<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended
October 2, 1994 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from ____________ to ____________
Commission file number: 0-15086
SUN MICROSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2805249
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2550 GARCIA AVENUE, MOUNTAIN VIEW, CA 94043-1100
(Address of principal executive offices with zip code)
Registrant's telephone number, including area code: (415) 960-1300
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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.
YES /X/ NO / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES / / NO / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practible date.
CLASS OUTSTANDING AT OCTOBER 2, 1994
----- ------------------------------
Common stock - $0.00067 par value 94,839,336
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COVER PAGE 1
INDEX 2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial Condition 7
PART II - OTHER INFORMATION
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 13
SIGNATURES 14
</TABLE>
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
October 2, June 30,
1994 1994
---------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 372,100 $ 433,937
Short-term investments 411,354 448,879
Accounts receivable, net 839,404 853,031
Inventories 339,466 294,948
Other current assets 277,137 274,298
---------- ----------
Total current assets 2,239,461 2,305,093
Property, plant and equipment, at cost 878,072 877,268
Accumulated depreciation and amortization (543,236) (517,020)
---------- ----------
334,836 360,248
Other assets, net 235,339 232,651
---------- ----------
$2,809,636 $2,897,992
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 68,060 $ 78,687
Accounts payable 270,920 363,828
Accrued liabilities 484,341 500,908
Other current liabilities 212,923 204,415
---------- ----------
Total current liabilities 1,036,244 1,147,838
Long-term debt and other obligations 83,648 121,831
Stockholders' equity 1,689,744 1,628,323
---------- ----------
$2,809,636 $2,897,992
========== ==========
</TABLE>
See accompanying notes.
3
<PAGE> 4
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
October 2, September 26,
1994 1993
---------- -------------
<S> <C> <C>
Net revenues $1,273,439 $960,481
Cost and expenses:
Cost of sales 761,378 567,973
Research and development 119,366 107,898
Selling, general and administrative 338,877 269,070
---------- --------
Total costs and expenses 1,219,621 944,941
---------- --------
Operating income 53,818 15,540
Interest income, net 2,692 590
---------- --------
Income before income taxes 56,510 16,130
Provision (credit) for income taxes 18,083 (476)
---------- --------
Net income $ 38,427 $ 16,606
========== ========
Net income per common
and common-equivalent
share $ 0.40 $ 0.16
========== ========
Common and common-equivalent
shares used in the calculation
of net income per share 95,667 100,976
========== ========
</TABLE>
See accompanying notes.
4
<PAGE> 5
SUN MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
October 2, September 26,
1994 1993
---------- -------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 38,427 $ 16,606
Adjustments to reconcile net income
to operating cash flows:
Depreciation, amortization
and other non-cash items 66,501 57,772
(Increase) decrease in accounts receivable 13,627 (24,904)
Increase in inventories (44,518) (25,616)
Decrease in accounts payable (92,908) (14,259)
Net (increase) decrease in other current
and non-current assets (5,766) 8,688
Net increase (decrease) in other current
and non-current liabilities 3,387 (35,963)
--------- ---------
Net cash used by operating activities (21,250) (17,676)
--------- ---------
Cash flow from investing activities:
Acquisition of property, plant and equipment (26,012) (46,950)
Acquisition of other assets (11,096) (7,527)
Acquisition of short-term investments (589,932) (522,718)
Maturities of short-term investments 624,995 420,128
--------- ---------
Net cash used by investing activities (2,045) (157,067)
--------- ---------
Cash flow from financing activities:
Issuance of common stock 9,344 2,242
Acquisition of treasury stock (9,303) (170,934)
Proceeds from employee stock purchase plans 12,187 10,866
Reduction of short-term borrowings, net (10,627) (7,176)
(Reduction) proceeds of long-term
borrowings and other (40,143) 16
--------- ---------
Net cash used by financing activities (38,542) (164,986)
--------- ---------
Net decrease in cash and cash equivalents $ (61,837) $(339,729)
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 6,670 $ 697
Income taxes $ 21,137 $ 24,349
</TABLE>
See accompanying notes.
5
<PAGE> 6
SUN MICROSYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Sun
Microsystems, Inc. ("Sun" or "the Company") and its wholly-owned
subsidiaries. Intercompany accounts and transactions have been eliminated.
While the quarterly financial information furnished is unaudited, the
financial statements included in this report reflect all adjustments
(consisting only of normal recurring accruals) that the Company considers
necessary for a fair presentation of the results of operations for the
interim periods covered and of the financial condition of the Company at the
date of the interim balance sheet. The results for interim periods are not
necessarily indicative of the results for the entire year. The information
included in this report should be read in conjunction with the Company's 1994
Annual Report to Stockholders.
INVENTORIES (in thousands)
<TABLE>
<CAPTION>
October 2, 1994 June 30, 1994
--------------- -------------
<S> <C> <C>
Raw materials $161,730 $129,784
Work in process 53,842 35,798
Finished goods 123,894 129,366
-------- -------
$339,466 $294,948
======== ========
</TABLE>
INCOME TAXES
The Company accounts for income taxes under the liability method of Statement
of Financial Accounting Standards No. 109. The provision for income taxes
during the interim periods considers anticipated annual income before taxes,
research and development tax credits, earnings of foreign subsidiaries
permanently invested in foreign operations, and other differences.
ACCOUNTING CHANGE
In the first quarter of fiscal 1995, the Company adopted Financial Accounting
Standards Board Statement No. 115 (FAS 115), "Accounting for Certain
Investments in Debt and Equity Securities." Under FAS 115, debt securities
that the Company has both the positive intent and ability to hold to maturity
are carried at amortized cost. Debt securities that the Company does not
have the positive intent and ability to hold to maturity and all marketable
equity securities are classified as either available-for-sale or trading and
are carried at fair value. Unrealized holding gains and losses on securities
classified as available-for-sale are carried as a separate component of
stockholders' equity. Unrealized holding gains and losses on securities
classified as trading are reported in earnings.
Cash equivalents consist primarily of highly liquid investments with
insignificant interest rate risk and original maturities of three months or
less at date of acquisition. Short-term investments consist primarily of
auction market preferred stock, commercial paper and tax-exempt securities
with original maturities beyond three months and less than twelve months.
Auction market preferred stock is traded at par and carries a floating rate
dividend that is paid and reset, at intervals of 49 days or less, through a
bidding process that determines the yield. All of the Company's short-term
investments and cash equivalents are classified as available-for-sale at
October 2, 1994. The adoption of FAS 115 resulted in an impact to
stockholders' equity that was not material as of the date of adoption, July
1, 1994, or as of the fiscal quarter ended October 2, 1994. Gross realized
gains and gross realized losses on sales of available-for-sale securities for
the three months ended October 2, 1994 were immaterial.
6
<PAGE> 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following table sets forth items from the Condensed Consolidated Statements
of Income as percentages of net revenues:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
October 2, September 26,
1994 1993
---------- -------------
<S> <C> <C>
Net revenues 100.0% 100.0%
Cost of sales 59.8 59.1
----- -----
Gross margin 40.2 40.9
Research and development 9.4 11.2
Selling, general and administrative 26.6 28.0
----- -----
Operating income 4.2 1.7
Interest income, net 0.2 -
----- -----
Income before income taxes 4.4 1.7
Provision for income taxes 1.4 -
----- -----
Net income 3.0% 1.7%
===== ======
</TABLE>
RESULTS OF OPERATIONS
The strong demand experienced in late fiscal 1994 for two desktop products,
the SPARCstation 5 and SPARCstation 20, continued into the first quarter of
fiscal 1995. Management believes these products, along with the recent fiscal
1995 release of the Company's most advanced software environment, Solaris 2.4,
help to competitively position the Company in the marketplace in fiscal 1995.
Supply constraints experienced on certain memory devices in late fiscal 1994
did not significantly impact the Company's first quarter fiscal 1995 results.
Although future operating results could be impacted depending on the
availability and cost of memory components during fiscal 1995, the Company is
proactively managing its memory component supply by developing additional
sources of supply as well as increasing volumes with existing suppliers.
The Company operates in a highly competitive industry characterized by
increasingly aggressive pricing. Increased demand for Sun's higher
performance desktop and server products, reductions in component costs and
increased operating efficiencies have, to date, significantly offset the
effects of Sun's product price reductions. Future operating results will
depend on additional component cost reductions, further operating efficiencies
and the mix of systems, software and other products, which in turn depend in
part on the Company's ability to generate revenues through increased system,
service and software license volumes. Sun's future operating results will also
depend on the continued acceptance and migration of customers to the Solaris 2
software environment, as well as the efforts of independent software vendors
to develop new, and port existing, application software.
7
<PAGE> 8
Net revenues
Net revenues were $1.3 billion for the first quarter of fiscal 1995,
representing an increase of 32.6% over the comparable period of fiscal 1994.
The growth in revenues primarily resulted from increased revenues from
memory, storage options and accessories shipped to both new customers
purchasing more richly configured systems and to installed base customers.
In addition, system unit shipments grew by 49% over the comparable period of
fiscal 1994, attributable in part to the strong demand experienced for the
SPARCstation 5 and SPARCstation 20 during the first quarter of fiscal 1995.
This growth in units was partially offset by a decrease in average selling
price per unit on desktop systems, due primarily to repricing actions on
base-level configurations. Service revenues for the first quarter of fiscal
1995 increased in absolute dollars, but declined slightly as a percent of net
revenues when compared with the corresponding period of fiscal 1994.
Domestic net revenues increased by 28% while international net revenues
(including United States exports) grew 38% in the first quarter of fiscal
1995 compared with the corresponding period of fiscal 1994. Net revenues in
Europe and Rest of World increased 48% and 29%, respectively, in the first
quarter of fiscal 1995 over fiscal 1994's comparable period primarily due to
the strengthening of international markets, principally central and northern
Europe, and Asia. International net revenues represented 49% and 47% of
total net revenues in the first quarter of fiscal 1995 and fiscal 1994,
respectively.
The impact of currency fluctuations on net revenues and operating results
cannot be precisely measured because the Company's product mix and pricing
change over time in various markets, partially in response to currency
movements. Further, the Company's international structure and transaction
activity provide a degree of natural hedge where fluctuations in a particular
currency result in financial effects that mitigate or tend to offset each
other on a consolidated basis. The Company generally manages currency
exposure through an established hedging program, the objective of which is
to minimize the impact of currency fluctuations on results of operations.
Compared with the first quarter of the prior fiscal year, the dollar has
weakened against most major European currencies as well as against the
Japanese yen. Management has estimated that the net impact of currency
fluctuations on operating results, while slightly favorable, was not
significant in the first quarter of fiscal 1995.
Gross margin
Gross margin was 40.2% for the first quarter of fiscal 1995, compared with
40.9% for the corresponding period of fiscal 1994. The effects of repricing
actions and increased shipments of low price-point desktop systems were
somewhat offset by a favorable gross margin impact generated from certain
component cost reductions and operating efficiencies.
Repricing actions may continue to be initiated in the future, which
could result in downward pressure on gross margin. This margin pressure
could be mitigated by increased software licensing, a change in the systems
mix to higher margin products such as servers, or by other favorable product
or geographical mix shifts. In addition, the pressure could be mitigated by
component cost reductions and operating efficiencies generated by higher unit
volumes.
8
<PAGE> 9
Research and development
Research and development (R&D) expenses were $119.4 million in the first
quarter of fiscal 1995, compared with $107.9 million for the same period of
fiscal 1994. As a percentage of net revenues, R&D expenses decreased to 9.4
percent for the first quarter of fiscal 1995, from 11.2 percent for the
corresponding period of fiscal 1994. The decrease as a percent of revenues
is primarily due to the increase in revenues in the first quarter of fiscal
1995 over the comparable period of fiscal 1994. The increase in absolute
dollars is due to the Company's continuing emphasis on technological
advancement for both hardware and software products, as well as
microprocessor technologies. To maintain its competitive position in the
industry, the Company expects to continue to invest significant resources in
new hardware, software and microprocessor product development, as well as in
enhancements to existing products.
Selling, general and administrative
Selling, general and administrative (SG&A) expenses were $338.9 million in
the first quarter of fiscal 1995, an increase of $69.8 million, or 25.9%,
from the corresponding period of fiscal 1994. As a percentage of net
revenues, SG&A expenses decreased to 26.6% for the first quarter of fiscal
1995 from 28.0% for the comparable period of fiscal 1994. Approximately half
of the dollar increase reflects increases in compensation based principally
on the achievement of specified performance goals. The dollar increase also
reflects sales staff increases to support continuing growth as well as costs
incurred in connection with facilities consolidations. The decrease as a
percent of net revenues reflects the increase in revenues in the first
quarter of fiscal 1995 over the comparable period of fiscal 1994. In
addition, the Company continues its efforts to reduce the structural level of
such expenses over time through improvements in business processes and cycle
times.
Interest income, net
Net interest income was $2.7 million for the first quarter of fiscal 1995,
compared with $.6 million for the first quarter of fiscal 1994. The increase
is primarily the result of higher interest earned on investments as well as
interest savings from scheduled debt repayments.
Income taxes
The Company's effective income tax rate for the first quarter of fiscal 1995
was 32%, while the effective tax rate for the first quarter of fiscal 1994
was 34%, prior to the one-time credit of $5.9 million resulting from the
Omnibus Budget Reconciliation Act of 1993. The decrease in the fiscal 1995
rate compared with the 34% for the corresponding period of fiscal 1994 is
primarily due to increased earnings of foreign subsidiaries permanently
invested in foreign operations.
Future operating results
The computer industry is marked by rapidly changing technology and increasing
competition. The Company expects that the markets for its products and
technology, as well as its competitors within such markets, will continue to
change as the rightsizing trend shifts customer buying patterns to
distributed systems employing solutions from multiple vendors. In addition,
improvements in hardware and operating system software products introduced,
or to be introduced, by competing companies are expected to improve the
characteristics of certain networked personal computer solutions. These
developments are expected to provide competitive pressure, particularly at
the low end of the Company's product range, where customers are more price
sensitive and the systems environment is less complex. Therefore, the
Company's future operating results will depend to a considerable extent on
its ability to rapidly and continuously develop, introduce and deliver in
quantity competitive new hardware, software and service products, as well as
new microprocessor technologies, that offer its customers enhanced
performance at competitive prices.
9
<PAGE> 10
The development of new, high performance computer products is a complex and
uncertain process requiring high levels of innovation from both the Company's
designers and those of its suppliers, as well as accurate anticipation of
customer requirements and technological trends. The Company is increasingly
dependent on the ability of its suppliers to design, manufacture and deliver
advanced components required for the timely introduction of new products. The
failure of any of these suppliers to deliver components on time or in
sufficient quantities could result in a significant adverse impact on the
Company's operating results. The inability to secure enough components to
build products, including new products, in the quantities and configurations
required, or to produce, test and deliver sufficient products to meet demand
in a timely manner, would adversely affect the Company's net revenues and
operating results.
The production and introduction of new or enhanced products also requires the
Company to make advanced payments, if necessary, under contracts with certain
suppliers. In addition, in order to secure components for development of new
products, the Company frequently enters into non-cancelable purchase
commitments with vendors early in the design process. Due to the variability
of material requirement specifications during the design process, the Company
must closely manage material purchase commitments and their respective
delivery schedules. Once a hardware product is developed, the Company must
rapidly bring it into volume manufacturing, a process that requires accurate
forecasting of both volumes and configurations, among other things, in order
to achieve acceptable yields and costs. The Company must also manage the
transition from older, displaced products in order to minimize disruptions in
customer ordering patterns and excessive levels of older product inventory
and to ensure that adequate supplies of new products can be delivered to meet
customer demand. The ability of the Company to match supply and demand is
further complicated by the need to take pricing actions, which may result in
the Company not being able to correctly anticipate the demand for the mix of
products following those pricing actions. Because the Company is
continuously engaged in this product development, introduction and transition
process, its operating results may be subject to considerable fluctuation,
particularly when measured on a quarterly basis.
Generally, the computer systems sold by Sun are the result of both hardware
and software development, so that delays in software development can delay
the ability of the Company to ship new hardware products. In addition,
adoption of a new release of an operating system typically requires effort on
the part of the customer as well as software porting by software vendors
providing applications. As a result, the timing of conversion to a new
release is inherently unpredictable. Moreover, delays in adoption of a new
release of an operating system by customers can limit the acceptability of
hardware products tied to that release. Such delays could adversely affect
the future operating results of the Company.
The Company's operating results will also be affected by the volume, mix and
timing of orders received during a period and by conditions both in the
computer industry and in the general economy, such as recessionary periods,
political instability, changes in trade policies and fluctuations in interest
or currency exchange rates. The Company's customer order backlog at October
2, 1994 was approximately $334 million, relatively unchanged from the backlog
level of approximately $338 million at June 30, 1994. Backlog levels vary
with demand, product availability and the Company's delivery lead times, and
are subject to decreases as a result of customer order delays, changes or
cancellations. As such, backlog levels may not be a reliable indicator of
future operating results. As delivery lead times continue to decrease, the
Company must generate a higher percentage of revenue from new order bookings
in the same fiscal period.
Seasonality also affects the Company's operating results, particularly in
the first quarter of each fiscal year. In addition, the Company's operating
expenses are increasing as the Company continues to expand its operations,
and future operating results will be adversely affected if revenues do not
increase accordingly. The Company expects to continue efforts to achieve
additional operating efficiencies through the continual review and
improvement of business processes and cycle times. In connection with these
efforts, the Company is continuously engaged in the process of managing the
mix and level of its workforce.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Total assets at October 2, 1994 decreased by approximately $88.4 million from
June 30, 1994, due principally to decreases in cash, cash equivalents and
short-term investments ($99.3 million) and property, plant and equipment
($25.4 million) offset by an increase in inventories ($44.5 million). Cash
decreased primarily due to scheduled debt repayments and the final annual
payment under a patent-cross license agreement. The increase in inventories
reflects a build-up of supply to meet increased customer demand and to enable
more timely response to shifts in product mix requirements.
Total liabilities decreased approximately $149.8 million from June 30, 1994,
due principally to decreases in accounts payable ($92.9 million), and
long-term debt and other obligations ($38.2 million). Accounts payable
decreased due to increased linearity of inventory receipts in the first
quarter of fiscal 1995, compared with the fourth quarter of fiscal 1994.
Approximately 60% more inventory was received in the last month of the fourth
quarter of fiscal 1994 than was received in the comparable period of the
first quarter of fiscal 1995. Long-term debt and other obligations decreased
as a result of scheduled debt repayments.
At October 2, 1994, the Company's primary sources of liquidity consisted of
cash, cash equivalents and short-term investments of $783 million;
uncommitted lines of credit available to the Company's international
subsidiaries totalling approximately $464 million, of which approximately
$394 million was available; and a revolving credit facility with banks
aggregating $150 million, all of which was available subject to compliance
with certain covenants. In the second quarter of fiscal 1995, the Company
will acquire for cash approximately $80 million in property, plant and
equipment as part of the development of new operating facilities. The
Company believes that the liquidity provided by existing cash and short-term
investment balances and the borrowing arrangements described above will be
sufficient to meet the Company's capital requirements through fiscal 1995.
However, the Company believes the level of financial resources is a
significant competitive factor in its industry and may choose at any time to
raise additional capital through debt or equity financings to strengthen its
financial position, facilitate growth and provide the Company with additional
flexibility to take advantage of business opportunities that may arise.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 5 - OTHER INFORMATION
SCHEDULE OF SALES BY EXECUTIVE OFFICERS DURING THE QUARTER
The following is a summary of all sales of the Company's Common Stock by the
Company's executive officers who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended, during the fiscal quarter ended October 2,
1994:
<TABLE>
<CAPTION>
OFFICER DATE PRICE NUMBER OF
SHARES SOLD
=============================================================
<S> <C> <C> <C>
Richard Barker 8/29/94 $27.5625 1,500
8/29/94 $27.5625 3,000
Larry Hambly 8/26/94 $26.00 5,000
William Raduchel 8/30/94 $27.3125 6,000
George Reyes 8/31/94 $27.75 346
Eric Schmidt 8/29/94 $27.625 3,000
8/31/94 $27.375 7,000
Dorothy Terrell 8/23/94 $24.8125 2,000
8/26/94 $26.4375 2,000
8/26/94 $26.50 1,000
Ed Zander 8/30/94 $27.3125 8,000
8/30/94 $26.75 3,500
8/31/94 $27.625 3,500
</TABLE>
12
<PAGE> 13
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
10.84 Amended and Restated Lease Agreement between BNP Leasing
Corporation and Registrant, effective as of September 23, 1994
11.0 Statement re: Computation of Earnings Per Share
27.0 Financial data schedule for the period ended October 2, 1994
b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended
October 2, 1994.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements 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.
SUN MICROSYSTEMS, INC.
BY /s/ MICHAEL E. LEHMAN
----------------------------------------------
Michael E. Lehman
Vice President and Chief Financial Officer
/s/ GEORGE REYES
----------------------------------------------
George Reyes
Vice President and Corporate Controller,
Chief Accounting Officer
Dated: November 15, 1994
14
<PAGE> 15
EXHIBITS TO REPORT
ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 2, 1994
<PAGE> 1
EXHIBIT 10.84
AMENDED AND RESTATED LEASE AGREEMENT
(PHASES II AND III)
BETWEEN
BNP LEASING CORPORATION,
AS LANDLORD
AND
SUN MICROSYSTEMS, INC., AS TENANT
EFFECTIVE AS OF September 23, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Active Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Advance Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(e) Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(f) Applicable Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(g) Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(h) Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(i) Base Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(j) Base Rental Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(k) Base Rental Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(l) Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(m) Capital Adequacy Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(n) Carrying Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(o) Change of Control Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(p) Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(q) Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(r) Completion Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(s) Construction Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(t) Construction Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(u) Construction Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(v) Construction Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(w) Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(x) Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(y) Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(z) Effective Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(aa) Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(ab) Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(ac) Environmental Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(ad) Environmental Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(ae) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(af) Escrowed Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(ag) Eurocurrency Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(ah) Eurodollar Rate Reserve Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(ai) Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(aj) Excluded Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(ak) Fed Funds Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(al) Final Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(am) Final Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(an) Funding Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(ao) Hazardous Substance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(ap) Hazardous Substance Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(aq) Hazardous Substance Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(ar) Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(as) Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(at) Initial Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(au) Initial Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(av) Landlord's Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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(aw) LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(ax) Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(ay) Outstanding Construction Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(az) Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(ba) Participation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(bb) Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(bc) Permitted Hazardous Substance Use . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(bd) Permitted Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(be) Permitted Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(bf) Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(bg) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(bh) Prime Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(bi) Prior Funding Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(bj) Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(bk) Qualified Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(bl) Remaining Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(bm) Release Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(bn) Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(bo) Responsible Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(bp) Revolving Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(bq) Scope Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(br) Stipulated Loss Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(bs) Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(bt) Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(bu) Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(bv) Other Terms and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3. Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4. Insurance and Condemnation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5. No Lease Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Status of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. Construction Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Advances; Outstanding Construction Allowance . . . . . . . . . . . . . . . . . . . . . . 23
(b) Initial Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Conditions to Construction Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(i) Prior Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(ii) Amount of the Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(iii) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
a) Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
b) Builder's Risk Insurance . . . . . . . . . . . . . . . . . . . . . . . . 27
(iv) Progress of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(v) Evidence of Costs to be Reimbursed . . . . . . . . . . . . . . . . . . . . . . 28
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(vi) No Event of Default or Change of Control Event . . . . . . . . . . . . . . . . . . 28
(vii) No Sale of Landlord's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(viii) Certificate of No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(ix) Payments by Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7. Purchase Agreement and Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8. Use and Condition of Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9. Other Representations, Warranties and Covenants of Tenant . . . . . . . . . . . . . . . . . . . . . 30
(a) Financial Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Raychem Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) No Default or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Compliance with Covenants and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(e) Environmental Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(f) No Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(g) Condition of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(h) Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(i) Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(j) Not a Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(k) Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(l) Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(m) Tenant Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(n) Operation of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(o) Debts for Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(p) Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(q) Repair, Maintenance, Alterations and Additions . . . . . . . . . . . . . . . . . . . . . . . 36
(r) Insurance and Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(s) Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(t) Protection and Defense of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(u) No Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(v) Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(w) Financial Statements; Certificates as to Default . . . . . . . . . . . . . . . . . . . . . . 39
(x) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(y) Fees and Expenses; General Indemnification; Increased Costs; and Capital Adequacy Charges . 41
(z) Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(aa) Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(ab) Environmental Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(ac) Right of Landlord to Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(ad) Funds Held As Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(ae) Compliance with Financial Covenants and Certain Other Requirements Established by the
Revolving Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10. Other Representations, Warranties and Covenants of Landlord . . . . . . . . . . . . . . . . . . . . 48
(a) Title Claims By, Through or Under Landlord . . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) Actions Required of the Title Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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(c) No Default or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
(d) No Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
(e) Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
(f) Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
(g) Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
(h) Not a Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
11. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
(a) Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
(b) Standard for Landlord's Consent to Assignments and Certain Other Matters . . . . . . . . . .51
(c) No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
(d) Landlord's Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
(d) Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
12. Environmental Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
(a) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
(b) Assumption of Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
(c) Notice of Environmental Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
(d) Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
(e) Survival of the Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
13. Landlord's Right of Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
14. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
(a) Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
(b) Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
(c) Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
(d) Limitation on Recovery Against Tenant for Title Defects . . . . . . . . . . . . . . . . . .59
(e) Waiver by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
(f) Personal Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
(g) No Implied Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
(h) Attorneys' Fees and Legal Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
15. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
16. Surrender Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
17. Holding Over by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
18. Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
19. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
20. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
21. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
22. NO REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
23. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
24. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
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25. Time is of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
26. Termination of Prior Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
27. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
28. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
29. Default by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
30. BCDC Permit Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
31. Development Plan Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
32. Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Exhibits and Schedules
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Description
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Encumbrance List
Exhibit C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Construction Budget
Exhibit D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contractor's Estoppel Letter
Exhibit E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Architect's Estoppel Letter
Exhibit F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Covenant Compliance Certificate
Schedule 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . List of Participants
</TABLE>
(v)
<PAGE> 7
AMENDED AND RESTATED LEASE AGREEMENT
(PHASES II AND III)
This AMENDED AND RESTATED LEASE AGREEMENT (PHASES II AND III)
(hereinafter called this "LEASE"), made to be effective as of September 23,
1994 (all references herein to the "DATE HEREOF" or words of like effect shall
mean such effective date), by and between BNP LEASING CORPORATION, a Delaware
corporation (hereinafter called "LANDLORD"), and SUN MICROSYSTEMS, INC., a
Delaware corporation (hereinafter called "TENANT");
W I T N E S S E T H T H A T:
WHEREAS, pursuant to an Agreement and Contract of Sale and Escrow
Instructions dated April 24, 1990 (as subsequently amended and supplemented,
hereinafter called the "RAYCHEM CONTRACT") covering the land described in
Exhibit A attached hereto (hereinafter called the "LAND") and any improvements
thereon, Landlord has acquired such land and improvements from Raychem
Corporation (hereinafter called "SELLER");
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
(Phases II and III) dated to be effective as of September 25, 1992 (hereinafter
called the "PRIOR LEASE") covering the Land and any improvements thereon;
WHEREAS, concurrently with the execution of the Prior Lease Landlord
leased to Tenant, pursuant to that certain Lease Agreement (Phase I) dated to
be effective as of September 25, 1992, certain property described therein
(hereinafter called the "PHASE I PROPERTY");
WHEREAS, also concurrently with the execution of the Prior Lease,
Tenant agreed to purchase or procure a third party to purchase the Phase I
Property from Landlord pursuant to that certain Purchase Agreement (Phase I)
dated to be effective as of September 25, 1992 (hereinafter called the "PHASE I
PURCHASE AGREEMENT");
WHEREAS, Tenant desires to construct improvements on the Land and in
that regard has requested that Landlord amend and restate the Prior Lease in
its entirety to include, among other things, provisions related to the
construction of additional Improvements, hereinafter defined;
WHEREAS, Landlord and Tenant have reached agreement as to the terms
and conditions upon which Landlord is willing to amend and restate the Prior
Lease with respect to the Land and other property hereinafter described to
Tenant, and by this Lease Landlord and Tenant desire to evidence such
agreement;
<PAGE> 8
NOW, THEREFORE, in consideration of the rent to be paid and the
covenants and agreements to be performed by Tenant, as hereinafter set forth,
Landlord does hereby LEASE, DEMISE and LET unto Tenant for the term hereinafter
set forth the Land, together with:
1. Landlord's interest in any and all buildings and
improvements now or hereafter erected on the Land, including, but not
limited to, the fixtures, attachments, appliances, equipment,
machinery and other articles attached to said buildings and
improvements (hereinafter called the "IMPROVEMENTS");
2. all easements and rights-of-way now owned or
hereafter acquired by Landlord for use in connection with the Land or
Improvements or as a means of access thereto, including, without
limiting the generality of the foregoing, the easements described in
Exhibit A, all rights pursuant to any trackage agreement and all
rights to the non-exclusive use of common drive entries, and all
tenements, hereditaments and appurtenances thereof and thereto, and
all water and water rights and shares of stock evidencing the same;
3. all right, title and interest of Landlord, now owned
or hereafter acquired, in and to (A) any land lying within the
right-of-way of any street, open or proposed, adjoining the Land, (B)
any and all sidewalks and alleys adjacent to the Land and (C) any
strips and gores between the Land and abutting land (except strips and
gores, if any, between the Land and abutting land owned by Landlord,
with respect to which this Lease shall cover only the portion thereof
to the center line between the Land and the abutting land owned by
Landlord).
The Land and all of the property described in items 1. through 3. above are
hereinafter referred to collectively as the "REAL PROPERTY".
In addition to the leasehold in the Real Property described above,
Landlord hereby grants and assigns to Tenant for the term of this Lease the
right to use and enjoy (and, to the extent the following consist of contract
rights, to enforce) any interests or rights in, to or under the following that
have been transferred to Landlord by Seller under the Raychem Contract, to the
extent any such rights and interests are assignable and related to the Real
Property: (a) any goods, equipment, furnishings, furniture, chattels and
personal property of whatever nature that are located on the Real Property and
all renewals or replacements of or substitutions for any of the foregoing; and
(b) any general intangibles, permits, licenses, franchises, certificates, and
other rights and privileges, including without limitation, to the extent they
are related to the Real Property, the "BCDC Permit" referred to in the Raychem
Contract and all rights and privileges assigned by the Assignment of Contract
Rights and Intangible Assets
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<PAGE> 9
described in the Raychem Contract. All of the property, rights and privileges
described in this paragraph, together with all furniture, furnishings and other
personalty included in the Initial Improvements (as hereinafter defined)
because of Tenant's purchase thereof with the Construction Allowance (as
hereinafter defined), are hereinafter collectively called the "PERSONAL
PROPERTY". The Real Property and the Personal Property are hereinafter
sometimes collectively called the "LEASED PROPERTY."
Provided, however, the leasehold estate conveyed hereby and Tenant's
rights hereunder are expressly made subject and subordinate to the Permitted
Encumbrances (as hereinafter defined) and to any other claims or encumbrances
not lawfully made by or arising through or under Landlord, but only to the
extent such other claims or encumbrances are valid and subsisting.
The Leased Property is leased by Landlord to Tenant and is accepted
and is to be used and possessed by Tenant upon and subject to the following
terms, provisions, covenants, agreements and conditions:
1. Definitions. As used herein, the terms "Landlord," "Tenant,"
"Raychem Contract," "Land," "Seller," "Prior Lease," "Phase I Property," "Phase
I Purchase Agreement," "Improvements," "Real Property," "Personal Property,"and
"Leased Property" shall have the meanings indicated above and the terms listed
immediately below shall have the following meanings:
(a) Active Negligence. "ACTIVE NEGLIGENCE" of an
Indemnified Party means, and is limited to, the negligent conduct of physical
activities on or about the Leased Property by the Indemnified Party in a manner
that proximately causes actual damage or loss to be incurred. "ACTIVE
NEGLIGENCE" shall not include (1) any negligent failure of Landlord to act when
the duty to act would not have been imposed but for Landlord's status as owner
of the Leased Property or as a party to the transactions described in this
Lease, (2) any negligent failure of any other Indemnified Party to act when the
duty to act would not have been imposed but for such party's contractual or
other relationship to Landlord or participation or facilitation in any manner,
directly or indirectly, of the transactions described in this Lease, or (3) the
exercise in a lawful manner by Landlord (or any party lawfully claiming through
or under Landlord) of any right or remedy provided herein or in the Purchase
Agreement prior to Landlord's actual reentry and taking possession of the
Leased Property following any Event of Default or expiration of this Lease.
(b) Additional Rent. "ADDITIONAL RENT" shall have the
meaning assigned to it in subparagraph 3(d) below.
(c) Advance Date. "ADVANCE DATE" means, regardless of
whether any Construction Advance shall actually be made thereon, October 3,
1994 and the first Business Day of every calendar month thereafter to and
including the Base Rent Commencement Date, which
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<PAGE> 10
is expected to be the last "Advance Date"; provided, that if Landlord sells its
interest in the Leased Property pursuant to the Purchase Agreement before the
Base Rent Commencement Date, the last Advance Date shall be the Final Payment
Date.
(d) Affiliate. "AFFILIATE" of any Person means any other
Person controlling, controlled by or under common control with such Person.
For purposes of this definition, the term "CONTROL" when used with respect to
any Person means the power to direct the management of policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
(e) Applicable Laws. "APPLICABLE LAWS" shall have the
meaning assigned to it in subparagraph 9(d) below.
(f) Applicable Purchaser. "APPLICABLE PURCHASER" means
any third party designated by Tenant to purchase the Landlord's interest in the
Leased Property and in any Escrowed Proceeds as provided in the Purchase
Agreement.
(g) Attorneys' Fees. "ATTORNEYS' FEES" means the
reasonable fees and expenses of counsel to the parties incurring the same.
(h) Base Rent. "BASE RENT" means the rent payable by
Tenant pursuant to subparagraph 3(a) below.
(i) Base Rent Commencement Date. "BASE RENT COMMENCEMENT
DATE" means the earlier of (1) April 1, 1997, or (2) the first Business Day of
the first calendar month to follow by ten (10) days or more Landlord's receipt
of the Completion Notice.
(j) Base Rental Date. "BASE RENTAL DATE" means the first
day of each calendar month, beginning with the first day of the first calendar
month after the Base Rent Commencement Date and continuing regularly thereafter
to and including the Final Payment Date; provided, that any Base Rental Date
that would not fall on a Business Day under the foregoing shall occur on the
next following Business Day.
(k) Base Rental Period. "BASE RENTAL PERIOD" means each
successive period of approximately one (1) month after the Base Rent
Commencement Date, with the first Base Rental Period beginning on and including
the Base Rent Commencement Date and ending on but not including the first Base
Rental Date. Each successive Base Rental Period after the first Base Rental
Period shall begin on and include the day on which the preceding Base Rental
Period ends and shall end on but not include the next following Base Rental
Date.
(l) Business Day. "BUSINESS DAY" means any day that is
(1) not a Saturday, Sunday or day on which commercial banks are generally
closed or required to be closed in New York City, New
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<PAGE> 11
York, and (2) a day on which dealings in deposits of dollars are transacted in
the London interbank market; provided that if such dealings are suspended
indefinitely for any reason, "BUSINESS DAY" shall mean any day described in
clause (1).
(m) Capital Adequacy Charges. "CAPITAL ADEQUACY CHARGES"
means any additional amounts Landlord's Lender or any Participant requires
Landlord to pay as compensation for an increase in required capital as provided
in part (4) of subparagraph 9 (y).
