reports concerning his business interests or employment; or
(iv) made materially false representations which are relied upon
by the Employer or an affiliate in furnishing information to
shareholders, accountants, a stock exchange, the Securities
and Exchange Commission or public or private regulatory
body; or
(v) maintained an undisclosed, unauthorized and material
conflict of interest in the discharge of the duties owed by
him to the Employer or an affiliate; or
(vi) engaged in conduct causing a serious violation of state or
federal law by the Employer or an affiliate; or
(vii) engaged in the theft of assets or funds of the Employer or
an affiliate; or
(viii) has been convicted of any crime which directly or indirectly
arose out of his employment relationship with the Employer
or an affiliate or materially affected his ability to
discharge the duties of his employment with the Employer or
an affiliate; or
(ix) engaged during his employment in any employment or
self-employment with a competitor of the Employer or an
affiliate; or
(x) engaged during a period of two (2) years after his voluntary
termination of employment with the Employer in any
employment or self-employment with a competitor of the
Employer or an affiliate within the geographical area which
is then served by the Employer or the affiliate.
He shall be notified within thirty (30) days of any such decision by the Board
of Directors. He may contest such action by filing a claim as prescribed in
Section 6.4.
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<PAGE>
SECTION 3
DEATH BENEFITS
3.1. DEATH BEFORE BENEFIT COMMENCEMENT.
3.1.1. WHEN AVAILABLE. If upon the death of WILLIAM J. CADOGAN he:
(a) had not yet begun to receive any payment of the Supplemental
Retirement Benefit under the Agreement, and
(b) was married and had been married for the one (1) year preceding his
death, and
(c) was entitled to some Accrued Benefit immediately before his death;
a lump sum survivor benefit shall be payable to the surviving spouse to whom he
was married for at least one (1) year ending on the date of death.
3.1.2. AMOUNT. The amount of the lump sum survivor benefit shall be:
(a) If he had not Terminated Employment at the date of his death, the
amount shall be the 85% of Actuarially Equivalent single lump sum
which he would have received if he had Terminated Employment on the
date of his death at the written request of the Board of Directors
(and not by reason of his death).
(b) If he had Terminated Employment at the date of his death and had not
received the payment to which he was entitled under Section 2.1, the
amount shall be the amount, if any, which he would have received, if
any, under Section 2.1 if he had lived to receive such amount.
3.1.3. FORM OF BENEFIT. The lump sum survivor benefit shall be due on
the first day of the calendar month after the death of WILLIAM J. CADOGAN. No
other death benefit shall be payable with respect to him if he dies under these
circumstances. No death benefit shall be payable with respect to him if he dies
under any other circumstances.
SECTION 4
FUNDING OF PLAN
4.1. UNFUNDED AGREEMENT. All benefits payable under this Agreement shall be
paid exclusively from the general assets of the Employer. No fund or trust
shall be established apart from the general assets of the Employer for the
purposes of this Agreement. No assets or property shall be segregated or set
apart from the general assets of the Employer for the purpose of funding this
Agreement. The rights of WILLIAM J. CADOGAN under this Agreement (or of any
surviving spouse with respect to him) shall be solely those of an unsecured
general creditor of the Employer. If, for its own internal purposes, the
Employer elects to purchase life insurance policies on his life or any other
assets in connection with this Agreement, he will not be the beneficial owner or
beneficiary of such policies or assets (all such rights being retained by the
Employer) and shall not have any preferred claim or interest in any such
policies, assets or the proceeds thereof. The Employer makes no representation
that it will actually use any life insurance policies, other assets or proceeds
of the same which it may acquire for the purpose of paying any benefits under
this Agreement.
4.2. SPENDTHRIFT PROVISIONS. Neither WILLIAM J. CADOGAN nor his surviving
spouse shall have any transferrable interest in any benefit nor shall he or his
surviving spouse have any power to
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<PAGE>
anticipate, alienate, dispose of, pledge or encumber the same nor shall the
Employer or the Board of Directors recognize any assignment thereof, either in
whole or in part, nor shall it be subject to attachment, garnishment, execution
following judgment or other legal process.
SECTION 5
AMENDMENT AND TERMINATION
This Agreement may be amended and terminated only by the written agreement of
the Employer and WILLIAM J. CADOGAN. The rights and obligations of the Employer
and him shall be binding upon them and their heirs, successors and assigns.
