UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
This conforming paper format document is being submitted pursuant to rule
300(d) of regulation s-t.
FORM 10-Q
X quarterly report pursuant to section 13 or 15(d) of
the securities exchange act of 1934
For the Quarterly Period Ended August 31, 1994
Commission File No. 0-12867
or
transition report pursuant to section 13 or 15(d) of
the securities exchange act of 1934
For the transition period from to
____________________
3Com Corporation
(Exact name of registrant as specified in its charter)
California 94-2605794
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5400 Bayfront Plaza 95052
Santa Clara, California (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (408) 764-5000
Former name, former address and former fiscal year, if changed since last
report: N/A
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 XX No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of August 31, 1994, 64,702,410 shares of the Registrant's Common Stock
were outstanding.
3Com Corporation
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets
August 31, 1994 and May 31, 1994
Consolidated Statements of Income
Quarter ended August 31, 1994 and 1993
Consolidated Statements of Cash Flows
Quarter ended August 31, 1994 and 1993
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
3Com Corporation
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
August 31, May 31,
1994 1994
---------- ---------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 75,237 $ 66,284
Temporary cash investments 62,954 63,413
Trade receivables 121,774 118,653
Inventories 57,335 71,352
Deferred income taxes 32,344 31,236
Other 9,964 10,134
-------- --------
Total current assets 359,608 361,072
Property and equipment-net 72,658 67,001
Other assets 14,948 16,270
-------- --------
Total $447,214 $444,343
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 40,313 $ 51,827
Accrued and other liabilities 76,036 91,130
Income taxes payable 32,413 19,090
Current portion of long-term
obligations 472 482
-------- --------
Total current liabilities 149,234 162,529
Long-term obligations 913 1,058
Shareholders' Equity:
Preferred stock, no par value, 3,000,000
shares authorized; none outstanding - -
Common stock, no par value, 200,000,000
shares authorized; shares outstanding:
August 31, 1994: 64,702,410;
May 31, 1994: 65,052,900 222,148 219,937
Unamortized restricted stock grants (208) (202)
Retained earnings 75,371 61,326
Accumulated translation adjustments (244) (305)
-------- --------
Total shareholders' equity 297,067 280,756
-------- --------
Total $447,214 $444,343
======== ========
See notes to consolidated financial statements.
3Com Corporation
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)
Quarter Ended
-------------------------
August 31, August 31,
1994 1993
---------- ----------
Sales $249,280 $162,091
-------- --------
Costs and expenses:
Cost of sales 118,154 81,676
Sales and marketing 51,051 35,455
Research and development 26,057 15,878
General and administrative 9,488 8,204
-------- --------
Total 204,750 141,213
Operating income 44,530 20,878
Other expense-net (13) (320)
Gain on sale of investment - 17,746
-------- --------
Income before income taxes 44,517 38,304
Income tax provision 16,026 12,190
-------- --------
Net income $ 28,491 $ 26,114
======== ========
Net income per common and equivalent
share $ 0.41 $ 0.40
======== ========
Common and equivalent shares used in
computing per share amounts 69,539 65,312
======== ========
See notes to consolidated financial statements.
3Com Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Quarter Ended
------------------------
August 31, August
1994 1993
---------- ---------
Cash flows from operating activities:
Net income $ 28,491 $ 26,114
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 10,202 6,555
Gain on sale of investment - (17,746)
Deferred income taxes (2,931) (1,010)
Changes in assets and liabilities:
Trade receivables (3,121) (1,430)
Inventories 13,615 4,589
Other current assets 170 9,237
Accounts payable (11,514) (6,778)
Accrued and other liabilities (15,343) (124)
Income taxes payable 15,820 12,529
-------- --------
Net cash provided by operating activities 35,389 31,936
-------- --------
Cash flows from investing activities:
Proceeds from sale of investment - 18,066
Investment in property and equipment (13,543) (6,534)
Purchase of temporary cash investments (5,092) (5,046)
Proceeds from temporary cash
investments 4,767 8,926
Other-net 2,222 105
-------- --------
Net cash (used for) provided by
investing activities (11,646) 15,517
-------- --------
Cash flows from financing activities:
Sale of stock 2,107 1,456
Repurchases of common stock (16,893) (16,496)
Repayments of notes payable and capital
lease obligations (65) -
Other-net 61 (465)
-------- --------
Net cash used for financing activities (14,790) (15,505)
-------- --------
Increase in cash and cash equivalents 8,953 31,948
Cash and cash equivalents at beginning
of period 66,284 40,046
-------- --------
Cash and cash equivalents at end of
period $75,237 $71,994
======== ========
See notes to consolidated financial statements.
3Com Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements include the accounts of 3Com
Corporation and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated. In the
opinion of management, these unaudited consolidated financial statements
include all adjustments necessary for a fair presentation of the Company's
financial position as of August 31, 1994, and the results of operations and
cash flows for the quarters ended August 31, 1994 and 1993.
The results of operations for the quarter ended August 31, 1994 may
not necessarily be indicative of the results for the fiscal year ending May
31, 1995.
These financial statements should be read in conjunction with the
consolidated financial statements and related notes thereto included in the
Company's Annual Report to Shareholders for the year ended May 31, 1994.
2. Investments
Effective June 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." This statement requires the Company to classify
debt and equity securities into one of three categories: held-to-maturity,
trading or available-for-sale. At August 31, 1994, all temporary cash
investments of the Company were classified as available-for-sale and the
difference between the carrying value and fair value of those securities
was not significant.
3. Inventories consisted of (in thousands):
August 31, May 31,
1994 1994
---------- ---------
Finished goods $35,370 $44,770
Work-in-process 7,260 8,232
Raw materials 14,705 18,350
------- -------
Total $57,335 $71,352
======= =======
4. Net Income Per Share
Net income per common and equivalent share is computed using the
weighted average number of common shares and the dilutive effects of stock
options outstanding during the period using the treasury stock method.
Weighted average shares outstanding and per share amounts have been
restated to reflect the two-for-one stock split on September 1, 1994 for
shareholders of record on August 16, 1994.
3Com Corporation
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Quarter ended August 31, 1994
The Company achieved record sales in the first quarter of fiscal 1995
totaling $249.3 million, an increase of $87.2 million or 54 percent from
the corresponding quarter a year ago. Compared with the fourth quarter of
fiscal 1994, sales for the first quarter of fiscal 1995 increased $7.8
million or 3 percent.
The Company believes that the year-over-year increase in first quarter
sales is due to several factors, including general market strength in the
data networking market, rapid growth in sales outside the U.S., the breadth
of the Company's product offerings and its ability to deliver complete data
networking solutions for different connectivity environments. Sales from
products introduced in the last 12 months represented 25 percent of sales
in the first quarter of fiscal 1995, a decline from 52 percent of sales in
the first quarter of the prior year and an increase from 21 percent of
sales in the fourth quarter of fiscal 1994.
Sales of network adapters in the first quarter of fiscal 1995 represented
55 percent of total sales and increased 48 percent from the corresponding
period in fiscal 1994. The increase in network adapter sales represented
an increase in unit volume partially offset by continuation of the
industry-wide trend toward decreasing average selling prices. The increase
in unit volume primarily resulted from sales of the EtherLink (registered
trademark) III and the TokenLink (registered trademark) III network
adapters but was also favorably impacted by the introduction of the PCMCIA
adapter.
Sales of systems products (internetworking, hub and switching products) in
the first quarter of fiscal 1995 represented 40 percent of total sales and
increased 71 percent from the year-ago quarter. The increase was led
primarily by the LinkBuilder (registered trademark) FMS (trademark) II, a
component of 3Com's SuperStack (trademark) family of network system
products, and TRi stackable hubs, the high-performance NETBuilder II
(registered trademark) bridge/router, and the LANplex family of switching
products. Similar to network adapters, the increase in systems product
sales represented an increase in unit volume which was partially offset by
a decrease in average selling prices. The Company believes there is an
industry-wide trend towards demand for fully-functional, lower-priced
stackable systems, such as 3Com's SuperStack network system products which
are currently comprised of stackable hubs, remote office routers and LAN
switching products.
Sales of other products (terminal servers, customer service, protocols and
other products) represented five percent of first quarter sales. Sales of
other products increased 12 percent from the first quarter of fiscal 1994,
although they continued to represent a decreasing percentage of the
Company's total sales, as expected.
Sales outside the United States provided 49 percent of first quarter sales,
compared to 47 percent for the same period last year. Growth in sales was
strong in all geographic regions, especially in Europe and Latin American
regions. The Company believes that the increase in international sales
from a year ago reflected the Company's continued expansion globally
through the opening of new sales offices in Latin America, Asia and Europe,
and the expansion of worldwide service and support programs.
Cost of sales as a percentage of sales was 47.4 percent for the quarter,
compared to 50.4 percent for the first quarter of fiscal 1994. The 3.0
percentage points improvement in gross margin from the year-ago period
resulted primarily from a favorable shipment mix towards lower-cost and
higher-margin products and continued improvement in the efficiency of the
Company's manufacturing operations.
Total operating expenses in the first quarter of fiscal 1995 were $86.6
million or 35 percent of sales, compared to $59.5 million or 37 percent of
sales for the first quarter of fiscal 1994. The Company has been
successful in its efforts to grow operating expenses at a rate slower than
sales growth. The $27.1 million, or 45 percent increase in operating
expenses reflected increased selling costs related to higher sales volume,
the cost of developing and promoting the Company's products, increased
investment in research and development activities and growth in the number
of employees in all parts of the Company, especially in research and
development. Annualized revenue per average headcount was $426,000 in the
first quarter of fiscal 1995, compared to $327,000 in the first quarter of
fiscal 1994, an increase of 30 percent.