(n) Carrying Costs. "CARRYING COSTS" means the charges
added to and made a part of the Outstanding Construction Allowance from time to
time on and before the Base Rent Commencement Date pursuant to and as more
particularly described in subparagraph 6(a) below.
(o) Change of Control Event. "CHANGE OF CONTROL EVENT"
means the occurrence of any of the following: (i) any corporation or Person, or
a group of related corporations or Persons, shall acquire (a) beneficial
ownership of in excess of 50% of the outstanding Voting Stock of Tenant, or (b)
all or substantially all of the assets of Tenant, or (ii) a majority of the
Board of Directors of Tenant is, at any time, composed of persons other than
(a) persons who were members of such Board on the date of this Lease, (b)
successors to such persons elected or nominated in the ordinary course of
business, and (c) any person who has served as a member of such Board for at
least the prior 12 months.
(p) Closing Costs. "CLOSING COSTS" means the sum of
$700,000, which is being or will be advanced by or on behalf of Landlord to pay
costs incurred in connection with this Lease. To the extent that Landlord does
not expect to itself use such amount to pay Attorneys' Fees and other expenses
incurred in connection with the negotiation of this Lease, the remainder
thereof is being advanced to Tenant on the effective date hereof, with the
understanding that Tenant shall use the same for payment of expenses incurred
by Tenant in connection herewith or for improvements that will be made to the
Land in addition to those to be paid for with the proceeds of the Construction
Allowance or for payment of Rent due hereunder from time to time.
(q) Commitment Fee. "COMMITMENT FEE" shall have the
meaning assigned to it in subparagraph 3(b) below.
(r) Completion Notice. "COMPLETION NOTICE" means a
notice from Tenant to Landlord stating that construction of the Initial
Improvements is substantially complete.
(s) Construction Advances. "CONSTRUCTION ADVANCES" means
actual advances of funds made by or on behalf of Landlord pursuant to Paragraph
6 below for costs incurred to construct the Initial Improvements.
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<PAGE> 12
(t) Construction Allowance. "CONSTRUCTION ALLOWANCE"
means the allowance, consisting of all Construction Advances and Carrying
Costs, which is to be provided by Landlord for the construction of the Initial
Improvements as more particularly described in Paragraph 6 below.
(u) Construction Documents. "CONSTRUCTION DOCUMENTS"
means all construction contracts, architectural contracts, engineering
contracts, drawings, plans, specifications, change orders, budgets, surveys,
soils reports, environmental impact studies and other documents executed by or
prepared for Tenant with respect to the construction of the Initial
Improvements.
(v) Construction Periods. "CONSTRUCTION PERIOD" means
each successive period of approximately one (1) month, except that the first
Construction Period shall be a shorter period beginning on and including the
effective date hereof and ending on but not including the first Advance Date.
Each successive Construction Period after the first Construction Period shall
begin on and include the day on which the preceding Construction Period ends
and shall end on but not include the next following Advance Date, until the
last Construction Period, which shall end on but not include the Base Rent
Commencement Date. "CONSTRUCTION PERIODS" shall mean all Construction Periods
collectively; that is, the period from and including the effective date hereof
to but not including the Base Rent Commencement Date.
(w) Debt. "DEBT" means (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of property
or services (excluding ordinary trade payables incurred in the ordinary course
of business), (iv) obligations as lessee under leases which shall have been or
should be, in accordance with generally accepted accounting principles,
recorded as capital leases, (v) all obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the
sale of the same or substantially similar securities or property, (vi) any
reimbursement obligations of such Person to the issuer of a letter of credit or
similar instrument, (vii) all indebtedness or obligations of others secured by
a lien on any asset of such Person, whether or not such indebtedness or
obligations are assumed by such Person (to the extent of the value of the
asset), (viii) any reimbursement obligation of such Person or other arrangement
of whatever nature having the effect of assuring or holding harmless any other
Person against loss with respect to any real property owned by such other
Person including without limitation, assuring or guaranteeing that other Person
shall receive a specified amount in connection with the conveyance of such real
property, (ix) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (viii)
above, and (x) liabilities in respect of unfunded
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<PAGE> 13
vested benefits under plans covered by Title IV of ERISA. Notwithstanding any
provision herein to the contrary, no obligations of any Person (whether such
obligations be direct or indirect, contingent or otherwise) under the
Receivables Purchase Agreement (as defined in the Revolving Credit Agreement)
or any similar agreement or arrangement shall be "Debt" for purposes of this
Lease; provided that the foregoing exclusion shall not apply to obligations of
any such Person pursuant to the indemnity or reimbursement provisions contained
in the Receivables Purchase Agreement (including, without limitation,
indemnities for breaches of representations and warranties, and those set forth
in Article VIII, Section 9.03(b) and Section 10.06 thereof) or any similar
agreement or arrangement and to fees and expenses payable pursuant to the
Receivables Purchase Agreement or any similar agreement or arrangement to the
extent that any such obligations are required to be recorded as liabilities on
such Person's balance sheet under generally accepted accounting principles.
(x) Default. "DEFAULT" means any event which, with the
passage of time or the giving of notice or both, would (if not cured within any
applicable cure period) constitute an Event of Default.
(y) Default Rate. "DEFAULT RATE" shall mean, for
purposes of computing interest accruing on past due amounts for any day during
the Initial Period, the Effective Rate plus two hundred ten basis points
(2.10%), with the Effective Rate being determined in the same manner as for the
Construction Period or Base Rental Period during which such day falls.
"DEFAULT RATE" shall mean, for purposes of computing interest accruing on past
due amounts for any day after the Initial Period and during the first ninety
(90) days after such amounts first become due, a floating per annum rate equal
to the Prime Rate. For purposes of computing interest accruing on past due
amounts for each day after such ninety (90) day period and after the Initial
Period, "DEFAULT RATE" shall mean a floating per annum rate equal to five
percent (5%) above the Prime Rate. However, in no event will the "Default
Rate" exceed the maximum interest rate permitted by law.
(z) Effective Rate. "EFFECTIVE RATE" means:
(1) for each Construction Period and Base Rental
Period occurring during the Initial Period, the rate which is forty-five basis
points (45/100 of 1%) above the rate per annum determined by dividing (A) LIBOR
for such Construction Period or Base Rental Period, as the case may be, by (B)
100% minus the Eurodollar Rate Reserve Percentage for such Construction Period
or Base Rental Period; and
(2) for each Base Rental Period occurring during the
Final Period, the rate which is seventy-five basis points (75%) above the rate
per annum determined by dividing (A) LIBOR for such Base Rental Period by (B)
100% minus the Eurodollar Rate Reserve Percentage for such Base Rental Period.
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<PAGE> 14
If LIBOR or the Eurodollar Rate Reserve Percentage changes from Construction
Period to Construction Period or from Base Rental Period to Base Rental Period,
then the Effective Rate shall be automatically increased or decreased as of the
date of such change, as the case may be, without prior notice to Tenant (but
after the Base Rent Commencement Date Landlord will provide notice of any such
change after the same shall take effect and at least three days prior to the
next following Base Rental Date). If for any reason Landlord determines that
it is impossible or impractical to determine the Effective Rate with respect to
a given Construction Period or Base Rental Period in accordance with the
preceding sentences, then the "Effective Rate" for that Construction Period or
Base Rental Period shall equal the Prime Rate at the beginning of the first day
of that period. Any determination by Landlord of the Effective Rate hereunder
shall, in the absence of clear and demonstrable error, be conclusive and
binding.
(aa) Environmental Indemnity. "ENVIRONMENTAL INDEMNITY"
means the separate Environmental Indemnity Agreement dated as of September 25,
1992 executed by Tenant in favor of Landlord covering the Land and certain
other property described therein, as such agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time.
(ab) Environmental Laws. "ENVIRONMENTAL LAWS" means any
and all existing and future Applicable Laws pertaining to safety, health or the
environment, or to Hazardous Substances or Hazardous Substance Activities,
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (as amended, hereinafter called "CERCLA"), and
the Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, hereinafter called
"RCRA").
(ac) Environmental Losses. "ENVIRONMENTAL LOSSES" means
Losses suffered or incurred by any Indemnified Party, directly or indirectly,
relating to or arising out of, based on or as a result of: (i) any Hazardous
Substance Activity that occurs or is alleged to have occurred on or prior to
the Release Date; (ii) any violation on or prior to the Release Date of any
applicable Environmental Laws relating to the Leased Property or to the
ownership, use, occupancy or operation thereof; (iii) any investigation,
inquiry, order, hearing, action, or other proceeding by or before any
governmental or quasi-governmental agency or authority in connection with any
Hazardous Substance Activity that occurs or is alleged to have occurred in
whole or in part on or prior to the Release Date; or (iv) any claim, demand,
cause of action or investigation, or any action or other proceeding, whether
meritorious or not, brought or asserted against any Indemnified Party which
directly or indirectly relates to, arises from, is based on, or results from
any of the matters described in clauses (i), (ii), or (iii) of this
subparagraph (z), or any allegation of
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<PAGE> 15
any such matters. Environmental Losses incurred by or asserted against a
particular Indemnified Party shall include Losses relating to or arising out of
or as a result of any matters listed above even when such matters are caused by
the negligence (other than the Active Negligence) of that particular or any
other Indemnified Party. Further, even if after the Release Date Losses are
incurred by or asserted against a particular Indemnified Party that would not
have been incurred or asserted, but for any matter described in clauses (i),
(ii), or (iii) of this subparagraph (z), or an allegation of any such matter,
then such Losses will constitute Environmental Losses. However, Losses
incurred by or asserted against a particular Indemnified Party as a result of
that party's own wilful misconduct, gross negligence or Active Negligence will
not constitute Environmental Losses of such Indemnified Party.
(ad) Environmental Report. "ENVIRONMENTAL REPORT" means
the following, collectively: that certain Report, Phase I Property Transaction
Environmental Assessment and Phase II and Phase III Site Characterization at
the Raychem East Campus Site, located north of Highway 84 between University
Avenue and Willow Road in Menlo Park, California, prepared by McLaren
Engineering of Alameda, California, dated April 20, 1990; as reviewed and
supplemented by that certain report, Environmental Review of McLaren
Engineering Report and Site Assessment on Raychem Corporation's East Campus
Site, prepared by Wahler Associates of Palo Alto, California, dated July 20,
1990; as supplemented by that certain report, Additional Site Investigation,
Raychem East Campus Site, prepared by Wahler Associates, dated October 25,
1990; and as updated by Raychem East Campus Property, Environmental Update
Survey, prepared by Wahler Associates, dated March 20, 1992; and Phase I and
Phase II Environmental Site Assessment Update for Sun Microsystems East Campus
Site, prepared by Tetra Tech, dated August 31, 1994.
(ae) ERISA. "ERISA", "ERISA AFFILIATE" and "ERISA
TERMINATION EVENT" shall have the meanings assigned to them in the Revolving
Credit Agreement.
(af) Escrowed Proceeds. "ESCROWED PROCEEDS" shall mean
any proceeds that are received by Landlord from time to time during the Term
(and any interest earned thereon), which Landlord is holding for the purposes
specified in the next sentence, from any party (1) under any casualty insurance
policy as a result of damage to the Leased Property, (2) as compensation for
any restriction placed upon the use or development of the Leased Property or
for the condemnation of the Leased Property or any portion thereof, (3) because
of any judgment, decree or award for injury or damage to the Leased Property or
(4) under any title insurance policy or otherwise as a result of any title
defect or claimed title defect with respect to the Leased Property; provided,
however, in determining "ESCROWED PROCEEDS" there shall be deducted all
expenses and costs of every type, kind and nature (including Attorneys' Fees)
incurred by Landlord to collect such proceeds; and provided, further, "ESCROWED
PROCEEDS" shall not include any
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<PAGE> 16
payment to Landlord by a Participant or an Affiliate of Landlord that is made
to compensate Landlord for the Participant's or Affiliate's share of any Losses
Landlord may incur as a result of any of the events described in the preceding
clauses (1) through (4). "ESCROWED PROCEEDS" shall include only such proceeds
as are held by Landlord (A) pursuant to Paragraph 4 for the payment to Tenant
for the restoration or repair of the Leased Property or (B) for application
(generally, on the next following Base Rental Date which is at least three (3)
Business Days following Landlord's receipt of such proceeds) as a Qualified
Payment or as reimbursement of costs incurred in connection with a Qualified
Payment. "ESCROWED PROCEEDS" shall not include any proceeds that (i) must be
paid to Seller pursuant to the Raychem Contract or any document executed by
Landlord in connection therewith or (ii) have been applied as a Qualified
Payment or to pay any costs incurred in connection with a Qualified Payment.
Until Escrowed Proceeds are paid to Tenant pursuant to Paragraph 4 below or
applied as a Qualified Payment or as reimbursement for costs incurred in
connection with a Qualified Payment, Landlord shall keep the same deposited in
an interest bearing account, which Landlord shall maintain subject to
subparagraph 9(ad) below, and all interest earned on such account shall be
added to and made a part of Escrowed Proceeds.
(ag) Eurocurrency Liabilities. "EUROCURRENCY LIABILITIES"
has the meaning assigned to that term in Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
(ah) Eurodollar Rate Reserve Percentage. "EURODOLLAR RATE
RESERVE PERCENTAGE" means, for purposes of determining the Effective Rate for
any Construction Period or Base Rental Period, the reserve percentage
applicable two Business Days before the first day of such Construction Period
or Base Rental Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with deposits exceeding One Billion
Dollars with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category or liabilities
which includes deposits by reference to which LIBOR is determined) having a
term equal to such Construction Period or Base Rental Period.
(ai) Event of Default. "EVENT OF DEFAULT" shall have the
meaning assigned to it in subparagraph 14(a) below.
(aj) Excluded Taxes. "EXCLUDED TAXES" shall mean all
federal, state and local income taxes upon the Base Rent, Commitment Fees and
any interest paid to Landlord pursuant to subparagraph 3(e), including any
state "franchise" taxes to the extent computed on the net income earned by
Landlord from this Lease. Further, if ad valorem taxes assessed against the
Leased
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<PAGE> 17
Property during the Initial Period increase because of Landlord's transfer of
any interest in the Leased Property to a third party during the Initial Period
(other than a Permitted Transfer), then "EXCLUDED TAXES" will include such ad
valorem taxes to the extent that such taxes exceed the ad valorem taxes that
would have become due but for such transfer. Further, if transfer taxes are
assessed during the Initial Period because of Landlord's transfer of any
interest in the Leased Property to a third party during the Initial Period
(other than a Permitted Transfer), then "EXCLUDED TAXES" will include such
transfer taxes.
(ak) Fed Funds Rate. "FED FUNDS RATE" means, for any
period, a fluctuating interest rate (expressed as a per annum rate) equal for
each day during such period to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rates are not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Landlord's Lender from three Federal funds brokers of
recognized standing selected by it. All determinations of the Fed Funds Rate
by Landlord's Lender shall, in the absence of clear and demonstrable error, be
binding and conclusive upon Landlord and Tenant.
(al) Final Payment Date. "FINAL PAYMENT DATE" means the
earlier of (i) the date upon which the Term expires or is terminated or (ii)
any date upon which Landlord's entire interest in the Leased Property is to be
sold pursuant to the Purchase Agreement.
(am) Final Period. "FINAL PERIOD" shall have the meaning
assigned to it in Paragraph 2 below.
(an) Funding Advances. "FUNDING ADVANCES" means (1) the
Prior Funding Advances, (2) the advance to be made by or on behalf of Landlord
for Closing Costs and (3) all advances (which, together with Prior Funding
Advances and the advance to be made for Closing Costs, are expected to total
$115,000,000) made by Landlord's Lender or any Participant to or on behalf of
Landlord to allow Landlord to provide the Construction Allowance hereunder.
(ao) Hazardous Substance. "HAZARDOUS SUBSTANCE" means (i)
any chemical, compound, material, mixture or substance that is now or hereafter
defined or listed in, regulated under, or otherwise classified pursuant to, any
Environmental Laws as a "hazardous substance," "hazardous material," "hazardous
waste," "extremely hazardous waste," "infectious waste," "toxic substance,"
"toxic pollutant," or any other formulation intended to define, list or
classify substances by reason of deleterious properties, including, without
limitation, ignitability, corrosiveness, reactivity, carcinogenicity, toxicity
or reproductive toxicity; (ii) petroleum, any fraction of petroleum, natural
gas, natural gas
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liquids, liquified natural gas, synthetic gas usable for fuel (or mixtures of
natural gas and such synthetic gas), and ash produced by a resource recovery
facility utilizing a municipal solid waste stream, and drilling fluids,
produced waters and other wastes associated with the exploration, development
or production of crude oil, natural gas or geothermal resources; (iii) asbestos
and any asbestos containing material; (iv) "waste" as defined in section
13050(d) of the California Water Code; and (v) any other material that, because
of its quantity, concentration or physical or chemical characteristics, poses a
significant present or potential hazard to human health or safety or to the
environment if released into the workplace or the environment.
(ap) Hazardous Substance Activity. "HAZARDOUS SUBSTANCE
ACTIVITY" means any actual, proposed or threatened use, storage, holding,
existence, location, release (including, without limitation, any spilling,
leaking, leaching, pumping, pouring, emitting, emptying, dumping, disposing
into the environment, and the continuing migration into or through soil,
surface water, groundwater or any body of water), discharge, deposit,
placement, generation, processing, construction, treatment, abatement, removal,
disposal, disposition, handling or transportation of any Hazardous Substance
from, under, in, into or on the Leased Property, including, without limitation,
the movement or migration of any Hazardous Substance from surrounding property,
surface water, groundwater or any body of water under, in, into or onto the
Leased Property and any residual Hazardous Substance contamination in, on or
under the Leased Property.
(aq) Hazardous Substance Claims. "HAZARDOUS SUBSTANCE
CLAIMS" shall have the meaning assigned to it in subparagraph 9(ab) below.
(ar) Impositions. "IMPOSITIONS" shall have the meaning
assigned to it in subparagraph 9(p) below.
(as) Indemnified Party. "INDEMNIFIED PARTY" means each of
(1) Landlord and any of Landlord's successors and assigns as to all or any
portion of the Leased Property or any interest therein, (2) the Participants,
and (3) any Affiliate, officer, agent, director, employee or servant of any of
the parties described in clause (1) or (2) preceding.
(at) Initial Improvements. "INITIAL IMPROVEMENTS" shall
mean the improvements on the Land and furnishings for such improvements which
are to be constructed and installed by Tenant using the Construction Allowance
furnished by Landlord as described in Paragraph 6 below.
(au) Initial Period. "INITIAL PERIOD" shall have the
meaning assigned to it in Paragraph 2 below.
(av) Landlord's Lender. "LANDLORD'S LENDER" means
Landlord's Affiliate, Banque Nationale de Paris, a bank organized
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and existing under the laws of France, together with any affiliates of such
bank that directly or indirectly provided or hereafter during the Term provide
or maintain any of the Funding Advances, and any successors of such bank and
such affiliates.
(aw) LIBOR. "LIBOR" means, for purposes of determining the
Effective Rate for each Construction Period after October 1, 1994 and prior to
the Base Rental Commencement Date, the rate determined by Landlord's Lender to
be the average rate of interest per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates at which deposits of dollars are offered or
available to Landlord's Lender in the London interbank market at approximately
11:00 a.m. (London time) on the second Business Day preceding the first day of
such Construction Period. Landlord shall instruct Landlord's Lender to
consider deposits, for purposes of making the determination described in the
preceding sentence, that are offered: (i) for delivery on the first day of such
Construction Period, (ii) in an amount equal or comparable to the total
(projected on the applicable date of determination by Landlord's Lender)
Stipulated Loss Value on the first day of such Construction Period, and (iii)
for a period of time equal or comparable to the length of such Construction
Period. "LIBOR" means, for purposes of determining the Effective Rate for each
Base Rental Period, the rate determined by Landlord's Lender to be the average
rate of interest per annum (rounded upwards, if necessary, to the next 1/16 of
1%) of the rates at which deposits of dollars are offered or available to
Landlord's Lender in the London interbank market at approximately 11:00 a.m.
(London time) on the second Business Day preceding the first day of such Base
Rental Period. Landlord shall instruct Landlord's Lender to consider deposits,
for purposes of making the determination described in the preceding sentence,
that are offered: (i) for delivery on the first day of such Base Rental Period,
(ii) in an amount equal or comparable to the total (projected on the applicable
date of determination by Landlord's Lender) Stipulated Loss Value on the first
day of such Base Rental Period, and (iii) for a period of time equal or
comparable to the length of such Base Rental Period. If Landlord's Lender so
chooses, it may determine LIBOR for any period by reference to the rate
reported by the British Banker's Association on Page 3750 of the Telerate
Service at approximately 11:00 a.m. (London time) on the Second Business day
preceding the first day of such period. If for any reason Landlord's Lender
determines that it is impossible or impractical to determine LIBOR with respect
to a given Construction Period or Base Rental Period in accordance with the
preceding sentences, then "LIBOR" for that Construction Period or Base Rental
Period shall equal the rate which is fifty basis points (50/100 of 1%) above
the Fed Funds Rate for that period. All determinations of LIBOR by Landlord's
Lender shall, in the absence of clear and demonstrable error, be binding and
conclusive upon Landlord and Tenant.
(ax) Losses. "LOSSES" means any and all losses,
liabilities, damages (whether actual, consequential, punitive or otherwise
denominated), demands, claims, actions, judgments, causes
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<PAGE> 20
of action, assessments, fines, penalties, costs, and out-of-pocket expenses
(including, without limitation, Attorneys' Fees and the fees of outside
accountants and environmental consultants), of any and every kind or character,
foreseeable and unforeseeable, liquidated and contingent, proximate and remote.
(ay) Outstanding Construction Allowance. "OUTSTANDING
CONSTRUCTION ALLOWANCE" shall have the meaning indicated in subparagraph 6(a).
(az) Participant. "PARTICIPANT" means the purchaser of
any participating interest in Landlord's rights to receive payments under this
Lease as permitted in subparagraph 11(d) hereof. As of the effective date
hereof, all Participants are listed in Schedule 1 attached hereto, although
such Participants and Landlord may convey participating interests to others in
the future.
(ba) Participation Agreements. "PARTICIPATION AGREEMENTS"
means the participation agreements dated as of the date hereof between Landlord
and the Participants listed in Schedule 1, as described more particularly in
subparagraph 11(d) hereof, as such Participation Agreements may be extended,
supplemented, amended, restated or otherwise modified from time to time.
(bb) Permitted Encumbrances. "PERMITTED ENCUMBRANCES"
means (i) the encumbrances and other matters affecting the Leased Property that
are set forth in Exhibit B attached hereto and made a part hereof, and (ii) any
provisions of the Raychem Contract that survive closing thereunder with respect
to the Leased Property, and (iii) any easement agreement or other document
affecting title to the Leased Property executed by Landlord pursuant to the
Raychem Contract or pursuant to a document executed in accordance with the
Raychem Contract or otherwise executed by Landlord at the request of or with
the consent of Tenant.
(bc) Permitted Hazardous Substance Use. "PERMITTED
HAZARDOUS SUBSTANCE USE" means the use, storage and offsite disposal of
Permitted Hazardous Substances in strict accordance with applicable
Environmental Laws and with due care, given the nature of the Hazardous
Substances involved; provided, the scope and nature of such use, storage and
disposal shall not include the use of underground storage tanks for any purpose
other than the storage of water for fire control, nor shall such scope and
nature exceed that reasonably required for the construction and operation of an
office complex. Notwithstanding anything to the contrary herein contained,
Permitted Hazardous Substance Use shall not include any use of the Leased
Property as a treatment, storage or disposal facility (as defined by federal
Environmental Laws), including but not limited to a landfill, incinerator or
other waste disposal facility.
(bd) Permitted Hazardous Substances. "PERMITTED HAZARDOUS
SUBSTANCES" means Hazardous Substances used and reasonably required for the
construction of the Initial
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<PAGE> 21
Improvements or for Tenant's operation of an office complex on the Land (or on
any adjoining land owned or leased by Tenant), in either case in strict
compliance with all Environmental Laws and with due care, given the nature of
the Hazardous Substances involved.
(be) Permitted Transfer. "PERMITTED TRANSFER" means any
one or more of the following: (1) the assignments to the Participants listed
in Schedule 1 as set forth in the Participation Agreements dated as of the date
hereof and the terms and conditions of such Participation Agreements; (2) any
subsequent assignment or conveyance by Landlord of any lien or security
interest against the Leased Property (in contrast to a conveyance of Landlord's
fee estate in the Leased Property) or of any interest in Rent, payments
required by the Purchase Agreement or payments to be generated from the Leased
Property after the Term, to any present or future Participant or to any
Affiliate of Landlord; (3) any agreement to exercise or refrain from exercising
rights or remedies hereunder or under the Purchase Agreement made by Landlord
with any present or future Participant or Affiliate of Landlord; (4) any
assignment or conveyance by Landlord requested by Tenant or required by the
Raychem Contract, by any Permitted Encumbrance, by the Purchase Agreement or by
Applicable Laws; (5) any assignment or conveyance by Landlord when an Event of
Default shall have occurred and be continuing; or (6) any assignment or
conveyance by Landlord after the Initial Period.
(bf) Person. "PERSON" means an individual, a corporation,
a partnership, an unincorporated organization, an association, a joint stock
company, a joint venture, a trust, an estate, a government or agency or
political subdivision thereof or other entity, whether acting in an individual,
fiduciary or other capacity.
(bg) Plan. "PLAN" shall have the meaning assigned to it
in the Revolving Credit Agreement.
(bh) Prime Rate. "PRIME RATE" means the prime interest
rate or equivalent charged by Landlord's Lender as announced or published by
Landlord's Lender from time to time, which need not be the lowest interest rate
charged by Landlord's Lender. If for any reason Landlord's Lender does not
announce or publish a prime rate or equivalent, the prime rate or equivalent
announced or published by either Citibank, N.A. or Credit Commercial de France
as selected by Landlord shall be used to compute the "Prime Rate." The prime
rate or equivalent announced or published by such bank need not be the lowest
rate charged by it. If the prime rate or equivalent of Landlord's Lender (or
the applicable bank) changes from time to time after the date hereof, the Prime
Rate shall be automatically increased or decreased, as the case may be, without
notice to Tenant as of the effective time of each change in such prime rate or
equivalent.
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(bi) Prior Funding Advances. "PRIOR FUNDING ADVANCES"
means the advances totalling $23,500,000 made to or on behalf of Landlord on or
prior to the date hereof in connection with Landlord's acquisition of the
Leased Property.
(bj) Purchase Agreement. "PURCHASE AGREEMENT" means the
Amended and Restated Purchase Agreement (Phases II and III) dated as of the
date hereof between Landlord and Tenant pursuant to which Tenant has agreed to
purchase or to arrange for the purchase by a third party of the Leased
Property, as such Amended and Restated Purchase Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time.
(bk) Qualified Payments. "QUALIFIED PAYMENTS" means all
payments received by Landlord from time to time during the Term from any party
(1) under any casualty insurance policy as a result of damage to the Leased
Property, (2) as compensation for any restriction placed upon the use or
development of the Leased Property or for the condemnation of the Leased
Property or any portion thereof, (3) because of any judgment, decree or award
for injury or damage to the Leased Property or (4) under any title insurance
policy or otherwise as a result of any title defect or claimed title defect
with respect to the Leased Property; provided, however, that (x) in determining
"QUALIFIED PAYMENTS", there shall be deducted all expenses and costs of every
kind, type and nature (including taxes and Attorneys' Fees) incurred by
Landlord with respect to the collection of such payments, (y) "QUALIFIED
PAYMENTS" shall not include any payment to Landlord by a Participant or an
Affiliate of Landlord that is made to compensate Landlord for the Participant's
or Affiliate's share of any Losses Landlord may incur as a result of any of the
events described in the preceding clauses (1) through (4) and (z) "QUALIFIED
PAYMENTS" shall not include any payments received by Landlord that Landlord has
paid to Tenant for the restoration or repair of the Leased Property or that
Landlord is holding as Escrowed Proceeds. For purposes of computing the total
Qualified Payments (and other amounts dependent upon Qualified Payments, such
as Stipulated Loss Value and the Outstanding Construction Allowance) paid to or
received by Landlord as of any date, payments described in the preceding
clauses (1) through (4) will be considered as Escrowed Proceeds, not Qualified
Payments, until they are actually applied as Qualified Payments by Landlord,
which will generally not occur until the first Advance Date or Base Rental Date
which is at least three (3) Business Days after Landlord's receipt of the same.
Thus, for example, condemnation proceeds actually received by Landlord in the
middle of a Base Rental Period will not be considered as having been received
by Landlord for purposes of computing the total Qualified Payments unless and
until actually applied by Landlord as a Qualified Payment on a subsequent Base
Rental Date in accordance with Paragraph 4 below.
(bl) Remaining Proceeds. "REMAINING PROCEEDS" shall have
the meaning assigned to it in subparagraph 4(a)(ii).
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<PAGE> 23
(bm) Release Date. "RELEASE DATE" means the later of the
dates upon which (i) this Lease terminates, (ii) Tenant surrenders possession
of the Leased Property or (iii) Tenant ceases to have any leasehold or other
interest in the Leased Property under this Lease or otherwise.
(bn) Rent. "RENT" means the Base Rent and all Additional
Rent.
(bo) Responsible Financial Officer. "RESPONSIBLE
FINANCIAL OFFICER" means the chief financial officer, the controller, the
treasurer or an assistant treasurer of Tenant.
(bp) Revolving Credit Agreement. "REVOLVING CREDIT
AGREEMENT" shall have the meaning assigned to it in subparagraph 9.(ae) below.
(bq) Scope Change. A "SCOPE CHANGE" means a material
addition to, deletion from or other modification to the quality, function or
capacity of the Initial Improvements as delineated in Exhibit C or in any plans
and specifications therefor previously approved by Landlord, but shall not
include refinement, correction and detailing by Tenant or Tenant's architects
or contractors from time to time. As used in this definition, a "MATERIAL"
change means a change that (a) could substantially reduce the fair market value
of the Leased Property after the Initial Improvements are complete, (b) is
expected to cause the construction of the Initial Improvements to exceed the
constraints of the Construction Budget attached hereto as Exhibit C (as the
same may be revised by Tenant from time to time with Landlord's prior written
approval) or (c) will change the general character of the Initial Improvements
from that described in Exhibit C.
(br) Stipulated Loss Value. "STIPULATED LOSS VALUE" means
the amount computed from time to time in accordance with the formula specified
in this definition. Such amount shall equal the Prior Funding Advances (i.e.,
$23,500,000) plus the advance made for Closing Costs (i.e., $700,000), plus the
Outstanding Construction Allowance as of the date a computation is required
hereunder, minus the amount (if any) of Qualified Payments paid to Landlord on
or prior to such date in excess of the Qualified Payments deducted in
calculating the Outstanding Construction Allowance. Thus, for example, if a
determination of Stipulated Loss Value is required under subparagraph 3(a) on
the first day of the applicable Base Rental Period, and if Tenant has used the
entire $90,800,000 Construction Allowance to make the Initial Improvements to
the Leased Property, but the Leased Property has been damaged by fire or other
casualty with the result that $5,000,000 of net insurance proceeds have been
paid to Landlord and retained by Landlord as Qualified Payments, then the
"STIPULATED LOSS VALUE" as of the date of the required determination shall
equal $110,000,000 (i.e., 23,500,000 + $700,000 + ($90,800,000 - $5,000,000) -
$0).
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(bs) Subsidiary. "SUBSIDIARY" means any corporation of
which Tenant and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors.
(bt) Term. "TERM" shall have the meaning assigned to it
in Paragraph 2 below.
(bu) Voting Stock. "VOTING STOCK" of any Person means any
shares of stock of such Person whose holders are entitled under ordinary
circumstances to vote for the election of directors of such Person
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
(bv) Other Terms and References. Words of any gender used
in this Lease shall be held and construed to include any other gender, and
words in the singular number shall be held to include the plural, unless the
context otherwise requires. References herein to Paragraphs or subparagraphs
shall refer to the corresponding Paragraphs or subparagraphs of this Lease,
unless specific reference is made to another document or instrument. References
herein to any Schedule or Exhibit shall refer to the corresponding Schedule or
Exhibit attached hereto, which shall be made a part hereof by such reference.
All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles consistent with those
applied in the preparation of the financial statements referred to in
subparagraph 9(w). Other terms are defined in the provisions that follow.
2. Term. The term of this Lease (herein called the "TERM") shall
commence on and include the effective date hereof, and end at midnight on
September 30, 1999 (or the next following Business Day if September 30, 1999 is
not a Business Day), unless extended by subsequent written agreement of
Landlord and Tenant or sooner terminated as herein provided. The Term shall
consist of an Initial Period and a Final Period, both as defined in this
paragraph. The "INITIAL PERIOD" (herein so called) during which construction
of the Initial Improvements is to be completed, shall commence upon and include
the effective date hereof and end on but not include October 1, 1997 (or the
next following Business Day if October 1, 1997 is not a Business Day). In any
event, unless this Lease is terminated as a result of an Event of Default or
for any other reason permitted hereunder, this Lease shall continue after the
Initial Period until midnight on September 30, 1999 (or the next following
Business Day if September 30, 1999 is not a Business Day) (the "FINAL PERIOD").
Provided that Tenant is still in possession of the Leased Property and
has not breached its obligation to make any payment required by Paragraph 2 of
the Purchase Agreement on any prior Designated Payment Date (as defined
therein), Tenant may notify Landlord of Tenant's election to terminate this
Lease, effective as
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of midnight of any Advance Date or Base Rental Date, by giving Landlord an
irrevocable notice of such election at least thirty (30) days prior to the
effective date of the termination. If Tenant elects to so terminate this
Lease, then on the Base Rental Date on which this Lease is to be terminated,
not only must Tenant pay all unpaid Rent, Tenant must also satisfy its
obligations under the Purchase Agreement. The payment of all unpaid Rent,
including but not limited to accrued and unpaid Commitment Fees and the
satisfaction of Tenant's obligations under the Purchase Agreement shall be
conditions to any early termination of this Lease by Tenant.
3. Rental.
(a) Base Rent. Tenant shall pay Landlord rent (herein
called "BASE RENT") in arrears, in currency that at the time of payment is
legal tender for public and private debts in the United States of America, in
monthly installments on each Base Rental Date through the end of the Term.
Each installment of Base Rent shall represent rent allocable to the Base Rental
Period ending on the date on which the installment is due. If Tenant or any
Applicable Purchaser purchases Landlord's interest in the Leased Property
pursuant to the Purchase Agreement, any Base Rent for the month ending on the
date of purchase and all outstanding Additional Rent shall be due on the Final
Payment Date in addition to the purchase price and other sums due Landlord
under the Purchase Agreement. The Base Rent for each Base Rental Period shall
equal (A) Stipulated Loss Value on the first day of such Base Rental Period,
times (B) the Effective Rate with respect to such Base Rental Period, times (C)
the number of days in such Base Rental Period, divided by (D) three hundred
sixty (360). Assume, only for the purpose of illustration: that a hypothetical
Base Rental Period contains exactly thirty (30) days; that prior to the first
day of such Base Rental Period Tenant has used the entire $90,800,000
Construction Allowance to construct the Initial Improvements, but only
$85,800,000 of the Construction Allowance remains outstanding on the first day
of such Base Rental Period after deducting a total of $5,000,000 of Qualified
Payments received by Landlord, thereby leaving a Stipulated Loss Value of
$110,000,000 (the Prior Funding Advances of $23,500,000, plus the Closing Costs
of $700,000, plus the $85,800,000 Outstanding Construction Allowance); and that
the Effective Rate computed with respect to the applicable Base Rental Period
is 6%. Under such assumptions, the Base Rent for the hypothetical Base Rental
Period will equal:
$110,000,000 x 6% x 30/360, or $550,000.