SECTION 6
DETERMINATIONS - RULES AND REGULATIONS
6.1. DETERMINATIONS. The Board of Directors shall make such determinations as
may be required from time to time in the administration of the Agreement. Each
interested party may act and rely upon all information reported to them
hereunder and need not inquire into the accuracy thereof nor be charged with any
notice to the contrary.
6.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Board of Directors.
6.3. METHOD OF EXECUTING INSTRUMENTS. Information to be supplied or written
notices to be made or consents to be given by the Employer or the Board of
Directors pursuant to any provision of this Agreement may be signed in the name
of the Employer by any officer thereof who has been authorized to make such
certification or to give such notices or consents or by any Board of Directors
member.
6.4. CLAIMS PROCEDURE. Until modified by the Board of Directors, the claims
procedure set forth in this Section 6.4 shall be the claims procedure for the
resolution of disputes and disposition of claims arising under the Agreement. An
application for benefits under Section 3 or Section 5 shall be considered as a
claim for the purposes of this Section 6.4.
6.4.1. ORIGINAL CLAIM. WILLIAM J. CADOGAN or his surviving spouse may,
if he or she so desires, file with the Board of Directors a written claim for
benefits under the Agreement. Within ninety (90) days after the filing of such
a claim, the Board of Directors shall notify the claimant in writing whether his
claim is upheld or denied in whole or in part or shall furnish the claimant a
written notice describing specific special circumstances requiring a specified
amount of additional time (but not more than one hundred eighty days from the
date the claim was filed) to reach a decision on the claim. If the claim is
denied in whole or in part, the Board of Directors shall state in writing:
(a) the specific reasons for the denial;
(b) the specific references to the pertinent provisions of this Agreement
on which the denial is based;
(c) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(d) an explanation of the claims review procedure set forth in this
section.
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<PAGE>
6.4.2. CLAIMS REVIEW PROCEDURE. Within sixty (60) days after receipt of
notice that his claim has been denied in whole or in part, the claimant may file
with the Board of Directors a written request for a review and may, in
conjunction therewith, submit written issues and comments. Within sixty (60)
days after the filing of such a request for review, the Board of Directors shall
notify the claimant in writing whether, upon review, the claim was upheld or
denied in whole or in part or shall furnish the claimant a written notice
describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred twenty days from the date the
request for review was filed) to reach a decision on the request for review.
6.4.3. GENERAL RULES.
(a) No inquiry or question shall be deemed to be a claim or a request for
a review of a denied claim unless made in accordance with the claims
procedure. The Board of Directors may require that any claim for
benefits and any request for a review of a denied claim be filed on
forms to be furnished by the Board of Directors upon request.
(b) All decision on claims and on requests for a review of denied claims
shall be made by the Board of Directors.
(c) The Board of Directors may, in its discretion, hold one or more
hearings on a claim or a request for a review of a denied claim.
(d) A claimant may be represented by a lawyer or other representative (at
their own expense), but the Board of Directors reserves the right to
require the claimant to furnish written authorization. A claimant's
representative shall be entitled to receive copies of notices sent to
the claimant.
(e) The decision of the Board of Directors on a claim and on a request for
a review of a denied claim shall be served on the claimant in writing.
If a decision or notice is not received by a claimant within the time
specified, the claim or request for a review of a denied claim shall
be deemed to have been denied.
(f) Prior to filing a claim or a request for a review of a denied claim,
the claimant or his representative shall have a reasonable opportunity
to review a copy of this Agreement and all other pertinent documents
in the possession of the Employer, and the Board of Directors.
SECTION 7
PLAN ADMINISTRATION
7.1. EMPLOYER.
7.1.1. OFFICERS. Functions generally assigned to the Employer shall be
discharged by the officers of ADC TELECOMMUNICATIONS, INC. (other than WILLIAM
J. CADOGAN) or delegated and allocated as provided herein.
7.1.2. DELEGATION BY BOARD. Except as hereinafter provided, the Board
of Directors of ADC TELECOMMUNICATIONS, INC. may delegate or redelegate and
allocate and reallocate to one or more persons or to a committee of persons
jointly or severally, and whether or not such persons are directors, officers or
employees, such functions assigned to the Employer hereunder as it may from time
to time deem advisable.