Nonoperating income was favorably impacted during the first quarter of
fiscal 1994, as the Company realized a gain of $17.7 million from the sale
of the Company's investment in Madge N.V.
The Company's effective income tax rate was 36 and 32 percent in the first
quarter of fiscal 1995 and 1994, respectively. The 32 percent income tax
rate in the prior year quarter reflected the recognition of a net benefit
of $1.2 million which resulted from retroactive changes to the Revenue
Reconciliation Act of 1993. Without this $1.2 million benefit, the
effective income tax rate would have been 35 percent.
Net income for the first quarter of fiscal 1995 was a record $28.5 million,
or $0.41 per share, compared to net income of $26.1 million, or $0.40 per
share, reported a year ago. Excluding the gain from sale of an investment
and the tax benefit, net income for the first quarter of fiscal 1994 would
have been $13.4 million, or $.20 per share. Net income per share for the
first quarter of fiscal 1994 has been restated to reflect the two-for-one
stock split on September 1, 1994 for shareholders of record on August 16,
1994.
Business Environment and Risk Factors
The Company's future operating results may be affected by various trends
and factors which the Company must successfully manage in order to achieve
favorable operating results. In addition, there are trends and factors
beyond the Company's control which affect its operations. Such trends and
factors include adverse changes in general economic conditions,
governmental regulation or intervention affecting communications or data
networking, fluctuations in foreign exchange rates, and other factors
listed below. The data networking industry has become increasingly
competitive, and the Company's results may be adversely affected by the
actions of existing or future competitors. Such actions may include the
development or acquisition of new technologies, the introduction of new
products, the assertion by third parties of patent or similar intellectual
property rights, and the reduction of prices by competitors to gain or
retain market share. Industry consolidation or alliances may also affect
the competitive environment.
The market for the Company's products is characterized by rapidly changing
technology. An unexpected change in one or more of the technologies
affecting data networking or in market demand for products based on a
particular technology could have a material adverse effect on the Company's
operating results. For instance, a large portion of the Company's revenues
is comprised of sales of products based on the Ethernet technology. The
Company's operating results could be adversely affected if there is an
unexpected change in demand for products based on such technology or if the
Company does not respond timely and effectively to expected changes. The
Company is engaged in research and development activities in certain
emerging high-speed technologies, such as 100 Mbps Ethernet, ATM and FDDI.
As the industry standardizes on high-speed technologies, there can be no
assurance that the Company will be able to respond timely to compete in the
marketplace.
Some key components of the Company's products are currently available only
from single sources. There can be no assurance that in the future the
Company's suppliers will be able to meet the Company's demand for
components in a timely and cost effective manner. The Company's operating
results and customer relationships could be adversely affected by either an
increase in prices for, or an interruption or reduction in supply of, any
key components.
The market price of the Company's common stock has been, and may continue
to be, extremely volatile. Factors such as new product announcements by the
Company or its competitors, quarterly fluctuations in the Company's
operating results and general conditions in the data networking market may
have a significant impact on the market price of the Company's common
stock. These conditions, as well as factors which generally affect the
market for stocks of high technology companies, could cause the price of
the Company's stock to fluctuate substantially over short periods.
The Company's corporate headquarters and a large portion of its research
and development activities and other critical business operations are
located near major earthquake faults. Operating results could be
materially adversely affected in the event of a major earthquake. Because
of the foregoing factors, as well as other factors affecting the Company's
operating results, past trends should not be used by investors to
anticipate future results or trends. Further, the Company's prior
performance should not be presumed to be an accurate indicator of future
performance.
Liquidity and Capital Resources
Cash, cash equivalents and temporary cash investments at August 31, 1994
were $138.2 million, increasing $8.5 million from May 31, 1994. The
announced acquisition of NiceCom Ltd., as described below, is expected to
use a significant portion of the Company's cash, cash equivalents and
temporary cash investments in the second quarter of fiscal 1995.
For the quarter ended August 31, 1994, net cash generated from operating
activities was $35.4 million. Net cash generated from operating activities
was offset by the final payment of $14.3 million to Centrum shareholders
for the acquisition of Centrum Communications in February 1994. Inventory
levels decreased $14.0 million from the prior fiscal year end, with
inventory turnover improving from 6.5 turns at May 31, 1994 to 7.3 turns at
August 31, 1994. Trade receivables at August 31, 1994 increased $3.1
million from May 31, 1994 due primarily to an increase in sales over the
same time period. Days sales outstanding in receivables remained constant
at 44 days at the end of the first quarter, compared to May 31, 1994.
During the quarter ended August 31, 1994, the Company repurchased 725,000
shares of common stock with a cash outlay of $16.9 million. As of August
31, 1994, the Company was authorized to repurchase up to an additional 2.8
million shares of its common stock in the open market.
During the first quarter of fiscal 1995, the Company signed a five-year
lease for 225,000 square feet of office and manufacturing space to be built
on land adjacent to its existing headquarters in Santa Clara. The Company
estimates that it will commence occupancy of portions of the facility in
early fiscal 1996, with payments on the lease to start no later than April
1996.
Since the beginning of the last fiscal year, the Company has completed
several acquisition transactions which required substantial cash outlays,
and has announced the pending acquisition of substantially all the assets
of NiceCom Ltd., as described below. The Company believes that its
existing cash balances, cash generated from operations and the available
revolving credit agreement are sufficient to satisfy the anticipated cash
outlay for the announced transaction and operating cash requirements
through fiscal 1995. Should the Company decide to undertake other
acquisition transactions during the current fiscal year, the Company
believes that the foregoing sources of cash, together with other reasonable
sources of capital, would be sufficient to satisfy its cash requirements
for such transactions.
Subsequent Event
On September 20, 1994, the Company announced a definitive agreement to
acquire substantially all of the assets of NiceCom Ltd., a subsidiary of
Nice Systems Ltd., located in Tel Aviv, Israel. NiceCom Ltd. has announced
a comprehensive Ethernet/ATM solution under development for a streamlined,
scalable and seamless migration path from existing Ethernet LANs to ATM
networking. The acquisition, with a value of approximately $58.5 million,
together with transaction costs of approximately $4 million will be
accounted for as a purchase and is expected to be completed in October
1994. It is anticipated that in the second quarter of fiscal 1995 the
Company will charge to expense approximately $60 million ($0.58 per share)
related to the acquisition of purchased in-process technology. The source
of funds for the acquisition is expected to be the Company's existing
balances of cash, cash equivalents and temporary cash investments and, as a
result, the Company expects to use approximately forty percent of those
balances in the second quarter of fiscal 1995.
3Com Corporation
Part II. Other Information
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
3.1 Amended and Restated Articles of Incorporation
(Exhibit 19.1 to Form 10-Q) (8)
3.2 Certificate of Amendment of the Amended and Restated
Articles of Incorporation (Exhibit 3.2 to Form 10-K) (19)
3.3 Bylaws, as amended and restated (Exhibit 3.2 to Form
10-K) (10)
4.1 Reference is made to Exhibit 3.1 (Exhibit 4.1 to Form
10-K) (19)
10.1 1983 Stock Option Plan, as amended (Exhibit 10.1 to
Form 10-K) (10)
10.2 Amended and Restated Incentive Stock Option Plan (4)
10.3 License Agreement dated March 19, 1981 (1)
10.4 First Amended and Restated 1984 Employee Stock
Purchase Plan, as amended (Exhibit 19.1 to Form 10-Q) (11)
10.5 License Agreement dated as of June 1, 1986 (Exhibit
10.16 to Form 10-K) (3)
10.6 3Com Corporation Director Stock Option Plan, as
amended (Exhibit 19.3 to Form 10-Q) (11)
10.7 Bridge Communications, Inc. 1983 Stock Option Plan,
as amended (Exhibit 4.7 to Form S-8) (2)
10.8 3Com Headquarters Lease dated December 1, 1988, as
amended (Exhibit 10.14 to Form 10-K) (10)
10.9 Ground Lease dated July 5, 1989 (Exhibit 10.19 to
Form 10-K) (5)
10.10 Sublease Agreement dated February 9, 1989 (Exhibit
10.20 to Form 10-K) (5)
10.11 Credit Agreement dated April 21, 1993 (Exhibit 10.11
to Form 10-K) (16)
10.12 Asset Purchase Agreement dated as of January 24, 1992
(Exhibit 2.1 to Form 8-K) (12)
10.13 3Com Corporation Restricted Stock Plan dated July 9,
1991 (Exhibit 19.2 to Form 10-Q) (11)
10.14 Agreement and Plan of Merger dated December 16, 1992
(Exhibit 3 to Form 8-K) (13)
10.15 Form of Indemnity Agreement for Directors and
Officers (Exhibit 10.15 to Form 10-Q) (18)
10.16 Agreement and Plan of Reorganization dated December
16, 1993 among 3Com Corporation, 3Sub Corporation and Synernetics, Inc.