(b) Commitment Fees. For each Construction Period Tenant
shall pay Landlord a fee (herein called a "COMMITMENT FEE") equal to (1) twenty
basis points (20/100 of 1%), times (2) the difference at the end of the first
day of such Construction Period between (A) $90,800,000 and (B) the sum
(computed without deduction for any Qualified Payments) of all Construction
Advances made by or on behalf of Landlord and all Carrying Costs added to and
made a
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part of the Construction Allowance, times (3) the number of days in such
Construction Period, divided by (4) three hundred sixty (360). Tenant shall
pay Commitment Fees in arrears on January 1, April 1, July 1 and October 1 of
each calendar year, beginning with January 1, 1995 and continuing regularly
thereafter to and including the first of such dates to fall on or after the
Base Rent Commencement Date.
(c) Additional Rent. All amounts which Tenant is
required to pay to or on behalf of Landlord pursuant to this Lease (other than
Base Rent), including without limitation all Commitment Fees required to be
paid under this Paragraph 3, together with every fine, penalty, interest and
cost set forth herein which may be added for nonpayment or late payment
thereof, shall constitute rent (herein called "ADDITIONAL RENT").
(d) Interest. The Base Rent and all other payments to be
made by Tenant hereunder shall bear interest if not paid when first due at the
Default Rate in effect from time to time from the date due until paid;
provided, that nothing herein contained will be construed as permitting the
charging or collection of interest at a rate exceeding the maximum rate
permitted under Applicable Laws.
(e) Net Lease. It is the intention of Landlord and
Tenant that the Base Rent and all other payments herein specified shall be
absolutely net to Landlord. Tenant shall pay all costs, expenses and
obligations of every kind relating to the Leased Property or this Lease which
may arise or become due, including, without limitation: (i) Impositions (other
than Excluded Taxes), including any taxes payable by virtue of Landlord's
receipt of amounts, other than Capital Adequacy Charges, paid to or on behalf
of Landlord in accordance with this subparagraph 3(f); (ii) any Capital
Adequacy Charges; (iii) any amount for which Landlord is or becomes liable with
respect to the Permitted Encumbrances; and (iv) any costs incurred by Landlord
(including Attorneys' Fees) because of Landlord's acquisition or ownership of
the Leased Property or because of this Lease or the transactions contemplated
herein (but excluding home office overhead and portfolio management expenses).
The Base Rent and all other amounts payable by Tenant hereunder shall be paid
without notice or demand and without abatement, counterclaim, deduction, setoff
or defense, except as expressly provided herein.
4. Insurance and Condemnation Proceeds.
(a) Subject to Landlord's rights under this Paragraph 4, and so
long as no Event of Default shall have occurred and be continuing, Tenant shall
be entitled to use all casualty insurance and condemnation proceeds payable
with respect to the Leased Property during the Term for the restoration and
repair of the Leased Property or any remaining portion thereof. All insurance
and condemnation proceeds received with respect to the Leased Property
(including proceeds payable under any insurance policy
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<PAGE> 27
covering the Leased Property which is maintained by Tenant) shall be paid to
Landlord and then applied as follows:
(i) First, such proceeds shall be used to reimburse
Landlord for any costs and expenses, including
Attorneys' Fees, incurred in connection with the
collection of such proceeds.
(ii) Second, the remainder of such proceeds (the
"REMAINING PROCEEDS"), shall be held by Landlord as
Escrowed Proceeds and applied to reimburse Tenant for
the actual cost of the repair, restoration or
replacement of the Leased Property. However, any
Remaining Proceeds not needed for such purpose shall
be applied by Landlord as Qualified Payments after
Tenant notifies Landlord that they are not needed for
repairs, restoration or replacement.
Notwithstanding the foregoing, at any time prior to the Final Period, provided
an Event of Default shall have occurred and be continuing, and (regardless of
the existence of any Event of Default) at any time during the Final Period,
Landlord shall be entitled to receive and collect any insurance and
condemnation proceeds received with respect to the Leased Property, and either,
at the discretion of Landlord, hold such proceeds as Escrowed Proceeds to be
applied to the repair, restoration or replacement of the Leased Property or
retain such proceeds (net of the deductions described in clause (i) above) as
Qualified Payments.
(b) Any Remaining Proceeds held by Landlord as Escrowed Proceeds
shall be deposited by Landlord in an interest bearing account as provided in
the definition of Escrowed Proceeds and shall be paid to Tenant upon completion
of the applicable repair, restoration or replacement and upon compliance by
Tenant with such terms, conditions and requirements as may be reasonably
imposed by Landlord, but in no event shall Landlord be required to pay any
Escrowed Proceeds to Tenant in excess of the actual cost to Tenant of the
applicable repair, restoration or replacement, it being understood that
Landlord may retain any such excess as a Qualified Payment. In any event,
Tenant will not be entitled to any abatement or reduction of the Base Rent or
any other amount due hereunder except to the extent that such excess Remaining
Proceeds result in Qualified Payments which reduce Stipulated Loss Value (and
thus payments computed on the basis of Stipulated Loss Value) as provided in
the definitions set out above. Further, notwithstanding any inadequacy of the
Remaining Proceeds or anything herein to the contrary, Tenant must, after any
taking of less than all or substantially all of the Leased Property by
condemnation and after any damage to the Leased Property by fire or other
casualty, restore or improve the Leased Property or the remainder thereof to a
value no less than Stipulated Loss Value as of the date just prior to the
taking or damage and to a safe and sightly condition. Any taking of so much of
the Leased Property as, in Landlord's reasonable judgment, makes it
impracticable to
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<PAGE> 28
restore or improve the remainder thereof as required by the preceding sentence
shall be considered a taking of substantially all the Leased Property for
purposes of this Paragraph 4.
(c) In the event of any taking of all or substantially all of the
Leased Property, Landlord shall be entitled to apply all Remaining Proceeds as
a Qualified Payment notwithstanding the foregoing. In addition, if Stipulated
Loss Value immediately prior to any taking of all or substantially all of the
Leased Property by condemnation exceeds the sum of the Remaining Proceeds
resulting from such condemnation, then Landlord shall be entitled to recover
the excess from Tenant upon demand as an additional Qualified Payment,
whereupon this Lease shall terminate.
(d) Nothing herein contained shall be construed to prevent Tenant
from obtaining a separate award from any condemning authority for a taking of
Tenant's personal property or for moving expenses or business interruption,
provided, such award is not combined with and does not reduce the award for any
taking of the Leased Property, including Tenant's interest therein.
(e) Landlord and Tenant each waive any right of recovery against
the other, and the other's agents, officers or employees, for any damage to the
Leased Property or to the personal property situated from time to time in or on
the Leased Property resulting from fire or other casualty covered by a valid
and collectible insurance policy; provided, however, that the waiver set forth
in this subparagraph (e) shall be effective insofar, but only insofar, as
compensation for such damage or loss is actually recovered by the waiving party
(net of costs of collection) under the policy notwithstanding the waivers set
out in this paragraph. Tenant shall cause the insurance policies required of
Tenant by this Lease to be properly endorsed, if necessary, to prevent any loss
of coverage because of the waivers set forth in this paragraph. If such
endorsements are not available, the waivers set forth in this paragraph shall
be ineffective to the extent that such waivers would cause required insurance
with respect to the Leased Property to be impaired.
(f) Any title insurance proceeds payable under any title insurance
policy or binder covering the Leased Property or any portion thereof shall be
payable to Landlord for application as a Qualified Payment. If Landlord and
Tenant are both named as insureds under any such title insurance policy or
binder, Tenant shall upon request direct the insurer under the policy or binder
to deliver all such proceeds directly to Landlord and shall release the insurer
from any claim that might otherwise result from the payment to Landlord.
Tenant shall also upon request endorse to the order of Landlord any check for
such proceeds that may be payable to Tenant or to both Tenant and Landlord.
5. No Lease Termination.
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(a) Status of Lease. Except as expressly provided
herein, this Lease shall not terminate, nor shall Tenant have any right to
terminate this Lease, nor shall Tenant be entitled to any abatement of the
Rent, nor shall the obligations of Tenant under this Lease be excused, for any
reason whatsoever, including without limitation any of the following: (i) any
damage to or the destruction of all or any part of the Leased Property from
whatever cause, (ii) the taking of the Leased Property or any portion thereof
by eminent domain or otherwise for any reason, (iii) the prohibition,
limitation or restriction of Tenant's use of all or any portion of the Leased
Property or any interference with such use by governmental action or otherwise,
(iv) any eviction of Tenant or anyone claiming through or under Tenant by
paramount title or otherwise (provided, if the eviction is by Landlord or any
party lawfully claiming through or under Landlord, other than Tenant or a third
party claiming through or under Tenant, then Tenant will have the remedies
described in Paragraph 29 below), (v) any default on the part of Landlord under
this Lease or under any other agreement to which Landlord and Tenant are
parties, (vi) the inadequacy in any way whatsoever of the design or
construction of the Initial Improvements or the Construction Documents, it
being understood that approval by Landlord of any Construction Documents does
not and will not constitute any representation express or implied as to the
adequacy thereof or (vii) any other cause whether similar or dissimilar to the
foregoing, any existing or future law to the contrary notwithstanding. It is
the intention of the parties hereto that the obligations of Tenant hereunder
shall be separate and independent of the covenants and agreements of Landlord,
that the Base Rent and all other sums payable by Tenant hereunder shall
continue to be payable in all events and that the obligations of Tenant
hereunder shall continue unaffected, unless the requirement to pay or perform
the same shall have been terminated or limited pursuant to an express provision
of this Lease.
(b) Waiver. Without limiting the foregoing, Tenant
waives to the extent permitted by Applicable Laws, except as otherwise
expressly provided herein, all rights to which Tenant may now or hereafter be
entitled by law (including any such rights arising because of any implied
"warranty of suitability" or other warranty under Applicable Laws) (i) to quit,
terminate or surrender this Lease or the Leased Property or any part thereof or
(ii) to any abatement, suspension, deferment or reduction of the Base Rent or
any other sums payable under this Lease.
6. Construction Allowance.
(a) Advances; Outstanding Construction Allowance.
(1) Tenant acknowledges that on the date hereof
Landlord has provided an initial Construction Advance (herein so called) of
$8,000,000 to reimburse Tenant for costs related to the construction of the
Initial Improvements. Subject to the conditions set forth below, Landlord
shall make further advances
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(herein also called "CONSTRUCTION ADVANCES") on Advance Dates from time to time
as requested by Tenant to pay for the actual cost of making and completing the
Initial Improvements to the Leased Property. In no event will (i) the total of
all Construction Advances which may be required of Landlord, when added to
Carrying Costs accrued or projected by Landlord to accrue prior to the Base
Rent Commencement Date as described below, exceed $90,800,000, unless an
additional Participant shall have been identified and Landlord and Tenant shall
have agreed to amend this Lease as provided in part (2) below or (ii) Landlord
be required to make any additional Construction Advances beyond the initial
Construction Advance of $8,000,000, unless and until Tenant has purchased the
Phase I Property pursuant to the Phase I Purchase Agreement. As used herein,
references to the "OUTSTANDING CONSTRUCTION ALLOWANCE" shall mean the
difference on the date in question (but not less than zero) of (A) the total
Construction Advances made by Landlord and all Carrying Costs added thereto
under part (3) of this subparagraph (a) on or prior to the date in question,
less (B) any Qualified Payments received on or prior to the date in question;
but Landlord will not be under any obligation to readvance any portion of the
Construction Allowance repaid by Qualified Payments. Notwithstanding the
foregoing, if for any reason Stipulated Loss Value (and thus the Outstanding
Construction Allowance included as a component thereof) must be determined
under this Lease as of any date between Advance Dates, the Outstanding
Construction Allowance determined on such date shall equal the Outstanding
Construction Allowance on the immediately preceding Advance Date computed in
accordance with the preceding sentence, plus Carrying Costs accruing on and
after such preceding Advance Date to but not including the date in question.
(2) The amount of the Construction Allowance may be
increased by a written agreement amending this Lease if an additional
Participant is identified before the Base Rental Commencement Date; provided,
that any such agreement to amend this Lease, any new participation agreement
with the identified Participant and the Participant itself must all be
satisfactory to Landlord in Landlord's sole and absolute discretion. Any
Participant so identified to provide an increase in the Construction Allowance
will be added to Schedule 1 as if such Participant had been one of the original
Participants listed thereon.
(3) Charges accruing at the Effective Rate (herein
called "CARRYING COSTS") for each Construction Period prior to or ending on the
Base Rent Commencement Date will be added to (and thereafter be included in)
the Outstanding Construction Allowance on the last day of such Construction
Period (i.e., generally on the Advance Date upon which such Construction Period
ends). The amount of Carrying Costs for each Construction Period shall be
equal to (A) Stipulated Loss Value (including accrued and unpaid Carrying Costs
added with respect to every previous Construction Period, if any) as of the
first day of such Construction Period, times (B) the Effective Rate with
respect to such Construction Period, times (C)
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the number of days in such Construction Period, divided by (D) 360. For
purposes of computing Carrying Costs for the Construction Period ending October
3, 1994, it is understood that Stipulated Loss Value as of the first of such
period will include not only the Prior Funding Advances of $23,500,000, but
also the Closing Costs of $700,000 and the initial Construction Advance of
$8,000,000 made on the date hereof.
(b) Initial Improvements. Tenant shall construct the
Initial Improvements in a good and workmanlike manner, in accordance with the
Construction Documents and Applicable Laws, and otherwise in compliance with
the provisions of this Lease. All Construction Documents must be consistent
with the description of the Initial Improvements and budget set forth in
Exhibit C attached hereto. Landlord acknowledges its approval of the
construction budget attached hereto as Exhibit C. If for any reason it shall
become apparent that the construction budget must be revised, Tenant shall
promptly notify Landlord thereof and of the reasons therefor. Upon the
execution of the general construction contract for the Initial Improvements,
Tenant shall cause the contractor thereunder to execute and deliver to Landlord
an estoppel letter in the form of Exhibit D attached hereto. Tenant shall also
cause the architect and engineer under any material architectural or
engineering contract for the Initial Improvements to execute and deliver to
Landlord an estoppel letter in the form of Exhibit E attached hereto. Before
making any Scope Change, Tenant shall provide to Landlord a reasonably detailed
written description of the Scope Change, a revised construction budget and a
copy of any changes to the drawings, plans, specifications and general
construction contract for the Initial Improvements required in connection
therewith, all of which must be approved in writing by Landlord (or by any
construction representative appointed by Landlord from time to time) before the
Scope Change is implemented. Upon request, Tenant shall furnish Landlord with
a written summary of all Initial Improvements then completed or contemplated
and any construction budgets, cost estimates, drawings, plans, specifications
and other Construction Documents available to Tenant with respect thereto.
Tenant shall have sole responsibility for satisfying the requirements of the
Construction Documents and for administering the construction of the Initial
Improvements, it being understood that Landlord's obligation with respect to
the Initial Improvements shall be limited to the making of advances under and
subject to the conditions set forth in this Paragraph 6. No contractor
performing any construction work on the Initial Improvements, no architect or
engineer performing any design work with respect thereto, and no other third
party shall be entitled to enforce Landlord's obligations to make advances as a
third party beneficiary. In any event, Tenant shall cause the Initial
Improvements to be completed no later than April 1, 1997 regardless of whether
(i) the Construction Allowance is sufficient to pay for such completion or (ii)
Landlord stops making Construction Advances pursuant to Paragraph 6(a)1)(ii),
and Tenant shall send the Completion Notice promptly after the Initial
Improvements are substantially complete. No funding of Construction Advances
and no
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failure of Landlord to object to Initial Improvements proposed or constructed
by Tenant shall constitute a waiver by Landlord of the requirements contained
in this subparagraph.
(c) Conditions to Construction Advances. Landlord's
obligation to make Construction Advances from time to time under this Paragraph
6 shall be subject to the following terms and conditions, all of which are
intended for the sole benefit of Landlord:
(i) Prior Notice. Tenant must request any
Construction Advance at least ten (10) Business Days prior to the Advance Date
upon which the advance is to be paid. Such request must confirm that Landlord
will not be responsible for the application of any funds advanced to Tenant or
to any other party at Tenant's request and otherwise be in form reasonably
satisfactory to Landlord. Without limiting the foregoing, such request must
also describe in such detail as Landlord may request: all costs to be paid or
reimbursed by the advance requested; all subcontractors, suppliers or other
parties to whom such costs have been or will be paid and the address of such
parties; and, to the extent not fully disclosed in any prior request for a
Construction Advance, the names and addresses of any subcontractors that have
filed or, to Tenant's knowledge, have threatened to file a lien against the
Leased Property. However, until such time as Landlord shall notify Tenant
otherwise, Tenant's compliance with the following requirements will be
considered adequate to evidence costs to be paid or reimbursed by Construction
Advances:
(A) With each notice requesting a Construction Advance,
Tenant shall submit copies of the applications for payment from
Tenant's general contractors, to the extent that the advance requested
by Tenant includes payments covered by such applications. Such
applications for payment shall have been signed by Tenant's architect
to indicate the architect's approval of the same.
(B) With each notice requesting a Construction Advance,
Tenant shall also a submit a list of payments to be made to each
professional or vendor (other than a general contractor) claiming a
right to payment in connection with the construction of the Initial
Improvements, to the extent that the advance requested by Tenant
includes such payments.
(C) With each notice requesting a Construction Advance,
Tenant shall also submit unconditional lien releases from the general
contractors, covering any payments to the general contractors for
which Tenant has been provided prior Construction Advances.
(D) Though not required with every notice requesting a
Construction Advance, copies of invoices and lien releases from each
subcontractor and from each professional or vendor described in part
(B) preceding, will be obtained by Tenant in
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accordance with the procedures and practices that Tenant followed for
the construction contemplated by the Phase I Lease. Tenant shall
periodically (and in any event no less often than once every 90 days)
submit to Landlord copies of such invoices and lien releases from each
subcontractor, vendor or professional that has been paid $100,000 or
more since the last preceding submission of invoices and lien release
pursuant to this part (D).
(ii) Amount of the Advances. No Construction
Advance shall exceed $90,800,000 less the sum of (A) the then Outstanding
Construction Allowance, (B) any Qualified Payments previously received, and (C)
the Carrying Costs then projected by Landlord to be added to the Construction
Allowance on and after the date of the advance. Further, no Construction
Advance shall exceed the actual costs previously incurred and paid by Tenant to
construct the Initial Improvements, including "soft costs" specified in
Tenant's construction budget, less the sum of all previous Construction
Advances made under this Paragraph 6 to Tenant as reimbursement for such costs.
Further, no Construction Advance shall be required that would cause the cost of
completing all Initial Improvements then contemplated as reasonably estimated
by Landlord to exceed the difference computed by subtracting (1) the Carrying
Costs then projected by Landlord to be added to the Construction Allowance,
from (2) the Construction Allowance remaining to be advanced. No Construction
Advance shall be requested for an amount less than the lesser of (A) the
maximum advance that may be required of Landlord under the preceding sentences,
and (B) $500,000.
(iii) Insurance. Tenant shall have obtained and
provided evidence reasonably satisfactory to Landlord of insurance concerning
the Initial Improvements as Landlord may require, including but not limited to
the liability insurance required by subparagraph 9(z) below and the following:
a) Title Insurance. An owner's title
insurance policy in an amount, form and substance and written by a title
insurance company satisfactory to Landlord and insuring Landlord's ownership of
fee title to the Leased Property, including the Initial Improvements, in the
amount no less than Stipulated Loss Value plus any remaining portion of the
Construction Allowance to be advanced under this Lease; and
b) Builder's Risk Insurance. Builder's
Completed Value Risk and such other hazard insurance as Landlord may reasonably
require against all risks of physical loss (including collapse and transit
coverage) with deductibles not to exceed $250,000, such insurance to be in
amounts sufficient to cover the total value of the Initial Improvements and to
be maintained in full force and effect at all times until completion of
construction of the Initial Improvements.
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(iv) Progress of Construction. Construction of
the Initial Improvements shall be progressing without any substantial
continuing interruption in a good and workmanlike manner and in accordance with
the Construction Documents and all Applicable Laws, and Tenant shall have
corrected or caused the correction promptly of any material defect in such
construction.
(v) Evidence of Costs to be Reimbursed. To the
extent required by Landlord at the time a Construction Advance is required, and
subject to subparagraph 6.(c)(i) above, Tenant shall have submitted invoices,
requests for payment from contractors, certifications from Tenant's architect
and/or construction manager, lien releases and other evidence reasonably
satisfactory to Landlord that (A) all costs for which Tenant requests
reimbursement constitute actual costs incurred by Tenant for the construction
of the Initial Improvements, (B) such costs are within the constraints of the
budget attached hereto as Exhibit C, as the same may be amended from time to
time with Landlord's prior written consent, and (C) all general contractors and
all parties that have filed a statutory Preliminary Notice which would give
them the right to assert a mechanic's or materialman's lien against the Leased
Property (collectively, "POTENTIAL LIEN CLAIMANTS") have been paid all sums for
which prior Construction Advances have been advanced. Without limiting the
foregoing, Landlord may decline to advance any amount that would result in an
excess of $10,000,000 or more of (1) the total cost of work for which Potential
Lien Claimants could have asserted a lien against the Leased Property and for
which Construction Advances have been advanced by Landlord, over (2) the cost
of any such work for which Tenant has failed to provide to Landlord
unconditional statutory lien releases from all Potential Lien Claimants in form
and substance reasonably satisfactory to Landlord.
(vi) No Event of Default or Change of Control
Event. No Event of Default shall have occurred and be continuing under this
Lease and no Change of Control Event shall have occurred.
(vii) No Sale of Landlord's Interest. No sale of
Landlord's interest in the Leased Property shall have occurred pursuant to the
Purchase Agreement.
(viii) Certificate of No Default. Landlord shall
have received, together with the notice requesting the Construction Advance
described in clause (i) above, a current certificate of a Responsible Financial
Officer of Tenant (a) representing and warranting that no Event of Default has
occurred and is continuing, (b) certifying that the representations and
warranties contained herein are true and correct on and as of the date of such
certificate as though made on and as of such date, (c) certifying that
construction of the Initial Improvements is progressing without any substantial
continuing interruption in a good and workmanlike manner and in accordance with
the Construction Documents and all Applicable Laws and that Tenant has
corrected or is correcting any material defect in such construction, and (d)
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certifying that the Construction Advance then being requested would not result
in an excess of $10,000,000 or more of (1) the total cost of work for which
Potential Lien Claimants could have asserted a lien against the Leased Property
and for which Construction Advances have been advanced by Landlord, over (2)
the cost of any such work for which Tenant has failed to provide to Landlord
unconditional statutory lien releases from all Potential Lien Claimants in form
and substance reasonably satisfactory to Landlord.
(ix) Payments by Participants. None of the
Participants listed in Schedule 1 or their successors or permitted assigns
under their respective Participation Agreements shall have failed to advance to
Landlord their pro rata shares of the Construction Advance being requested.
7. Purchase Agreement and Environmental Indemnity. Tenant
acknowledges and agrees that nothing contained in this Lease shall limit,
modify or otherwise affect any of Tenant's obligations under the Purchase
Agreement or Environmental Indemnity, which obligations, to the maximum extent
possible, shall be deemed to be separate, independent and in addition to, and
not in lieu of, the obligations set forth herein. In the event of any
inconsistency between the terms and provisions of the Purchase Agreement or
Environmental Indemnity and the terms and provisions of this Lease, the terms
and provisions of the Purchase Agreement or Environmental Indemnity shall
control.
8. Use and Condition of Leased Property.
(a) Use. Subject to the Permitted Encumbrances and the
terms hereof, Tenant may use and occupy the Leased Property during the Term of
this Lease for any lawful purpose so long as no Event of Default occurs
hereunder. Landlord may withhold its consent (in its sole discretion) to any
proposed use that would violate the express terms of this Lease.
(b) Condition. Tenant accepts the Leased Property (and
will accept the same upon any purchase of the Landlord's interest therein) in
its present state, AS IS, and without any representation or warranty, express
or implied, as to the condition of such property or as to the use which may be
made thereof. Tenant also accepts the Leased Property without any
representation or warranty, express or implied, by Landlord regarding the title
thereto or the rights of any parties in possession of any part thereof, except
as set forth in subparagraph 10(a). Landlord shall not be responsible for any
latent or other defect or change of condition in the Land, Improvements,
fixtures and personal property forming a part of the Leased Property, and the
Rent hereunder shall in no case be withheld or diminished (except as otherwise
expressly provided in this Lease) on account of any defect in such property,
any change in the condition thereof or the existence with respect thereto of
any violations of Applicable Laws. Nor shall Landlord be required to furnish
to Tenant any facilities or service of any
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kind, such as, but not limited to, water, steam, heat, gas, hot water,
electricity, light or power.
(c) Waiver. The provisions of subparagraph 8(b) above
have been negotiated by the Landlord and Tenant after due consideration for the
Rent payable hereunder and are intended to be a complete exclusion and negation
of any representations or warranties of the Landlord, express or implied, with
respect to the Leased Property that may arise pursuant to any law now or
hereafter in effect, or otherwise. However, such exclusion of representations
and warranties by Landlord is not intended to impair any representations or
warranties made by other parties, including Seller, the benefit of which is to
pass to Tenant during the Term because of the definition of Personal Property
and Leased Property above.
9. Other Representations, Warranties and Covenants of Tenant.
Tenant represents, warrants and covenants as follows:
(a) Financial Matters. Tenant is solvent, is not
bankrupt and has no outstanding liens, suits, garnishments, bankruptcies or
court actions which could render Tenant insolvent or bankrupt. There has not
been filed by or, to Tenant's knowledge, against Tenant a petition in
bankruptcy or a petition or answer seeking an assignment for the benefit of
creditors, the appointment of a receiver, trustee, custodian or liquidator with
respect to Tenant or any substantial portion of Tenant's property,
reorganization, arrangement, rearrangement, composition, extension, liquidation
or dissolution or similar relief under the federal Bankruptcy Code or any state
law. The financial statements and all financial data heretofore delivered to
Landlord relating to Tenant are true, correct and complete in all material
respects. No material adverse change has occurred in the financial position of
Tenant as reflected in Tenant's financial statements covering the fiscal period
ended June 30, 1994.
(b) Raychem Contract. Except to the extent required of
Landlord under subparagraph 10(b), Tenant shall satisfy all surviving
obligations of the "BUYER" (as the term "Buyer" is used in the Raychem
Contract) relating to the Leased Property under the Raychem Contract and under
all other documents, the execution of which is required by or in connection
with the Raychem Contract. Tenant agrees to indemnify, defend and hold
Landlord harmless from and against any and all Losses of any and every kind or
character, known or unknown, fixed or contingent, imposed on or asserted
against or incurred by Landlord at any time and from time to time by reason of,
in connection with or arising out of any obligations imposed by the Raychem
Contract with respect to the Leased Property. The indemnity set out in this
subparagraph shall apply even if the subject of the indemnification is caused
by or arises out of the negligence (other than Active Negligence) of Landlord,
but not if caused by the Active Negligence, gross negligence or willful
misconduct of Landlord. Because Tenant hereby assumes and agrees to satisfy
all surviving obligations of the Buyer under the
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Raychem Contract with respect to the Leased Property, no failure by Landlord to
take any action required by the Raychem Contract with respect to the Leased
Property (save and except any actions required of Landlord under subparagraph
10(b)) shall, for the purposes of this indemnity, be deemed to be caused by the
Active Negligence, gross negligence or willful misconduct of Landlord. The
foregoing indemnity is in addition to the other indemnities set out herein and
shall not terminate upon the closing of any sale of Landlord's interest in the
Leased Property pursuant to the provisions of the Purchase Agreement or the
termination of this Lease.
(c) No Default or Violation. The execution, delivery and
performance of this Lease, the Purchase Agreement and the Environmental
Indemnity have not and will not constitute a breach or default under any other
material agreement, law or court order under which Tenant is a party or which
affects the Leased Property or Tenant's use, occupancy or operation of the
Leased Property or any part thereof and such execution, delivery and
performance will not result in the creation or imposition of (or the obligation
to create or impose) any lien, charge or encumbrance on, or security interest
in, Tenant's property pursuant to the provisions of any of the foregoing.
(d) Compliance with Covenants and Laws. Tenant is
leasing the Leased Property in conjunction with the construction of commercial
or industrial improvements that will be subject to review under local agency
ordinances regulating the design and improvement thereof. The intended use of
the Leased Property by Tenant complies, or will comply after Tenant obtains
readily available permits, in all material respects with all applicable
restrictive covenants, zoning ordinances and building codes, flood disaster
laws, applicable health, safety and environmental laws and regulations, the
Americans with Disabilities Act and any other laws pertaining to disabled
persons to the extent applicable to Tenant and the Leased Property, and all
other applicable laws, statutes, ordinances, rules, permits, regulations,
orders, determinations and court decisions (all of the foregoing are herein
sometimes collectively called "APPLICABLE LAWS"). Tenant has obtained or will
promptly obtain all utility, building, health and operating permits as may be
required for Tenant's use of the Leased Property by any governmental authority
or municipality having jurisdiction over the Leased Property.
(e) Environmental Representations. To the best of
Tenant's knowledge and except as otherwise disclosed in the Environmental
Report, as of the date hereof: (i) no Hazardous Substances are or have been
used, generated, processed, transported, removed, treated, handled,
constructed, deposited, stored, disposed, placed or held on or from the Leased
Property in a manner that could put Landlord at risk of significant liability;
(ii) no Hazardous Substances Activity has occurred prior to the date of this
Lease in a manner that could put Landlord at risk of significant liability;
(iii) neither Tenant nor any prior owner or
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operator of the Leased Property or any surrounding property has reported or
been required to report any release of any Hazardous Substances on or from the
Leased Property or the surrounding property pursuant to any Environmental Law;
(iv) neither Tenant nor any prior owner or operator of the Leased Property or
any surrounding property has received any warning, citation, notice of
violation or other communication regarding a suspected or known violation of
Environmental Laws concerning the Leased Property from any federal, state or
local agency; and (v) none of the following are located on the Leased Property:
asbestos; urea formaldehyde foam insulation; transformers or other equipment
which contain dielectric fluid containing levels of polychlorinated biphenyls
in excess of fifty (50) parts per million; or any underground storage tank or
tanks. Further, Tenant represents that to the best of its knowledge the
Environmental Report is not misleading or inaccurate in any material respect.
(f) No Suits. There are no judicial or administrative
actions, suits, proceedings or investigations pending or, to Tenant's
knowledge, threatened that might affect Tenant's intended use of the Leased
Property or the validity, enforceability or priority of this Lease, or the use,
occupancy and operation of the Leased Property or any part thereof, and Tenant
is not in default with respect to any order, writ, injunction, decree or demand
of any court or other governmental or regulatory authority that could
materially and adversely affect the business or assets of Tenant or its use,
occupancy or operation of the Leased Property. No condemnation or other like
proceedings are pending or, to Tenant's knowledge, threatened against the
Leased Property.
(g) Condition of Property. When the Initial Improvements
have been completed in accordance with the Construction Documents, adequate
provision will have been made for the Leased Property to be served by electric,
gas, storm and sanitary sewers, sanitary water supply, telephone and other
utilities required for the use thereof. All streets, alleys and easements
necessary to serve the Leased Property have been completed and are serviceable
or will be so when the Initial Improvements are complete. The Leased Property
will be, when the Initial Improvements are complete, in a condition
satisfactory for its use and occupancy. Tenant is not aware of any latent or
patent material defects or deficiencies in the Real Property that, either
individually or in the aggregate, could materially and adversely affect
Tenant's use or occupancy or could reasonably be anticipated to endanger life
or limb. Prior to the effective date hereof, Tenant has caused the Land and
the Phase I Property to be segregated into one or more separate lots on a
recorded parcel map approved by all governmental entities that are entitled by
Applicable Law to require their approval as a condition to any lawful
subdivision of the Land from the land included in the Phase I Property.
(h) Organization. Tenant is duly incorporated and
legally existing under the laws of the State of Delaware and is
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duly qualified to do business in the State of California. Tenant has all
requisite power and has procured or will promptly procure all governmental
certificates of authority, licenses, permits, qualifications and other
documentation required to lease and operate the Leased Property and to carry on
its business.
(i) Enforceability. The execution, delivery and
performance of this Lease, the Purchase Agreement and the Environmental
Indemnity are duly authorized and do not require the consent or approval of any
governmental body or other regulatory authority that has not heretofore been
obtained and are not in contravention of or conflict with any applicable law or
regulation or any term or provision of Tenant's articles of incorporation or
bylaws. This Lease, the Purchase Agreement and the Environmental Indemnity are
valid, binding and legally enforceable obligations of Tenant in accordance with
their terms, except as such enforcement is affected by bankruptcy, insolvency
and similar laws affecting the rights of creditors, generally, and legal and
equitable principles of general application.
(j) Not a Foreign Person. Tenant is not a "foreign
person" within the meaning of the Internal Revenue Code of 1986, as amended
(hereinafter called the "CODE"), Sections 1445 and 7701 (i.e. Tenant is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and regulations
promulgated thereunder).
(k) Omissions. None of Tenant's representations or
warranties contained in this Lease or any document, certificate or written
statement furnished to Landlord by or on behalf of Tenant contains any untrue
statement of a material fact or omits a material fact necessary in order to
make the statements contained herein or therein (when taken in their
entireties) not misleading.
(l) Existence. Tenant shall continuously maintain its
existence and its qualification to do business in the State of California.
Tenant will not make any significant change in the nature of the business of
Tenant and it subsidiaries, taken as a whole, as presently conducted.
(m) Tenant Taxes. Tenant shall promptly pay all income,
franchise and other taxes owing by Tenant; except that Tenant may in good
faith, by appropriate proceedings, contest the validity, applicability or
amount of any such tax and pending such contest Tenant shall not be deemed in
default under this subparagraph if Tenant diligently prosecutes such contest to
completion in an appropriate manner, and if Tenant promptly causes to be paid
any amount adjudged by a court of competent jurisdiction to be due, with all
costs, penalties, and interest thereon, promptly after such judgment becomes
final; provided, however, that in any event such contest shall be concluded and
the tax, penalties, interest and costs shall be paid prior to the date any
liability may be asserted against Landlord or any action may be taken against
the Leased Property.