-9-
<PAGE>
7.1.3. NON-DELEGABLE FUNCTIONS. The Board of Directors of ADC
TELECOMMUNICATIONS, INC. shall have the exclusive authority, which authority may
not be delegated, to act for the Employer to amend this Agreement and to
terminate the Agreement.
7.2. ADMINISTRATOR. ADC TELECOMMUNICATIONS, INC. shall be the administrator for
purposes of section 3(16)(A) of the Employee Retirement Income Security Act of
1974.
7.3. SERVICE OF PROCESS. In the absence of any designation to the contrary by
ADC TELECOMMUNICATIONS, INC., the Secretary of ADC TELECOMMUNICATIONS, INC. is
designated as the appropriate and exclusive agent for the receipt of service of
process directed to the Agreement in any legal proceeding, including
arbitration, involving the Agreement.
SECTION 8
MISCELLANEOUS RULES
The continuance of this Agreement shall not be a term of the employment of
WILLIAM J. CADOGAN. The Employer shall not be obliged to continue the
Agreement. The terms of this Agreement shall not give him the right to be
retained in the employment of the Employer. Neither the officers nor the
members of the Board of Directors of ADC TELECOMMUNICATIONS, INC. in any way
guarantee the payment of any benefit or amount which may become due and payable
hereunder to him, or surviving spouse. He and surviving spouse shall look
solely to the assets of ADC TELECOMMUNICATIONS, INC. for such payments.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be executed
as of the day and year first above written:
ADC TELECOMMUNICATIONS, INC. WILLIAM J. CADOGAN
By /s/ Charles M. Denny, Jr. /s/ William J. Cadogan
------------------------------ -----------------------
Its Chairman of the Board
------------------------
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<PAGE>
APPENDIX A
DETERMINATION OF ACTUARIAL EQUIVALENT
TO SINGLE LIFE ANNUITY
Section 1. LUMP SUM SETTLEMENTS. When converting benefits to a single
lump sum for payment to WILLIAM J. CADOGAN, the benefit to be converted is the
Single Life Annuity form payable at the latest date such benefit may commence.
When converting benefits to a single lump sum for payment to any other person,
the benefit to be converted shall be the benefit payable to such other person at
the latest date such benefit may commence. The factors to be used to convert
the Single Life Annuity form to a lump sum benefit shall be:
INTEREST ASSUMPTION: One hundred twenty percent (120%) of the interest rate
used by the Pension Benefit Guaranty Corporation to value immediate annuities in
the event of plan terminations occurring on the first day of the calendar year
in which occurs the date as of which the Actuarial Equivalent amount of benefit
is being determined
MORTALITY ASSUMPTION: The 1983 Group Annuity Mortality Table (male lives) or a
later table adopted by the State of Minnesota Insurance Department as a reserve
basis for group annuities issued by life insurance companies doing business in
Minnesota
Section 2. DEFINED CONTRIBUTION PLAN ACCRUAL. To determine the Actuarial
Equivalent annuity value of WILLIAM J. CADOGAN'S account balances attributable
to contributions of the Employer in defined contribution plans as of a specified
date (expressed in the Single Life Annuity form beginning on the first day of
the calendar month following his Normal Retirement Age) the following steps
shall be followed:
(a) Determine the value of all such defined contribution plan accounts as
of the valuation date under each defined contribution plan which is coincident
with or immediately preceding such specified date;
(b) Increase such account balances from such valuation dates to the last
day of the calendar month in which his Termination of Employment occurs or, if
later, the last day of the calendar month in which he would attain age sixty
(60) years at an assumed rate of earnings equal to eight percent (8%),
compounded annually;
(c) Convert the resulting total to an Actuarial Equivalent amount of
monthly annuity in the Single Life Annuity form commencing on the last day of
the calendar month in which his Termination of Employment occurs or, if later,
the last day of the calendar month in which he would attain age sixty (60) years
by applying the interest and mortality factors set forth in Section 1 above.