(Exhibit 7.1 to Form 8-K) (14)
10.17 Side Agreement Regarding Agreement and Plan of
Reorganization dated January 14, 1993 among 3Com Corporation, 3Sub
Corporation and Synernetics, Inc. (Exhibit 7.2 to Form 8-K) (14)
10.18 Agreement and Plan of Reorganization dated January
18, 1994 (Exhibit 7.2 to Form 8-K) (15)
10.19 Indemnity and Escrow Agreement dated February 2, 1994
(Exhibit 7.3 to Form 8-K) (15)
10.20 Amendment to Credit Agreement (Exhibit 10.20 to Form
10-Q) (17)
10.21 Second Amendment to Credit Agreement (Exhibit 10.21
to Form 10-Q) (17)
10.22 1994 Stock Option Plan (Exhibit 10.22 to Form 10-K)
(19)
10.23 Lease Agreement between BNP Leasing Corporation, as
Landlord, and 3Com Corporation, as Tenant, effective as of July 14, 1994
10.24 Purchase Agreement between BNP Leasing Corporation
and 3Com Corporation, dated July 14, 1994
27.1 Financial Data Schedule
____________________________________
(1) Incorporated by reference to the corresponding
Exhibit previously filed as an Exhibit to Registrant's Registration
Statement on Form S-1 filed January 25, 1984 (File No. 2-89045).
(2) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Registration
Statement on Form S-8 filed October 13, 1987 (File No. 33-17848).
(3) Incorporated by reference to the corresponding
Exhibit or the Exhibit identified in parentheses previously filed as an
Exhibit to Registrant's Form 10-K filed August 29, 1987 (File No. 0-12867).
(4) Incorporated by reference to Exhibit 10.2 to
Registrant's Registration Statement on Form S-4 filed on August 31, 1987
(File No. 33-16850).
(5) Incorporated by reference to the corresponding
Exhibit or the Exhibit identified in parentheses previously filed as an
Exhibit to Registrant's Form 10-K filed on August 28, 1989 (File No. 0-
12867).
(6) Incorporated by reference to Exhibit 19.1 to
Registrant's Form 10-Q on April 14, 1990 (File No. 0-12867).
(7) Incorporated by reference to the corresponding
Exhibit or the Exhibit identified in parentheses previously filed as an
Exhibit to Registrant's Form 10-K filed on August 28, 1990 (File No. 0-
12867).
(8) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 10-Q
filed on January 2, 1991 (File No. 0-12867).
(9) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 10-Q
filed on April 15, 1991 (File No. 0-12867).
(10) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 10-K
filed on August 27, 1991 (File No. 0-12867).
(11) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 10-Q
filed January 10, 1992 (File No. 0-12867).
(12) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 8-K
filed on February 18, 1992 (File No. 0-12867).
(13) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 8-K
filed on February 12, 1993 (File No. 9-12867).
(14) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 8-K
filed on January 31, 1994 (File No. 0-12867).
(15) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 8-K
filed on February 11, 1994 (File No. 0-12867).
(16) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 10-K
filed on August 27, 1993 (File No. 0-12867).
(17) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 10-Q
filed on April 13, 1994 (File No. 0-12867).
(18) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 10-Q
filed on January 14, 1994 (File No. 0-12867).
(19) Incorporated by reference to the Exhibit identified
in parentheses previously filed as an Exhibit to Registrant's Form 10-K
filed on August 31, 1994 (File No. 0-12867).
(b) Reports on Form 8-K
None.
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.
3Com Corporation
(Registrant)
Dated: October 13, 1994 By:/s/ Christopher B. Paisley
--------------------------
Christopher B. Paisley
Vice President Finance and
Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 10.23
$33,500,000
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
AS LANDLORD
AND
3COM CORPORATION,
AS TENANT
EFFECTIVE AS OF JULY 14, 1994
TABLE OF CONTENTS
Page
1. Definitions 2
(a) Active Negligence 2
(b) Additional Rent 3
(c) Advance Date 3
(d) Affiliate 3
(e) Applicable Laws 3
(f) Applicable Purchaser 3
(g) Attorneys' Fees 3
(h) Base Rent 3
(i) Base Rent Commencement Date 3
(j) Base Rental Date 4
(k) Base Rental Period 4
(l) Breakage Costs 4
(m) Business Day 4
(n) Capital Adequacy Charges 4
(o) Carrying Costs 4
(p) Closing Costs 5
(q) Change of Control Event 5
(r) Code 5
(s) Commitment Fee 5
(t) Completion Notice 5
(u) Completion Deadline 5
(v) Construction Advances 5
(w) Construction Allowance 5
(x) Construction Documents 5
(y) Construction Periods 5
(z) Custodial Agreement 6
(aa) Debt 6
(ab) Default 6
(ac) Default Rate 6
(ad) Defaulting Participant 6
(ae) Designated Payment Date 7
(af) Effective Rate 7
(ag) Environmental Indemnity 7
(ah) Environmental Laws 8
(ai) Environmental Losses 8
(aj) Environmental Report 8
(ak) ERISA 9
(al) ERISA Affiliate 9
(am) ERISA Termination Event 9
(an) Escrowed Proceeds 9
(ao) Eurocurrency Liabilities 10
(ap) Eurodollar Rate Reserve Percentage 10
(aq) Event of Default 10
(ar) Excluded Taxes 10
(as) Fair Market Value 10
(at) Fed Funds Rate 10
(au) Funding Advances 11
(av) GAAP 11
(aw) Hazardous Substance 11
(ax) Hazardous Substance Activity 11
(ay) Impositions 12
(az) Improvements 12
(ba) Indemnified Party 12
(bb) Initial Funding Advance 12
(bc) Initial Improvements 12
(bd) Landlord's Lender 12
(be) Last Advance Date 12
(bf) LIBOR 12
(bg) Lien 13
(bh) Losses 13
(bi) Maximum Construction Allowance 14
(bj) Notice of Last Advance 14
(bk) Ordinary Negligence 14
(bl) Outstanding Construction Allowance 14
(bm) Participant 14
(bn) Participation Agreements 14
(bo) Permitted Encumbrances 14
(bp) Permitted Hazardous Substance Use 14
(bq) Permitted Hazardous Substances 15
(br) Permitted Transfer 15
(bs) Person 15
(bt) Plan 16
(bu) Pledge Agreement 16
(bv) Potential Lien Claimants 16
(bw) Prime Rate 16
(bx) Purchase Agreement 16
(by) Qualified Payments 16
(bz) Remaining Proceeds 17
(ca) Rent 17
(cb) Responsible Financial Officer 17
(cc) Scope Change 17
(cd) Spread 17
(ce) Stipulated Loss Value 18
(cf) Subsidiary 19
(cg) Tenant's Knowledge 19
(ch) Term 19
(ci) Unfunded Benefit Liabilities 19
(cj) Other Terms and References 19
2. Term 20
3. Rental 20
(a) Base Rent 20
(b) Upfront Fee 21
(c) Commitment Fees 21
(d) Additional Rent 22
(e) Interest and Order of Application 22
(f) Net Lease 22
(g) No Demand or Setoff 22
4. Insurance and Condemnation Proceeds 22
5. No Lease Termination 24
(a) Status of Lease 24
(b) Waiver By Tenant 25
6. Construction Allowance 25
(a) Advances; Outstanding Construction Allowance 25
(b) Initial Improvements 26
(i) Responsibility for Construction. 26
(ii) Scope Changes. 26
(iii) Value Added. 26
(iv) Estoppel Letters Required. 27
(v) Advances Not a Waiver. 27
(c) Conditions to Construction Advances 27
(i) Prior Notice 27
(ii) Amount of the Advances 27
(iii) Insurance 28
a) Title Insurance 28
b) Builder's Risk Insurance 28
(iv) Progress of Construction 29
(v) Evidence of Costs to be Reimbursed 29
(vi) No Event of Default or Change of Control Event 29
(vii) No Sale of Landlord's Interest 29
(viii) Certificate of No Default 29
(d) Completion Notice 30
7. Purchase Agreement, Pledge Agreement and Environmental
Indemnity 30
8. Use and Condition of Leased Property 30
(a) Use 30
(b) Condition 30
(c) Consideration of and Scope of Waiver 31
9. Other Representations, Warranties and Covenants of Tenant 31
(a) Financial Matters 31
(b) Existing Contract 31
(c) No Default or Violation 32
(d) Compliance with Covenants and Laws 32
(e) Environmental Representations 32
(f) No Suits 33
(g) Condition of Property 33
(h) Organization 33
(i) Enforceability 34
(j) Not a Foreign Person 34
(k) Omissions 34
(l) Existence 34
(m) Tenant Taxes 34
(n) Operation of Property 34
(o) Debts for Construction 36
(p) Impositions 36
(q) Repair, Maintenance, Alterations and Additions 37
(r) Insurance and Casualty 37
(s) Condemnation 38
(t) Protection and Defense of Title 39
(u) No Liens on the Leased Property 39
(v) Books and Records 40
(w) Financial Statements; Required Notices; Certificates as
to Default 40
(x) Further Assurances 42
(y) Fees and Expenses; General Indemnification; Increased
Costs; and Capital Adequacy Charges 42
(z) Liability Insurance 44
(aa) Permitted Encumbrances 45
(ab) Environmental 45
(ac) Right of Landlord to Perform 47
(ad) Affirmative Financial Covenants 47
(iii) Minimum Tangible Net Worth 49
(ae) Negative Covenants 50
(i) Liens 50
(ii) Transactions with Affiliates 52
(iii) Mergers; Sales of Assets 52
(v) Change of Business 53
(af) ERISA 53
10. Representations, Warranties and Covenants of Landlord 53
(a) Title Claims By, Through or Under Landlord 54
(b) Actions Required of the Title Holder 54
(c) No Default or Violation 54
(d) No Suits 55
(e) Organization 55
(f) Enforceability 55
(g) Existence 55
(h) Not a Foreign Person 55
11. Assignment and Subletting 55
(a) Consent Required 55
(b) Transfers in Violation of ERISA 56
(c) Consent Not a Waiver 56
(d) Landlord's Assignment 56
12. Environmental Indemnification 57
(a) Indemnity 57
(b) Assumption of Defense 57
(c) Notice of Environmental Losses 58
(d) Rights Cumulative 58
(e) Survival of the Indemnity 58
13. Landlord's Right of Access 59
14. Events of Default 59
(a) Definition of Event of Default 60
(b) Remedies 62
(c) Enforceability 64
(d) Remedies Cumulative 64
(e) Waiver by Tenant 64
(f) No Implied Waiver 64
15. Default by Landlord 65
16. Quiet Enjoyment 65
17. Surrender Upon Termination 65
18. Holding Over by Tenant 66
19. Miscellaneous 66
(a) Notices 66
(b) Severability 69
(c) No Merger 69
(d) NO IMPLIED REPRESENTATIONS BY LANDLORD 69
(e) Entire Agreement 69
(f) Binding Effect 69
(g) Time is of the Essence 70
(h) Termination of Prior Rights 70
(i) Governing Law 70
(j) Waiver of a Jury Trial 70
(k) Tax Reporting 70
Exhibits and Schedules
Exhibit A Legal Description
Exhibit B Encumbrance List
Exhibit C Information Concerning Initial Improvements
Exhibit D Contractor's Estoppel Letter
Exhibit E Architect's Estoppel Letter
Exhibit F Draw Request Forms
Exhibit G Covenant Compliance Certificate
Exhibit H Permitted Hazardous Substances
Exhibit I Resolution of Disputed Insurance Claims
Schedule 1 List of Existing Participants
LEASE AGREEMENT
This LEASE AGREEMENT (hereinafter called this "Lease"), made to be
effective as of July 14, 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 3COM CORPORATION, a California corporation (hereinafter
called "Tenant");
W I T N E S E T H T H A T:
WHEREAS, pursuant to a letter agreement dated April 6, 1994
(hereinafter, as extended, called the "Existing Contract") from between
3Com Development Corporation ("3CD") to Dairy Associates, L.P. (hereinafter
called "Seller") concerning the land described in Exhibit A attached hereto
(hereinafter called the "Land"), Landlord is acquiring the Land and any
improvements thereon from Seller contemporaneously with the execution of
this Lease;
WHEREAS, in anticipation of Landlord's acquisition of the Land and
other property hereinafter described, Landlord and Tenant have reached
agreement as to the terms and conditions upon which Landlord is willing to
lease the same to Tenant, and by this Lease Landlord and Tenant desire to
evidence such agreement;
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:
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 such buildings and improvements (hereinafter called the
"Improvements");
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;
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 through above are
hereinafter referred to collectively as the "Real Property".