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(n) Operation of Property. Tenant shall operate the
Leased Property in a good and workmanlike manner and in accordance with all
Applicable Laws and will pay all fees or charges of any kind in connection
therewith. Tenant shall not use or occupy, or allow the use or occupancy of,
the Leased Property in any manner which violates any Applicable Law or which
constitutes a public or private nuisance or which makes void, voidable or
cancelable any insurance then in force with respect thereto. To the extent
that any of the following would, individually or in the aggregate, materially
and adversely affect the value of the Leased Property or Tenant's use,
occupancy or operations on the Leased Property, Tenant shall not: (i) initiate
or permit any zoning reclassification of the Leased Property; (ii) seek any
variance under existing zoning ordinances applicable to the Leased Property;
(iii) use or permit the use of the Leased Property in a manner that would
result in such use becoming a nonconforming use under applicable zoning
ordinances or similar laws, rules or regulations; (iv) execute or file any
subdivision plat affecting the Leased Property; or (v) consent to the
annexation of the Leased Property to any municipality. If a change in the
zoning or other Applicable Laws affecting the permitted use or development of
the Leased Property shall occur that Landlord determines will materially reduce
the then-current market value of the Leased Property, and if after such
reduction the Stipulated Loss Value shall substantially exceed the then-current
market value of the Leased Property in the reasonable judgment of Landlord,
then Tenant shall pay Landlord upon request an amount equal to such excess for
application as a Qualified Payment. Tenant shall not impose any restrictive
covenants or encumbrances upon the Leased Property without the prior written
consent of the Landlord; provided, that such consent shall not be unreasonably
withheld for any encumbrance or restriction that is made expressly subject to
this Lease, as modified from time to time, and subordinate to Landlord's
interest in the Leased Property. Tenant shall not cause or permit any drilling
or exploration for, or extraction, removal or production of, minerals from the
surface or subsurface of the Leased Property. Tenant shall not do any act
whereby the market value of the Leased Property may be materially lessened.
Tenant shall allow Landlord or its authorized representative to enter the
Leased Property at any reasonable time and after reasonable notice to inspect
the Leased Property and, after reasonable notice, to inspect Tenant's books and
records pertaining thereto, and Tenant shall assist Landlord or Landlord's
representative in whatever way reasonably necessary to make such inspections.
If Tenant receives a notice or claim from any federal, state or other
governmental entity that the Leased Property is not in compliance with any
Applicable Law, Tenant shall promptly furnish a copy of such notice or claim
to Landlord. Notwithstanding the foregoing, Tenant may in good faith, by
appropriate proceedings, contest the validity and applicability of any
Applicable Law with respect to the Leased Property, and pending such contest
Tenant shall not be deemed in default hereunder because of violation of such
Applicable Law, if Tenant diligently prosecutes such contest to completion in a
manner reasonably satisfactory to Landlord, and if Tenant promptly causes
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the Leased Property to comply with any such Applicable Law upon a final
determination by a court of competent jurisdiction that the same is valid and
applicable to the Leased Property; provided, that in any event such contest
shall be concluded and the violation of such Applicable Law must be corrected
and any claims asserted against Landlord or the Leased Property because of such
violation must be paid by Tenant, all prior to the date that (i) any criminal
charges may be brought against Landlord or any of its directors, officers or
employees because of such violation or (ii) any action may be taken by any
governmental authority against Landlord or any property owned by Landlord
(including the Leased Property) because of such violation.
(o) Debts for Construction. Tenant shall cause all debts
and liabilities incurred in the construction, maintenance, operation and
development of the Leased Property, including without limitation all debts and
liabilities for labor, material and equipment and all debts and charges for
utilities servicing the Leased Property, to be promptly paid. Notwithstanding
the foregoing, Tenant may in good faith, by appropriate proceedings, contest
the validity, applicability or amount of any asserted mechanic's or
materialmen's lien and pending such contest Tenant shall not be deemed in
default hereunder if Tenant diligently prosecutes such contest to completion in
a manner reasonably satisfactory to Landlord, and if Tenant promptly causes to
be paid any amount adjudged by a court of competent jurisdiction to be due,
with all costs and interest thereon, promptly after such judgment becomes
final; provided, however, that in any event each such contest shall be
concluded and the lien, interest and costs shall be paid, bonded around or
otherwise removed in a manner reasonably acceptable to Landlord prior to the
date any writ or order is issued under which the Leased Property may be sold.
(p) Impositions. Tenant shall reimburse Landlord for
(or, if requested by Landlord, will pay or cause to be paid prior to
delinquency) all sales, excise, ad valorem, gross receipts, business, transfer,
stamp, occupancy, rental and other taxes, levies, fees, charges, surcharges,
assessments or penalties which arise out of or are attributable to this Lease
or which are imposed upon Landlord or the Leased Property because of the
ownership, leasing, occupancy, sale or operation of the Leased Property, or any
part thereof, or relating to or required to be paid by the terms of any of the
Permitted Encumbrances (collectively, herein called the "IMPOSITIONS"),
excluding only Excluded Taxes. If Landlord requires Tenant to pay any
Impositions directly to the applicable taxing authority or other party entitled
to collect the same, Tenant shall furnish Landlord with receipts showing
payment of such Impositions and other amounts at least ten (10) days prior to
the applicable default date therefor; except that Tenant may in good faith, by
appropriate proceedings, contest the validity, applicability or amount of any
asserted Imposition, and pending such contest Tenant shall not be deemed in
default hereunder if Tenant diligently prosecutes such contest to completion in
a manner reasonably satisfactory to Landlord, and if Tenant promptly causes
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to be paid any amount adjudged by a court of competent jurisdiction to be due,
with all costs, penalties and interest thereon, promptly after such judgment
becomes final; provided, however, that in any event each such contest shall be
concluded and the Impositions, penalties, interest and costs shall be paid
prior to the date (i) any criminal action may be instituted against Landlord or
its directors, officers or employees because of the nonpayment thereof or (ii)
any writ or order is issued under which any property owned by Landlord
(including the Leased Property) may be seized or sold or any other action may
be taken against Landlord or any property owned by Landlord because of the
nonpayment thereof. As used herein, "IMPOSITIONS" shall include real estate
taxes (other than Excluded Taxes) imposed because of a change of use or
ownership of the Leased Property, including, to the extent attributable to the
term of this Lease or any prior period, any such real estate taxes imposed
because of a change in use or ownership after the term of this Lease expires or
is terminated. Tenant's liability for real estate taxes (other than Excluded
Taxes) imposed because of a change in use or ownership of the Leased Property
shall survive the termination or expiration of this Lease.
(q) Repair, Maintenance, Alterations and Additions.
Tenant shall keep the Improvements on the Leased Property in good order,
repair, operating condition and appearance (ordinary wear and tear excepted),
causing all necessary repairs, renewals, replacements, additions and
improvements to be promptly made, and will not allow any of the Leased Property
to be materially misused, abused or wasted or to deteriorate. Tenant will
promptly replace any worn-out fixtures covered by this Lease with fixtures
comparable to the replaced fixtures when new. Notwithstanding the foregoing,
Tenant will not, without the prior written consent of Landlord, (i) remove from
the Leased Property any fixtures of significant value covered by this Lease
except such as are replaced by Tenant by articles of equal suitability and
value, free and clear of any lien or security interest or (ii) make any
structural alteration to any Improvements, once constructed, or any
alterations thereto which reduce the fair market value or which change the
general character of the Leased Property or which impair in any significant
manner the useful life or utility of any Improvements. Upon request of
Landlord made at any time, but not more often than once per calendar year
unless an Event of Default shall have occurred and be continuing, Tenant shall
deliver to Landlord an inventory describing and showing the make, model, serial
number and location of all fixtures and personalty, if any, included in the
Initial Improvements with a certification by Tenant that such inventory is a
true and complete schedule of all such fixtures and personalty and that all
items specified in the inventory are covered hereby free and clear of any lien
or security interest other than the Permitted Encumbrances described in Exhibit
B.
(r) Insurance and Casualty. Tenant shall procure and
maintain insurance against loss or damage to the Leased Property by fire,
explosion, windstorm, hail, tornado and such other hazards as
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may be customarily insured against by owners of comparable properties or
otherwise reasonably required by Landlord by policies of fire, extended
coverage and other insurance in such company or companies, in such amounts,
upon such terms and provisions, and with such endorsements, all as may be
reasonably required by Landlord. Without limiting the foregoing, Landlord may
reasonably require that Tenant keep the Initial Improvements insured against
damage by earthquake at any time after the Initial Period, and Landlord may
reasonably require through the entire Term that Tenant keep any Improvements
insured under an all-risk property insurance policy (not excluding from
coverage perils normally included within the definitions of extended coverage,
vandalism and malicious mischief) in the amount of one hundred percent (100%)
of the replacement value with endorsements for contingent liability from
operation of building laws, increased cost of construction and demolition costs
which may be necessary to comply with building laws. Such coverage will be on
an agreed value basis to eliminate the effects of coinsurance. Tenant shall
deliver to Landlord certificates evidencing such insurance and any additional
insurance which shall be taken out upon any part of the Leased Property and
certificates evidencing renewals of all such policies of insurance at least
fifteen (15) days before any such insurance shall expire. Tenant further
agrees that all such policies shall provide that proceeds thereunder will be
payable to Landlord as Landlord's interest may appear. In the event any of
the Leased Property is destroyed or damaged by fire, explosion, windstorm, hail
or by any other casualty against which insurance shall have been required
hereunder, (i) Landlord may, but shall not be obligated to, make proof of loss
if not made promptly by Tenant, (ii) each insurance company concerned is hereby
authorized and directed to make payment for such loss directly to Landlord as
its interests may appear, (iii) Landlord shall apply the insurance proceeds as
provided in Paragraph 4 above; and (iv) Landlord may settle, adjust or
compromise any and all claims for loss, damage or destruction under any policy
or policies of insurance (provided, that if any such claim is for less than
$500,000 and no Event of Default shall have occurred and be continuing, Tenant
shall have the right to settle, adjust or compromise the claim as Tenant deems
appropriate; and, provided further, that so long as no Event of Default shall
have occurred and be continuing, Landlord must provide Tenant with at least
ninety (90) days notice of Landlord's intention to settle any such claim before
settling it unless Tenant shall already have approved of the settlement by
Landlord). If any act or occurrence of any kind or nature (including any
casualty on which insurance was not obtained or obtainable) shall result in
damage to or loss or destruction of the Leased Property, Tenant shall give
immediate notice thereof to Landlord and Paragraph 4 shall apply.
(s) Condemnation. Immediately upon obtaining knowledge
of the institution of any proceedings for the condemnation of the Leased
Property or any portion thereof, or any other similar proceedings arising out
of injury or damage to the Leased Property or any portion thereof, Tenant shall
notify Landlord of the pendency of such proceedings. Tenant shall, at its
expense,
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diligently prosecute any such proceedings and shall consult with Landlord, its
attorneys and experts and cooperate with them in the carrying on or defense of
any such proceedings. All proceeds of condemnation awards or proceeds of sale
in lieu of condemnation with respect to the Leased Property and all judgments,
decrees and awards for injury or damage to the Leased Property shall be paid to
Landlord and applied as provided in Paragraph 4 above. Landlord is hereby
authorized, in the name of Tenant, to execute and deliver valid acquittances
for, and to appeal from, any such judgment, decree or award concerning
condemnation of any of the Leased Property. Landlord shall not be, in any
event or circumstances, liable or responsible for failure to collect, or to
exercise diligence in the collection of, any such proceeds, judgments, decrees
or awards.
(t) Protection and Defense of Title. If any encumbrance
or title defect whatsoever affecting Landlord's fee interest in the Leased
Property is claimed or discovered (other than Permitted Encumbrances, this
Lease and any other encumbrance which is lawfully claimed by, through or under
Landlord and which is not claimed by, through or under Tenant) or if any legal
proceedings are instituted with respect to title to the Leased Property, Tenant
shall give prompt written notice thereof to Landlord and at Tenant's own cost
and expense will promptly remove any such encumbrance and cure any such defect
(or bond over it to the satisfaction of Landlord) and will take all necessary
and proper steps for the defense of any such legal proceedings, including but
not limited to the employment of counsel, the prosecution or defense of
litigation and the release or discharge of all adverse claims. If Tenant fails
to promptly remove any encumbrance or title defect, Landlord (whether or not
named as a party to legal proceedings with respect thereto) shall be entitled
to take such additional steps as in its judgment may be necessary or proper to
remove such encumbrance or cure such defect or for the defense of any such
attack or legal proceedings or the protection of Landlord's fee interest in the
Leased Property, including but not limited to the employment of counsel, the
prosecution or defense of litigation, the compromise or discharge of any
adverse claims made with respect to the Leased Property, the purchase of any
tax lien and the removal of prior liens or security interests, and all expenses
(including Attorneys' Fees) so incurred of every kind and character shall be a
demand obligation owing by Tenant.
(u) No Other Liens. Tenant shall not, without the prior
written consent of Landlord (which consent will not be unreasonably withheld
for liens that are made expressly subject to this Lease, as modified from time
to time, and subordinate to Landlord's interest in the Leased Property),
create, place or permit to be created or placed, or through any act or failure
to act, acquiesce in the placing of, or allow to remain, any deed of trust,
mortgage, voluntary or involuntary lien, whether statutory, constitutional or
contractual (except for the lien for ad valorem taxes on the Leased Property
which are not delinquent), security interest, encumbrance or charge, or
conditional sale or other title retention document,
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against or covering the Leased Property or any part thereof (other than the
Permitted Encumbrances, this Lease, and any other lien or other encumbrance
which is lawfully claimed by, through or under Landlord and which is not
claimed by, through or under Tenant) regardless of whether the same are
expressly or otherwise subordinate to this Lease or Landlord's interest in the
Leased Property, and should any of the foregoing exist or become attached
hereafter in any manner to any part of the Leased Property without the prior
written consent of Landlord, Tenant shall cause the same to be promptly
discharged and released or bonded over to the satisfaction of Landlord.
(v) Books and Records. Tenant shall keep accurate books
and records in which full, true and correct entries shall be promptly made as
to all operations affecting the Leased Property and will permit all such books
and records (including without limitation all contracts, statements, invoices,
bills and claims for labor, materials and services supplied for the
construction and operation of any Improvements) to be inspected and copied by
Landlord and its duly accredited representatives at all times during reasonable
business hours after five (5) days advance notice. This subparagraph shall not
be construed as requiring Tenant to regularly maintain separate books and
records relating exclusively to the Leased Property; provided, however, that
upon request, Tenant shall construct or abstract from its regularly maintained
books and records information required by this subparagraph relating to the
Leased Property.
(w) Financial Statements; Certificates as to Default.
Tenant shall deliver to Landlord and to each Participant of which Landlord has
been notified:
(i) as soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of
Tenant, the unaudited consolidated balance sheet of Tenant and its
Subsidiaries as of the end of such quarter and consolidated unaudited
statements of income, stockholders' equity and cash flow of Tenant and
its Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, setting forth in
comparative form figures for the corresponding period in the preceding
fiscal year, in the case of such statements of income, stockholders'
equity and cash flow, and figures for the preceding fiscal year in the
case of such balance sheet, all in reasonable detail, in accordance
with generally accepted accounting principles consistently applied,
and certified in a manner acceptable to Landlord by a Responsible
Financial Officer of Tenant (subject to normal year-end adjustments);
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year of Tenant, the consolidated balance sheet of
Tenant and its Subsidiaries as of the end of such fiscal year and
consolidated statements of income,
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stockholders' equity and cash flow of Tenant and its Subsidiaries for
the period commencing at the end of the previous fiscal year and
ending with the end of such fiscal year, setting forth in comparative
form figures for the preceding fiscal year, all in reasonable detail,
in accordance with generally accepted accounting principles
consistently applied, and certified in a manner acceptable to Landlord
by independent public accountants of recognized national standing
reasonably acceptable to Landlord;
(iii) together with the financial statements furnished in accordance
with subdivision (i) and (ii) of this subparagraph (w), a certificate
of a Responsible Financial Officer of Tenant (a) representing and
warranting that no Event of Default or Default has occurred and is
continuing (or, if an Event of Default or Default has occurred,
stating the nature thereof and the action which Tenant proposes to
take with respect thereto), (b) setting forth a schedule containing
the information and calculations contained in the form of certificate
attached hereto as Exhibit F, and (c) stating that the representations
and warranties contained herein are true and correct on and as of the
date of such certificate as though made on and as of such date;
(iv) as soon as possible and in any event within five days after
the occurrence of each Default or Event of Default, a statement of a
Responsible Financial Officer of Tenant setting forth details of such
Default or Event of Default and the action which Tenant has taken and
proposes to take with respect thereto;
(v) promptly after the sending or filing thereof, copies of all
such financial statements, proxy statements, notices and reports which
Tenant or any Subsidiary sends to its public stockholders, and copies
of all reports and registration statements (without exhibits) which
Tenant or any Subsidiary files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission) or any national
securities exchange;
(vi) as soon as practicable and in any event (a) within 30 days
after Tenant or any ERISA Affiliate knows or has reason to know that
any ERISA Termination Event described in clause (i) of the definition
of ERISA Termination Event with respect to any Plan has occurred and
(b) within 10 days after Tenant or any ERISA Affiliate knows or has
reason to know that any other ERISA Termination Event with respect to
any Plan has occurred, a statement of a Responsible Financial Officer
of Tenant describing such ERISA Termination Event and the action, if
any, which Tenant or such ERISA Affiliate proposes to take with
respect thereto;
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(vii) promptly upon receipt thereof, a copy of each other summary
report in its final form submitted to Tenant or any Subsidiary for
delivery to, or which is actually delivered to, any member of the
Board of Directors of Tenant by independent accountants in connection
with any annual, interim or special audit made by them of the books of
Tenant or any Subsidiary; and
(viii) such other information respecting the condition or operations,
financial or otherwise, of Tenant or any of its Subsidiaries as any
Landlord or any Participant through Landlord may from time to time
reasonably request.
Landlord is hereby authorized to deliver a copy of any information or
certificate delivered to it pursuant to this subparagraph 9(w) to any
Participant and to any regulatory body having jurisdiction over Landlord that
requires or requests it.
(x) Further Assurances. Tenant shall, on request of
Landlord, (i) promptly correct any defect, error or omission which may be
discovered in the contents of this Lease or in any other instrument executed in
connection herewith or in the execution or acknowledgment thereof (provided
that such corrections do not materially alter the terms of this Lease); (ii)
execute, acknowledge, deliver and record or file such further instruments and
do such further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Lease and to subject to this Lease any
property intended by the terms hereof to be covered hereby including
specifically, but without limitation, any renewals, additions, substitutions,
replacements or appurtenances to the Leased Property; (iii) execute,
acknowledge, deliver, procure and record or file any document or instrument
deemed advisable by Landlord to protect its rights in and to the Leased
Property against the rights or interests of third persons; and (iv) provide
such certificates, documents, reports, information, affidavits and other
instruments and do such further acts as may be necessary, desirable or proper
in the reasonable determination of Landlord to enable Landlord, Landlord's
Lender and the Participants to comply with the requirements or requests of any
agency having jurisdiction over them.
(y) Fees and Expenses; General Indemnification; Increased
Costs; and Capital Adequacy Charges.
(1) Except for any costs paid by Landlord with funds
withheld from the Closing Costs advanced to Tenant, Tenant shall pay all costs
and expenses of every character incurred by Tenant, Landlord, Landlord's Lender
or any Participant in connection with or because of (1) the ownership of any
interest in or operation of the Leased Property, (2) the negotiation or
administration of this Lease, the Purchase Agreement, the Environmental
Indemnity or the Participation Agreements between Landlord and the Participants
listed in Schedule 1, (3) the making of Funding Advances, including Attorneys'
Fees or other costs incurred to evaluate lien releases
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submitted by Tenant with requests for Construction Advances, or (4) the
construction of the Initial Improvements, whether incurred at the time of
execution of this Lease or at any time during the Term. Such costs and
expenses may include, without limitation, all appraisal fees, filing and
recording fees, inspection fees, survey fees, taxes, brokerage fees and
commissions, abstract fees, title policy fees, Uniform Commercial Code search
fees, escrow fees, Attorneys' Fees and environmental consulting fees incurred
by Landlord with respect to the Leased Property. If Landlord pays or
reimburses Landlord's Lender for any such expenses, Tenant shall reimburse
Landlord for the same notwithstanding that Landlord may have already received
any payment from any Participant on account of such expenses. Tenant shall be
entitled to pay any of the foregoing expenses for which Tenant is responsible
out of Construction Advances, subject to all of the conditions to Construction
Advances set forth in Paragraph 6 hereof.
(2) Tenant shall also pay all expenses and reimburse
Landlord and Landlord's Lender for any expenditures, including Attorneys' Fees,
incurred or expended in connection with (i) the breach by Tenant of any
covenant herein or in any other instrument executed in connection herewith or
(ii) Landlord's exercise of any of Landlord's rights and remedies hereunder and
Landlord's protection of the Leased Property and Landlord's interest therein.
Tenant shall indemnify and hold harmless Landlord and all other Indemnified
Parties against, and reimburse them for, all Losses which may be imposed upon,
asserted against or incurred or paid by them by reason of, on account of or in
connection with any bodily injury or death or property damage occurring in or
upon or in the vicinity of the Leased Property through any cause whatsoever;
provided, although such indemnity shall apply even when the applicable injury,
death or property damage results in whole or in part from the negligence (other
than Active Negligence) of the Indemnified Party, such indemnity shall not
apply to any party when the applicable injury, death or property damage results
from such party's Active Negligence, gross negligence or wilful misconduct.
The foregoing indemnities shall not terminate upon termination of this Lease
with respect to any circumstance or event existing or occurring prior to such
termination, but will survive termination of this Lease.
(3) If, after the date hereof, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to Landlord's Lender or any Participant of agreeing to
make or making, funding or maintaining advances to Landlord in connection with
the Leased Property, then Tenant shall from time to time, upon demand by
Landlord pay to Landlord for the account of Landlord's Lender or such
Participant, as the case may be, additional amounts sufficient to compensate
Landlord's Lender
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or the Participant for such increased cost. A certificate as to the amount of
such increased cost, submitted to Landlord and Tenant by Landlord's Lender or
the Participant, shall be conclusive and binding for all purposes, absent
manifest error.
(4) If Landlord's Lender or any Participant determines
that any law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects
the amount of capital to be maintained by it and that the amount of such
capital is increased by or based upon the existence of advances made or to be
made to Landlord to permit Landlord to maintain Landlord's investment in the
Leased Property or to make Construction Advances, then to the extent that
Landlord's Lender or the Participant reasonably determines that the increase in
required capital is allocable to such advances, Landlord may be required to pay
additional amounts (herein called "CAPITAL ADEQUACY CHARGES") to Landlord's
Lender or the Participant, as the case may be, as Landlord's Lender or the
Participant may specify as sufficient to compensate it in light of such
circumstances.
(5) Any amount to be paid under this subparagraph by Tenant
shall be a demand obligation owing by Tenant.
(z) Liability Insurance. Tenant shall maintain commercial
general liability insurance against claims for bodily injury or death and
property damage occurring in or upon or resulting from the Leased Property, in
standard form and with an insurance company or companies rated by the A.M. Best
Company of Oldwick, New Jersey as having a policyholder's rating of A or better
and a reported financial information rating of XIII or better, such insurance
to afford immediate protection, to the limit of not less than $10,000,000
combined single limit for bodily injury and property damage in respect of any
one accident or occurrence, with not more than $500,000 self-insured
retention. Such commercial general liability insurance shall include blanket
contractual liability coverage which insures contractual liability under the
indemnifications set forth in this Lease (other than the indemnifications set
forth in Paragraph 12 concerning environmental matters), but such coverage or
the amount thereof shall in no way limit such indemnifications. The policy
evidencing such insurance shall name as additional insureds Landlord and all
Participants of which Tenant has been notified and which have requested to be
named as additional insureds (including all of the Participants listed in
Schedule 1). Tenant shall maintain with respect to each policy or agreement
evidencing such commercial general liability insurance such endorsements as may
be reasonably required by Landlord and shall at all times deliver and maintain
with Landlord a certificate with respect to such insurance in form reasonably
satisfactory to Landlord. Not less than fifteen (15) days prior to the
expiration date of each policy of insurance required of Tenant pursuant to this
subparagraph, Tenant shall deliver to Landlord a certificate evidencing a paid
renewal policy or policies.
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(aa) Permitted Encumbrances. Except to the extent expressly
required of Landlord by subparagraph 10(b), Tenant shall comply with and will
cause to be performed all of the covenants, agreements and obligations imposed
upon the owner of the Leased Property in the Permitted Encumbrances in
accordance with their respective terms and provisions. Without limiting the
foregoing, Tenant shall, unless Landlord's interest in the Leased Property is
sold pursuant to the Purchase Agreement, prior to the expiration or termination
of this Lease: (1) satisfy all obligations imposed upon Tenant or the owner of
the Leased Property (as "Developer") by the Development Agreement described in
Paragraph xiii of Exhibit B, including without limitation any monetary
obligations set forth therein which can only be satisfied by prepaying sums
that will not be due by the terms of the Development Agreement until after the
expiration or termination of this Lease; and (2) upon satisfaction of such
obligations, Tenant shall cause Tenant's rights under the Development Agreement
to be assigned to Landlord and shall obtain any consents required for such
assignment. Notwithstanding clause (1) of the preceding sentence, even if
Landlord's interest in the Leased Property is not sold pursuant to the Purchase
Agreement, Tenant shall not be required to prepay those obligations of the
Developer which do not become due until after the Term of this Lease and which
are set out in Sections 3.5 (a), (b), (c) and (d) of the Development Agreement
and in Section 1 (Below Market Rate Housing Fees) of Exhibit E of the
Development Agreement. Tenant shall not modify or permit any modification of
any Permitted Encumbrance without the prior written consent of Landlord. Such
consent will not be unreasonably withheld for the modification of any
encumbrance that has been made expressly subject to this Lease, as modified
from time to time, and subordinate to Landlord's interest in the Leased
Property.
(ab) Environmental Covenants. Tenant shall not cause or
permit the Leased Property to be in violation of, or do anything or permit
anything to be done which will subject the Leased Property to any remedial
obligations under, any Environmental Laws, including without limitation CERCLA
and RCRA, assuming disclosure to the applicable governmental authorities of all
relevant facts, conditions and circumstances pertaining to the Leased Property,
and Tenant shall promptly notify Landlord in writing of any existing, pending
or, to the knowledge of Tenant, threatened investigation or inquiry by any
governmental authority in connection with any Environmental Laws. Tenant shall
not conduct or permit Hazardous Substance Activities, except Permitted
Hazardous Substance Use. Tenant shall keep the Leased Property free of all
Hazardous Substances (other than Permitted Hazardous Substances) and will
remove the same (or if removal is prohibited by law, will take whatever action
is required by law) promptly upon discovery at Tenant's sole expense. Other
than storm water runoff, Tenant shall not allow anything (including Permitted
Hazardous Substances) to be discharged from the Leased Property into
groundwater or surface water (including, without limitation, San Francisco Bay)
that would require any permit under applicable Environmental Laws. In the
event Tenant fails to comply with or perform any of the foregoing
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obligations concerning Hazardous Substance Activities and Hazardous Substances,
Landlord may, in addition to any other remedies available to it, following
reasonable consultation with Tenant concerning remediation efforts Landlord
believes to be required in order to comply with Environmental Laws, cause the
Leased Property to be freed from all Hazardous Substances (or if removal is
prohibited by law, may take whatever action is required by law) and take such
other action as is necessary to cause the foregoing obligations to be met, and
the cost of the removal and any such other action shall be a demand obligation
owing by Tenant to Landlord. For such removal and other action, Tenant grants
to Landlord and Landlord's agents and employees access to the Leased Property
and the license to remove Hazardous Substances (or if removal is prohibited by
law or otherwise deemed inadvisable by Landlord, to take whatever action is
required by law or otherwise deemed advisable by Landlord) and take such other
action as is necessary to cause the foregoing obligations to be met and,
subject to the provisions of subparagraph 12(c) below, Tenant agrees to
indemnify Landlord against all Losses incurred by or asserted or proven against
Landlord in connection therewith. Tenant agrees to submit from time to time,
if requested by Landlord, a certificate of an officer of Tenant, certifying
that, except for Permitted Hazardous Substance Use, the Leased Property is not
being used for, nor to Tenant's knowledge (except as may be described in the
Environmental Report) has the Leased Property been used in the past for, any
Hazardous Substances Activities or the discharge of anything into groundwater
or surface water (including, without limitation, San Francisco Bay) that would
require any permits under applicable Environmental Laws. Landlord reserves the
right to retain an independent professional consultant to review any report
prepared by Tenant or to conduct Landlord's own investigation to confirm
whether Hazardous Substances Activities or the discharge of anything into
groundwater or surface water has occurred, but Landlord's right to
reimbursement for the fees of such consultant shall be limited to the following
circumstances: (1) an Event of Default shall have occurred; (2) Landlord shall
have retained the consultant to establish the condition of the Leased Property
just prior to any conveyance thereof pursuant to the Purchase Agreement or just
prior to the expiration of this Lease; (3) Landlord shall have retained the
consultant to satisfy any regulatory requirements applicable to Landlord or
Landlord's Lender; or (4) Landlord shall have retained the consultant because
Landlord has been notified of a violation of Environmental Laws concerning the
Leased Property or Landlord otherwise reasonably believes that Tenant has not
complied with this subparagraph. Tenant grants to Landlord and to Landlord's
agents, employees, consultants and contractors the right during reasonable
business hours and after reasonable notice to enter upon the Leased Property to
inspect the Leased Property and to perform such tests as are reasonably
necessary or appropriate to conduct a review or investigation of Hazardous
Substances on, or discharge into groundwater or surface water from, the Leased
Property. Without limiting the generality of the foregoing, Tenant agrees that
Landlord will have the same right, power and authority to enter and inspect the
Leased Property as is granted to a secured
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lender under Section 2929.5 of the California Civil Code. Tenant shall promptly
reimburse Landlord for the cost of any such inspections and tests, but only
when the inspections and tests are (1) ordered by Landlord after an Event of
Default; (2) ordered by Landlord to establish the condition of the Leased
Property just prior to any conveyance thereof pursuant to the Purchase
Agreement or just prior to the expiration of this Lease; (3) ordered by
Landlord to satisfy any regulatory requirements applicable to Landlord or
Landlord's Lender; or (4) ordered because Landlord has been notified of a
violation of Environmental Laws concerning the Leased Property or Landlord
otherwise reasonably believes that Tenant has not complied with this
subparagraph. Tenant shall immediately advise Landlord of (i) any discovery of
any event or circumstance which would render any of the representations
contained in subparagraph 9(e) inaccurate in any material respect if made at
the time of such discovery, (ii) any remedial action taken by Tenant in
response to any (A) discovery of any Hazardous Substances other than Permitted
Hazardous Substances on, under or about the Leased Property or (B) any claim
for damages resulting from Hazardous Substance Activities (herein called
"HAZARDOUS SUBSTANCE CLAIMS"), and (iii) Tenant's discovery of any occurrence
or condition on any real property adjoining or in the vicinity of the Leased
Property which could cause the Leased Property or any part thereof to be
subject to any ownership, occupancy, transferability or use restrictions under
Environmental Laws or that could give rise to Hazardous Substance Claims. In
such event, Tenant shall deliver to Landlord within thirty (30) days after
Landlord's request, a preliminary written environmental plan setting forth a
general description of the action that Tenant proposes to take with respect
thereto to bring the Leased Property into compliance with Environmental Laws
(herein called a "CLEAN UP"), including, without limitation, any proposed
corrective work, the estimated cost and time of completion, the name of the
contractor and a copy of the construction contract, if any, and such additional
data, instruments, documents, agreements or other materials or information as
Landlord may reasonably request. Tenant shall thereafter diligently and
continuously pursue the Clean Up of the Leased Property in strict compliance
with all Environmental Laws and shall inform Landlord monthly as to the status
of the Clean Up.
(ac) Right of Landlord to Perform. If Tenant fails to perform
any act or to take any action which hereunder Tenant is required to perform or
take, or to pay any money which hereunder Tenant is required to pay, and if
such failure or action constitutes an Event of Default or renders Landlord or
any director, officer, employee or affiliate of Landlord at risk of criminal
prosecution or renders Landlord's interest in the Leased Property or any part
thereof at risk of forfeiture by forced sale or otherwise, then in addition to
any other remedies specified herein or otherwise available, Landlord may, in
Tenant's name or in Landlord's own name, perform or cause to be performed such
act or take such action or pay such money, but Landlord shall not be obligated
to do so. Any expenses so incurred by Landlord, and any
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money so paid by Landlord, shall be a demand obligation owing by Tenant to
Landlord. Further, Landlord, upon making such payment, shall be subrogated to
all of the rights of the person, corporation or body politic receiving such
payment.
(ad) Funds Held As Security. No later than the commencement
of the Final Period, Tenant shall deposit with Landlord a sum equal to one half
(1/2) of Stipulated Loss Value (the "SECURITY DEPOSIT"). Landlord shall be
entitled to hold the Security Deposit and any funds held by Landlord from time
to time as Escrowed Proceeds as security for the full and faithful performance
by Tenant of Tenant's covenants and obligations under this Lease and under the
Purchase Agreement. Like the Escrowed Proceeds, the Security Deposit shall be
held by Landlord in an interest bearing account and all interest earned on the
Security Deposit shall be added to and made a part of the Security Deposit.
Neither the Security Deposit nor any Escrowed Proceeds shall be considered an
advance payment of Base Rent or Additional Rent or a measure of Landlord's
damages should an Event of Default occur. If an Event of Default does occur
under this Lease, Landlord may, from time to time, without prejudice to any
other remedy and without notice to Tenant, apply the Security Deposit and any
Escrowed Proceeds as a Qualified Payment. Alternatively, Landlord may apply the
Security Deposit to make good any arrearage in Base Rent or Additional Rent as
to which Tenant is in default hereunder. Following any application of the
Security Deposit by Landlord as a Qualified Payment or to make good any
arrearage in Rent, Tenant must pay Landlord on demand the amount so applied in
order to restore the Security Deposit to no less than one half (1/2) of the
then Stipulated Loss Value. Upon termination of this Lease, if no Event of
Default shall then exist, any remaining balance of the Security Deposit shall
be applied to satisfy any payment due Landlord hereunder or under the Purchase
Agreement. Tenant shall have no right to assign or encumber any interest it
may have in the moneys deposited hereunder as security; Landlord and its
successors and assigns shall not be bound by any such actual or attempted
assignment or encumbrance. If Landlord assigns its interest in the Leased
Property during the Term, Landlord may also assign the Security Deposit to the
assignee and thereafter Landlord will have no liability for the return of the
Security Deposit, it being agreed that Tenant shall look solely to the new
landlord for the return of the Security Deposit. Regardless of any assignment
of this Lease by Tenant, Landlord may return the Security Deposit and any
Escrowed Proceeds to the original Tenant unless Landlord receives evidence
satisfactory to it of an assignment by the original Tenant of the right to
receive the Security Deposit and the Escrowed Proceeds.
(ae) Compliance with Financial Covenants and Certain Other
Requirements Established by the Revolving Credit Agreement. So long as Tenant
shall continue to have any obligations under this Lease or the Purchase
Agreement, Tenant shall comply with each and every requirement set forth in the
following provisions of the $150,000,000 Credit Agreement dated as of June 1,
1994, by and
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among Tenant, as Borrower, Citicorp USA, Inc., as Agent, and various lenders,
including Banque Nationale de Paris, as amended by First Amendment to Credit
Agreement dated as of August 5, 1994 (the "REVOLVING CREDIT AGREEMENT"):
(i) Section 5.01(h) of the Revolving Credit Agreement,
which concerns the ratio of Tenant's consolidated debt to its
consolidated tangible net worth;
(ii) Section 5.01(i) of the Revolving Credit Agreement,
which concerns fixed charge ratios; and
(iii) Section 5.02 of the Revolving Credit Agreement,
including all subsections thereof, which concerns limitations
applicable to Tenant as to liens, mergers and consolidations, change
in business, maximum permitted debt and other matters.