Section 3. GENERAL FACTORS. Except to the extent otherwise specified in
the Agreement, the following interest and mortality factors shall be used in
determining the Actuarial Equivalent amount of any benefit:
INTEREST ASSUMPTION: One hundred twenty percent (120%) of the interest rate
used by the Pension Benefit Guaranty Corporation to value immediate annuities in
the event of plan terminations occurring on the first day of the calendar year
in which occurs the date as of which the Actuarial Equivalent amount of benefit
is being determined
MORTALITY ASSUMPTION: The 1983 Group Annuity Mortality Table (male lives) or a
later table adopted by the State of Minnesota Insurance Department as a reserve
basis for group annuities issued by life insurance companies doing business in
Minnesota
A-1
<PAGE>
Exhibit 21-a
SUBSIDIARIES OF THE COMPANY
The following list of subsidiaries of the Company identifies the name of the
subsidiary, the state or other jurisdiction of incorporation or organization and
the name under which such subsidiaries do business:
ADC EUROPE NV
BELGIUM
ADC, ADC EUROPE
ADC TELECOM CANADA INC.
CANADA
ADC TELECOMMUNICATIONS UK LTD
UNITED KINGDOM
ADC, ADC TELECOMMUNICATIONS
ADC INTERNATIONAL LIMITED
JAMAICA
ADC TELECOMUNICACIONES VENEZUELA, S.A.
VENEZUELA
ADC DE MEXICO, S.A. DE C.V.
MEXICO
KENTROX INDUSTRIES, INC.
A DELAWARE CORPORATION
KENTROX, ADC KENTROX
AMERICAN LIGHTWAVE SYSTEMS, INC.
A DELAWARE CORPORATION
ALS
FIBERMUX CORPORATION
A CALIFORNIA CORPORATION
FIBERMUX, ADC FIBERMUX
ADC TELECOMMUNICATIONS AUSTRALIA PTY. LIMITED
AUSTRALIA
ADC TELECOMMUNICATIONS SINGAPORE PTE LIMITED
SINGAPORE
Pursuant to Item 601 (b) (22) (ii) of Regulation S-K, the Company omits any of
its other subsidiaries from this exhibit on the grounds that, considered in the
aggregate as a single subsidiary, as of the end of fiscal 1993 such subsidiaries
would not constitute a significant subsidiary as defined in Rule 1-02 (v) of
Regulation S-X. Inclusion in this exhibit of those subsidiaries listed above
should not necessarily be construed as an indication that such subsidiaries,
either considered alone or considered in the aggregate as a single subsidiary,
constitute a significant subsidiary as so defined.
<PAGE>
Exhibit 23-a
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ADC Telecommunications, Inc.:
As independent public accountants, we hereby consent to the incorporation of our
report dated December 15, 1993 included in this Form 10-K, into the Company's
previously filed Registration Statement File Nos. 2-83584, 33-22654, 33-40356
and 33-40357.
ARTHUR ANDERSEN & CO.
Minneapolis, Minnesota
January 11, 1994
<PAGE>
Exhibit 24-a
POWER OF ATTORNEY
I, Charles M. Denny, Jr., do hereby constitute and appoint William J. Cadogan
and Joan K. Berg, or any one of them, my Attorney-in-Fact for the purpose of
signing, in my name and in my behalf as a Director of ADC Telecommunications,
Inc., the Annual Report of ADC Telecommunications, Inc. on Form 10-K for its
fiscal year ended October 31, 1993, and any and all amendments to said Annual
Report and any and all amendments thereto, as each thereof is so signed, for
filing with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
December 22, 1993
/s/ Charles M. Denny, Jr.
----------------------------------
Charles M. Denny, Jr.