In addition to conveying the leasehold in the Real Property as
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 Existing 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. All of the property, rights and privileges described above in
this paragraph, together with any 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 asserted by Landlord itself or by third parties lawfully
claiming through or under Landlord.
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:
Definitions. As used herein, the terms "Landlord," "Tenant,"
"Existing Contract," "3CD," "Seller," "Land," "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:
Active Negligence. "Active Negligence" of an Indemnified
Party means, and is limited to, the negligent conduct of activities on the
Leased Property by the Indemnified Party in a manner that proximately
causes actual bodily injury or property damage to occur. "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 remedy
provided herein or in the Purchase Agreement.
Additional Rent. "Additional Rent" shall have the
meaning assigned to it in subparagraph below.
Advance Date. "Advance Date" means, regardless of
whether any Construction Advance shall actually be made thereon, the first
Business Day of every calendar month, beginning with August 1, 1994 and
continuing regularly thereafter to and including the Base Rent Commencement
Date. If the Base Rent Commencement Date occurs before the Last Advance
Date (as defined below), then each Base Rental Date through and including
the Last Advance Date shall also constitute an "Advance Date" hereunder.
In any event, the Last Advance Date shall be the final Advance Date;
provided, however, if Landlord sells its interest in the Leased Property
pursuant to the Purchase Agreement before the Last Advance Date, the final
Advance Date shall be the Designated Payment Date.
Affiliate. "Affiliate" of any Person means any other
Person controlling, controlled by or under control of 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.
Applicable Laws. "Applicable Laws" shall have the
meaning assigned to it in subparagraph below.
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.
Attorneys' Fees. "Attorneys' Fees" means the reasonable
fees and expenses of counsel to the parties incurring the same, which may
include fairly allocated costs of in-house counsel, printing, photostating,
duplicating and other expenses, air freight charges, and fees billed for
law clerks, paralegals, librarians and others not admitted to the bar but
performing services under the supervision of an attorney. Such terms shall
also include, without limitation, all such fees and expenses incurred with
respect to appeals, arbitrations and bankruptcy proceedings, and whether or
not any manner or proceeding is brought with respect to the matter for
which such fees and expenses were incurred.
Base Rent. "Base Rent" means the rent payable by Tenant
pursuant to subparagraph below.
Base Rent Commencement Date. "Base Rent Commencement
Date" means the earlier of (1) the Last Advance Date, (2) April 1, 1996, or
(3) the first Business Day of any calendar month that occurs at least ten
(10) days after Landlord has received a notice from Tenant stating that
Tenant irrevocably elects to have Base Rent begin to accrue as soon as
possible under this Lease. It is understood that Tenant may, but shall not
be required, to give such a notice at any time Tenant would prefer to
commence payment of Base Rent rather than have Carrying Costs continue to
accrue.
Base Rental Date. "Base Rental Date" means the first
Business Day of each third calendar month, beginning with the first
Business Day of the third calendar month after the Base Rent Commencement
Date and continuing regularly thereafter to and including the Designated
Payment Date. If the Base Rent Commencement Date occurs before the Last
Advance Date, then Base Rental Dates shall also constitute Advance Dates
hereunder through and including the Last Advance Date, and Base Rental
Periods ending on or prior to the Last Advance Date shall also constitute
Construction Periods hereunder.
Base Rental Period. "Base Rental Period" means each
successive period of approximately three (3) months 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.
Breakage Costs. "Breakage Costs" means any and all costs,
losses or expenses incurred or sustained by Landlord's Lender or any
Participant, for which Landlord's Lender or the Participant shall expect
reimbursement from Landlord, because of the resulting liquidation or
redeployment of deposits or other funds used to make Funding Advances upon
any termination of this Lease by Tenant pursuant to Paragraph , if such
termination is effective as of any day other than an Advance Date or Base
Rental Date. Breakage Costs will include losses attributable to any
decline in LIBOR as of the effective date of termination as compared to
LIBOR used to determine the Effective Rate then in effect. (However, if
Landlord's Lender or a Participant actually receives a profit upon the
liquidation or redeployment of deposits or other funds used to make Funding
Advances, because of any increase in LIBOR, then such profit will be offset
against costs or expenses that would otherwise be charged as Breakage Costs
under this Lease.) Each determination by Landlord's Lender of Breakage
Costs shall, in the absence of clear and demonstrable error, be conclusive
and binding upon Landlord and Tenant.
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 or San
Francisco, California, 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).
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 subparagraph .
Carrying Costs. "Carrying Costs" means the charges
(accruing at the Effective Rate) 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 below.
Closing Costs. "Closing Costs" means the excess of
$6,700,000 over the sums actually paid by Landlord for or in connection
with Landlord's acquisition of the Leased Property at the closing under the
Existing Contract, which excess will be advanced by or on behalf of
Landlord to pay costs incurred in connection with the preparation and
negotiation of this Lease, the Purchase Agreement, the Pledge Agreement,
the Environmental Indemnity, the various Participation Agreements and
related documents. To the extent that Landlord does not itself use such
excess to pay expenses incurred by Landlord in connection with the
preparation and negotiation of such documents, the remainder thereof will
be advanced to Tenant for payment of expenses incurred by Tenant in
connection therewith 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.
Change of Control Event. "Change of Control Event" means
the occurrence of any merger or consolidation or sale of assets involving
Tenant that is prohibited by Paragraph .
Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
Commitment Fee. "Commitment Fee" shall have the meaning
assigned to it in subparagraph below.
Completion Notice. "Completion Notice" shall have the
meaning assigned to it in subparagraph below.
Completion Deadline. "Completion Deadline" means
October 1, 1996.
Construction Advances. "Construction Advances" means
actual advances of funds made by or on behalf of Landlord pursuant to
Paragraph below for costs incurred to construct the Initial Improvements
or for property taxes and assessments assessed against the Leased Property
paid prior to the Last Advance Date.
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 below.
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.
Construction Periods. The first "Construction Period"
shall be a short 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
be a period of approximately one (1) month (except Construction Periods, if
any, commencing on or after the Base Rent Commencement Date, which shall be
approximately three (3) months each), and 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. The last "Construction
Period" shall end on but not include the Last Advance Date.
Custodial Agreement. "Custodial Agreement" means the
Custodial Agreement dated as of the date hereof between Banque Nationale de
Paris, New York Branch, and Tenant pursuant to which such bank will hold
securities pledged by Tenant as collateral for Tenant's obligations under
the Purchase Agreement, as such Custodial Agreement may be extended,
supplemented, amended, restated or otherwise modified from time to time.
Debt. "Debt" of any Person means (i) indebtedness of
such Person for borrowed money, (ii) obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (iii) obligations
of such Person to pay the deferred purchase price of property or services,
(iv) obligations of such Person as lessee under leases which shall have
been or should be, in accordance with GAAP, recorded as capital leases,
(v) 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 (iv)
above, (vi) liabilities of another Person secured by a Lien on, or payable
out of the proceeds of production from, property of such Person even though
such obligation shall not be assumed by such Person (but in the case of
such liabilities not assumed by such Person, the liabilities shall
constitute Debt of such Person only to the extent of the value of such
Person's property encumbered by the Lien securing such liabilities) and
(vii) Unfunded Benefit Liabilities.