To the extent that any of the requirements set forth in other provisions of
this Lease, in the Environmental Indemnity or in the Purchase Agreement are
more stringent than the requirements set forth in the Revolving Credit
Agreement (for example, more stringent requirements concerning Tenant's use of
the Leased Property itself in compliance with Environmental Laws), the more
stringent requirements set forth herein or in the Environmental Indemnity or in
the Purchase Agreement shall control. Further, for purposes of determining
Tenant's compliance with requirements established in this Lease by reference to
the Revolving Credit Agreement, and for purposes of establishing the meaning of
capitalized terms defined herein by reference to the Revolving Credit
Agreement, such requirements and definitions shall be construed as if (1) the
Revolving Credit Agreement were continuing after any expiration or termination
thereof, (2) no modifications or waivers of the Revolving Credit Agreement were
made or granted after the date of this Lease, and (3) no consents or approvals
were given for anything requiring a consent or approval by the terms of the
Revolving Credit Agreement, other than such consents or approvals as Landlord
shall have itself approved in writing. Further, though one or more Affiliates
of Landlord may grant or be bound by modifications, waivers, approvals or
consents as a lender under the Revolving Credit Agreement or for other
purposes, Landlord will not itself be so bound as the landlord hereunder or as
the seller under the Purchase Agreement unless, without violating the
Participation Agreements, Landlord shall have approved in writing such
modifications, waivers, approvals or consents and in such writing shall have
indicated that it does so as the landlord hereunder and as the seller under the
Purchase Agreement. As used in the provisions of the Revolving Credit
Agreement referenced herein, capitalized terms shall have the meanings assigned
to them in the Revolving Credit Agreement itself.
10. Other Representations, Warranties and Covenants of Landlord.
Landlord represents, warrants and covenants as follows:
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(a) Title Claims By, Through or Under Landlord. Except by a
Permitted Transfer, Landlord shall not assign, transfer, mortgage, pledge,
encumber or hypothecate this Lease or any interest of Landlord in and to the
Leased Property without the prior written consent of Tenant. Landlord further
agrees that if any encumbrance or title defect affecting the Leased Property is
lawfully claimed by, through or under Landlord (but not otherwise), including
any judgment lien lawfully filed against Landlord, Landlord will at its own
cost and expense remove any such encumbrance and cure any such defect;
provided, however, Landlord shall not be responsible for (i) any Permitted
Encumbrances (regardless of whether claimed by, through or under Landlord),
(ii) any encumbrances or title defects claimed by, through or under Tenant or
any Participant listed in Schedule 1, other than a lien or other encumbrance
asserted by the Participant because of a default by the Landlord under the
applicable Participant's Participation Agreement, or (iii) any encumbrance or
title defect arising because of Landlord's compliance with subparagraph 10(b)
or any request made by Tenant. If any Participant listed in Schedule 1 or any
Person claiming through or under such a Participant shall assert a lien or
other encumbrance against the Leased Property for which Landlord is not
responsible under the preceding sentence, Landlord shall upon request assign to
Tenant any claim for damages or other rights Landlord has against the
Participant or other Person on account of such lien or encumbrance, provided no
Event of Default shall have occurred and be continuing.
(b) Actions Required of the Title Holder. So long as no
Event of Default shall have occurred and be continuing, Landlord shall take any
and all action required under the Construction Documents or the Raychem
Contract and all documents executed by Landlord in connection therewith or by
the Permitted Encumbrances or otherwise required by Applicable Laws or
reasonably requested by Tenant; provided that (i) actions Tenant may require of
Landlord under this subparagraph shall be limited to actions that can only be
taken by Landlord as the owner of the Leased Property, as opposed to any action
that can be taken by either Tenant or Landlord (and the payment of any monetary
obligation shall not be an action required of Landlord under this subparagraph
unless Landlord shall first have received funds from Tenant, in excess of any
other amounts due from Tenant hereunder, sufficient to pay such monetary
obligations), (ii) Tenant requests the action to be taken by Landlord (which
request must be in writing, if required by Landlord at the time the request is
made) and (iii) the action to be taken will not constitute a violation of any
Applicable Laws or otherwise be reasonably objectionable to Landlord. Any
claims, demands, liabilities, losses, damages, judgments, penalties, costs and
expenses incurred by Landlord because of any action taken pursuant to this
subparagraph shall be covered by the indemnification set forth in subparagraph
9(y). Further, for purposes of such indemnification, any action taken by
Landlord will be deemed to have been made at the request of Tenant if made
pursuant to any request of Tenant's counsel or of any officer of Tenant (or
with their knowledge, and without their objection) in
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connection with the closing under the Raychem Contract or the execution,
administration or enforcement of any Construction Document.
(c) No Default or Violation. The execution, delivery and
performance of this Lease do not contravene, result in a breach of or
constitute a default under any material contract or agreement to which Landlord
is a party or by which Landlord is bound and do not, to the knowledge of
Landlord, violate or contravene any law, order, decree, rule or regulation to
which Landlord is subject.
(d) No Suits. To Landlord's knowledge there are no judicial
or administrative actions, suits or proceedings involving the validity,
enforceability or priority of this Lease, and to Landlord's knowledge no such
suits or proceedings are threatened.
(e) Organization. Landlord is duly incorporated and legally
existing under the laws of Delaware and is or, if necessary, will become duly
qualified to do business in the State of California. Landlord has or will
obtain, at Tenant's expense pursuant to the other provisions of this Lease, all
requisite power and all material governmental certificates of authority,
licenses, permits, qualifications and other documentation necessary to own and
lease the Leased Property and to perform its obligations under this Lease.
(f) Enforceability. This Lease constitutes a legal, valid
and binding obligation of Landlord, enforceable in accordance with its terms,
subject to bankruptcy and other laws affecting creditors' rights generally and
general equitable principles. The execution and delivery of, and performance
under, this Lease are within Landlord's powers and have been duly authorized by
all requisite action and are not in contravention of the powers of the charter,
by-laws or other corporate papers of Landlord; provided, Landlord makes no
representation or warranty that conditions imposed by any state or local
Applicable Laws to the purchase, ownership, lease or operation of the Leased
Property have been satisfied.
(g) Existence. Landlord will continuously maintain its
existence and, after qualifying to do business in the State of California if
Landlord has not already done so, Landlord will continuously maintain its right
to do business in the State of California to the extent necessary for the
performance of Landlord's obligations hereunder.
(h) Not a Foreign Person. Landlord is not a "foreign person"
within the meaning of the Code, Sections 1445 and 7701 (i.e. Landlord is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and regulations
promulgated thereunder).
11. Assignment and Subletting.
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(a) Consent Required. During the term of this Lease, without
the prior written consent of Landlord first had and received, Tenant shall not
assign, transfer, mortgage, pledge or hypothecate this Lease or any interest of
Tenant hereunder and shall not sublet all or any part of the Leased Property,
by operation of law or otherwise; provided, that : (1) Tenant shall be entitled
to sublet less than all or substantially all of any then existing Improvements
if (i) any sublease by Tenant is made expressly subject and subordinate to the
terms hereof, and (ii) such sublease has a term less than the remainder of the
then effective term of this Lease; (2) Tenant shall be entitled to assign this
Lease to an Affiliate of Tenant if both Tenant and its Affiliate confirm their
joint and several liability hereunder by notice given to Landlord in accordance
with Paragraph 19 hereof; (3) without limiting Landlord's rights under
subparagraph 6.(c)(vi) or under the Purchase Agreement upon the occurrence of a
Change of Control Event, Tenant may participate in a merger or consolidation
permitted by the Revolving Credit Agreement; and (4) without limiting
Landlord's rights under subparagraph 6.(c)(vi) or under the Purchase Agreement
upon the occurrence of a Change of Control Event, Tenant may sell its interest
in the Leased Property and the Other Property with all or substantially all of
Tenant's assets in a transaction permitted by the Revolving Credit Agreement.
(b) Standard for Landlord's Consent to Assignments and
Certain Other Matters. Consents and approvals of Landlord which are required
by the preceding subparagraph will not be unreasonably withheld, but Tenant
acknowledges, without limiting the reasons why Landlord might reasonably
withhold such consents or approvals, that Landlord's withholding of such
consent or approval shall be reasonable if Landlord determines in good faith
that giving the approval may significantly increase Landlord's risk of
liability for any existing or future environmental problem.
(c) No Waiver. No consent by Landlord to a sale, assignment,
transfer, mortgage, pledge or hypothecation of this Lease or Tenant's interest
hereunder, and no assignment or subletting of the Leased Property or any part
thereof in accordance with this Lease or otherwise with Landlord's consent,
shall release Tenant from liability hereunder; and any such consent shall apply
only to the specific transaction thereby authorized and shall not relieve
Tenant from any requirement of obtaining the prior written consent of Landlord
to any further sale, assignment, transfer, mortgage, pledge or hypothecation of
this Lease or any interest of Tenant hereunder.
(d) Landlord's Assignment. Landlord shall have the right to
transfer, assign and convey, in whole or in part, the Leased Property and any
and all of its rights under this Lease (a) to Landlord's Lender or any
Affiliate of Landlord's Lender or Landlord; (b) to any Participant or any
Affiliate of a Participant; (c) following the Initial Period, to any other
party; or (d) with Tenant's consent (which consent shall not be unreasonably
withheld), to any other party during the Initial Period. Without
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limiting the foregoing, Tenant's consent shall not be required for the sale of
any participating interests by Landlord as provided in subparagraph 11(d)
below. In the event Landlord sells or otherwise transfers the Leased Property
and assigns its rights under this Lease and the Purchase Agreement, and if
Landlord's successor in interest confirms its liability for the obligations
imposed upon Landlord by this Lease and the Purchase Agreement on and subject
to the express terms and conditions set out herein and therein, then the
original Landlord shall thereby be released from any further obligations under
this Lease and under the Purchase Agreement, and Tenant agrees to look solely
to each successor in interest of Landlord for performance of such obligations.
However, notwithstanding anything to the contrary herein contained, if
withholding taxes are imposed on the rents and other amounts payable to
Landlord hereunder because of Landlord's assignment of this Lease to any
citizen of, or any corporation or other entity formed under the laws of, a
country other than the United States, Tenant shall not be required to
compensate such assignee for the withholding tax.
(d) Participations. Landlord is selling participating
interests in Landlord's rights to payments hereunder and under the Purchase
Agreement to the financial institutions listed in Schedule 1 attached hereto
and made a part hereof, as evidenced by Lease Participation Agreements dated as
of the date hereof between Landlord and the Participants listed in Schedule 1.
12. Environmental Indemnification.
(a) Indemnity. Tenant hereby agrees to assume liability for
and to pay, indemnify, defend, and hold harmless each and every Indemnified
Party from and against any and all Environmental Losses, subject only to the
provisions of subparagraph (c) below.
(b) Assumption of Defense.
(i) If an Indemnified Party notifies Tenant of any claim,
demand, action, administrative or legal proceeding, investigation or
allegation as to which the indemnity provided for in this Paragraph 12
applies, Tenant shall assume on behalf of the Indemnified Party and
conduct with due diligence and in good faith the investigation and
defense thereof and the response thereto with counsel reasonably
satisfactory to the Indemnified Party; provided, that the Indemnified
Party shall have the right to be represented by advisory counsel of
its own selection and at its own expense; and provided further, that
if any such claim, demand, action, proceeding, investigation or
allegation involves both Tenant and the Indemnified Party and the
Indemnified Party shall have reasonably concluded that there may be
legal defenses available to it which are inconsistent with those
available to Tenant, then the Indemnified Party shall have the right
to select separate counsel to participate in the investigation and
defense of and response to such claim, demand, action,
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proceeding, investigation or allegation on its own behalf at Tenant's
expense.
(ii) If any claim, demand, action, proceeding,
investigation or allegation arises as to which the indemnity provided
for in this Paragraph 12 applies, and Tenant fails to assume promptly
(and in any event within ten (10) days after being notified of the
claim, demand, action, proceeding, investigation or allegation) the
defense of the Indemnified Party, then the Indemnified Party may
contest (or, with the prior written consent of Tenant, settle) the
claim, demand, action, proceeding, investigation or allegation at
Tenant's expense using counsel selected by the Indemnified Party;
provided, that after any such failure by Tenant no such contest need
be made by the Indemnified Party and settlement or full payment of any
claim may be made by the Indemnified Party without Tenant's consent
and without releasing Tenant from any obligations to the Indemnified
Party under this Paragraph 12 if, in the written opinion of reputable
counsel to the Indemnified Party, the settlement or payment in full is
clearly advisable.
(c) Notice of Environmental Losses. If any Indemnified Party
receives a written notice of Environmental Losses that such Indemnified Party
believes are covered by this Paragraph 12, then such Indemnified Party shall
promptly furnish a copy of such notice to Tenant. The failure to so provide a
copy of the notice to Tenant shall not excuse Tenant from its obligations under
this Paragraph 12; provided, that if Tenant is unaware of the matters described
in the notice and such failure renders unavailable defenses that Tenant might
otherwise assert, or precludes actions that Tenant might otherwise take, to
minimize its obligations hereunder, then Tenant shall be excused from its
obligation to indemnify the Indemnified Party that received the notice against
assessments, fines, costs and expenses, if any, which would not have been
incurred but for such failure. For example, if any Indemnified Party fails to
provide Tenant with a copy of a notice of an obligation covered by the
indemnity set out in subparagraph (a) and Tenant is not otherwise already aware
of such obligation, and if as a result of such failure the Indemnified Party
that received the notice becomes liable for penalties and interest covered by
the indemnity in excess of the penalties and interest that would have accrued
if Tenant had been promptly provided with a copy of the notice, then Tenant
will be excused from any obligation to such Indemnified Party to pay the
excess.
(d) Rights Cumulative. The rights of each Indemnified Party
under this Paragraph 12 shall be in addition to any other rights and remedies
of such Indemnified Party against Tenant under the other provisions of this
Lease or under any other document or instrument now or hereafter executed by
Tenant, or at law or in equity (including, without limitation, any right of
reimbursement or contribution pursuant to CERCLA).
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(e) Survival of the Indemnity. Tenant's obligations under
this Paragraph 12 shall survive the termination or expiration of this Lease.
All obligations of Tenant hereunder shall be payable upon demand, and any
amount due upon demand to any Indemnified Party by Tenant which is not paid
shall bear interest from the date of such demand at a floating interest rate
equal to the Default Rate, but in no event in excess of the maximum rate
permitted by law.
13. Landlord's Right of Access.
Landlord and Landlord's representatives may enter the Leased Property
at any reasonable time for the purpose of making inspections or performing any
work which Landlord elects to undertake made necessary by reason of Tenant's
default under the terms of this Lease. Nothing herein shall imply any duty
upon the part of Landlord to do any such work which under any provision of this
Lease Tenant may be required to perform, and the performance thereof by
Landlord shall not constitute a waiver of Tenant's default. Landlord may
during the progress of any work on or in the Leased Property keep and store
upon the Leased Property all necessary materials, tools, and equipment.
Landlord shall not in any event be liable for inconvenience, annoyance,
disturbance, loss of business, or other damage to Tenant or the subtenants of
Tenant by reason of making such repairs or the performance of any such work on
or in the Leased Property, or on account of bringing materials, supplies and
equipment into or through the Leased Property during the course of such work,
and the obligations of Tenant under this Lease shall not thereby be affected in
any manner.
14. Events of Default.
(a) Defaults. Each of the following events shall be deemed
to be an "EVENT OF DEFAULT" by Tenant under this Lease:
(i) Tenant shall fail to pay when due any installment of
Rent due hereunder and such failure shall continue for five (5)
Business Days after Tenant is notified thereof.
(ii) Tenant shall fail to comply with any term, provision
or covenant of this Lease, other than as described in the other
clauses of this subparagraph 14(a), and shall not cure such failure
prior to the earlier of (A) forty-five (45) days after written notice
thereof is sent to Tenant or (B) the date any writ or order is issued
for the levy or sale of any property owned by Landlord (including the
Leased Property) or any criminal action is instituted against Landlord
or any of its directors, officers or employees because of such
failure; provided, however, that so long as no such writ or order is
issued and no such criminal action is instituted, if such failure is
susceptible of cure but cannot with reasonable diligence be cured
within such forty-five day period, and if Tenant shall promptly have
commenced to cure the same and
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shall thereafter prosecute the curing thereof with reasonable
diligence, the period within which such failure may be cured shall be
extended for such further period (not to exceed an additional ninety
(90) days) as shall be reasonably necessary for the curing thereof
with reasonable diligence.
(iii) Tenant shall fail to comply with any term, provision
or condition of the Purchase Agreement or the Environmental Indemnity.
(iv) Tenant shall abandon any portion of the Leased
Property.
(v) Tenant or any of its Subsidiaries shall fail to pay
any principal of or premium or interest on any Debt which is
outstanding in a principal amount of at least $10,000,000 in the
aggregate of Tenant or the applicable Subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement
or instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate,
or to permit the acceleration by the creditor of the maturity of such
Debt; or any such Debt shall be declared by the creditor to be due and
payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), redeemed, purchased or defeased, or an
offer to prepay, redeem, purchase or defease such Debt shall be
required to be made, in each case prior to the stated maturity
thereof.
(vi) Tenant or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against Tenant or any of its Subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of
thirty (30) consecutive days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver,
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trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or Tenant or any of its
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this clause (vi).
(vii) Any order, judgment or decree is entered in any
proceedings against Tenant or any Subsidiary decreeing the dissolution
of Tenant or such Subsidiary and such order, judgment or decree
remains unstayed and in effect for more than sixty (60) days.
(viii) Any order, judgment or decree is entered in any
proceedings against Tenant or any Subsidiary decreeing a split-up of
Tenant or such Subsidiary which requires the divestiture of assets
representing a substantial part, or the divestiture of the stock of a
Subsidiary whose assets represent a substantial part, of the
consolidated assets of Tenant and its Subsidiaries (determined in
accordance with generally accepted accounting principles) or which
requires the divestiture of assets, or stock of a Subsidiary, which
shall have contributed a substantial part of the consolidated net
income of Tenant and its Subsidiaries (determined in accordance with
generally accepted accounting principles) for any of the three fiscal
years then most recently ended, and such order, judgment or decree
remains unstayed and in effect for more than sixty (60) days.
(ix) A final judgment or order for the payment of money in
an amount (not covered by insurance) which exceeds $10,000,000 shall
be rendered against Tenant or any of its Subsidiaries and either (i)
enforcement proceedings shall have been commenced by any creditor upon
such judgment, or (ii) within sixty (60) days after the entry thereof,
such judgment or order is not discharged or execution thereof stayed
pending appeal, or within thirty (30) days after the expiration of any
such stay, such judgment is not discharged.
(x) An "Event of Default" as defined in the Revolving
Credit Agreement (taking into account any applicable notice and cure
period set forth therein) by Tenant shall occur.
Notwithstanding the foregoing, any Default that could become an Event of
Default under clause (ii) of this subparagraph 14(a) may be cured within the
earlier of the periods described in clauses (A) and (B) thereof, and any
Default that could become an Event of Default under any of clauses (iii)
through (x) of this subparagraph 14(a) may be cured within ten (10) days after
Tenant is notified or otherwise becomes aware of such Default, by Tenant's
delivery to Landlord of a written notice irrevocably exercising Tenant's option
under the Purchase Agreement to purchase Landlord's interest in the Leased
Property and designating as the Designated Payment Date (as defined in the
Purchase Agreement) the next following date which is either an Advance Date or
a Base Rental Date and which is at least
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ten (10) days after the date of such notice; provided, however, Tenant must, as
a condition to the effectiveness of its cure, on the date so designated as the
Designated Payment Date tender to Landlord the full purchase price required by
the Purchase Agreement and all Rent and all other amounts then due or accrued
and unpaid hereunder (including reimbursement for any costs incurred by
Landlord in connection with the applicable Default hereunder, regardless of
whether Landlord shall have been reimbursed for such costs in whole or in part
by the Participants) and Tenant must also furnish written confirmation that all
indemnities set forth herein (including specifically, but without limitation,
the general indemnity set forth in Paragraph 9(y) and the environmental
indemnity set forth in Paragraph 12 shall survive the payment of such amounts
by Tenant to Landlord and the conveyance of Landlord's interest in the Leased
Property to Tenant.
(b) Remedies. Upon the occurrence of an Event of Default
which is not cured within any applicable period expressly permitted by
subparagraph (a), at Landlord's option and without limiting Landlord in the
exercise of any other right or remedy Landlord may have on account of such
default, and without any further demand or notice except as expressly described
in this subparagraph 14 (b):
(i) By notice to Tenant, Landlord may terminate Tenant's
right to possession of the Leased Property. A notice given in connection with
unlawful detainer proceedings specifying a time within which to cure a default
shall terminate Tenant's right to possession if Tenant fails to cure the
default within the time specified in the notice.
(ii) Upon termination of Tenant's right to possession and
without further demand or notice, Landlord may re-enter the Leased Property and
take possession of all improvements, additions, alterations, equipment and
fixtures thereon and remove any persons in possession thereof. Any property in
the Leased Property may be removed and stored in a warehouse or elsewhere at
the expense and risk of and for the account of Tenant.
(iii) Upon termination of Tenant's right to possession,
this Lease shall terminate and Landlord may recover from Tenant:
a) The worth at the time of award of the unpaid
Rent which had been earned at the time of termination;
b) The worth at the time of award of the amount
by which the unpaid Rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided;
c) The worth at the time of award of the amount
by which the unpaid Rent for the balance of the scheduled Term after the time
of award exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided; and
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d) Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform Tenant's obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom, including, but not limited to,
the costs and expenses (including Attorneys' Fees, advertising costs and
brokers' commissions) of recovering possession of the Leased Property, removing
persons or property therefrom, placing the Leased Property in good order,
condition, and repair, preparing and altering the Leased Property for
reletting, all other costs and expenses of reletting, and any loss incurred by
Landlord as a result of Tenant's failure to perform Tenant's obligations under
the Purchase Agreement.
The "worth at the time of award" of the amounts referred to in
subparagraph 14(b)(iii)a) and b) is computed by allowing interest at ten
percent (10%) per annum, or such other rate as may be the maximum interest rate
then permitted to be charged under California law at the time of computation.
The worth at the time of award of the amount referred to in subparagraph
14(b)(iii)c) is 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
(1%).
e) Such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by applicable California
law.
(iv) Even though Tenant has breached this Lease and
abandoned the Leased Property, this Lease shall continue in effect for so long
as Landlord does not terminate Tenant's right to possession, and Landlord may
enforce all of Landlord's rights and remedies under this Lease, including the
right to recover the Rent as it becomes due under this Lease. Tenant's right
to possession shall not be deemed to have been terminated by Landlord except
pursuant to subparagraph 14(b)(i) hereof. The following shall not constitute a
termination of Tenant's right to possession:
a) Acts of maintenance or preservation or efforts
to relet the Leased Property;
b) The appointment of a receiver upon the
initiative of Landlord to protect Landlord's interest under this Lease; or
c) Reasonable withholding of consent to an
assignment or subletting, or terminating a subletting or assignment by Tenant.
(c) Remedies Cumulative. No right or remedy herein conferred
upon or reserved to Landlord is intended to be exclusive of any other right or
remedy, and each and every right and remedy shall be cumulative and in addition
to any other right or remedy given hereunder or now or hereafter existing at
law or in equity or by statute. In addition to other remedies provided in this
Lease,
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Landlord shall be entitled, to the extent permitted by applicable law, to
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the covenants, agreements, conditions or provisions of
this Lease, or to a decree compelling performance of any of the other
covenants, agreements, conditions or provisions of this Lease, or to any other
remedy allowed to Landlord at law or in equity. Without limiting the
generality of the foregoing, nothing contained herein shall modify, limit or
impair any of the rights and remedies of Landlord under the Purchase Agreement
or the Environmental Indemnity.
(d) Limitation on Recovery Against Tenant for Title Defects.
Notwithstanding any other provisions to the contrary in this Paragraph 14 or
subparagraph 9(t) or 9(u) above, but subject to the provisions of this
subparagraph 14(d), Tenant's liability for any loss or damages to Landlord
resulting from Tenant's failure to cure any title defect affecting the Leased
Property shall be reduced on a dollar for dollar basis to the extent of any
payment (computed net of all costs of collection, including Attorneys' Fees)
paid to Landlord under any title insurance policy covering the Leased Property.
However, Tenant acknowledges and agrees that: (a) this subparagraph shall not
be construed as requiring Landlord to bring any action against any title
insurance company or incur any liability or expense to collect any such title
insurance proceeds unless prior to bringing any such action or incurring any
such liability or expense Landlord shall have received (1) an indemnification
from Tenant in connection therewith pursuant to an indemnification agreement
reasonably satisfactory to Landlord (which indemnification agreement shall in
no way limit any indemnification or other agreement provided herein), and (2) a
written commitment from Tenant in form and substance reasonably satisfactory to
Landlord whereby Tenant agrees to diligently prosecute a claim under the
applicable title insurance policy in the name of Landlord or Tenant, as
appropriate, using counsel and in a manner satisfactory to Landlord; (b)
Landlord shall be entitled to make any settlement it deems appropriate in its
sole and absolute discretion with any title insurance company because of a
defect in the title to the Leased Property without in any way limiting
Landlord's rights to recover from Tenant any loss or damage which is caused by
such defect and which is in excess of the net proceeds from such settlement
(provided, if Tenant has delivered an indemnification agreement and a
commitment to Landlord as described in the preceding clause (a), and so long as
no Event of Default hereunder and no breach by Tenant under such
indemnification agreement or commitment has occurred, Landlord will not enter
into any such settlement without first obtaining the prior written consent of
Tenant); (c) under no circumstances will any such settlement or any payment
received and accepted from a title insurance company be deemed to be a measure
of the loss or damage suffered because of any such title defect; (d) no payment
of proceeds of any title insurance policy shall reduce Tenant's obligation for
Base Rent or any other amount due hereunder, save and except only (1) the
dollar for dollar reduction of Tenant's liability for loss or damages resulting
from Tenant's failure to
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correct any title defect and (2) any reduction in Base Rent that results from
any Qualified Payments which are received from the proceeds of title insurance;
and (e) if for any reason whatsoever, this subparagraph is determined to
invalidate or reduce the coverage of, in whole or in part, any title insurance
policy existing in favor of Landlord, then this subparagraph (d) shall, at
Landlord's option, be void and Tenant's obligations under the other provisions
of this Paragraph 14 and subparagraphs 9(t) and 9(u) above shall be enforceable
with respect to any title defect affecting the Leased Property as though this
subparagraph were not a part of this Lease.
(e) Waiver by Tenant. To the extent permitted by law, Tenant
hereby waives and surrenders for itself and all claiming by, through and under
it, including creditors of all kinds, (i) any right and privilege which it or
any of them may have under any present or future constitution, statute or rule
of law to have a continuance of this Lease for the term hereby demised after
termination of Tenant's right of occupancy by order or judgment of any court or
by any legal process or writ, or under the terms of this Lease, or after the
termination of this Lease as herein provided, and (ii) the benefits of any
present or future constitution, or statute or rule of law which exempts
property from liability for debt or for distress for rent, and (iii) the
provisions of law relating to notice and/or delay in levy of execution in case
of eviction of a lessee for nonpayment of rent.
(f) Personal Liability. The liability of Landlord to Tenant
for any default by Landlord under the terms of this Lease shall be limited to
the interest of Landlord in the Leased Property and Landlord shall not be
personally liable for any deficiency on any judgment obtained by Tenant
hereunder.
(g) No Implied Waiver. The failure of Landlord to insist at
any time upon the strict performance of any covenant or agreement or to
exercise any option, right, power or remedy contained in this Lease shall not
be construed as a waiver or a relinquishment thereof for the future. The
waiver of or redress for any violation by Tenant of any term, covenant,
agreement or condition contained in this Lease shall not prevent a similar
subsequent act from constituting a violation. Any express waiver shall affect
only the term or condition specified in such waiver and only for the time and
in the manner specifically stated therein. A receipt by Landlord of any Base
Rent or other payment hereunder with knowledge of the breach of any covenant or
agreement contained in this Lease shall not be deemed a waiver of such breach,
and no waiver by Landlord of any provision of this Lease shall be deemed to
have been made unless expressed in writing and signed by Landlord.
(h) Attorneys' Fees and Legal Expenses. Tenant shall
reimburse Landlord for all Attorneys' Fees and other costs incurred in
connection with the preparation and negotiation of this Lease and the
consummation of the transactions contemplated herein.
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Tenant shall also pay to Landlord upon demand all Attorneys' Fees and all
expenses of Landlord incurred in enforcing any of the obligations of Tenant
under this Lease, provided Landlord is the prevailing party in cases where
litigation results from a dispute hereunder.
15. Quiet Enjoyment. Provided Tenant pays the Base Rent and all
Additional Rent payable hereunder as and when due and payable and keeps and
fulfills all of the terms, covenants, agreements and conditions to be performed
by Tenant hereunder, Landlord shall not during the Term disturb Tenant's
peaceable and quiet enjoyment of the Leased Property; however, such enjoyment
shall be subject to the terms, provisions, covenants, agreements and conditions
of this Lease and the Permitted Encumbrances and any other claims not lawfully
made by, through or under Landlord, to which this Lease is subject and
subordinate as hereinabove set forth. Any breach by Landlord of the foregoing
covenant of quiet enjoyment shall render Landlord liable to Tenant for any
monetary damages proximately caused thereby, but as more specifically provided
in Paragraph 5 above, no such breach shall entitle Tenant to terminate this
Lease or excuse Tenant from its obligation to pay Base Rent and other amounts
hereunder.
16. Surrender Upon Termination. Unless Tenant purchases the
Landlord's entire interest in the Leased Property pursuant to the terms of the
Purchase Agreement, Tenant shall, upon the termination of Tenant's right to
occupancy, surrender to Landlord the Leased Property, including any buildings,
alterations, improvements, replacements or additions constructed by Tenant,
with all fixtures and furnishings included in the Initial Improvements, but not
including movable furniture and movable personal property not covered by this
Lease, free of all Hazardous Substances and tenancies and, to the extent
required by Landlord, with all Initial Improvements in the same condition as on
the date the same were initially completed, excepting only (i) ordinary wear
and tear (provided that the Leased Property shall have been maintained as
required by the other provisions hereof), and (ii) alterations and additions
which are expressly permitted by the terms of this Lease and which have been
completed by Tenant in a good and workmanlike manner in accordance with all
Applicable Laws. Any movable furniture or movable personal property belonging
to Tenant or any party claiming under Tenant, if not removed at the time of
such termination and if Landlord shall so elect, shall be deemed abandoned and
become the property of Landlord without any payment or offset therefor. If
Landlord shall not so elect, Landlord may remove such property from the Leased
Property and store it at Tenant's risk and expense. Tenant shall bear the
expense of repairing any damage to the Leased Property caused by such removal
by Landlord or Tenant.
17. Holding Over by Tenant. Should Tenant not purchase Landlord's
right, title and interest in the Leased Property as provided in the Purchase
Agreement, but nonetheless continue to hold the Leased Property after the
termination of this Lease,
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whether such termination occurs by lapse of time or otherwise, such holding
over shall constitute and be construed as a tenancy from day to day only, at a
daily Base Rent equal to: (i) Stipulated Loss Value on the day in question,
times (ii) (A) the Prime Rate in effect for such day so long as the holdover
period does not extend beyond ninety (90) days and (B) for each such day
beginning with the ninety-first day after the holdover commences, five percent
(5%) above the Prime Rate; divided by (iii) 360; subject, however, to all of
the terms, provisions, covenants and agreements on the part of Tenant
hereunder. No payments of money by Tenant to Landlord after the termination of
this Lease shall reinstate, continue or extend the Term of this Lease and no
extension of this Lease after the termination thereof shall be valid unless and
until the same shall be reduced to writing and signed by both Landlord and
Tenant.
18. Estoppel Certificate. Tenant shall, at any time and from time
to time, upon request by Landlord, execute, acknowledge and deliver to Landlord
a statement in writing certifying that this Lease is unmodified and in full
effect (or, if there have been modifications, that this Lease is in full effect
as modified, and setting forth such modifications) and the dates to which the
Base Rent and Commitment Fees have been paid, and either stating that to the
knowledge of Tenant no default exists hereunder or specifying each such default
of which Tenant may have knowledge; it being intended that any such statement
by Tenant may be relied upon by any prospective purchaser or mortgagee of the
Leased Property or any prospective Participant.
19. Notices. Each provision of this Lease, or of any applicable
governmental laws, ordinances, regulations and other requirements with
reference to the sending, mailing or delivery of any notice or with reference
to the making of any payment by Tenant to Landlord, shall be deemed to be
complied with when and if the following steps are taken:
(i) All Rent required to be paid by Tenant to Landlord
hereunder shall be paid to Landlord in immediately available funds by wire
transfer to:
Banque Nationale de Paris
ABA # 121027234
Reference: Sun Microsystems, Inc.
or at such other place and in such other manner as Landlord may designate in a
notice to Tenant. Time is of the essence as to all payments and other
obligations under this Lease.
(ii) All notices and other communications to be made
hereunder to the parties hereto shall be in writing (at the addresses set forth
on the signature page of this Lease) and shall be given by any of the following
means: (A) personal service; (B) electronic communication, whether by telex,
telegram or telecopying (if confirmed in writing sent by registered or
certified first
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class mail, return receipt requested); or (C) registered or certified first
class mail, return receipt requested. Such addresses may be changed by notice
to the other parties given in the same manner as provided above. Any notice or
other communication sent pursuant to clause (A) or (B) hereof shall be deemed
received upon such personal service or upon dispatch by electronic means, and,
if sent pursuant to clause (C) shall be deemed received five (5) days following
deposit in the mail.
20. Severability. If any term or provision of this Lease or the
application thereof shall to any extent be invalid and unenforceable, the
remainder of this Lease, or the application of such term or provision other
than to the extent to which it is invalid or unenforceable, shall not be
affected thereby.
21. No Merger. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the Leased Property or
any part thereof by reason of the fact that the same person may acquire or
hold, directly or indirectly, this Lease or the leasehold estate hereby created
or any interest in this Lease or in such leasehold estate as well as the fee
estate in the Leased Property or any interest in such fee estate.
22. NO REPRESENTATIONS. LANDLORD AND LANDLORD'S AGENTS HAVE MADE
NO REPRESENTATIONS OR PROMISES WITH RESPECT TO THE LEASED PROPERTY EXCEPT AS
EXPRESSLY SET FORTH HEREIN, AND NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED
BY TENANT BY IMPLICATION OR OTHERWISE EXCEPT AS EXPRESSLY SET FORTH IN THE
PROVISIONS OF THIS LEASE.
23. Entire Agreement. This Lease and the instruments referred to
herein supersede any prior negotiations and agreements between the parties
concerning the Leased Property, including the Prior Lease and the Prior
Purchase Agreement (as defined in the Purchase Agreement), but not including
the Environmental Indemnity, and no amendment or modification of this Lease
shall be binding or valid unless expressed in a writing executed by both
parties hereto. Tenant ratifies and confirms the Environmental Indemnity as a
separate and independent continuing agreement.