<PAGE>
POWER OF ATTORNEY
I, Thomas E. Holloran, do hereby constitute and appoint William J. Cadogan and
Joan K. Berg, or any one of them, my Attorney-in-Fact for the purpose of
signing, in my name and in my behalf as a Director of ADC Telecommunications,
Inc., the Annual Report of ADC Telecommunications, Inc. on Form 10-K for its
fiscal year ended October 31, 1993, and any and all amendments to said Annual
Report and any and all amendments thereto, as each thereof is so signed, for
filing with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
December 22, 1993
/s/ Thomas E. Holloran
----------------------------------
Thomas E. Holloran
<PAGE>
POWER OF ATTORNEY
I, B. Kristine Johnson, do hereby constitute and appoint William J. Cadogan and
Joan K. Berg, or any one of them, my Attorney-in-Fact for the purpose of
signing, in my name and in my behalf as a Director of ADC Telecommunications,
Inc., the Annual Report of ADC Telecommunications, Inc. on Form 10-K for its
fiscal year ended October 31, 1993, and any and all amendments to said Annual
Report and any and all amendments thereto, as each thereof is so signed, for
filing with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
December 22, 1993
/s/ B. Kristine Johnson
----------------------------------
B. Kristine Johnson
<PAGE>
POWER OF ATTORNEY
I, Charles W. Oswald, do hereby constitute and appoint William J. Cadogan and
Joan K. Berg, or any one of them, my Attorney-in-Fact for the purpose of
signing, in my name and in my behalf as a Director of ADC Telecommunications,
Inc., the Annual Report of ADC Telecommunications, Inc. on Form 10-K for its
fiscal year ended October 31, 1993, and any and all amendments to said Annual
Report and any and all amendments thereto, as each thereof is so signed, for
filing with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
December 22, 1993
/s/ Charles W. Oswald
----------------------------------
Charles W. Oswald
<PAGE>
POWER OF ATTORNEY
I, Jean-Pierre Rosso, do hereby constitute and appoint William J. Cadogan and
Joan K. Berg, or any one of them, my Attorney-in-Fact for the purpose of
signing, in my name and in my behalf as a Director of ADC Telecommunications,
Inc., the Annual Report of ADC Telecommunications, Inc. on Form 10-K for its
fiscal year ended October 31, 1993, and any and all amendments to said Annual
Report and any and all amendments thereto, as each thereof is so signed, for
filing with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
December 21, 1993
/s/ Jean-Pierre Rosso
----------------------------------
Jean-Pierre Rosso
<PAGE>
POWER OF ATTORNEY
I, Donald M. Sullivan, do hereby constitute and appoint William J. Cadogan and
Joan K. Berg, or any one of them, my Attorney-in-Fact for the purpose of
signing, in my name and in my behalf as a Director of ADC Telecommunications,
Inc., the Annual Report of ADC Telecommunications, Inc. on Form 10-K for its
fiscal year ended October 31, 1993, and any and all amendments to said Annual
Report and any and all amendments thereto, as each thereof is so signed, for
filing with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
December 22, 1993
/s/ Donald M. Sullivan
----------------------------------
Donald M. Sullivan
<PAGE>
POWER OF ATTORNEY
I, Warde F. Wheaton, do hereby constitute and appoint William J. Cadogan and
Joan K. Berg, or any one of them, my Attorney-in-Fact for the purpose of
signing, in my name and in my behalf as a Director of ADC Telecommunications,
Inc., the Annual Report of ADC Telecommunications, Inc. on Form 10-K for its
fiscal year ended October 31, 1993, and any and all amendments to said Annual
Report and any and all amendments thereto, as each thereof is so signed, for
filing with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
December 22, 1993
/s/ Warde F. Wheaton
----------------------------------
Warde F. Wheaton
<PAGE>
POWER OF ATTORNEY
I, John D. Wunsch, do hereby constitute and appoint William J. Cadogan and Joan
K. Berg, or any one of them, my Attorney-in-Fact for the purpose of signing, in
my name and in my behalf as a Director of ADC Telecommunications, Inc., the
Annual Report of ADC Telecommunications, Inc. on Form 10-K for its fiscal year
ended October 31, 1993, and any and all amendments to said Annual Report and any
and all amendments thereto, as each thereof is so signed, for filing with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
December 22, 1993
/s/ John D. Wunsch
----------------------------------
John D. Wunsch
<PAGE>
POWER OF ATTORNEY
I, William J. Cadogan, do hereby constitute and appoint Joan K. Berg, my
Attorney-in-Fact for the purpose of signing, in my name and in my behalf as
President, Chief Executive Officer (principal executive officer), Chief
Operating Officer and as a Director of ADC Telecommunications, Inc., the Annual
Report of ADC Telecommunications, Inc. on Form 10-K for its fiscal year ended
October 31, 1993, and any and all amendments to said Annual Report and any and
all amendments thereto, as each thereof is so signed, for filing with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
January 6, 1994
/s/ William J. Cadogan
----------------------------------
William J. Cadogan