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.
Default Rate. "Default Rate" means a floating per annum
rate equal to three percent (3%) above the Prime Rate. However, in no
event will the Default Rate exceed the maximum interest rate permitted by
law.
Defaulting Participant. "Defaulting Participant" means
any Participant listed in Schedule 1, or any other Participant which Tenant
shall have approved (which approval shall not be unreasonably withheld for
any proposed Participant that is a commercial bank operating in the United
States of America having capital and surplus in excess of $500,000,000 or
for any Affiliate of such a bank), that shall have breached its
Participation Agreement with Landlord by failing to provide a Funding
Advance to Landlord for (or equal to) such Participant's percentage of any
Construction Advance requested by Tenant. (For purposes of this Lease a
"Participant's percentage" shall mean the percentage that, under such
Participant's Participation Agreement with Landlord, is to be multiplied
against Construction Advances to compute the amount the Participant must
advance to Landlord for (or equal to) a percentage of Construction Advances
requested hereunder.) Notwithstanding the foregoing, however, in no event
will any Participant be a Defaulting Participant unless its Participation
Agreement with Landlord expressly makes Tenant a third party beneficiary of
the applicable Participant's promise to fund advances for (or equal to) its
percentage share of Construction Advances hereunder.
Designated Payment Date. "Designated Payment Date" shall
have the meaning assigned to it in the Purchase Agreement.
Effective Rate. "Effective Rate" means:
for the short first Construction Period ending August 1, 1994,
the per annum rate which equals the Spread plus the per annum rate charged
to Landlord by Landlord's Lender on the Initial Funding Advance for such
Construction Period, it being understood that the rate charged to Landlord
by Landlord's Lender during such period will be equal to the rate
Landlord's Lender establishes internally as its marginal cost of funds; and
for each subsequent Construction Period and for each Base
Rental Period, the per annum rate which equals the Spread for such
Construction Period or Base Rental Period plus the per annum rate
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.
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.
If for any reason Landlord determines that it is impossible or unreasonably
difficult 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 Spread plus any published index or per annum
interest rate determined reasonably and in good faith by Landlord's Lender
to be comparable to LIBOR at the beginning of the first day of that period.
A comparable interest rate might be, for example, the then existing yield
on short term United States Treasury obligations (as compiled by and
published in the then most recently published United States Federal Reserve
Statistical Release H.15(519) or its successor publication), plus or minus
a fixed adjustment based on Landlord's Lender's comparison of past
eurodollar market rates to past yields on such Treasury obligations. Any
determination by Landlord of the Effective Rate hereunder shall, in the
absence of clear and demonstrable error, be conclusive and binding.
Environmental Indemnity. "Environmental Indemnity" means
the separate Environmental Indemnity Agreement dated as of the date hereof
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.
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").
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; (ii) any violation of 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; 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 , or any allegation of
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 IN THE PRECEDING SENTENCE EVEN
WHEN SUCH MATTERS ARE CAUSED BY THE ORDINARY NEGLIGENCE (AS DEFINED BELOW)
OF THAT PARTICULAR OR ANY OTHER INDEMNIFIED PARTY. However, Losses
incurred by or asserted against a particular Indemnified Party and
proximately caused by (and attributed by any applicable principles of
comparative fault to) the wilful misconduct, Active Negligence or gross
negligence of any Indemnified Party will not constitute Environmental
Losses of such Indemnified Party for purposes of this Lease.
Environmental Report. "Environmental Report" means,
collectively, the following reports: Soil and Groundwater Assessment, IBM-
ROLM Property, Old Mountain View/Alviso Road, Santa Clara, California,
prepared by Kleinfelder, dated January 29, 1988; Site Investigation Data
Summary, Former Edelweiss Dairy Site, 3131 Old Mountain View-Alviso Road,
Santa Clara, California, prepared by EMCON Associates, dated June 1989;
Remedial Strategy Development for Property at the Former Edelweiss Dairy,
Santa Clara, California, prepared by Levine-Fricke, dated April 25, 1989;
Site Status Report on Soil Remediation at Former Edelweiss Dairy and Future
3COM Corporate Campus, Santa Clara, California, prepared by Levine-Fricke,
dated June 13, 1989; Interim Status Report and Final Sampling Plan: Soil
Remediation at Former Edelweiss Dairy and Future 3COM Corporate Campus,
Santa Clara, California, prepared by Levine-Fricke, dated November 13,
1989; Letter to Penny Silzer, California Water Quality Control Board--San
Francisco Bay Region, from Dirk J. Bouma, Levine-Fricke, dated February 5,
1990, regarding Final Soil Status Report, Report of Waste Discharge, and
Request for Waiver of WDRs for Disposal of Treated Soils from Former
Edelweiss Dairy, Santa Clara, California; Report of Quarterly Ground-Water
Monitoring at the Former Edelweiss Dairy, 5400 Bay Front Plaza, Santa
Clara, California, prepared by Levine-Fricke, dated January 21, 1993; Phase
I Environmental Site Assessment, 3COM Corporation Phase I Parcel, Santa
Clara, California, prepared by Levine-Fricke, dated June 17, 1994; Phase I
Environmental Site Assessment, 3COM Corporation Phase II Parcel, Santa
Clara, California, prepared by Levine-Fricke, dated June 17, 1994; and
Letter to Jennifer Cho, Banque Nationale de Paris, from Ron Goloubow,
Levine-Fricke, dated July 7, 1994, regarding 3COM Corporation Phase II
Parcel, located in Santa Clara, California.
ERISA. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, together with all rules
and regulations promulgated with respect thereto.
ERISA Affiliate. "ERISA Affiliate" means any Person who
for purposes of Title IV of ERISA is a member of Tenant's controlled group,
or under common control with Tenant, within the meaning of Section 414 of
the Code, and the regulations promulgated and rulings issued thereunder.
ERISA Termination Event. "ERISA Termination Event" means
the occurrence with respect to any Plan of a reportable event described in
Sections 4043(b)(5) or (6) of ERISA or any other reportable event
described in Section 4043(b) of ERISA other than a reportable event not
subject to the provision for 30-day notice to the Pension Benefit Guaranty
Corporation pursuant to a waiver by such corporation under Section 4043(a)
of ERISA, or the withdrawal of Tenant or any Affiliate of Tenant from a
Plan during a plan year in which it was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA, or the filing of a notice of intent to
terminate any Plan or the treatment of any Plan amendment as a termination
under Section 4041 of ERISA, or the institution of proceedings to
terminate any Plan by the Pension Benefit Guaranty Corporation under
Section 4042 of ERISA, or any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan.
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 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 for the payment to Tenant for the restoration or repair of the
Leased Property or (B) for application (generally, on the next following
Advance Date or 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 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 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, and all interest earned
on such account shall be added to and made a part of Escrowed Proceeds.
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.
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 deposits
consisting of or including Eurocurrency Liabilities (or with respect to any
other category or liabilities by reference to which LIBOR is determined)
having a term comparable to such Construction Period or Base Rental Period.
Event of Default. "Event of Default" shall have the
meaning assigned to it in subparagraph below.
Excluded Taxes. "Excluded Taxes" shall mean (1) all
federal, state and local income taxes upon the Base Rent, the Upfront Fee,
Commitment Fees and any interest paid to Landlord pursuant to
subparagraph , (2) any taxes imposed by any governmental authority outside
the United States, and (3) any transfer or change of ownership taxes
assessed because of Landlord's transfer or conveyance to any third party of
any rights or interest in the Lease, the Purchase Agreement or the Leased
Property, but excluding any such taxes assessed because of any Permitted
Transfer.
Fair Market Value. "Fair Market Value" shall have the
meaning assigned to it in the Purchase Agreement.
Fed Funds Rate. "Fed Funds Rate" means, for any period,
a fluctuating interest rate (expressed as a per annum rate and rounded
upwards, if necessary, to the next 1/16 of 1%) 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 Landlord's Lender. 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.
Funding Advances. "Funding Advances" means (1) the
Initial Funding Advance and (2) all future advances (which, together with
Initial Funding Advance, are expected to total $33,500,000) made by
Landlord's Lender or any Participant to or on behalf of Landlord to allow
Landlord to provide the Construction Allowance hereunder.
GAAP. "GAAP" means generally accepted accounting principles
in the United States of America as in effect from time to time, applied on
a basis consistent with those used in the preparation of the financial
statements referred to in subparagraph (except for changes concurred in by
Tenant's independent public accountants).
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 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.
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.
Impositions. "Impositions" shall have the meaning
assigned to it in subparagraph below.
Improvements. "Improvements," as defined in the recitals
at the beginning of this Lease, shall include not only existing
improvements to the Land as of the date hereof, if any, but also any new
improvements or changes to existing improvements made by Tenant.
Accordingly, any and all new improvements made to the Leased Property by
Tenant using the Construction Allowance as contemplated in this Lease shall
constitute Improvements as that term is used herein.
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 (but excluding
Tenant or any Applicable Purchaser under the Purchase Agreement or any
Person that claims its interest in the Leased Property through or under
Tenant or such Applicable Purchaser), (2) any Participants, and (3) any
Affiliate, officer, agent, director, employee or servant of any of the
parties described in clause (1) or (2) preceding.