24. Binding Effect. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective successors and, to the extent
assignment is permitted hereunder, their respective assigns.
25. Time is of the Essence. Time is of the essence as to all
obligations of Tenant and all notices required of Tenant under this Lease, but
this paragraph shall not limit Tenant's opportunity to prevent an Event of
Default by curing any breach within the cure period (if any) applicable under
Paragraph 14.
26. Termination of Prior Rights. Without limiting the rights and
obligations of Tenant under this Lease, Tenant acknowledges
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that any and all rights or interest of Tenant in and to the Land, the
improvements to the Land and to any other property included in the Leased
Property (except under this Lease and the Purchase Agreement) are hereby
superseded. Tenant quitclaims unto Landlord any interest Tenant has in or to
the Land, the improvements to the Land and to any other property included in
Leased Property (including any rights or interests created by the Prior Lease
or the Prior Purchase Agreement and any memorandum thereof recorded in real
property records applicable to the Leased Property), but Tenant does not by
this provision quitclaim or waive any rights and interests created by this
Lease, the Purchase Agreement or the Environmental Indemnity.
27. Governing Law. This Lease shall be governed by and construed
in accordance with the laws of the State of California.
28. Waiver. LANDLORD AND TENANT EACH HEREBY WAIVES ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS LEASE OR ANY OTHER DOCUMENT OR DEALINGS BETWEEN THEM RELATING TO
THIS LEASE OR THE LEASED PROPERTY. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Tenant and Landlord each acknowledge that
this waiver is a material inducement to enter into a business relationship,
that each has already relied on the waiver in entering into this Lease and the
other documents referred to herein, and that each will continue to rely on the
waiver in their related future dealings. Tenant and Landlord each further
warrants and represents that it has reviewed this waiver with its legal
counsel, and that it knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS LEASE OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS LEASE OR
THE LEASED PROPERTY. In the event of litigation, this Lease may be filed as a
written consent to a trial by the court.
29. Default by Landlord. If Landlord should default in the
performance of any of its obligations under this Lease, Landlord shall have the
time reasonably required, but in no event less than thirty (30) days, to cure
such default after receipt of written notice from Tenant specifying such
default and specifying what action Tenant believes is necessary to cure the
default. If Tenant prevails in any litigation brought against Landlord because
of Landlord's failure to cure a default within the time required by the
preceding sentence, then Tenant shall be entitled to an award against Landlord
for the damages proximately caused to Tenant by such default, and Landlord
shall pay to Tenant upon demand all reasonable attorneys' fees and all expenses
and court costs of Tenant incurred in connection with such litigation.
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30. BCDC Permit Notice. As required by the terms of the amended
Permit No. 26-78 (the BCDC Permit) included in the Permitted Encumbrances,
reference is hereby expressly made to the public access and public parking
provisions contained therein.
31. Development Plan Notice. As required by the terms of the Las
Pulgas Community Development Plan, Tenant covenants by and for itself and its
assigns and all persons claiming under or through them that there shall be no
discrimination against, or segregation of, any person or group of persons on
account of race, color, creed, marital status, ancestry, religion, sex, or
national origin, in the sale, lease, sublease, transfer, use, occupancy,
tenure, or enjoyment of the premises herein leased, nor shall Tenant or any
Person claiming under or through Tenant establish or permit any such practice
or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees,
or vendees in the premises herein leased. The foregoing covenants shall run
with the land.
32. Tax Reporting. Landlord and Tenant shall report this Lease
for federal income tax purposes as a conditional sale, not an operating lease,
unless prohibited from doing so by the Internal Revenue Service. Similarly,
Tenant shall report all interest earned on Escrowed Proceeds or the Security
Deposit as Tenant's income for federal and state income tax purposes. If the
Internal Revenue Service shall challenge Landlord's characterization of this
Lease and the Purchase Agreement as a conditional sale for federal income tax
reporting purposes, Landlord shall notify Tenant in writing of such challenge
and consider in good faith any reasonable suggestions by Tenant about an
appropriate response. In any event, Tenant shall indemnify and hold harmless
Landlord from and against all liabilities, costs, additional taxes and other
expenses that may arise or become due because of such challenge or because of
any resulting recharacterization required by the Internal Revenue Service,
including any additional taxes that may become due upon any sale under the
Purchase Agreement to the extent (if any) that such additional taxes are not
offset by tax savings resulting from additional depreciation deductions or
other tax benefits to Landlord of the recharacterization.
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IN WITNESS WHEREOF, this Lease is hereby executed in multiple
originals as of the effective date above set forth.
"Landlord"
Address of Landlord: BNP LEASING CORPORATION
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201 By:____________________________
Attn: Lloyd Cox Lloyd G. Cox, Vice President
With a copy to:
Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
3300 First City Center
1700 Pacific Avenue
Dallas, Texas 75201
"Tenant"
Address of Tenant: SUN MICROSYSTEMS, INC.
Sun Microsystems, Inc.
2550 Garcia Ave.
Mountain View, Ca. 94043
MS PALI-211 By:____________________________
Attention: Robert Prantis Richard Barker, Vice
President and Treasurer
With a copy to:
Sun Microsystems, Inc.
2550 Garcia Ave.
Mountain View, Ca. 94043
MS PALI-211
Attention: Charles Dolci, Esq.
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Exhibit A
PROPERTY DESCRIPTION
Parcels 2, 3, & 4
The land referred to herein is situated in the State of California, County of
San Mateo, City of Menlo Park and is described as follows:
Parcel A:
Parcels 2, 3, & 4 as shown on Parcel Map, lands of BNP Leasing Corporation,
filed February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive,
San Mateo County Records.
Reserving therefrom the easements set forth in Sections 5-1-1, 5-1-2, 5-1-6,
5-1-7, 5-1-8, 5-1-9 and 5-1-10 of the Declaration of Covenants, Conditions,
Restrictions and Easements recorded February 16, 1994, Series No. 94028453, San
Mateo County Records. Said easements are to be appurtenant to Parcel 1 as
shown on said parcel map.
Parcel B:
Non-exclusive and exclusive easements for the purposes of constructing, laying,
installing, operating, using, maintaining, altering, repairing, replacing,
inspecting and repairing utility service connections, service lines and similar
facilities, as contained in the Easement Agreement dated March 25, 1992 by and
between Raychem Corporation, a Delaware corporation, and BNP Leasing
Corporation, a Delaware corporation, recorded March 26, 1992 under Recorders
Serial No. 92042487, Official Records of San Mateo County, California being
more particularly described as follows:
BEGINNING at a point on the Northerly line of Rancho de las Pulgas, said
point being distant along said Northerly line South 81 degrees 22' 50"
East 1989.00 feet (an angle point in said Northerly line called PMC-13) and
North 89 degrees 11' East 648.34 feet from the most Northeasterly corner of the
boundary of the lands shown on a Record of Survey Map recorded in Volume 3 of
Licensed Land Surveyors Maps, at page 120, San Mateo County Records; thence
from said point of beginning along said Northerly line North 89 degrees 11'
East 1786.01 feet to a point on the Northerly prolongation of the Westerly line
of Willow Road, as said road is shown upon the map of Newbridge Park, recorded
in Volume 14 of Maps at pages 6 and 7, Records of San Mateo County, California;
thence along said prolongation South 22 degrees 02' 45" West 485.29 feet to the
Northerly line of Southern Pacific Company right of way; thence along the last
mentioned line, South 84 degrees 57' 30" West 1902.61 feet; thence North 5
degrees 02' 30" West 100.00
<PAGE> 74
feet; thence North 84 degrees 57' 30" East 342.43 feet; thence North 5
degrees 02' 30" West 463.64 feet to the point of beginning.
EXCEPTING THEREFROM Parcel 46737-1 as contained in the Final Order of
Condemnation recorded July 27, 1983 under Recorders Serial No. 83078012,
Official Records of San Mateo County, California and being more particularly
described as follows:
COMMENCING at the Northeasterly corner of Parcel 6, as said Parcel 6 is
designated in the map entitled "RECORD OF SURVEY OF A PORTION OF THE LANDS
FORMERLY OWNED BY THE CARNDUFF SITUATED IN SECTION 24; TOWNSHIP 5 SOUTH, RANGE
3 WEST, M.D.B. AND M. AND IN THE RANCHO DE LAS PULGAS" filed in the office of
the Recorder of the San Mateo County, State of California, on October 29, 1965,
in Volume 6 of Licensed Land Survey Maps at page 66; thence along common line
of said Parcel 6 and Parcel 5 of said Record of Survey South 54 degrees 33' 08"
West, 37.03 feet; thence from a tangent that bears South 82' 18' 07" West,
along a curve to the right with a radius of 2120.00 feet, through an angle of 2
degrees 07' 56", an arc length of 78.90 feet; thence South 35 degrees 20' 07"
West, 114.78 feet; thence South 18 degrees 44' 08" West, 0.42 feet to said
common line of Parcel 6 and Parcel 5; thence along last said line South 54' 33'
08" West 204.46 feet to the Westerly line of said Parcel 5; thence along last
said line South 23 degrees 08' 15" West, 106.70 feet to the Southwesterly
corner of said Parcel 5; thence leaving last said corner North 15 degrees 03'
57" East, 107.78 feet; thence North 0 degrees 11' 25" West, 172.12 feet; thence
along a tangent curve to the left with a radius of 45.00 feet, through an angle
of 81 degrees 13' 05", an arc length of 63.79 feet; North 81 degrees 24' 30"
West 162.32 feet to the Northerly line of Rancho de las Pulgas between PMC 13
to PMC 12; along last said line South 89 degrees 38' 32" East 554.89 feet to
the point of commencement.
Parcel C:
Easements set forth in Sections 5-1-1, 5-1-2, 5-1-6, 5-1-7, 5-1-8, 5-1-9 and
5-1-10 of the Declaration of Covenants, Conditions, Restrictions and Easements
recorded February 16, 1994, Series No. 94028453, San Mateo County Records, over
Parcel 1 as shown on Parcel Map, lands of BNP Leasing Corporation, filed
February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive, San
Mateo County Records. Said easements are to be appurtenant to Parcel A above.
Exhibit A, Page -2-
<PAGE> 75
Exhibit B
PERMITTED ENCUMBRANCES
Parcels 2, 3, & 4
This conveyance is subject to the following matters, but only to the
extent the same are still valid and in full force and effect:
(i) General and Special Taxes for the fiscal year 1994-95, now a
lien, amount not yet ascertainable.
(ii) General and Special Taxes for the fiscal year 1993-94, in the
amount of $201,146.56, each installment has been paid in full.
(Code Area 008-080; A.P. No. 055-411-100; Affects additional
property).
(iii) The Lien of Supplemental Taxes assessed pursuant to Chapter 3.5,
commencing with Section 75 of the California Revenue and Taxation
Code.
(iv) Amendment to Reservation executed by Fred Carnduff, Chester
Carnduff, Edgar Carnduff, Jeanette Carnduff Thornton, Alfred
A. Affinito and Bess M. Affinito, dated June 6, 1968, recorded
on June 14, 1968, as Document No. 50849-AB in Book/Reel 5487
of the Official Records at page/image 381 of the Records of
San Mateo County, California. Said amendment modified the
reservations contained in Grant Deed from Edgar Carnduff, et
al., to Nathaniel Hellman, et al., recorded on September 17,
1964, in Book/Reel 4799 of the Official Records at page/image
48 of the Records of San Mateo County, California. Said
amendment quitclaims rights in reserved minerals within the
surface 500 feet except for two one acre sites described as
Parcels "E" and "F" together with 20 foot wide access
easements. Said amendment also amends the reservation for
access to property south of the Southern Pacific R.R. to
except the property herein described.
(v) Ordinance No. 670 of the Community Development Agency of the
City of Menlo Park, entitled "An Ordinance Adopting Community
Development Plan for the Las Pulgas Project Area and Making
Certain Findings and Determinations Pursuant to the Community
Redevelopment Law of the State of California," passed and
adopted by the Community Development Agency on November 24,
1981, a certified copy of which was recorded on December 21,
1981, as Document No. 19388-AT of the Official Records of San
Mateo County, California.
Exhibit B -1-
<PAGE> 76
Ordinance No. 826 of the City Council of the City of Menlo
Park, entitled "An Ordinance of the City Council of the City
of Menlo Park adopting the First Amended and Restated Las
Pulgas Community Development Plan pursuant to the Community
Redevelopment Law of the State of California," passed and
adopted by the City Council on September 10, 1991, a certified
copy of which was recorded on September 11, 1991, as Document
No. 91120049 of the Official Records of San Mateo County,
California.
Statement of Institution of Amended Redevelopment Plan of the
Las Pulgas Community Development Plan which was recorded on
September 11, 1991, as Document No. 91120050 of the Official
Records of San Mateo County, California.
(vi) Easements condemned in that certain Final Order of
Condemnation under Action No. 245918 entitled "The People of
the State of California vs. Raychem Corporation," recorded on
July 27, 1983, as Document No. 83078012 (Parcel 45670-3, an
easement for drainage purposes over an irregular parcel in the
Southeast corner of Parcel 4; Parcel 45670-4, an easement for
road purposes over a 20' x 60.29' parcel near the Southeast
corner of Parcel 4).
(vii) Relinquishment of Abutters Rights as contained in that certain Final
Order of Condemnation under Action No. 245918 entitled "The People of
the State of California vs. Raychem Corporation," recorded on July 27,
1983, as Document No. 83078012. Access is restricted to certain
portions of frontage along said condemned lands.
(viii) Resolution No. 785 of the Menlo Park Fire Protection District,
Resolution approving the annexation of certain Baylands to the Menlo
Park Fire Protection District, recorded on August 18, 1989, as
Document No. 89109745 of the Official Records of San Mateo County,
California.
(ix) The terms, covenants and conditions as contained in Permit No.
26-78 by and between the San Francisco Bay Conservation and
Development Commission and Raychem Corporation, recorded on
March 18, 1991, under Recorders Serial No. 91029676 of the
Official Records of San Mateo County, California. An
Assignment of BCDC Permit, recorded on March 26, 1992, under
Recorders Serial No. 92042489 of the Official Records of San
Mateo County, California. Amendment No. Four thereunder dated
August 13, 1993, recorded on September 9, 1993, Series No.
93152912.
(x) Development Agreement by and between the City of Menlo Park, a
municipal corporation of the State of California, and Sun
Microsystems, Inc., a Delaware corporation, dated November 29,
1991, recorded on December 9, 1991, as
Exhibit B -2-
<PAGE> 77
Document No. 91160984 of the Official Records of San Mateo County,
California.
(xi) Easement for water meter over the property, as shown on the
Parcel Map, lands of BNP Leasing Corporation, filed February
16, 1994, Book 67 of Parcel Maps, pages 36 through 38
inclusive, San Mateo County Records, such strips to be kept
open and free from buildings and structures of any kind.
Affects two 15 foot by 30 foot areas within Parcel 3 and one
15 foot by 30 foot area within Parcel 4. Includes right of
ingress and egress across the premises for construction,
maintenance and use of the water facilities.
(xii) Covenants, conditions, restrictions, limitations, reservations,
easements, exceptions, terms, assessments, liens and charges, but
deleting restrictions, if any, based on race, color, religion or
national origin as contained in the Declaration of Covenants,
Conditions, Restrictions and Easements for Sun Microsystems, Inc.
Menlo Park Campus executed by and between BNP Leasing Corporation, a
Delaware corporation, and Sun Microsystems, Inc., a Delaware
corporation, dated February 9, 1994, recorded on February 16, 1994, as
Document No. 94028453 of the Official Records of San Mateo County,
California. Said instrument does not expressly provide for forfeiture
of title in case of violation. Said instrument does provide that a
violation shall not lessen the security of any Deed of Trust or
Mortgage made in good faith and for value. A lien for upkeep
assessments was provided for in the herein described declaration.
Exhibit B -3-
<PAGE> 78
EXHIBIT C
Construction Budget
<TABLE>
<CAPTION>
Description Cost
<S> <C>
Building Cost $49,353,000
Site Preparation 6,357,000
General Conditions/Fees 3,322,000
Fees & Permits 3,100,000
Architectural/Consultant Fees 4,000,000
Project Contingency 4,200,000
Telecommunication Equipment 10,728,000
Security & Safety Costs 765,000
Transaction Costs 675,000
Anticipated Capitalized Carrying Costs 9,000,000
Phase II Land 23,500,000
Total $115,000,000
</TABLE>
Exhibit C -1-
<PAGE> 79
Exhibit C (continued)
Description of the Initial Improvements
1. Attached hereto as Exhibit C-1 is a project description taken from the
Owner/Architect Agreement between Tenant and Backen, Arrigoni and
Ross, Inc. The Initial Improvements shall consist only of "Phases II
and III" of the project described in this Exhibit C-1.
2. Attached hereto as Exhibit C-2 are outline specifications prepared for
the Initial Improvements. Such specifications are intended only to
illustrate the nature and quality of the Initial Improvements; the
specifications are not intended to be exhaustive.
3. Attached hereto as Exhibit C-3 are renderings of floor plans intended
only to illustrate the type and general appearance of the Initial
Improvements; the renderings are not intended to be complete or to
show all buildings included in the Initial Improvements.
Exhibit C -2-
<PAGE> 80
EXHIBIT D
ESTOPPEL FROM CONTRACTORS
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents to BNP
Leasing Corporation, a Delaware corporation ("BNP"), and covenants with BNP as
follows:
1. The undersigned has entered into that certain
(****Construction Contract) (the "Construction Contract") by and between the
undersigned and Sun Microsystems, Inc. ("Sun") dated ____________________,
199__ for the construction of Phases II and III of the office complex to be
constructed on the Menlo Park campus leased by Sun (the "Improvements") located
on the land described in Exhibit A attached hereto and made a part hereof for
all purposes (the "Land" and, together with the Improvements and any other
improvements now on or constructed in the future on the Land, the "Project").
2. The undersigned has been advised that BNP owns the Land.
3. The undersigned has also received a copy of the Lease
Agreement (Phases II and III) dated as of September 23, 1994 (the "Lease"),
pursuant to which BNP is leasing the Project to Sun, and has agreed, subject to
the terms and conditions of the Lease, to provide a construction allowance for
Sun's construction of the Improvements. The Lease also requires Sun to fulfill
all obligations of the ("Owner") under the Construction Contract and related
documents and to indemnify BNP against any liability arising thereunder, all as
more particularly provided in the Lease, reference to which is hereby made for
all purposes.
4. A complete and correct copy of the Construction Contract is
attached to this letter. The Construction Contract is in full force and effect
and has not been modified or amended.
5. The undersigned has not sent or received any notice of default
or any other notice for the purpose of terminating the Construction Contract,
nor is there any existing circumstance or
Exhibit D -1-
<PAGE> 81
BNP Leasing Corporation
_______________, 199___
Page 2
event which, but for the elapse of time or otherwise, would constitute a
default by the undersigned or the ("Owner") under the Construction Contract.
The undersigned acknowledges and agrees that:
a). BNP shall not be held liable for, and the undersigned shall
not assert, any claims, demands or liabilities against BNP or, except for any
statutory lien rights, against the Project arising under or in any way relating
to the Construction Contract; provided, this paragraph will not prohibit the
undersigned from asserting any claims or making demands under the Construction
Contract if BNP elects in writing, pursuant to Paragraph b) below, to assume
the Construction Contract in the event Sun's right to possession of the Land is
terminated, in which event BNP shall be liable thereunder for (but only for)
any acts or omissions on the part of BNP occurring after the date on which BNP
notifies the undersigned of BNP's election to assume the Construction Contract.
b) Upon any termination of Sun's right to possession of the
Project under the Lease, including but not limited to any eviction of Sun
resulting from an Event of Default (as defined in the Lease), BNP may, by
notice to the undersigned and without the necessity of the execution of any
other document, assume Sun's rights and obligations under the Construction
Contract, cure any defaults by Sun thereunder and enforce the Construction
Contract and all rights of the ("Owner") thereunder. Within ten (10) days of
receiving notice from BNP that Sun's right to possession has been terminated,
the undersigned shall send to BNP a written estoppel letter stating: (i) that
the undersigned has not performed any act or executed any other instrument
which invalidates or modifies the Construction Contract in whole or in part
(or, if so, the nature of such modification); (ii) that the Construction
Contract is valid and subsisting and in full force and effect; (iii) that there
are no defaults or events of default then existing under the Construction
Contract and no event has occurred which with the passage of time or the giving
of notice, or both, would constitute such a default or event of default (or, if
there is a default, the nature of such default in detail); (iv) that the
construction contemplated by the Construction Contract is proceeding in a
satisfactory manner in all material respects (or if not, a detailed description
of all significant problems with the progress of construction); (v) a
reasonably detailed report of the then critical dates projected by the
undersigned for work and deliveries required to complete the construction
project; (vi) the total amount paid for construction through the date of the
letter; (vii) the estimated total cost of completing such construction as of
the date of the letter, together with a current draw schedule; and (viii) any
other information BNP may request to allow it to decide whether to assume the
Construction Contract. BNP shall have
Exhibit D -2-
<PAGE> 82
BNP Leasing Corporation
_______________, 199___
Page 3
thirty (30) days from receipt of such written certificate containing all such
requested information to decide whether to assume the Construction Contract.
If BNP fails to assume the Construction Contract within such time, the
undersigned agrees that BNP shall not be liable for (and the undersigned shall
not assert or bring any action against BNP or, except for any statutory lien
rights not waived, against the Land or improvements thereon for) any damages or
other amounts resulting from the breach or termination of the Construction
Contract or under any other theory of liability of any kind or nature, but
rather the undersigned shall look solely to Sun and any statutory lien rights
not waived for the recovery of any such damages or other amounts.
c). If BNP notifies the undersigned that BNP shall not assume the
Construction Contract pursuant to the preceding paragraph following the
termination of Sun's right to possession of the Project under the Lease, the
undersigned shall immediately discontinue the work under the Construction
Contract and remove its personnel from the Project, and BNP shall be entitled
to take exclusive possession of the Project and all or any part of the
equipment and materials delivered or en route to the Project. The undersigned
shall also, upon request by BNP, deliver and assign to BNP all plans and
specifications and other contract documents previously delivered to the
undersigned (except that the undersigned may keep an original set of the
Construction Contract and other contract documents executed by Sun), all other
material relating to the work which belongs to BNP or Sun, and all papers and
documents relating to governmental permits, orders placed, bills and invoices,
lien releases and financial management under the Construction Contract.
Notwithstanding the undersigned's receipt of any notice from BNP that BNP
declines to assume the Construction Contract, the undersigned shall for a
period not to exceed fifteen (15) days after receipt of such notice take such
steps, at BNP's expense, as are reasonably necessary to preserve and protect
work completed and in progress and to protect materials, equipment and supplies
at the site or in transit.
d). No action taken by BNP or the undersigned with respect to the
Construction Contract shall prejudice any other rights or remedies of BNP or
the undersigned provided by law, by the Lease , by the Construction Contract or
otherwise against Sun.
e). The undersigned agrees promptly to notify BNP of any material
default or claimed material default by Sun under the Construction Contract,
describing with particularity the default and the action the undersigned
believes is necessary to cure the same. The undersigned will send any such
notice to BNP prominently marked "URGENT - NOTICE OF SUN MICROSYSTEMS's
MATERIAL DEFAULT UNDER CONSTRUCTION AGREEMENT WITH _______________ - MENLO PARK
CALIFORNIA" at the address specified for notice below (or at such
Exhibit D -3-
<PAGE> 83
BNP Leasing Corporation
_______________, 199___
Page 4
other addresses as BNP shall designate in notice sent to the undersigned), by
certified or registered mail, return receipt requested. Following receipt of
such notice, the undersigned will permit BNP or its designee to cure any such
default within the time period reasonably required for such cure, but in no
event less than thirty (30) days. If it is necessary or helpful to take
possession of all or any portion of the Project to cure a default by Sun under
the Construction Contract, the time permitted by the undersigned for cure by
BNP will include the time necessary to terminate Sun's right to possession of
the Project and evict Sun, provided that BNP commences the steps required to
exercise such right within sixty (60) days after it is entitled to do so under
the terms of the Lease and applicable law. If the undersigned incurs
additional costs due to the extension of the aforementioned cure period, the
undersigned shall be entitled to an equitable adjustment to the price of the
Construction Contract for such additional costs.
f). Any notice or communication required or permitted hereunder
shall be given in writing, sent by (a) personal delivery or (b) expedited
delivery service with proof of delivery or (c) United States mail, postage
prepaid, registered or certified mail or (d) telegram, telex or telecopy,
addressed as follows:
To the undersigned: ___________________________________________________
___________________________________________________
___________________________________________________
To BNP: BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
g). The undersigned acknowledges that it has all requisite authority
to execute this letter. The undersigned further acknowledges that BNP has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNP's decision to advance funds
for construction under the Lease with Sun.
Very truly yours,
_____________________________________
By:__________________________________
Name:_____________________________
Title:____________________________
Exhibit D -4-
<PAGE> 84
BNP Leasing Corporation
_______________, 199___
Page 5
Sun joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNP to assume the Construction Contract in the
event Sun is evicted from the Project.
Sun Microsystems, Inc.
By:_________________________________________
Name:_____________________________________
Title:____________________________________
Exhibit D -5-
<PAGE> 85
EXHIBIT E
ESTOPPEL FROM ARCHITECTS/ENGINEERS
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents to BNP
Leasing Corporation, a Delaware corporation ("BNP"), and covenants with BNP as
follows:
1. The undersigned has entered into that certain
(****Architects/Engineers Agreement) (the "Agreement") by and between the
undersigned and Sun Microsystems, Inc. ("Sun") dated ____________________,
199__ for the (***design) of Phases II and III of the office complex to be
constructed on the Menlo Park campus leased by Sun (the "Improvements") located
on the land described in Exhibit A attached hereto and made a part hereof for
all purposes (the "Land" and, together with the Improvements and any other
improvements now on or constructed in the future on the Land, the "Project").
2. The undersigned has been advised that BNP owns the Land.
3. The undersigned has also received a copy of the Lease
Agreement (Phases II and III) dated as of September 23, 1994 (the "Lease"),
pursuant to which BNP is leasing the Project to Sun, and has agreed, subject to
the terms and conditions of the Lease, to provide a construction allowance for
Sun's construction of the Improvements. The Lease also requires Sun to fulfill
all obligations of the ("Owner") under the Agreement and related documents and
to indemnify BNP against any liability arising thereunder, all as more
particularly provided in the Lease, reference to which is hereby made for all
purposes.
4. A complete and correct copy of the Agreement is attached to
this letter. The Agreement is in full force and effect and has not been
modified or amended.
5. The undersigned has not sent or received any notice of default
or any other notice for the purpose of terminating the Agreement, nor is there
any existing circumstance or event which,
<PAGE> 86
BNP Leasing Corporation
______________, 199____
Page 2
but for the elapse of time or otherwise, would constitute a default by the
undersigned or the ("Owner") under the Agreement.
The undersigned acknowledges and agrees that:
a) BNP shall not be held liable for, and the undersigned shall
not assert, any claims, demands or liabilities against BNP or, except for any
statutory lien rights, against the Project arising under or in any way relating
to the Agreement; provided, this paragraph will not prohibit the undersigned
from asserting any claims or making demands under the Agreement if BNP elects
in writing, pursuant to Paragraph b) below, to assume the Agreement in the
event Sun's right to possession of the Land is terminated, in which event BNP
shall be liable thereunder for (but only for) any acts or omissions on the part
of BNP occurring after the date on which BNP notifies the undersigned of BNP's
election to assume the Agreement.
b) Upon any termination of Sun's right to possession of the
Project under the Lease, including but not limited to any eviction of Sun
resulting from an Event of Default (as defined in the Lease), BNP may, by
notice to the undersigned and without the necessity of the execution of any
other document, assume Sun's rights and obligations under the Agreement, cure
any defaults by Sun thereunder and enforce the Agreement and all rights of the
("Owner") thereunder. Within ten (10) days of receiving notice from BNP that
Sun's right to possession has been terminated, the undersigned shall send to
BNP a written estoppel letter stating: (i) that the undersigned has not
performed any act or executed any other instrument which invalidates or
modifies the Agreement in whole or in part (or, if so, the nature of such
modification); (ii) that the Agreement is valid and subsisting and in full
force and effect; (iii) that there are no defaults or events of default then
existing under the Agreement and no event has occurred which with the passage
of time or the giving of notice, or both, would constitute such a default or
event of default (or, if there is a default, the nature of such default in
detail); (iv) that the construction contemplated by the Agreement is proceeding
in a satisfactory manner in all material respects (or if not, a detailed
description of all significant problems with the progress of construction); (v)
a reasonably detailed report of the then critical dates projected by the
undersigned for work and deliveries required to complete the construction
project; (vi) the total amount paid for construction through the date of the
letter; (vii) the estimated total cost of completing such construction as of
the date of the letter, together with a current draw schedule; and (viii) any
other information BNP may request to allow it to decide whether to assume the
Agreement. BNP shall have thirty (30) days from receipt of such written
certificate containing all such requested information to decide whether to
assume the Agreement.
Exhibit E -2-
<PAGE> 87
BNP Leasing Corporation
______________, 199____
Page 3
If BNP fails to assume the Agreement within such time, the undersigned agrees
that BNP shall not be liable for (and the undersigned shall not assert or bring
any action against BNP or, except for any statutory lien rights not waived,
against the Land or improvements thereon for) any damages or other amounts
resulting from the breach or termination of the Agreement or under any other
theory of liability of any kind or nature, but rather the undersigned shall
look solely to Sun and any statutory lien rights not waived for the recovery of
any such damages or other amounts.
c) If BNP notifies the undersigned that BNP shall not assume the
Agreement pursuant to the preceding paragraph following the termination of
Sun's right to possession of the Project under the Lease, the undersigned shall
immediately discontinue the work under the Agreement and remove its personnel
from the Project, and BNP shall be entitled to take exclusive possession of the
Project and all or any part of the equipment and materials delivered or en
route to the Project. The undersigned shall also, upon request by BNP, deliver
and assign to BNP all plans and specifications and other contract documents
previously delivered to the undersigned (except that the undersigned may keep
an original set of the Agreement and other contract documents executed by Sun),
all other material relating to the work which belongs to BNP or Sun, and all
papers and documents relating to governmental permits, orders placed, bills and
invoices, lien releases and financial management under the Agreement.
Notwithstanding the undersigned's receipt of any notice from BNP that BNP
declines to assume the Agreement, the undersigned shall for a period not to
exceed fifteen (15) days after receipt of such notice take such steps, at BNP's
expense, as are reasonably necessary to preserve and protect work completed and
in progress and to protect materials, equipment and supplies at the site or in
transit.
d) No action taken by BNP or the undersigned with respect to the
Agreement shall prejudice any other rights or remedies of BNP or the
undersigned provided by law, by the Lease, by the Agreement or otherwise
against Sun.
e) The undersigned agrees promptly to notify BNP of any material
default or claimed material default by Sun under the Agreement, describing with
particularity the default and the action the undersigned believes is necessary
to cure the same. The undersigned will send any such notice to BNP prominently
marked "URGENT - NOTICE OF SUN MICROSYSTEMS's MATERIAL DEFAULT UNDER AGREEMENT
WITH _______________ - MENLO PARK CALIFORNIA" at the address specified for
notice below (or at such other addresses as BNP shall designate in notice sent
to the undersigned), by certified or registered mail, return receipt requested.
Following receipt of such notice, the undersigned will permit BNP or its
designee to cure any such default within the time period reasonably
Exhibit E -3-
<PAGE> 88
BNP Leasing Corporation
______________, 199____
Page 4
required for such cure, but in no event less than thirty (30) days. If it is
necessary or helpful to take possession of all or any portion of the Project to
cure a default by Sun under the Agreement, the time permitted by the
undersigned for cure by BNP will include the time necessary to terminate Sun's
right to possession of the Project and evict Sun, provided that BNP commences
the steps required to exercise such right within sixty (60) days after it is
entitled to do so under the terms of the Lease and applicable law.
f) Any notice or communication required or permitted hereunder
shall be given in writing, sent by (a) personal delivery or (b) expedited
delivery service with proof of delivery or (c) United States mail, postage
prepaid, registered or certified mail or (d) telegram, telex or telecopy,
addressed as follows:
To the undersigned:__________________________________________________
__________________________________________________
__________________________________________________
To BNP: BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
g) The undersigned acknowledges that it has all requisite authority
to execute this letter. The undersigned further acknowledges that BNP has
requested this letter, and is relying on the truth and accuracy of the
representations made herein, in connection with BNP's decision to advance funds
for construction under the Lease with Sun.
Very truly yours,
__________________________________________________
By:_______________________________________________
Name:__________________________________________
Title:_________________________________________
Exhibit E -4-
<PAGE> 89
BNP Leasing Corporation
______________, 199____
Page 5
Sun joins in the execution of this letter solely for the purpose of
evidencing its consent hereto, including its consent to the provisions that
would allow, but not require, BNP to assume the Agreement in the event Sun is
evicted from the Project.
Sun Microsystems, Inc.
By:____________________________________________
Name:_______________________________________
Title:______________________________________
Exhibit E -5-
<PAGE> 90
Exhibit F
COVENANT COMPLIANCE CERTIFICATE
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Gentlemen:
I, the undersigned, the _____________________________ of Sun
Microsystems, Inc., do hereby certify, represent and warrant that:
1. This Certificate is furnished pursuant to subparagraph
9(w)(iii) of that certain Lease Agreement (Phases II and III) dated as of
September 23, 1994 (the "Lease Agreement," the terms defined therein being used
herein as therein defined) between Sun Microsystems, Inc. (the "Tenant"), and
you.
2. Schedule 1 attached hereto sets forth financial data and
computations evidencing the Tenant's compliance with certain covenants included
in the Lease Agreement by reference to a Revolving Credit Agreement described
therein, all of which data and computations are complete, true and correct.
3. No Default or Event of Default under the Lease Agreement has
occurred and is continuing.
4. The representations and warranties set forth in Paragraph 9 of
the Lease Agreement are true and correct as of the date hereof as though made
on and as of the date hereof.
Executed this _____ day of ______________, 19___.
__________________________________________
Name:_____________________________________
Title:____________________________________
Exhibit F -1-
<PAGE> 91
Schedule 1
To
Compliance Certificate
For the _________________ Ended ________________, 19___
I. Section 5.01(h) of the Revolving Credit Agreement: Debt to
Consolidated Tangible Net Worth
<TABLE>
<S> <C> <C>
A. Total Debt: $_____________
B. Consolidated total assets: $_____________
C. Consolidated total liabilities: $_____________
D. Intangibles and other
exclusions (if any): $_____________
E. Consolidated Tangible Net Worth
(B - C - D): $_____________
F. Ratio of A to E: _____ to 1.00
I. Maximum ratio: .45 to 1.00
</TABLE>
II. Section 5.01(i) of the Revolving Credit Agreement: : Fixed Charge
Ratio
<TABLE>
<S> <C> <C>
A. Adjusted EBIT for previous 12 months: $____________
B. Fixed Charges for previous 12 months: $____________
C. Ratio of A to B: ______ to 1.00
D. Minimum ratio: *1.25 to 1.00
</TABLE>
* applicable to the twelve month period ending on the last day of the first
fiscal quarter of any fiscal year of Tenant
** applicable to the twelve month periods ending on the last day of the second,
third or fourth fiscal quarters of any fiscal year of Tenant
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III. Section 5.02(h) of the Revolving Credit Agreement: Subsidiary Debt
<TABLE>
<S> <C> <C>
A. U.S. Subsidiary Debt: $____________
B. Maximum Subsidiary Debt: $120,000,000
</TABLE>
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<PAGE> 93
Schedule 1
LIST OF PARTICIPANTS
1. Banque Nationale de Paris
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, CA 94104
Attention: Jennifer Cho
Telephone: (415) 956-0707 (ext. 205)
Facsimile: (415) 296-8954
Telex: RCA 278900
Answerback: BNP UR
2. The Sumitomo Bank, Limited
San Francisco Branch
555 California Street, Suite 3350
San Francisco, CA 94104
Attention: Herman White, Jr.