Initial Funding Advance. "Initial Funding Advance" means
the advance of $6,700,000 made by Landlord's Lender and/or Participants to
or on behalf of Landlord on or prior to the date of this Lease to finance
the cost of Landlord's acquisition of the Leased Property and Closing
Costs.
Initial Improvements. "Initial Improvements" shall mean
the improvements on the Land and any furnishings for such improvements
which are to be constructed and installed by Tenant using the Construction
Allowance s described in Paragraph below.
Landlord's Lender. "Landlord's Lender" means Landlord's
Affiliate, Banque Nationale de Paris, a bank organized 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.
Last Advance Date. "Last Advance Date" means the earlier
of (1) the Completion Deadline, or (2) the first Business Day of any
calendar month that occurs on or before the Base Rent Commencement Date and
that occurs at least ten (10) days after Landlord has received a Completion
Notice or Notice of Last Advance, or (3) the first Base Rental Date that
occurs at least ten (10) days after Landlord has received a Completion
Notice or a Notice of Last Advance.
LIBOR. "LIBOR" means, for purposes of determining the
Effective Rate for each Construction Period and 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 Construction Period
or Base Rental Period, as the case may be. 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 or 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 Construction Period or Base Rental Period,
and (iii) for a period of time equal or comparable to the length of such
Construction Period or 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; provided, however, Tenant may
notify Landlord that Tenant objects to any future determination of LIBOR in
the manner provided by this sentence, in which case any determination of
LIBOR required more than three Business Days after Landlord's receipt of
such notice shall be made as if this sentence had been struck from this
Lease. If for any reason Landlord's Lender determines that it is
impossible or unreasonably difficult to determine LIBOR with respect to a
given Construction Period or Base Rental Period in accordance with the
preceding sentences, or if Landlord's Lender shall determine that it is
unlawful (or any central bank or governmental authority shall assert that
it is unlawful) for Landlord, Landlord's Lender or any Participant to
provide Funding Advances hereunder during any Base Rental Period for which
Base Rent is computed by reference to LIBOR, 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.
Lien. "Lien" means any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including any agreement
to give any of the foregoing, any conditional sale or other title retention
agreement, any agreement to sell receivables with recourse, any lease in
the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).
Customary bankers' rights of set-off arising by operation of law or by
contract (however styled, if the contract grants rights no greater than
those arising by operation of law) in connection with working capital
facilities, lines of credit, term loans and letter of credit facilities and
other contractual arrangements entered into with banks in the ordinary
course of business are not "Liens" for the purposes of this Lease.
Losses. "Losses" means any and all losses, liabilities,
damages (whether actual, consequential, punitive or otherwise denominated),
demands, claims, actions, judgments, causes 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, known
and unknown.
Maximum Construction Allowance. "Maximum Construction
Allowance" means an amount equal to $33,500,000, less the Initial Funding
Advance.
Notice of Last Advance. "Notice of Last Advance" means
any notice given by Tenant to Landlord stating that Tenant irrevocably
elects not to request or accept any further Construction Advances which
Tenant might be entitled to but for such election. It is understood that
Tenant may, but shall not be required, to give a Notice of Last Advance in
order to accelerate the Last Advance Date and to thereby accelerate the
date upon which Commitment Fees shall cease to accrue.
Ordinary Negligence. "Ordinary Negligence" of an
Indemnified Party means any negligent acts or omissions of such party that
does not for any reason constitute Active Negligence as defined in this
Lease.
Outstanding Construction Allowance. "Outstanding
Construction Allowance" shall have the meaning assigned to it in
subparagraph .
Participant. "Participant" means any Person other than
Landlord that agrees with Landlord or another Participant to participate in
all or some of the risks and rewards to Landlord of this Lease and the
Purchase Agreement. As of the effective date hereof, all Participants (if
any) are listed in Schedule 1 attached hereto, but such Participants and
Landlord may agree to share in risks and rewards of this Lease and the
Purchase Agreement with other Participants in the future.
Participation Agreements. "Participation Agreements"
means participation agreements between Landlord and one or more third
parties, pursuant to which the third party or parties become Participants
by agreeing to participate in all or some of the risks and rewards to
Landlord of this Lease and the Purchase Agreement, as such Participation
Agreements may be extended, supplemented, amended, restated or otherwise
modified from time to time.
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 Existing Contract or any other agreement described
therein that survived closing thereunder, and (iii) any easement agreement
or other document affecting title to the Leased Property executed by
Landlord at the request of or with the consent of Tenant.
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:
(1) exceed that reasonably required for the construction of the Initial
Improvements and any other Improvements permitted by this Lease and for the
operation of the Leased Property for the purposes expressly permitted under
subparagraph ; or
(2) include any disposal, discharge or other release of Hazardous
Substances from operations on the Leased Property in any manner that might
allow such substances to reach the San Francisco Bay, surface water or
groundwater, except (i) through a lawful and properly authorized discharge
(A) to a publicly owned treatment works or (B) with rainwater or storm
water runoff in accordance with Applicable Laws and any permits obtained by
Tenant that govern such runoff; or (ii) any such disposal, discharge or
other release of Hazardous Substances for which no permits are required and
which are not otherwise regulated under applicable Environmental Laws.
Further, 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) for Hazardous Substances, including but not
limited to a landfill, incinerator or other waste disposal facility.
Permitted Hazardous Substances. "Permitted Hazardous
Substances" means Hazardous Substances used and reasonably required for the
construction of the Initial Improvements or for Tenant's operation of the
Leased Property for the purposes expressly permitted by subparagraph , in
either case in strict compliance with all Environmental Laws and with due
care given the nature of the Hazardous Substances involved. Without
limiting the generality of the foregoing, Permitted Hazardous Substances
shall include, without limitation, usual and customary office and
janitorial products, and the materials listed on Exhibit H attached hereto.
Permitted Transfer. "Permitted Transfer" means any one
or more of the following: (1) the creation or conveyance of rights and
interests in favor of any Participants listed in Schedule 1 pursuant to the
terms and conditions of Participation Agreements between such Participants
and Landlord; (2) subject to the last sentence of subparagraph , 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, the Pledge Agreement or the Environmental Indemnity
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 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 Designated Payment Date.
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.
Plan. "Plan" means at any time an employee pension
benefit plan which is covered under Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and is either
(i) maintained by Tenant or any Subsidiary for employees of Tenant or any
Subsidiary or (ii) maintained pursuant to a collective bargaining agreement
or any other arrangement under which more than one employer makes
contributions and to which Tenant or any Subsidiary is then making or
accruing an obligation to make contributions or has within the preceding
five plan years made contributions.
Pledge Agreement. "Pledge Agreement" means the Pledge
Agreement dated as of the date hereof between Landlord and Tenant pursuant
to which Tenant may pledge securities as collateral for Tenant's
obligations under the Purchase Agreement, as such Pledge Agreement may be
extended, supplemented, amended, restated or otherwise modified from time
to time.
Potential Lien Claimants. "Potential Lien Claimants"
shall have the meaning assigned to it in subparagraph .
Prime Rate. "Prime Rate" means the prime interest rate
or equivalent charged by Landlord's Lender in the United States 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 as the Prime Rate. The prime rate or equivalent announced or
published by such bank need not be the lowest rate charged by it. The
Prime Rate may change from time to time after the date hereof without
notice to Tenant as of the effective time of each change in rates described
in this definition.
Purchase Agreement. "Purchase Agreement" means the
Purchase Agreement 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 Purchase
Agreement may be extended, supplemented, amended, restated or otherwise
modified from time to time.
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 Landlord will do upon the first Advance Date or Base Rental
Date which is at least three (3) Business Days after Landlord's receipt of
the same unless postponement of such application is required by other
provisions of this Lease or consented to by Tenant in writing. 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 below.
Remaining Proceeds. "Remaining Proceeds" shall have the
meaning assigned to it in subparagraph .
Rent. "Rent" means the Base Rent and all Additional
Rent.
Responsible Financial Officer. "Responsible Financial
Officer" means the chief financial officer, the controller, the treasurer
or the assistant treasurer of Tenant.
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 includes any change that (a) is reasonably
likely to substantially reduce the fair market value of the Leased Property
(after completion of the Initial Improvements), or (b) will change the
general character of the Initial Improvements from that described in
Exhibit C.
Spread. "Spread" means, for purposes of determining the
Effective Rate for each Construction Period and Base Rental Period, the
difference between (1) seventy-five basis points (75/100 of 1%), less (2)
the product of (a) fifty basis points (50/100 of 1%) times (b) the
Collateral Percentage (as defined below) in effect for such Construction
Period or Base Rental Period. As used in this Lease, "Collateral
Percentage" means the Collateral Percentage determined under (and as
defined in) the Pledge Agreement; provided, however, for purposes of this
Lease, the Collateral Percentage for any Construction Period or Base Rental
Period shall not exceed a fraction; the numerator of which fraction shall
equal the Market Value (as defined below) of all collateral that (a) is, on
the first day of such Construction Period or Base Rental Period, held by
the Custodian under the Custodial Agreement subject to a Qualifying
Security Interest (as defined below), (b) is free from claims or security
interests held or asserted by any third party, and (c) with respect to
which Tenant shall have satisfied the requirements of Section 2.4 of the
Pledge Agreement; and the denominator of which fraction shall equal the
Stipulated Loss Value on the first day of such Construction Period or Base
Rental Period (computed after the addition of any Construction Advance made
on such first day, after the addition of all Carrying Costs for prior
Construction Periods, and after the subtraction of any Qualified Payments
applied on such first day). As used in this paragraph, "Market Value"
means, for purposes of determining the Collateral Percentage for each
Construction Period and Base Rental Period, the Market Value determined in
accordance with (and as defined in) the Pledge Agreement on the Valuation
Date (as defined in the Custodial Agreement) upon which such Construction
Period or Base Rental Period commences or, if such Construction Period or
Base Rental Period does not commence upon a Valuation Date, on the most
recent Valuation Date prior to the commencement of such period. As used in
this paragraph, "Qualifying Security Interest" means a first priority
perfected security interest under the Pledge Agreement which is sufficient,
for purposes of the laws and regulations which govern minimum amounts of
capital that Landlord and Participants or their affiliates must maintain,
to permit them to assign a twenty percent risk weighting to a portion of
their collective investment in the Property equal to the Market Value of
the collateral encumbered by such an interest.