Telephone: (415) 616-3009
Facsimile: (415) 397-1475
Telex: 46910340
Answerback: SUMIT SF
3. The Toronto-Dominion Bank
909 Fannin #1700
Houston, Texas 77010
Attention: Mark G. Fields
Telephone: (713) 653-8225
Facsimile: (713) 652-2647
4. The Industrial Bank of Japan, Limited
San Francisco Agency
555 California Street, Suite 1610
San Francisco, CA 94104
Attention: Greg Stewart
Telephone: (415) 981-3131
Facsimile: (415) 982-1917
Telex: 49608738
Answerback: IBJ SFO
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5. Royal Bank of Canada
Grand Cayman (North America No. 1) Branch
c/o New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Attention: Manager, Loans Administration
Telephone: (212) 858-7168
Facsimile: (718) 522-6292
Telex: 420464 (RBOCUI Royal Bank)
62519 (Royal Bank)
With a copy to:
Royal Bank of Canada
600 Wilshire Blvd., Suite 800
Los Angeles, CA 90017
Attention: Stephen S. Hughes
Telephone (213) 955-5316, Facsimile: (213) 955-5350
6. Bayerische Vereinsbank AG, Cayman Islands Branch
c/o Bayerische Vereinsbank AG, Los Angeles Agency
800 Wilshire Blvd., Suite 1600
Los Angeles, CA 91754
Attention: Christine Taylor
Telephone: (213) 629-1821
Facsimile: (213) 622-6341
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<PAGE> 95
AMENDED AND RESTATED PURCHASE AGREEMENT
(PHASES II and III)
This AMENDED AND RESTATED PURCHASE AGREEMENT (PHASES II and III) (this
"AGREEMENT") is made as of September 23, 1994, by SUN MICROSYSTEMS, INC., a
Delaware corporation ("SUN") and BNP LEASING CORPORATION, a Delaware
corporation ("BNPLC").
R E C I T A L S
A. BNPLC has acquired the land and easements described in Exhibit
A attached hereto and any improvements and fixtures located thereon and has
been leasing the same to Sun pursuant to that certain Lease Agreement (Phases
II and III) (as from time to time supplemented, amended or restated, the "PRIOR
LEASE") between Sun and BNPLC dated as of September 25, 1992. (The land and
easements described in EXHIBIT A and any and all other real or personal
property from time to time covered by the Lease and included within the "Leased
Property" as defined therein are hereinafter collectively referred to as the
"PROPERTY".)
B. BNPLC also concurrently with the execution of the Prior Lease,
received a separate environmental indemnity from Sun pursuant to an
Environmental Indemnity Agreement (as from time to time supplemented, amended
or restated, the "ENVIRONMENTAL INDEMNITY") between Sun and BNPLC dated as of
September 25, 1992.
C. BNPLC also, concurrently with the execution of the Prior
Lease, entered into a Purchase Agreement (Phases II and III) with Sun dated
September 25, 1992 (as from time to time supplemented, amended or restated, the
"PRIOR PURCHASE AGREEMENT").
D. Sun has among other things, requested permission to construct
improvements on the Property and in connection therewith has entered into that
certain Amended and Restated Lease Agreement (Phases II and III) (as from time
to time supplemented, amended or restated, the "LEASE") between Sun and BNPLC
dated as of the date hereof, which Lease amends and restates the Prior Lease in
its entirety.
E. Sun is concurrently herewith ratifying and confirming its
separate Environmental Indemnity (supplemented, amended or restated) executed
for the benefit of BNPLC.
F. In connection with the execution of the Lease, Sun has agreed
to purchase or procure a third party to purchase the Property, on and subject
to the terms and conditions set out in
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this Agreement, with the understanding that this Agreement shall amend and
restate the Prior Purchase Agreement in its entirety.
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Definitions. As used herein, the terms "Sun", "BNPLC", "Prior
Lease", "Property", "Environmental Indemnity", "Prior Purchase Agreement" and
"Lease" shall have the meanings indicated above, and the terms listed
immediately below shall have the following meanings:
Applicable Purchaser. "APPLICABLE PURCHASER" means any third party
designated by Sun to purchase the interest of BNPLC in the Property as provided
in Paragraph 2(a)(ii) below.
BNPLC's Investment. "BNPLC'S INVESTMENT" shall mean the sum of
$24,200,000 plus all Construction Advances (as defined in the Lease) and
accrued Carrying Costs (as defined in the Lease), less Qualified Payments (as
defined in the Lease), if any. For purposes of this definition Construction
Advances, Carrying Costs and Qualified Payments will be determined as of the
Designated Payment Date or other date for which BNPLC's Investment is being
determined.
Business Day. "BUSINESS DAY" means any day that is (1) not a Saturday,
Sunday or day on which commercial banks are generally closed or required to be
closed in New York City, New York, and (2) a day on which dealings in deposits
of dollars are transacted in the London interbank market; provided that if such
dealings are suspended indefinitely for any reason, "BUSINESS DAY" shall mean
any day described in clause (1).
Change of Control Event. "CHANGE OF CONTROL EVENT" means the
occurrence of any of the following: (i) any corporation or Person (as defined
in the Lease), or a group of related corporations or Persons, shall acquire (a)
beneficial ownership of in excess of 50% of the outstanding Voting Stock of
Sun, or (b) all or substantially all of the assets of Sun, or (ii) a majority
of the Board of Directors of Sun is, at any time, composed of persons other
than (a) persons who were members of such Board on the date of this Agreement,
(b) successors to such persons elected or nominated in the ordinary course of
business, and (c) any person who has served as a member of such Board for at
least the prior 12 months.
Designated Payment Date. "DESIGNATED PAYMENT DATE" means the Payment
Date on which pursuant to Paragraph 2(a) below Sun must purchase or arrange for
the sale of BNPLC's interest in the Property under this Agreement, which date
shall be the earlier of: (1) the Payment Date upon which the last payment of
Base Rent
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<PAGE> 97
is required under the Lease (whether such date occurs on October 1, 1999, or
earlier because of an early termination of the Lease pursuant to Paragraph 2
thereof or otherwise); (2) any Payment Date after a Change of Control Event or
an Event of Default by Sun has occurred, provided such Payment Date is
designated in a written notice from BNPLC to Sun at least ten (10) days before
such Payment Date; (3) any Payment Date after a default by BNPLC under the
Lease has occurred which BNPLC has failed to cure within the time permitted by
Paragraph 29 of the Lease, provided such Payment Date is designated in a
written notice from Sun to BNPLC at least ten (10) days before such Payment
Date; or (4) any Payment Date specified by Tenant as the Designated Payment
Date pursuant to Paragraph 14(a) of the Lease.
Event of Default . "EVENT OF DEFAULT" by Sun means any Event of
Default under the Lease as described in Paragraph 14 thereof.
Fair Market Value. "FAIR MARKET VALUE" means an amount not less than
the fair market value of the Property (calculated under the assumption that Sun
has maintained the Property in compliance with all applicable laws, including
laws relating to health, safety and the environment, as required by the Lease)
on or about the Designated Payment Date as determined by an independent MAI
appraiser selected by BNPLC, which appraiser must have five (5) years or more
experience appraising properties in northern California.
Payment Date . "PAYMENT DATE" means the first Business Day of any
calendar month.
Purchase Price. "PURCHASE PRICE" means an amount equal to BNPLC's
Investment outstanding on the Designated Payment Date, plus all costs and
expenses (including appraisal costs, withholding taxes (if any) and reasonable
Attorneys' Fees (as defined in the Lease)) incurred in connection with any sale
of the Property by BNPLC hereunder.
Required Documents. "REQUIRED DOCUMENTS" shall have the meaning
assigned to it in Paragraph 3 below.
Shortage Amount. "SHORTAGE AMOUNT" means any amount payable to BNPLC
by Sun, rather than by the Applicable Purchaser pursuant to clause 2(a)(ii)
below.
Voting Stock . "VOTING STOCK" of Sun means any shares of stock of Sun
whose holders are entitled under ordinary circumstances to
vote for the election of directors of Sun (irrespective of
whether at the time stock of any other class or classes
shall have or might have voting power by reason of the
happening of any contingency).
2. Sun's Obligations on the Designated Payment Date
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<PAGE> 98
(a) Choices. On the Designated Payment Date Sun must satisfy the
obligations specified in either of the following clauses, unless excused in
writing by BNPLC:
(i) Sun shall purchase BNPLC's interest in the Property
and in Escrowed Proceeds (as defined in the Lease),
if any, for a net cash price equal to the Purchase
Price.
(ii) Sun shall cause the Applicable Purchaser to purchase
BNPLC's interest in the Property and in Escrowed
Proceeds, if any, for a net cash price not less than
the lesser of (a) the Fair Market Value or (b)
fifteen percent (15%) of BNPLC's Investment
outstanding immediately prior to the purchase.
However, if the Fair Market Value is less than
fifteen percent (15%) of BNPLC's Investment and if
Sun has elected to satisfy its obligations under this
clause (ii), BNPLC may elect to keep the Property and
any Escrowed Proceeds rather than sell it to the
Applicable Purchaser, in which case Sun shall pay
BNPLC an amount equal to eighty-five percent (85%) of
BNPLC's Investment. Unless BNPLC elects to keep the
Property pursuant to the preceding sentence, Sun
must, if Sun elects to satisfy its obligations under
this clause (ii) rather than clause (i) above, also
make a supplemental payment to BNPLC on the
Designated Payment Date equal to the excess (if any)
of the Purchase Price over the net cash price
actually paid on the Designated Payment Date for
BNPLC's interest in the Property and in Escrowed
Proceeds, if any, by the Applicable Purchaser, but in
no event will any such supplemental payment exceed
eighty-five percent (85%) of BNPLC's Investment
outstanding immediately prior to such purchase.
Amounts payable to BNPLC by Sun, rather than by the
Applicable Purchaser, pursuant to this clause (ii)
are hereinafter referred to as the "SHORTAGE AMOUNT."
If the net cash price actually paid by the Applicable
Purchaser to BNPLC exceeds the Purchase Price and all
other sums that are then due from Sun to BNPLC, Sun
shall be entitled to such excess.
(b) Right to Purchase and Election by Sun. Even if BNPLC is
willing to excuse Sun's obligations under Subparagraph (a), Sun shall have the
option and right to purchase BNPLC's interest in the Property and in Escrowed
Proceeds, if any, as contemplated in clause (i) of the preceding Subparagraph
(a) by tendering the Purchase Price to BNPLC, subject only to subparagraph (c).
Sun shall also have the right to elect whether it will satisfy the
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<PAGE> 99
obligations set out in clause (i) or (ii) of the preceding Subparagraph (a);
provided, however, that Sun must notify BNPLC of its election in writing at
least seven (7) days prior to the Designated Payment Date. If Sun fails to so
notify BNPLC, Sun will be deemed to have elected to satisfy the obligations set
out in clause (i).
(c) Termination of Sun's Option. Without limiting BNPLC's right to
require Sun to satisfy the obligations imposed by subparagraph 2(a), Sun shall
have no further option under subparagraph 2(b) if either:
(1) Sun shall have elected to satisfy its obligations under
clause (ii) of subparagraph 2(a) on a prior Designated Payment Date and BNPLC
shall have elected to keep the Property on such Designated Payment Date in
accordance with clause (ii) of subparagraph 2(a); or
(2) Sun shall have failed on a prior Designated Payment Date
to make or cause to be made all payments to BNPLC required by this Agreement or
by the Lease and such failure shall have continued beyond the thirty (30) day
period for tender specified in the next sentence.
If BNPLC does not receive all payments due under the Lease and all payments
required hereunder on a Designated Payment Date, Sun may nonetheless tender to
BNPLC the full Purchase Price, together with interest on the total Purchase
Price computed at the Default Rate from the Designated Payment Date to the date
of tender, and if presented with such a tender within thirty (30) days after
the applicable Designated Payment Date, BNPLC must accept it and promptly
deliver any Escrowed Proceeds and a deed and all other documents required to
convey BNPLC's interest in the Property to Sun as listed in Paragraph 3.
(d) Payment to BNPLC. All amounts payable under the preceding
subparagraphs (a) or (c) by Sun and, if applicable, by the Applicable Purchaser
shall be paid to BNPLC. In no event will a payment directly to any other party
be effective for the purposes of this Agreement. BNPLC will remit any excess
amounts due Sun pursuant to the last sentence of clause (ii) of Subparagraph
(a) promptly after BNPLC's receipt of the same.
3. Terms of Conveyance Upon Purchase. Promptly following the
payment or payments to BNPLC required pursuant to the preceding Paragraph 2,
BNPLC must, unless it is to keep the Property as permitted by Paragraph
2(a)(ii), deliver Escrowed Proceeds, if any, and convey all of its right, title
and interest in the Property by grant deed to Sun or the Applicable Purchaser,
as the case may be, subject only to the Permitted Encumbrances (as defined in
the Lease) and any other encumbrances for which BNPLC is not responsible under
subparagraph 10(a) of the Lease. However, such conveyance shall not include
the right to receive
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<PAGE> 100
any payment under the Lease then due BNPLC or that may become due thereafter
because of any expense or liability incurred by BNPLC resulting in whole or in
part from events or circumstances occurring before such conveyance. All costs
of such purchase and conveyance of every kind whatsoever, both foreseen and
unforeseen (excluding only BNPLC's home office overhead costs and expenses),
shall be the responsibility of the purchaser, and the form of grant deed used
to accomplish such conveyance shall be substantially in the form attached as
EXHIBIT B. With such grant deed, BNPLC shall also tender the following, each
fully executed and, where appropriate, acknowledged on BNPLC's behalf by an
officer of BNPLC: (1) a Preliminary Change of Ownership Report in the form
attached as EXHIBIT C, (2) a Bill of Sale and Assignment of Contract Rights and
Intangible Assets in the form attached as EXHIBIT D, (3) an Assignment of BCDC
Permit in the form attached as EXHIBIT E, (4) an Acknowledgment of Disclaimer
of Representations and Warranties, in the form attached as EXHIBIT F, which Sun
or the Applicable Purchaser must execute and return to BNPLC, (5) a Documentary
Transfer Tax Request in the form attached as EXHIBIT G, (6) a Secretary's
Certificate in the form attached as EXHIBIT H, (7) a letter to First American
Title Insurance Company in the form attached as EXHIBIT I, and (8) a
certificate concerning tax withholding in the form attached as EXHIBIT J (which
documents, together with the grant deed, are herein called the "REQUIRED
DOCUMENTS").
It is the intent of the parties that BNPLC's delivery of the Required
Documents shall convey all right, title and interest BNPLC then has in and to
the Leased Property and the appurtenances thereto. Accordingly, if after the
Delivery of the Required Documents and BNPLC's receipt of the payments required
to be made to BNPLC by this Agreement, it is discovered that the Required
Documents were insufficient for such intended purpose, then BNPLC shall execute
such additional documents as Tenant may reasonably request to accomplish the
conveyance of all right, title and interest of BNPLC in and to the Leased
Property and the appurtenances thereto; provided, that no such additional
documents shall increase BNPLC's obligations for title defects or other matters
beyond the obligations imposed upon BNPLC by the Required Documents themselves.
If the Property is sold to the Applicable Purchaser pursuant to
clause (ii) of Paragraph 2(a), then, either:
(a) The Applicable Purchaser must assume in writing Sun's
obligations under the Environmental Indemnity and provide a new environmental
indemnity to BNPLC comparable in scope and form to the Environmental Indemnity
and otherwise reasonably acceptable to BNPLC, but providing that the Release
Date (as defined in the Environmental Indemnity) shall not occur before the
Applicable Purchaser conveys all its interest in the Property to an
unaffiliated transferee. Further, to provide BNPLC with assurance that the
Applicable Purchaser has the financial
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<PAGE> 101
capability to satisfy its indemnity obligations, the Applicable Purchaser or a
guarantor of such obligations under an unconditional and absolute guaranty in
form and substance satisfactory to BNPLC must have a net worth as of the
Designated Payment Date, as shown on current financial statements audited by a
recognized accounting firm of national standing, of no less than
$50,000,000.00; or
(b) Sun must confirm and ratify its obligations under the
Environmental Indemnity and agree to modify the Environmental Indemnity to
provide that the Release Date (as defined in the Environmental Indemnity) shall
not occur before the Applicable Purchaser conveys all its interest in the
Property to an unaffiliated transferee. Such modification shall also expressly
provide that the Environmental Indemnity shall cover any and all Environmental
Losses (as defined in the Environmental Indemnity) asserted against an
"Indemnified Party" thereunder by the Applicable Purchaser or any affiliate of
the Applicable Purchaser.
4. Survival of Sun's Obligations.
(a) Status of this Agreement. Except as expressly provided
herein, this Agreement shall not terminate, nor shall Sun or BNPLC have any
right to terminate this Agreement, nor shall Sun be entitled to any reduction
of the Purchase Price hereunder, nor shall the obligations of Sun to BNPLC
under Paragraph 2 or BNPLC to Sun under Paragraph 3 be affected by reason of
(i) any damage to or the destruction of all or any part of the Property from
whatever cause, (ii) the taking of or damage to the Property or any portion
thereof under the power of eminent domain or otherwise for any reason, (iii)
the prohibition, limitation or restriction of Sun's use of all or any portion
of the Property or any interference with such use by governmental action or
otherwise, (iv) any eviction of Sun or any party claiming under Sun by
paramount title or otherwise, (v) Sun's acquisition or ownership of all or any
part of the Property, (vi) any default on the part of BNPLC under this
Agreement, the Lease or any other agreement to which BNPLC is a party, or (vii)
any other cause, whether similar or dissimilar to the foregoing, any existing
or future law to the contrary notwithstanding. It is the intention of the
parties hereto that the obligations of Sun to make payment to and, if
applicable, to cause the Applicable Purchaser to make payment to BNPLC under
Paragraph 2 shall be separate and independent covenants and agreements from
BNPLC's obligation under Paragraph 3 to convey the Property pursuant to this
Agreement; provided, however, that BNPLC shall not refuse to tender a grant
deed and the other Required Documents in substantially the form attached hereto
as exhibits as required by Paragraph 3 contemporaneously with the tender by Sun
and/or the Applicable Purchaser of such payments and of the other documents to
be executed in favor of BNPLC at the closing of the sale. Accordingly, the
Purchase Price and the Shortage Amount, as the
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case may be under Paragraph 2, shall continue to be payable in all events
(other than BNPLC's failure to so tender the Required Documents), and the
obligations of Sun hereunder shall continue unaffected, unless the requirement
to pay or perform the same shall have been terminated or limited pursuant to an
express provision of this Agreement. If BNPLC does refuse to tender the
Required Documents as required by Paragraph 3, BNPLC may cure such refusal at
any time before thirty (30) days after receipt of a written demand for such
cure from Sun.
(b) Remedies Under the Lease and Environmental Indemnity. No
repossession of or re-entering upon the Property or exercise of any other
remedies available under the Lease or the Environmental Indemnity shall relieve
Sun of its liabilities and obligations hereunder, all of which shall survive
the exercise of remedies under the Lease and Environmental Indemnity. Sun
acknowledges that the consideration for this Agreement is separate and
independent of the consideration for the Lease and Environmental Indemnity, and
Sun's obligations hereunder shall not be affected or impaired by any event or
circumstance that would excuse Sun from performance of its obligations under
the Lease or the Environmental Indemnity.
5. Remedies Cumulative. No right or remedy herein conferred upon
or reserved to BNPLC is intended to be exclusive of any other right or remedy
BNPLC has with respect to the Property, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given
hereunder or now or hereafter existing at law or in equity or by statute. In
addition to other remedies available under this Agreement, BNPLC shall be
entitled, to the extent permitted by applicable law, to a decree compelling
performance of any of Sun's agreements hereunder.
6. No Implied Waiver. The failure of either party to this
Agreement to insist at any time upon the strict performance of any covenant or
agreement of the other party or to exercise any remedy contained in this
Agreement shall not be construed as a waiver or a relinquishment thereof for
the future. The waiver by either party of or redress for any violation of any
term, covenant, agreement or condition contained in this Agreement shall not
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. No express
waiver by either party shall affect any condition other than the one specified
in such waiver and that one only for the time and in the manner specifically
stated. A receipt by BNPLC of any payment hereunder with knowledge of the
breach of this Agreement shall not be deemed a waiver of such breach, and no
waiver by BNPLC of any provision of this Agreement shall be deemed to have been
made unless expressed in writing and signed by BNPLC.
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<PAGE> 103
7. Attorneys' Fees and Legal Expenses. If any party hereto
commences any legal action or other proceeding against the other party hereto
to enforce any of the terms of this Agreement or the documents and agreements
referred to herein, or because of any breach or dispute hereunder or
thereunder, the successful or prevailing party shall be entitled to recover
from the losing party Attorneys' Fees, whether or not such controversy, claim
or dispute is prosecuted to a final judgment; provided, however, if the losing
party is entitled to and does appeal any judgment resulting from a lawsuit or
other proceeding filed with respect hereto or thereto, then the prevailing
party shall be determined upon the issuance of a final, non-appealable order
with respect to such lawsuit or other proceeding. As used herein, the term
"ATTORNEYS' FEES" shall have the meaning given such term in the Lease.
8. Estoppel Certificate. Each party hereto will, upon not less
than twenty (20) days' prior request by the other party, execute, acknowledge
and deliver to the requesting party a written statement certifying that this
Agreement is unmodified and in full effect (or, if there have been
modifications, that this Agreement is in full effect as modified, and setting
forth such modification) and either stating that to the knowledge of the signer
of such certificate no default exists hereunder or specifying each such default
of which the signer may have knowledge; it being intended that any such
statement may be relied upon by any prospective purchaser or assignee of the
requesting party with respect to the Property. Neither party shall be required
to provide such a certificate more frequently than once in any six month
period; provided, however, that if a requesting party determines that there is
a significant business reason for requiring a current certificate, including,
without limitation, the need to provide such a certificate to a prospective
purchaser or assignee, then the other party shall provide a certificate whether
or not it had provided a certificate within the prior six month period.
9. Notices. Each provision of this Agreement referring to the
sending, mailing or delivery of any notice or referring to the making of any
payment to BNPLC, shall be deemed to be complied with when and if the following
steps are taken:
(a) All payments required to be made by Sun or the
Applicable Purchaser to BNPLC hereunder shall be paid to BNPLC in
immediately available funds in accordance with the payment
instructions set forth in the Lease or as BNPLC may otherwise direct
by written notice sent in accordance herewith. Time is of the essence
as to all payments required hereunder and other obligations of Sun.
All payments required to be made by BNPLC to Sun pursuant to the last
sentence of clause (ii) of Paragraph 2(a) shall be paid to Sun in
immediately available funds at the address of Sun
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set forth below or as Sun may otherwise direct by written notice sent
in accordance herewith.
(b) All notices and other communications to be made hereunder
to the parties hereto shall be in writing (at the addresses set forth below) and
shall be given by any of the following means: (1) personal service; (2)
electronic communication, whether by telex, telegram or telecopying (if
confirmed in writing sent by registered or certified first class mail, return
receipt requested); or (3) registered or certified first class mail, return
receipt requested. Such addresses may be changed by notice to the other parties
given in the same manner as provided above. Any notice or other communication
sent pursuant to clause (1) or (2) shall be deemed received upon such
personal service or upon dispatch by electronic means except for
telecopies, and, if telecopied or sent pursuant to clause (3), shall be
deemed received five (5) days following deposit in the mail.
To BNPLC: BNP Leasing Corporation
717 North Harwood
Suite 2630
Dallas, Texas 75201
Attention: David Schad
With
a copy to: Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho
Telecopy: (415) 296-8954
And with
a copy to: Clint Shouse, Esq.
Thompson & Knight, P.C.
3300 First City Center
1700 Pacific Avenue
Dallas, Texas 75201
To Sun: Sun Microsystems, Inc.
2550 Garcia Ave.
Mountain View, Ca. 94043
MS PALI-211
Attention: Robert Prantis
With
a copy to: Sun Microsystems, Inc.
2550 Garcia Ave.
Mountain View, Ca. 94043
MS PALI-211
Attention: Charles Dolci, Esq.
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10. Severability. Each and every covenant and agreement of Sun
contained in this Agreement is, and shall be construed to be, a separate and
independent covenant and agreement. If any term or provision of this Agreement
or the application thereof to any person or circumstances shall to any extent
be invalid and unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected
thereby. Further, the obligations of Sun hereunder, to the maximum extent
possible, shall be deemed to be separate, independent and in addition to, not
in lieu of, the obligations of Sun under the Lease. In the event of any
inconsistency between the terms of this Agreement and the terms and provisions
of the Lease, the terms and provisions of this Agreement shall control.
11. Entire Agreement. This Agreement and the documents and
agreements referred to herein set forth the entire agreement between the
parties concerning the subject matter hereof and no amendment or modification
of this Agreement shall be binding or valid unless expressed in a writing
executed by both parties hereto.
12. Paragraph Headings. The paragraph headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several paragraphs hereof.
13. Gender and Number. Within this Agreement, words of any gender
shall be held and construed to include any other gender and words in the
singular number shall be held and construed to include the plural, unless the
context otherwise requires.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE UNDER AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA IN ALL
RESPECTS.
15. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Sun and BNPLC and their respective
successors and assigns and shall inure to the benefit of Sun and BNPLC and all
transferees, mortgagees, successors and assignees of Sun and BNPLC with respect
to the Property. As used herein, all references to "BNPLC" shall be deemed to
include all subsequent owners of the Property (excluding, however, Sun and any
Applicable Purchaser and any subsequent owner claiming through them); and if
there shall be more than one owner of the Property, any action, request, notice
or determination required or permitted of BNPLC hereunder shall be effective if
approved by the owner or owners of that portion of a majority of the square
footage of the land included within the Property.
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<PAGE> 106
16. WAIVER OF JURY TRIAL. BNPLC AND SUN EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THE LEASE, THIS AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE
RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended
to be all- encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Sun and BNPLC each acknowledge that this
waiver is a material inducement to enter into a business relationship, that
each has already relied on the waiver in entering into this Agreement and the
other documents referred to herein, and that each will continue to rely on the
waiver in their related future dealings. Sun and BNPLC each further warrant
and represent that it has reviewed this waiver with its legal counsel, and that
it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LEASE, THIS
AGREEMENT OR THE ENVIRONMENTAL INDEMNITY. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
17. BCDC PERMIT NOTICE. As required by the terms of the amended
Permit No. 26-78 (the BCDC Permit) included in the Permitted Encumbrances,
reference is hereby expressly made to the public access and public parking
provisions contained therein.
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<PAGE> 107
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
"BNPLC"
BNP LEASING CORPORATION, a Delaware
corporation
By:__________________________________
Lloyd G. Cox, Vice President
"Sun"
SUN MICROSYSTEMS, INC., a Delaware
corporation
By:__________________________________
Richard Barker, Vice President
and Treasurer
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<PAGE> 108
EXHIBIT A
Legal Description
Parcels 2, 3, & 4
The land referred to herein is situated in the State of California, County of
San Mateo, City of Menlo Park and is described as follows:
Parcel A:
Parcels 2, 3, & 4 as shown on Parcel Map, lands of BNP Leasing Corporation,
filed February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive,
San Mateo County Records.
Reserving therefrom the easements set forth in Sections 5-1-1, 5-1-2, 5-1-6,
5-1-7, 5-1-8, 5-1-9 and 5-1-10 of the Declaration of Covenants, Conditions,
Restrictions and Easements recorded February 16, 1994, Series No. 94028453, San
Mateo County Records. Said easements are to be appurtenant to Parcel 1 as
shown on said parcel map.
Parcel B:
Non-exclusive and exclusive easements for the purposes of constructing, laying,
installing, operating, using, maintaining, altering, repairing, replacing,
inspecting and repairing utility service connections, service lines and similar
facilities, as contained in the Easement Agreement dated March 25, 1992 by and
between Raychem Corporation, a Delaware corporation, and BNP Leasing
Corporation, a Delaware corporation, recorded March 26, 1992 under Recorders
Serial No. 92042487, Official Records of San Mateo County, California being
more particularly described as follows:
BEGINNING at a point on the Northerly line of Rancho de las Pulgas,
said point being distant along said Northerly line South 81 degrees 22' 50"
East 1989.00 feet (an angle point in said Northerly line called PMC-13) and
North 89 degrees 11' East 648.34 feet from the most Northeasterly corner of the
boundary of the lands shown on a Record of Survey Map recorded in Volume 3 of
Licensed Land Surveyors Maps, at page 120, San Mateo County Records; thence
from said point of beginning along said Northerly line North 89 degrees 11'
East 1786.01 feet to a point on the Northerly prolongation of the Westerly line
of Willow Road, as said road is shown upon the map of Newbridge Park, recorded
in Volume 14 of Maps at pages 6 and 7, Records of San Mateo County, California;
thence along said prolongation South 22 degrees 02' 45" West 485.29 feet to the
Northerly line of Southern Pacific Company right of way; thence along the last
mentioned line, South 84 degrees 57' 30" West 1902.61 feet; thence North 5
degrees 02' 30" West 100.00 feet; thence North 84 degrees 57' 30" East
A-1
<PAGE> 109
342.43 feet; thence North 5 degrees 02' 30" West 463.64 feet to the point of
beginning.
EXCEPTING THEREFROM Parcel 46737-1 as contained in the Final Order of
Condemnation recorded July 27, 1983 under Recorders Serial No. 83078012,
Official Records of San Mateo County, California and being more particularly
described as follows:
COMMENCING at the Northeasterly corner of Parcel 6, as said Parcel 6 is
designated in the map entitled "RECORD OF SURVEY OF A PORTION OF THE LANDS
FORMERLY OWNED BY THE CARNDUFF SITUATED IN SECTION 24; TOWNSHIP 5 SOUTH, RANGE
3 WEST, M.D.B. AND M. AND IN THE RANCHO DE LAS PULGAS" filed in the office of
the Recorder of the San Mateo County, State of California, on October 29, 1965,
in Volume 6 of Licensed Land Survey Maps at page 66; thence along common line
of said Parcel 6 and Parcel 5 of said Record of Survey South 54 degrees 33' 08"
West, 37.03 feet; thence from a tangent that bears South 82' 18' 07" West,
along a curve to the right with a radius of 2120.00 feet, through an angle of 2
degrees 07' 56", an arc length of 78.90 feet; thence South 35 degrees 20' 07"
West, 114.78 feet; thence South 18 degrees 44' 08" West, 0.42 feet to said
common line of Parcel 6 and Parcel 5; thence along last said line South 54' 33'
08" West 204.46 feet to the Westerly line of said Parcel 5; thence along last
said line South 23 degrees 08' 15" West, 106.70 feet to the Southwesterly
corner of said Parcel 5; thence leaving last said corner North 15 degrees 03'
57" East, 107.78 feet; thence North 0 degrees 11' 25" West, 172.12 feet; thence
along a tangent curve to the left with a radius of 45.00 feet, through an angle
of 81 degrees 13' 05", an arc length of 63.79 feet; North 81 degrees 24' 30"
West 162.32 feet to the Northerly line of Rancho de las Pulgas between PMC 13
to PMC 12; along last said line South 89 degrees 38' 32" East 554.89 feet to
the point of commencement.
Parcel C:
Easements set forth in Sections 5-1-1, 5-1-2, 5-1-6, 5-1-7, 5-1-8, 5-1-9 and
5-1-10 of the Declaration of Covenants, Conditions, Restrictions and Easements
recorded February 16, 1994, Series No. 94028453, San Mateo County Records, over
Parcel 1 as shown on Parcel Map, lands of BNP Leasing Corporation, filed
February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive, San
Mateo County Records. Said easements are to be appurtenant to Parcel A above.
A-2
<PAGE> 110
EXHIBIT B
(Use printed form deed provided by G. Maloney, but expressly subject to
encumbrances described in Annex B)
B-1
<PAGE> 111
ANNEX A
Legal Description
Parcels 2, 3, & 4
The land referred to herein is situated in the State of California, County of
San Mateo, City of Menlo Park and is described as follows:
Parcel A:
Parcels 2, 3, & 4 as shown on Parcel Map, lands of BNP Leasing Corporation,
filed February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive,
San Mateo County Records.
Reserving therefrom the easements set forth in Sections 5-1-1, 5-1-2, 5-1-6,
5-1-7, 5-1-8, 5-1-9 and 5-1-10 of the Declaration of Covenants, Conditions,
Restrictions and Easements recorded February 16, 1994, Series No. 94028453, San
Mateo County Records. Said easements are to be appurtenant to Parcel 1 as
shown on said parcel map.
Parcel B:
Non-exclusive and exclusive easements for the purposes of constructing, laying,
installing, operating, using, maintaining, altering, repairing, replacing,
inspecting and repairing utility service connections, service lines and similar
facilities, as contained in the Easement Agreement dated March 25, 1992 by and
between Raychem Corporation, a Delaware corporation, and BNP Leasing
Corporation, a Delaware corporation, recorded March 26, 1992 under Recorders
Serial No. 92042487, Official Records of San Mateo County, California being
more particularly described as follows:
BEGINNING at a point on the Northerly line of Rancho de las Pulgas,
said point being distant along said Northerly line South 81 degrees 22' 50"
East 1989.00 feet (an angle point in said Northerly line called PMC-13) and
North 89 degrees 11' East 648.34 feet from the most Northeasterly corner of the
boundary of the lands shown on a Record of Survey Map recorded in Volume 3 of
Licensed Land Surveyors Maps, at page 120, San Mateo County Records; thence
from said point of beginning along said Northerly line North 89 degrees 11'
East 1786.01 feet to a point on the Northerly prolongation of the Westerly line
of Willow Road, as said road is shown upon the map of Newbridge Park, recorded
in Volume 14 of Maps at pages 6 and 7, Records of San Mateo County, California;
thence along said prolongation South 22 degrees 02' 45" West 485.29 feet to the
Northerly line of Southern Pacific Company right of way; thence along the last
mentioned line, South 84 degrees 57' 30" West 1902.61 feet; thence North 5
degrees 02' 30" West 100.00 feet; thence North 84 degrees 57' 30" East
B-2
<PAGE> 112
342.43 feet; thence North 5 degrees 02' 30" West 463.64 feet to the point of
beginning.