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 Initial Funding Advance
(i.e., $6,700,000), PLUS the Outstanding Construction Allowance as of the
date a computation is required hereunder, LESS the amount (if any) of
Qualified Payments paid to Landlord on or prior to such date that have not
been deducted in calculating the Outstanding Construction Allowance. Thus,
for example, if a determination of Stipulated Loss Value is required under
subparagraph on the first day of the applicable Base Rental Period, and if
Tenant has used the entire $26,800,000 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 $5,500,000 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 be $28,000,000:
The Initial Funding Allowance ($6,700,000) PLUS the Outstanding
Construction Allowance--after accounting for Qualified Payments that were
applied to reduce the Outstanding Construction Allowance--($26,800,000 -
$5,500,000 = $21,300,000) LESS zero (since all Qualified Payments were
applied to reduce the Outstanding Construction Allowance) = $6,700,000 +
$21,300,000 - $0 = $28,000,000.
If in the foregoing example, Qualified Payments had been $31,500,000,
"Stipulated Loss Value" would have been $2,000,000, computed as follows:
The Initial Funding Allowance ($6,700,000) PLUS the Outstanding
Construction Allowance (in this example, zero, because Qualified Payments
more than offset the Outstanding Construction Allowance) LESS those
Qualified Payments that were NOT applied to reduce the Outstanding
Construction Allowance (i.e., the "excess" Qualified Payments remaining
after the Outstanding Construction Allowance had been offset in full
[$31,500,000 - $26,800,000 = $4,700,000]) = $6,700,000 + $0 - $4,700,000 =
$2,000,000.
Under no circumstances will any payment of Base Rent or the Upfront Fee or
Commitment Fees reduce Stipulated Loss Value.
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.
Tenant's Knowledge. "Tenant's knowledge," "to the
knowledge of Tenant" and words of like effect means the actual knowledge
(with due investigation) of any of the following employees of Tenant: Judy
Bruner, Treasurer; Christopher B. Paisley, Chief Financial Officer; Abe
Darwish, Director of Site Services; and Walter Patti, Manager of Safety and
Security. However, to the extent Tenant's knowledge after the date hereof
may become relevant hereunder or under any certificate or other notice
provided by Tenant to Landlord in connection with this Lease, "Tenant's
knowledge" and words of like effect shall include the then actual knowledge
of other employees of Tenant (if any) that have assumed responsibilities of
the current employees listed in the preceding sentence or that have
replaced such current employees. But none of the employees of Tenant whose
knowledge is now or may hereafter be relevant shall be personally liable
for the representations of Tenant made herein.
Term. "Term" shall have the meaning assigned to it in
Paragraph below.
Unfunded Benefit Liabilities. "Unfunded Benefit
Liabilities" means, with respect to any Plan, the amount (if any) by which
the present value of all benefit liabilities (within the meaning of Section
4001(a)(16) of ERISA) under the Plan exceeds the fair market value of all
Plan assets allocable to such benefit liabilities, as determined on the
most recent valuation date of the Plan and in accordance with the
provisions of ERISA for calculating the potential liability of Tenant or
any ERISA Affiliate of Tenant under Title IV of ERISA.
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 and vice
versa, unless the context otherwise requires. References herein to
Paragraphs, subparagraphs or other subdivisions shall refer to the
corresponding Paragraphs, subparagraphs or subdivisions 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 capitalized terms used in this Lease
which refer to other documents shall be deemed to refer to such other
documents as they may be renewed, extended, supplemented, amended or
otherwise modified from time to time, provided such documents are not
renewed, extended or modified in breach of any provision contained herein
or therein or, in the case of any other document to which Landlord is a
party or of which Landlord is an intended beneficiary, without the consent
of Landlord. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. The words "this Lease", "herein",
"hereof", "hereby", "hereunder" and words of similar import refer to this
Lease as a whole and not to any particular subdivision unless expressly so
limited. The phrases "this Paragraph" and "this subparagraph" and similar
phrases refer only to the Paragraphs or subparagraphs hereof in which the
phrase occurs. The word "or" is not exclusive. Other capitalized terms
are defined in the provisions that follow.
Term. The term of this Lease (herein called the "Term") shall
commence on and include the effective date hereof, and end at 8:00 A.M. on
August 1, 1999 (or the next following Business Day if August 1, 1999 is not
a Business Day), unless extended or sooner terminated as herein provided.
Provided that Tenant is still in possession of the Leased Property and has
not breached its obligation to make or have made any payment required by
Paragraph 2 of the Purchase Agreement on any prior Designated Payment Date,
Tenant may notify Landlord of Tenant's election to terminate this Lease by
giving Landlord an irrevocable notice of such election and of the effective
date of the termination, which notice must be given (if at all) at least
sixty (60) days prior to the effective date of the termination. If Tenant
elects to so terminate this Lease, then on the date on which this Lease is
to be terminated, not only must Tenant pay all unpaid Rent, Tenant must
also pay any Breakage Costs resulting from the termination and must satisfy
its obligations under the Purchase Agreement. The payment of any unpaid
Rent and Breakage Costs and the satisfaction of Tenant's obligations under
the Purchase Agreement shall be conditions precedent to the effectiveness
of any early termination of this Lease by Tenant.
Rental.
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
installments on each Base Rental Date through the end of the Term. Each
payment of Base Rent must be received by Landlord no later that 12:00 noon
(San Francisco time) on the date it becomes due; if received after 12:00
noon it will be considered for purposes of this Lease as received on the
next following Business Day. Each installment of Base Rent shall represent
rent allocable to the Base Rental Period ending on the date on which the
installment is due. After the Base Rental Commencement Date, Landlord
shall notify Tenant in writing of the Base Rent due for each Base Rental
Period at least fifteen (15) days prior to the Base Rental Date on which
such period ends. Any failure by Landlord to so notify Tenant shall not
constitute a waiver of Landlord's right to payment, but absent such notice
Tenant shall not be in default for any underpayment resulting therefrom if
Tenant, in good faith, reasonably estimates the payment required, makes a
timely payment of the amount so estimated and corrects any underpayment
within three (3) Business Days after being notified by Landlord of the
underpayment. If Tenant or any other Applicable Purchaser purchases
Landlord's interest in the Leased Property after the Base Rent Commencement
Date pursuant to the Purchase Agreement, any Base Rent for the three (3)
months ending on the date of purchase (or if the date of Purchase is not a
Base Rental Date, then pro rated Base Rent for the Base Rental Period which
included the date of purchase) and all outstanding Additional Rent shall be
due on the Designated 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 ninety (90) days; that prior to the first day of such Base
Rental Period Tenant has used the entire $26,800,000 Construction Allowance
to construct the Initial Improvements, but the Outstanding Construction
Allowance is only $23,300,000 on the first day of such Base Rental Period
after deducting a total of $3,500,000 of Qualified Payments received by
Landlord, thereby leaving a Stipulated Loss Value of $30,000,000 (the
Initial Funding Advance of $6,700,000 plus the $23,300,000 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:
$30,000,000 x 6% x 90/360, or $450,000.
Upfront Fee. Upon execution and delivery of this Lease
by Landlord, Tenant shall pay Landlord an upfront fee (the "Upfront Fee")
equal to (1) thirty basis points (30/100 of 1%), times (2) the sum of the
Initial Funding Advance plus the Maximum Construction Allowance, and then
subtracting from that result the sum of Fifty Thousand Dollars ($50,000)
(the deposit already paid by Tenant to be applied against the Upfront Fee).
The Upfront Fee shall represent Additional Rent for the first Construction
Period.
Commitment Fees. For each Construction Period Tenant
shall pay Landlord a fee (herein called a "Commitment Fee") equal to (1)
twenty-five basis points (25/100 of 1%), times (2) the difference at the
end of the first day of such Construction Period between (A) Maximum
Construction Allowance 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 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 February 1, May 1, August 1 and November 1 of
each calendar year, beginning with August 1, 1994 and continuing regularly
thereafter to and including the first of such dates to fall on or after the
Last Advance Date; provided that if any of such dates does not fall on a
Business Day, the payment of Commitment Fees otherwise then due shall
become due on the next following Business Day; and provided, further, if
any Commitment Fees shall have accrued and remain unpaid on the Designated
Payment Date, such accrued unpaid Commitment Fees shall be due on the
Designated Payment Date.
Additional Rent. All amounts which Tenant is required to
pay to or on behalf of Landlord pursuant to this Lease, together with every
charge, premium, interest and cost set forth herein which may be added for
nonpayment or late payment thereof, shall constitute rent (all such
amounts, other than Base Rent, are herein called "Additional Rent").
Interest and Order of Application. All Rent 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. Landlord shall be entitled to apply any amounts paid by or on behalf
of Tenant hereunder against any Rent then past due in the order the same
became due or in such other order as Landlord may elect.