EXCEPTING THEREFROM Parcel 46737-1 as contained in the Final Order of
Condemnation recorded July 27, 1983 under Recorders Serial No. 83078012,
Official Records of San Mateo County, California and being more particularly
described as follows:
COMMENCING at the Northeasterly corner of Parcel 6, as said Parcel 6 is
designated in the map entitled "RECORD OF SURVEY OF A PORTION OF THE LANDS
FORMERLY OWNED BY THE CARNDUFF SITUATED IN SECTION 24; TOWNSHIP 5 SOUTH, RANGE
3 WEST, M.D.B. AND M. AND IN THE RANCHO DE LAS PULGAS" filed in the office of
the Recorder of the San Mateo County, State of California, on October 29, 1965,
in Volume 6 of Licensed Land Survey Maps at page 66; thence along common line
of said Parcel 6 and Parcel 5 of said Record of Survey South 54 degrees 33' 08"
West, 37.03 feet; thence from a tangent that bears South 82' 18' 07" West,
along a curve to the right with a radius of 2120.00 feet, through an angle of 2
degrees 07' 56", an arc length of 78.90 feet; thence South 35 degrees 20' 07"
West, 114.78 feet; thence South 18 degrees 44' 08" West, 0.42 feet to said
common line of Parcel 6 and Parcel 5; thence along last said line South 54' 33'
08" West 204.46 feet to the Westerly line of said Parcel 5; thence along last
said line South 23 degrees 08' 15" West, 106.70 feet to the Southwesterly
corner of said Parcel 5; thence leaving last said corner North 15 degrees 03'
57" East, 107.78 feet; thence North 0 degrees 11' 25" West, 172.12 feet; thence
along a tangent curve to the left with a radius of 45.00 feet, through an angle
of 81 degrees 13' 05", an arc length of 63.79 feet; North 81 degrees 24' 30"
West 162.32 feet to the Northerly line of Rancho de las Pulgas between PMC 13
to PMC 12; along last said line South 89 degrees 38' 32" East 554.89 feet to
the point of commencement.
Parcel C:
Easements set forth in Sections 5-1-1, 5-1-2, 5-1-6, 5-1-7, 5-1-8, 5-1-9 and
5-1-10 of the Declaration of Covenants, Conditions, Restrictions and Easements
recorded February 16, 1994, Series No. 94028453, San Mateo County Records, over
Parcel 1 as shown on Parcel Map, lands of BNP Leasing Corporation, filed
February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive, San
Mateo County Records. Said easements are to be appurtenant to Parcel A above.
B-3
<PAGE> 113
ANNEX B
PERMITTED ENCUMBRANCES
Parcels 2, 3, & 4
This conveyance is subject to the following matters, but only to the
extent the same are still valid and in full force and effect:
1. General and Special Taxes for the fiscal year 1994-95, now a lien,
amount not yet ascertainable.
2. General and Special Taxes for the fiscal year 1993-94, in the amount
of $201,146.56, each installment has been paid in full. (Code Area
008-080; A.P. No. 055-411-100; Affects additional property).
3. The Lien of Supplemental Taxes assessed pursuant to Chapter 3.5,
commencing with Section 75 of the California Revenue and Taxation
Code.
4. Amendment to Reservation executed by Fred Carnduff, Chester Carnduff,
Edgar Carnduff, Jeanette Carnduff Thornton, Alfred A. Affinito and
Bess M. Affinito, dated June 6, 1968, recorded on June 14, 1968, as
Document No. 50849-AB in Book/Reel 5487 of the Official Records at
page/image 381 of the Records of San Mateo County, California. Said
amendment modified the reservations contained in Grant Deed from Edgar
Carnduff, et al., to Nathaniel Hellman, et al., recorded on September
17, 1964, in Book/Reel 4799 of the Official Records at page/image 48
of the Records of San Mateo County, California. Said amendment
quitclaims rights in reserved minerals within the surface 500 feet
except for two one acre sites described as Parcels "E" and "F"
together with 20 foot wide access easements. Said amendment also
amends the reservation for access to property south of the Southern
Pacific R.R. to except the property herein described.
5. Ordinance No. 670 of the Community Development Agency of the City of
Menlo Park, entitled "An Ordinance Adopting Community Development Plan
for the Las Pulgas Project Area and Making Certain Findings and
Determinations Pursuant to the Community Redevelopment Law of the
State of California," passed and adopted by the Community Development
Agency on November 24, 1981, a certified copy of which was recorded on
December 21, 1981, as Document No. 19388-AT of the Official Records of
San Mateo County, California.
Ordinance No. 826 of the City Council of the City of Menlo Park,
entitled "An Ordinance of the City Council of the City of Menlo Park
adopting the First Amended and Restated Las Pulgas Community
Development Plan pursuant to the Community
B-4
<PAGE> 114
Redevelopment Law of the State of California," passed and adopted by
the City Council on September 10, 1991, a certified copy of which was
recorded on September 11, 1991, as Document No. 91120049 of the
Official Records of San Mateo County, California.
Statement of Institution of Amended Redevelopment Plan of the Las
Pulgas Community Development Plan which was recorded on September 11,
1991, as Document No. 91120050 of the Official Records of San Mateo
County, California.
6. Easements condemned in that certain Final Order of Condemnation under
Action No. 245918 entitled "The People of the State of California vs.
Raychem Corporation," recorded on July 27, 1983, as Document No.
83078012 (Parcel 45670-3, an easement for drainage purposes over an
irregular parcel in the Southeast corner of Parcel 4; Parcel 45670-4,
an easement for road purposes over a 20' x 60.29' parcel near the
Southeast corner of Parcel 4).
7. Relinquishment of Abutters Rights as contained in that certain Final
Order of Condemnation under Action No. 245918 entitled "The People of
the State of California vs. Raychem Corporation," recorded on July 27,
1983, as Document No. 83078012. Access is restricted to certain
portions of frontage along said condemned lands.
8. Resolution No. 785 of the Menlo Park Fire Protection District,
Resolution approving the annexation of certain Baylands to the Menlo
Park Fire Protection District, recorded on August 18, 1989, as
Document No. 89109745 of the Official Records of San Mateo County,
California.
9. The terms, covenants and conditions as contained in Permit No. 26-78
by and between the San Francisco Bay Conservation and Development
Commission and Raychem Corporation, recorded on March 18, 1991, under
Recorders Serial No. 91029676 of the Official Records of San Mateo
County, California. An Assignment of BCDC Permit, recorded on March
26, 1992, under Recorders Serial No. 92042489 of the Official Records
of San Mateo County, California. Amendment No. Four thereunder dated
August 13, 1993, recorded on September 9, 1993, Series No. 93152912.
10. Development Agreement by and between the City of Menlo Park, a
municipal corporation of the State of California, and Sun
Microsystems, Inc., a Delaware corporation, dated November 29, 1991,
recorded on December 9, 1991, as Document No. 91160984 of the Official
Records of San Mateo County, California.
11. Easement for water meter over the property, as shown on the Parcel
Map, lands of BNP Leasing Corporation, filed February
B-5
<PAGE> 115
16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive, San
Mateo County Records, such strips to be kept open and free from
buildings and structures of any kind. Affects two 15 foot by 30 foot
areas within Parcel 3 and one 15 foot by 30 foot area within Parcel 4.
Includes right of ingress and egress across the premises for
construction, maintenance and use of the water facilities.
12. Covenants, conditions, restrictions, limitations, reservations,
easements, exceptions, terms, assessments, liens and charges, but
deleting restrictions, if any, based on race, color, religion or
national origin as contained in the Declaration of Covenants,
Conditions, Restrictions and Easements for Sun Microsystems, Inc.
Menlo Park Campus executed by and between BNP Leasing Corporation, a
Delaware corporation, and Sun Microsystems, Inc., a Delaware
corporation, dated February 9, 1994, recorded on February 16, 1994, as
Document No. 94028453 of the Official Records of San Mateo County,
California. Said instrument does not expressly provide for forfeiture
of title in case of violation. Said instrument does provide that a
violation shall not lessen the security of any Deed of Trust or
Mortgage made in good faith and for value. A lien for upkeep
assessments was provided for in the herein described declaration.
13. Lease Agreement (Phases II and III) dated as of September 25, 1992 by
and between BNP Leasing Corporation, as lessor, and Sun Microsystems,
Inc., as lessee, which was amended, restated and replaced by that
certain Amended and Restated Lease Agreement (Phases II and III) dated
as of September 23, 1994, by and between BNP Leasing Corporation, as
lessor, and Sun Microsystems, Inc., as lessee.
14. Any encumbrances claimed by, through or under Sun Microsystems, Inc.
15. The grantee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through it, that there
shall be no discrimination against, or segregation of, any person or
group of persons on account of race, color, creed, marital status,
ancestry, religion, sex or national origin, in the sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the
premises herein conveyed, nor shall the grantee or any person claiming
under or through it, establish or permit any such practice or
practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessee, or vendees in the premises herein conveyed.
The foregoing covenants shall run with the land.
B-6
<PAGE> 116
(ADD ONLY IF APPLICABLE A LIST OF ANY OTHER KNOWN ENCUMBRANCES FOR WHICH BNPLC
IS NOT RESPONSIBLE UNDER PARAGRAPH 10(A) OF THE LEASE.)
B-7
<PAGE> 117
EXHIBIT C
(PRINTED FORM OF CHANGE OF OWNERSHIP REPORT
SUPPLIED BY GRAHAM MALONEY TO BE ATTACHED)
C-1
<PAGE> 118
EXHIBIT D
BILL OF SALE, ASSIGNMENT OF CONTRACT
RIGHTS AND INTANGIBLE ASSETS
Reference is made to that certain Agreement and Contract of Sale and
Escrow Instructions, dated April 23, 1990, as amended, (the "Agreement")
between Raychem Corporation, as seller, and Sun Microsystems, Inc., as buyer.
The interest of buyer under the Agreement was assigned to the Assignor named
below prior to the closing thereunder.
BNP LEASING CORPORATION, a Delaware corporation ("Assignor"), hereby
sells, transfers and assigns unto (SUN MICROSYSTEMS, INC. OR THE APPLICABLE
PURCHASER, AS THE CASE MAY BE), a _____________ corporation ("Assignee"), all
of Assignor's right, title and interest in and to the following property, if
any, to the extent such property is assignable:
(a) any warranties, guaranties, indemnities and claims Assignor
may have under the Agreement or under any document delivered by the seller
thereunder to the extent related to the real property described in Annex A
attached hereto (the "Property), including specifically, without limitation,
warranties, guaranties, indemnities and claims for workmanship, materials and
performance;
(b) all licenses, permits or similar consents (excluding any
prepaid utility reservations) from third parties to the extent related to the
Property;
(c) any pending or future award made because of any condemnation
affecting the Property or because of any conveyance to be made in lieu thereof,
and any unpaid award for damage to the Property and any unpaid proceeds of
insurance or claim or cause of action for damage, loss or injury to the
Property;
(d) any goods, equipment, furnishings, furniture, chattels and
personal property of whatever nature that are located on or about the Property;
and
(e) any general intangibles, permits, licenses, franchises,
certificates, and other rights and privileges owned by Assignor and used
solely in connection with, or relating solely to, the Property, including any
such rights and privileges conveyed to Assignor pursuant to the Agreement; but
excluding any rights or privileges of Assignor under (i) the Environmental
Indemnity, as defined in that certain Amended and Restated Purchase Agreement
(Phases II and III) between Assignor and Sun Microsystems, Inc. dated as of
September 23, 1994 (the "Purchase Agreement") (pursuant to which this document
is being delivered), (ii) the
D-1
<PAGE> 119
Lease, as defined in the Purchase Agreement, to the extent rights under the
Lease relate to the period ending on the date hereof, whether such rights are
presently known or unknown, including rights of the Assignor to be indemnified
against claims of third parties as provided in the Lease which may not
presently be known, and including rights to recover any accrued unpaid rent
under the Lease which may be outstanding as of the date hereof, (iii) the
Participation Agreement, as defined in the Lease, or any modification or
extension thereof, (iv) any supplemental or modified indemnity agreement
required by the Purchase Agreement, and (iv) any other instrument being
delivered to Assignor contemporaneously herewith pursuant to the Purchase
Agreement.
Assignor does for itself and its heirs, executors and administrators,
covenant and agree to warrant and defend the title to the property assigned
herein against the just and lawful claims and demands of any person claiming
under or through Assignor, but not otherwise; excluding, however, any claim or
demand arising by, through or under Sun Microsystems, Inc.
Assignee hereby assumes and agrees to keep, perform and fulfill
Assignor's obligations, if any, relating to any permits or contracts, under
which Assignor has rights being assigned herein.
Executed: ________________________________, 199__.
ASSIGNOR:
BNP LEASING CORPORATION, a Delaware
corporation
By:________________________________________
Its:_________________________________
ASSIGNEE:
(SUN MICROSYSTEMS, INC., OR THE
APPLICABLE PURCHASER), a __________________
corporation
By:________________________________________
Its:_________________________________
D-2
<PAGE> 120
ANNEX A
Legal Description
Parcels 2, 3, & 4
The land referred to herein is situated in the State of California, County of
San Mateo, City of Menlo Park and is described as follows:
Parcel A:
Parcels 2, 3, & 4 as shown on Parcel Map, lands of BNP Leasing Corporation,
filed February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive,
San Mateo County Records.
Reserving therefrom the easements set forth in Sections 5-1-1, 5-1-2, 5-1-6,
5-1-7, 5-1-8, 5-1-9 and 5-1-10 of the Declaration of Covenants, Conditions,
Restrictions and Easements recorded February 16, 1994, Series No. 94028453, San
Mateo County Records. Said easements are to be appurtenant to Parcel 1 as
shown on said parcel map.
Parcel B:
Non-exclusive and exclusive easements for the purposes of constructing, laying,
installing, operating, using, maintaining, altering, repairing, replacing,
inspecting and repairing utility service connections, service lines and similar
facilities, as contained in the Easement Agreement dated March 25, 1992 by and
between Raychem Corporation, a Delaware corporation, and BNP Leasing
Corporation, a Delaware corporation, recorded March 26, 1992 under Recorders
Serial No. 92042487, Official Records of San Mateo County, California being
more particularly described as follows:
BEGINNING at a point on the Northerly line of Rancho de las Pulgas, said
point being distant along said Northerly line South 81 degrees 22' 50"
East 1989.00 feet (an angle point in said Northerly line called PMC-13) and
North 89 degrees 11' East 648.34 feet from the most Northeasterly corner of the
boundary of the lands shown on a Record of Survey Map recorded in Volume 3 of
Licensed Land Surveyors Maps, at page 120, San Mateo County Records; thence
from said point of beginning along said Northerly line North 89 degrees 11'
East 1786.01 feet to a point on the Northerly prolongation of the Westerly line
of Willow Road, as said road is shown upon the map of Newbridge Park, recorded
in Volume 14 of Maps at pages 6 and 7, Records of San Mateo County, California;
thence along said prolongation South 22 degrees 02' 45" West 485.29 feet to the
Northerly line of Southern Pacific Company right of way; thence along the last
mentioned line, South 84 degrees 57' 30" West 1902.61 feet; thence North 5
degrees 02' 30" West 100.00 feet; thence North 84 degrees 57' 30" East
D-3
<PAGE> 121
342.43 feet; thence North 5 degrees 02' 30" West 463.64 feet to the point of
beginning.
EXCEPTING THEREFROM Parcel 46737-1 as contained in the Final Order of
Condemnation recorded July 27, 1983 under Recorders Serial No. 83078012,
Official Records of San Mateo County, California and being more particularly
described as follows:
COMMENCING at the Northeasterly corner of Parcel 6, as said Parcel 6 is
designated in the map entitled "RECORD OF SURVEY OF A PORTION OF THE LANDS
FORMERLY OWNED BY THE CARNDUFF SITUATED IN SECTION 24; TOWNSHIP 5 SOUTH, RANGE
3 WEST, M.D.B. AND M. AND IN THE RANCHO DE LAS PULGAS" filed in the office of
the Recorder of the San Mateo County, State of California, on October 29, 1965,
in Volume 6 of Licensed Land Survey Maps at page 66; thence along common line
of said Parcel 6 and Parcel 5 of said Record of Survey South 54 degrees 33' 08"
West, 37.03 feet; thence from a tangent that bears South 82' 18' 07" West,
along a curve to the right with a radius of 2120.00 feet, through an angle of 2
degrees 07' 56", an arc length of 78.90 feet; thence South 35 degrees 20' 07"
West, 114.78 feet; thence South 18 degrees 44' 08" West, 0.42 feet to said
common line of Parcel 6 and Parcel 5; thence along last said line South 54' 33'
08" West 204.46 feet to the Westerly line of said Parcel 5; thence along last
said line South 23 degrees 08' 15" West, 106.70 feet to the Southwesterly
corner of said Parcel 5; thence leaving last said corner North 15 degrees 03'
57" East, 107.78 feet; thence North 0 degrees 11' 25" West, 172.12 feet; thence
along a tangent curve to the left with a radius of 45.00 feet, through an angle
of 81 degrees 13' 05", an arc length of 63.79 feet; North 81 degrees 24' 30"
West 162.32 feet to the Northerly line of Rancho de las Pulgas between PMC 13
to PMC 12; along last said line South 89 degrees 38' 32" East 554.89 feet to
the point of commencement.
Parcel C:
Easements set forth in Sections 5-1-1, 5-1-2, 5-1-6, 5-1-7, 5-1-8, 5-1-9 and
5-1-10 of the Declaration of Covenants, Conditions, Restrictions and Easements
recorded February 16, 1994, Series No. 94028453, San Mateo County Records, over
Parcel 1 as shown on Parcel Map, lands of BNP Leasing Corporation, filed
February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive, San
Mateo County Records. Said easements are to be appurtenant to Parcel A above.
D-4
<PAGE> 122
EXHIBIT E
ASSIGNMENT OF BCDC PERMIT
Attached to and made a part of this Exhibit E are two forms of
assignment, one of which will apply in the case of a sale to Sun Microsystems,
Inc., and the second of which will apply in the case of a sale to the
Applicable Purchaser. BNPLC will tender whichever of these forms applies, but
not both, contemporaneously with its receipt of the payments to become due it
hereunder.
(NOTE: ASSIGNMENTS FORMS ARE INTENDED TO BE LIMITED TO RIGHTS UNDER THE PERMIT
AS IT RELATES TO THE PHASES II AND III LAND)
E-1
<PAGE> 123
ANNEX A
Legal Description
Parcels 2, 3, & 4
The land referred to herein is situated in the State of California, County of
San Mateo, City of Menlo Park and is described as follows:
Parcel A:
Parcels 2, 3, & 4 as shown on Parcel Map, lands of BNP Leasing Corporation,
filed February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive,
San Mateo County Records.
Reserving therefrom the easements set forth in Sections 5-1-1, 5-1-2, 5-1-6,
5-1-7, 5-1-8, 5-1-9 and 5-1-10 of the Declaration of Covenants, Conditions,
Restrictions and Easements recorded February 16, 1994, Series No. 94028453, San
Mateo County Records. Said easements are to be appurtenant to Parcel 1 as
shown on said parcel map.
Parcel B:
Non-exclusive and exclusive easements for the purposes of constructing, laying,
installing, operating, using, maintaining, altering, repairing, replacing,
inspecting and repairing utility service connections, service lines and similar
facilities, as contained in the Easement Agreement dated March 25, 1992 by and
between Raychem Corporation, a Delaware corporation, and BNP Leasing
Corporation, a Delaware corporation, recorded March 26, 1992 under Recorders
Serial No. 92042487, Official Records of San Mateo County, California being
more particularly described as follows:
BEGINNING at a point on the Northerly line of Rancho de las Pulgas, said
point being distant along said Northerly line South 81 degrees 22' 50"
East 1989.00 feet (an angle point in said Northerly line called PMC-13) and
North 89 degrees 11' East 648.34 feet from the most Northeasterly corner of the
boundary of the lands shown on a Record of Survey Map recorded in Volume 3 of
Licensed Land Surveyors Maps, at page 120, San Mateo County Records; thence
from said point of beginning along said Northerly line North 89 degrees 11'
East 1786.01 feet to a point on the Northerly prolongation of the Westerly line
of Willow Road, as said road is shown upon the map of Newbridge Park, recorded
in Volume 14 of Maps at pages 6 and 7, Records of San Mateo County, California;
thence along said prolongation South 22 degrees 02' 45" West 485.29 feet to the
Northerly line of Southern Pacific Company right of way; thence along the last
mentioned line, South 84 degrees 57' 30" West 1902.61 feet; thence
E-2
<PAGE> 124
North 5 degrees 02' 30" West 100.00 feet; thence North 84 degrees 57'
30" East 342.43 feet; thence North 5 degrees 02' 30" West 463.64 feet to the
point of beginning.
EXCEPTING THEREFROM Parcel 46737-1 as contained in the Final Order of
Condemnation recorded July 27, 1983 under Recorders Serial No. 83078012,
Official Records of San Mateo County, California and being more particularly
described as follows:
COMMENCING at the Northeasterly corner of Parcel 6, as said Parcel 6 is
designated in the map entitled "RECORD OF SURVEY OF A PORTION OF THE LANDS
FORMERLY OWNED BY THE CARNDUFF SITUATED IN SECTION 24; TOWNSHIP 5 SOUTH, RANGE 3
WEST, M.D.B. AND M. AND IN THE RANCHO DE LAS PULGAS" filed in the office of the
Recorder of the San Mateo County, State of California, on October 29, 1965, in
Volume 6 of Licensed Land Survey Maps at page 66; thence along common line of
said Parcel 6 and Parcel 5 of said Record of Survey South 54 degrees 33' 08"
West, 37.03 feet; thence from a tangent that bears South 82' 18' 07" West, along
a curve to the right with a radius of 2120.00 feet, through an angle of 2
degrees 07' 56", an arc length of 78.90 feet; thence South 35 degrees 20' 07"
West, 114.78 feet; thence South 18 degrees 44' 08" West, 0.42 feet to said
common line of Parcel 6 and Parcel 5; thence along last said line South 54' 33'
08" West 204.46 feet to the Westerly line of said Parcel 5; thence along last
said line South 23 degrees 08' 15" West, 106.70 feet to the Southwesterly corner
of said Parcel 5; thence leaving last said corner North 15 degrees 03' 57" East,
107.78 feet; thence North 0 degrees 11' 25" West, 172.12 feet; thence along a
tangent curve to the left with a radius of 45.00 feet, through an angle of 81
degrees 13' 05", an arc length of 63.79 feet; North 81 degrees 24' 30" West
162.32 feet to the Northerly line of Rancho de las Pulgas between PMC 13 to PMC
12; along last said line South 89 degrees 38' 32" East 554.89 feet to the point
of commencement.
Parcel C:
Easements set forth in Sections 5-1-1, 5-1-2, 5-1-6, 5-1-7, 5-1-8, 5-1-9 and
5-1-10 of the Declaration of Covenants, Conditions, Restrictions and Easements
recorded February 16, 1994, Series No. 94028453, San Mateo County Records, over
Parcel 1 as shown on Parcel Map, lands of BNP Leasing Corporation, filed
February 16, 1994, Book 67 of Parcel Maps, pages 36 through 38 inclusive, San
Mateo County Records. Said easements are to be appurtenant to Parcel A above.
E-3
<PAGE> 125
EXHIBIT F
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(this "Certificate") is made as of ___________________, 199___, by (SUN OR THE
APPLICABLE PURCHASER, AS THE CASE MAY BE), a ___________________ ("Grantee").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNPLC"), is executing and delivering to
Grantee (1) a Corporation Grant Deed, (2) a Bill of Sale, Assignment of
Contract Rights and Intangible Assets, and (3) an Assignment of BCDC Permit
(the foregoing documents and any other documents to be executed in connection
therewith are herein called the "Conveyancing Documents" and any of the
properties, rights or other matters assigned, transferred or conveyed pursuant
thereto are herein collectively called the "Subject Property").
NOTWITHSTANDING ANY PROVISION CONTAINED IN THE CONVEYANCING DOCUMENTS
TO THE CONTRARY, GRANTEE ACKNOWLEDGES THAT BNPLC MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE OR KIND, WHETHER STATUTORY, EXPRESS OR IMPLIED, WITH
RESPECT TO ENVIRONMENTAL MATTERS OR THE PHYSICAL CONDITION OF THE SUBJECT
PROPERTY, AND GRANTEE, BY ACCEPTANCE OF THE CONVEYANCING DOCUMENTS, ACCEPTS THE
SUBJECT PROPERTY "AS IS," "WHERE IS," "WITH ALL FAULTS" AND WITHOUT ANY SUCH
REPRESENTATION OR WARRANTY BY GRANTOR AS TO ENVIRONMENTAL MATTERS, THE PHYSICAL
CONDITION OF THE SUBJECT PROPERTY, COMPLIANCE WITH SUBDIVISION OR PLATTING
REQUIREMENTS OR CONSTRUCTION OF ANY IMPROVEMENTS. Without limiting the
generality of the foregoing, Grantee hereby further acknowledges and agrees
that warranties of merchantability and fitness for a particular purpose are
excluded from the transaction contemplated by the Conveyancing Documents, as
are any warranties arising from a course of dealing or usage of trade. Grantee
hereby assumes all risk and liability (and agrees that BNPLC shall not be
liable for any special, direct, indirect, consequential, or other damages)
resulting or arising from or relating to the ownership, use, condition,
location, maintenance, repair, or operation of the Subject Property.
The provisions of this Certificate shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that BNPLC is entitled to rely and is relying on this
Certificate.
F-1
<PAGE> 126
EXECUTED as of ________________, 199___.
_______________________________, a______________
_______________
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
F-2
<PAGE> 127
EXHIBIT G
DOCUMENTARY TRANSFER TAX REQUEST
ACCOUNTABLE FORM #______________
DATE:___________________________
To: San Mateo County Recorder
Subject: REQUEST THAT DOCUMENTARY TRANSFER TAX DECLARATION BE MADE IN
ACCORDANCE WITH SAN MATEO COUNTY ORDINANCE CODE SECTION 2920 &
REVENUE CODE 11932.
Re: Instrument Title: Corporation Grant Deed
Name of Party Conveying Title: BNP Leasing Corporation
The Documentary Transfer Tax is declared to be in the amount of
$_______________ for the referenced instrument and is:
( ) Computed on full value of property conveyed.
( ) Computed on full value less liens/encumbrances
remaining thereon at time of sale.
This separate declaration is made in accordance with County Ordinance Code
Section 2922. It is requested that the amount paid be indicated on the face of
the document after the permanent copy has been made.
Sincerely,
___________________________________
Individual (or his agent) who made,
signed or issued instrument
PART I
RECORDING REFERENCE DATA:
Serial #______________________ Date Recorded_________________
SEPARATE PAPER AFFIXED TO INSTRUMENT:
"Tax paid" indicated on the face of instrument and the separate
request (DRA 3-A) was affixed for Recorder by:
_________________________________ Date______________
Documentary Transfer Tax Collector
Witnessed by:____________________ Date______________
Mail Clerk
(Note: Prepare photo for Recorder file.)
G-1
<PAGE> 128
PART II ACCOUNTABLE FORM #____________________
______________________________________
REFERENCE DATA: Title:_______________________________________________________
Serial: _______________________________________ Date:________
INSTRUCTIONS:
1. This slip must accompany document.
2. Mail Clerk hand carry document to Tax Collector to
indicate the amount of tax paid.
G-2
<PAGE> 129
EXHIBIT H
SECRETARY'S CERTIFICATE
The undersigned, _____________________ Secretary of BNP Leasing
Corporation, a Delaware corporation (the "Corporation"), hereby certifies as
follows:
1. That he is the duly, elected, qualified and acting Secretary
(or Assistant Secretary) of the Corporation and has custody of the corporate
records, minutes and corporate seal.
2. That the following named persons have been properly
designated, elected and assigned to the office in the Corporation as indicated
below; that such persons hold such office at this time and that the specimen
signature appearing beside the name of such officer is his true and correct
signature.
(THE FOLLOWING BLANKS MUST BE COMPLETED WITH THE NAMES AND SIGNATURES OF THE
OFFICERS WHO WILL BE SIGNING THE DEED AND OTHER REQUIRED DOCUMENTS ON BEHALF OF
THE CORPORATION.)
Name Title Signature
___________________ ______________________ ______________________
___________________ ______________________ ______________________
3. That the resolutions attached hereto and made a part hereof
were duly adopted by the Board of Directors of the Corporation in accordance
with the Corporation's Articles of Incorporation and Bylaws, as evidenced by
the signatures of all directors of the Corporation affixed thereto. Such
resolutions have not been amended, modified or rescinded and remain in full
force and effect.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of the Corporation on this _________, day of _________________
___, 199___.
_______________________________________
(signature)
H-1
<PAGE> 130
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Amended and Restated Purchase
Agreement (Phases II and III) (herein called the "Purchase Agreement") dated as
of September 23, 1994, by and between BNP Leasing Corporation (the
"Corporation") and Sun Microsystems, Inc. ("Sun"), the Corporation agreed to
sell and Sun agreed to purchase or cause the Applicable Purchaser (as defined
in the Purchase Agreement) to purchase the Corporation's interest in the
property (the "Property") located in Menlo Park, California more particularly
described therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgement, deems it in the best interest of
the Corporation and its shareholders that the Corporation convey the Property
to Sun or the Applicable Purchaser pursuant to and in accordance with the terms
of the Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and
each of them, are hereby authorized and directed in the name and on behalf of
the Corporation to cause the Corporation to fulfill its obligations under the
Purchase Agreement.
RESOLVED FURTHER, that the proper officers of the Corporation, and
each of them, are hereby authorized and directed to take or cause to be taken
any and all actions and to prepare or cause to be prepared and to execute and
deliver any and all deeds and other documents, instruments and agreements that
shall be necessary, advisable or appropriate, in such officer's sole and
absolute discretion, to carry out the intent and to accomplish the purposes of
the foregoing resolutions.
IN WITNESS WHEREOF, we, being all the directors of the Corporation,
have hereunto signed our names as of the dates indicated by our signatures.
________________________________
(signature and date)
________________________________
(signature and date)
________________________________
(signature and date)
H-2
<PAGE> 131
EXHIBIT I
BNP LEASING CORPORATION
717 N. HARWOOD
SUITE 2630
DALLAS, TEXAS 75201
____________________, 199___
First American Title
Insurance Company
555 Marshall Street
P.O. Box 549
Redwood City, California 94064
Re: Recording of Grant Deed to Sun Microsystems, Inc.
("Sun")
Ladies and Gentlemen:
BNP Leasing Corporation ("BNPLC") has executed and delivered to (Sun
Microsystems, Inc. or the Applicable Purchaser) a Grant Deed in the form
attached to this letter. You are hereby authorized and directed to record the
Grant Deed at the request of Sun.
Sincerely,
I-1
<PAGE> 132
EXHIBIT J
FIRPTA STATEMENT
Section 1445 of the Internal Revenue Code of 1986, as amended,
provides that a transferee of a U.S. real property interest must withhold tax
if the transferor is a foreign person. Sections 18805, 18815 and 26131 of the
California Revenue and Taxation Code, as amended, provide that a transferee of
a California real property interest must withhold income tax if the transferor
is a nonresident seller.
To inform (SUN MICROSYSTEMS, INC. OR THE APPLICABLE PURCHASER, AS THE
CASE MAY BE) (the "Transferee") that withholding of tax is not required upon
the disposition of a California real property interest by transferor, BNPLC
Leasing Corporation (the "Seller"), the undersigned hereby certifies the
following on behalf of the Seller:
1. The Seller is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
2. The United States employer identification number for the
Seller is _____________________;
3. The office address of the Seller is _________________________
__________________________________________.
(NOTE: BNPLC MUST INCLUDE EITHER ONE, BUT ONLY ONE, OF THE FOLLOWING
REPRESENTATIONS IN THE FIRPTA STATEMENT, BUT IF THE ONE INCLUDED STATES THAT
BNPLC IS DEEMED EXEMPT FROM CALIFORNIA INCOME AND FRANCHISE TAX, THEN BNPLC
MUST ALSO ATTACH A WITHHOLDING CERTIFICATE FROM THE CALIFORNIA FRANCHISE TAX
BOARD EVIDENCING THE SAME:
4. THE SELLER IS QUALIFIED TO DO BUSINESS IN CALIFORNIA.
OR
4. THE SELLER IS DEEMED TO BE EXEMPT FROM THE WITHHOLDING
REQUIREMENT OF CALIFORNIA REVENUE AND TAXATION CODE SECTION 26131(E), AS
EVIDENCED BY THE WITHHOLDING CERTIFICATE FROM THE CALIFORNIA FRANCHISE TAX
BOARD WHICH IS ATTACHED.)
The Seller understands that this certification may be disclosed to the
Internal Revenue Service and/or to the California Franchise Tax Board by the
Transferee and that any false statement contained herein could be punished by
fine, imprisonment, or both.
J-1
<PAGE> 133
The Seller understands that the Transferee is relying on this
affidavit in determining whether withholding is required upon said transfer.
The Seller hereby agrees to indemnify and hold the Transferee harmless from and
against any and all obligations, liabilities, claims, losses, actions, causes
of action, demands, rights, damages, costs, and expenses (including but not
limited to court costs and attorneys' fees) incurred by the Transferee as a
result of any false misleading statement contained herein.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct
and complete, and I further declare that I have authority to sign this document
on behalf of the Seller.
Dated: ___________, 199___.
By:_________________________________________
Name: ___________________________________
Title:___________________________________
J-2
<PAGE> 1
EXHIBIT 11.0
SUN MICROSYSTEMS, INC.
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(unaudited)
(in thousands, except per share amounts)
PRIMARY
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
October 2, September 26,
1994 1993
---------- -------------
<S> <C> <C>
Net income $38,427 $ 16,606
======= ========
Weighted average common shares
outstanding 94,501 98,966
Common-equivalent shares attributable to
stock options and warrants 1,166 2,010
------- --------
Total common and common-equivalent
shares outstanding 95,667 100,976
======= ========
Net income per common and
common-equivalent share $ 0.40 $ 0.16
======= ========
</TABLE>
<PAGE> 2
EXHIBIT 11.0 (continued)
SUN MICROSYSTEMS, INC.
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(unaudited)
(in thousands, except per share amounts)
FULLY DILUTED
<TABLE>
<CAPTION>
Three Months Ended
October 2, September 26,
1994 1993
---------- -------------
<S> <C> <C>
Net income $38,427 $ 16,606
======= ========
Weighted average common shares
outstanding 94,501 98,966
Common-equivalent shares attirbutable to
stock options and warrants 1,378 2,061
------- --------
Total common and common-equivalent
shares outstanding 95,879 101,027
======= ========
Net income per common and
common-equivalent share $ 0.40 $ 0.16
======= ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> OCT-02-1994
<CASH> 372,100
<SECURITIES> 411,354
<RECEIVABLES> 839,404
<ALLOWANCES> 90,028
<INVENTORY> 339,466
<CURRENT-ASSETS> 2,239,461
<PP&E> 878,072
<DEPRECIATION> 543,236
<TOTAL-ASSETS> 2,809,636
<CURRENT-LIABILITIES> 1,036,244
<BONDS> 77,842
<COMMON> 72
0
0
<OTHER-SE> 1,689,672
<TOTAL-LIABILITY-AND-EQUITY> 2,809,636
<SALES> 1,273,439
<TOTAL-REVENUES> 1,273,439
<CGS> 761,378
<TOTAL-COSTS> 1,219,621
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 7,756
<INTEREST-EXPENSE> 5,392
<INCOME-PRETAX> 56,510
<INCOME-TAX> 18,083
<INCOME-CONTINUING> 38,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,427
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
</TABLE>