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, including any taxes payable by virtue of Landlord's receipt of
amounts paid to or on behalf of Landlord in accordance with this
subparagraph , but not including any Excluded Taxes; (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.
No Demand or Setoff. The Base Rent and all Additional
Rent shall be paid without notice or demand and without abatement,
counterclaim, deduction, setoff or defense, except as expressly provided
herein.
Insurance and Condemnation Proceeds.
Subject to Landlord's rights under this Paragraph , 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. Except as
provided in the last sentence of subparagraph and the last sentence of
subparagraph , all insurance and condemnation proceeds received with
respect to the Leased Property (including proceeds payable under any
insurance policy covering the Leased Property which is maintained by
Tenant) shall be paid to Landlord and then applied as follows:
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.
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, if an Event of Default shall have occurred
and be continuing, then Landlord shall be entitled to receive and collect
insurance or condemnation proceeds payable with respect to the Leased
Property, and either, at the discretion of Landlord, (A) hold such proceeds
as Escrowed Proceeds until paid to Tenant as reimbursement for the actual
and reasonable cost of repairing, restoring or replacing the Leased
Property when Tenant has completed such repair, restoration or replacement,
or (B) retain such proceeds (net of the deductions described in clause (i)
above) as Qualified Payments.
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 the inadequacy of the Remaining Proceeds held by
Landlord as Escrowed Proceeds, if any, 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 fifty percent (50%) of Stipulated
Loss Value (computed after the application of any Remaining Proceeds as a
Qualified Payment) 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 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 .
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.
Nothing herein contained shall be construed to prevent Tenant
from obtaining and applying as it deems appropriate any separate award from
any condemning authority or from any insurer for a taking of or damage to
Tenant's personal property not included in the Leased 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. Further, notwithstanding
anything to the contrary herein contained, if Remaining Proceeds held by
Landlord during the term of this Lease shall exceed Stipulated Loss Value
and any Rent payable by Tenant, then Tenant may get the excess by
terminating this Lease in accordance with Paragraph and purchasing such
any remaining interest of Landlord in the Leased Property and the Escrowed
Proceeds, pursuant to the Purchase Agreement.
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 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.
No Lease Termination.
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 of anyone
claiming through or under Tenant by paramount title or otherwise (provided,
if Tenant is wrongfully evicted by Landlord or by any third 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 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 any improvements included in the Leased Property, it being
understood that Landlord has not made and will not make 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.
However, nothing in this Paragraph shall be construed as a waiver by Tenant
of any right Tenant may have at law or in equity to (i) recover monetary
damages for any default under this Lease by Landlord that Landlord fails to
cure within the period provided in Paragraph , (ii) injunctive relief in
case of the violation, or attempted or threatened violation, by Landlord of
any of the express covenants, agreements, conditions or provisions of this
Lease, or (iii) a decree compelling performance of any of the express
covenants, agreements, conditions or provisions of this Lease.
Waiver By Tenant. 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.
Construction Allowance.
Advances; Outstanding Construction Allowance.
Subject to the conditions set forth below, Landlord shall make
advances (herein called "Construction Advances") on Advance Dates from time
to time as requested by Tenant to reimburse Tenant for the actual cost of
making the Initial Improvements to the Leased Property and for any property
taxes or assessments payable prior to the Last Advance Date with respect to
the Leased Property. In no event will 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 the Maximum Construction
Allowance. 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 subparagraph on or prior to the date in
question, less (B) any Qualified Payments received on or prior to the date
in question. (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.
Charges accruing at the Effective Rate (herein collectively 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
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) the
number of days in such Construction Period, divided by (D) 360.
Initial Improvements.
Responsibility for Construction. Tenant shall construct all Initial
Improvements in a good and workmanlike manner, in accordance with (1) the
descriptions and renderings attached as Exhibit C, (2) any Construction
Documents for which Tenant has requested and obtained the written approval
of Landlord or which Landlord has executed at the request of Tenant
pursuant to Paragraph (though this clause (2) shall not be construed to
require Tenant the get such approval or execution of Construction Documents
by Landlord), (3) Applicable Laws, and (4) the other provisions of this
Lease. Further, except for building foundations, driveways, parking lots,
sidewalks and other improvements which would not suffer damage by being
submerged under flood waters, all Initial Improvements shall be constructed
by Tenant above the elevation that the U.S. Army Corp of Engineers or any
other governmental authority estimates as the highest elevation that 100
year flood waters could be expected to reach. Tenant shall have sole
responsibility for contracting for and administering the construction of
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 .
No contractor or other third party shall be entitled to enforce Landlord's
obligations to make advances as a third party beneficiary. Notwithstanding
delays beyond Tenant's control, and even if the Construction Allowance is
not sufficient to pay for completion of Initial Improvements, Tenant
warrants that it shall cause all Initial Improvements with respect to which
it receives any Construction Advances to be completed on or prior to the
Completion Deadline.
Scope Changes. Before making any Scope Change to the Initial
Improvements contemplated in Exhibit C, Tenant shall provide to Landlord a
reasonably detailed written description of the Scope Change and a revised
construction budget, 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.
Value Added. The Initial Improvements, upon completion and
taken as a whole, must enhance the value of the Leased Property by an
amount commensurate with the total Construction Allowance used by Tenant;
however, this requirement will not preclude Tenant from obtaining
Construction Advances for soft costs (such as architectural fees),
demolition costs or other costs that do not, individually, add value to the
Leased Property but that are incurred in connection with the construction
of Initial Improvements which will in the aggregate satisfy this
requirement. For purposes hereof, the Initial Improvements will be deemed
to have added value "commensurate" with the Construction Allowance used by
Tenant if, when the Initial Improvements are substantially complete, the
Leased Property has a fair market value with the Initial Improvements that
exceeds the fair market value which the Leased Property would have without
the Initial Improvements by an amount equal to no less than fifty percent
(50%) of the then Outstanding Construction Allowance.
Estoppel Letters Required. If requested by Landlord prior to
the substantial completion of the Initial Improvements, Tenant shall cause
the contractor under each significant general construction contract for the
Initial Improvements to execute and deliver to Landlord an estoppel letter
in the form of Exhibit D attached hereto. Similarly, if requested by
Landlord prior to the substantial completion of the Initial Improvements,
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; provided, that no such estoppel letter shall be required
from any architect or engineer who has assigned his plans and
specifications for the Initial Improvements to Tenant without restricting
Tenant's right to further assign or allow other to use the same. Tenant
hereby grants to Landlord (and Landlord's successors and assigns through
any Permitted Transfer) a license to copy and use any such plans and
specifications as Landlord shall deem appropriate.
Advances Not a Waiver. No funding of Construction Advances and
no 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 .
Conditions to Construction Advances. Landlord's
obligation to make Construction Advances from time to time under this
Paragraph shall be subject to the following terms and conditions, all of
which are intended for the sole benefit of Landlord:
Prior Notice. Tenant must make a request in substantially the
form attached to this Lease as Exhibit F for any Construction Advance at
least ten (10) Business Days prior to the Base Rental Date upon which the
advance is to be paid. Landlord shall consider in good faith any changes
to the Construction Advance request forms attached hereto that Tenant may
reasonably request, provided the requested changes do not impair Landlord's
rights or create or increase any liability Landlord may have in connection
with the Initial Improvements.
Amount of the Advances. No Construction Advance shall exceed
the lesser of:
the Maximum Construction Allowance, less (1) all prior Construction
Advances and all Carrying Costs accruing through the date of such advance,
and (2) the Carrying Costs then projected by Landlord to be added to the
Construction Allowance on and after the date of the advance; or
(1) the actual costs and expenses previously incurred and paid by
Tenant for the Initial Improvements, including "soft costs," and for
property taxes or assessments assessed against the Leased Property after
the date hereof and prior to the Last Advance Date, less (2) the sum of all
previous Construction Advances made under this Paragraph to Tenant as
reimbursement for such costs and expenses; or
the maximum amount which Landlord determines it can advance without
causing projected Stipulated Loss Value, computed after adding such advance
and all Carrying Costs then projected by Landlord to be added to the
Construction Allowance on and after the date of the advance, to exceed the
quotient calculated by dividing (1) $17,500,000, by (2) one minus the sum
of all Participants' percentages, other than Defaulting Participants' (if
any) percentages, under their respective Participation Agreements with
Landlord.
Further, no Construction Advance shall be required that would cause the
cost of completing all Initial Improvements then contemplated as 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.
Tenant shall not request any Construction Advance (other than the final
Construction Advance) for an amount less than $500,000.
Insurance. Tenant shall have obtained and provided
certificates (or, in the case of clause a) below, title policies or
binders) reasonably satisfactory to Landlord evidencing insurance covering
the Leased Property as follows (in addition to the liability insurance
required under subparagraph below):
Title Insurance. An owner's title insurance policy (or
binder committing the applicable title insurer to issue an owner's title
insurance policy, without the payment of further premiums) in an amount,
form and substance and written by First American Title Insurance Company or
one or more other title insurance companies reasonably satisfactory to
Landlord and insuring Landlord's ownership of fee title to the Leased
Property, including any new Improvements constructed by Tenant, in the
amount no less than Stipulated Loss Value plus any remaining portion of the
Construction Allowance to be advanced under this Lease; and
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, but
not including earthquake or flood coverage) with deductibles not to exceed
$500,000, such insurance to be in amounts sufficient to cover the total
value of any Improvements under construction and to be maintained in full
force and effect at all times until completion of the Initial Improvements.
Progress of Construction. Construction of the Initial
Improvements shall be progressing in a good and workmanlike manner and in
accordance with the requirements of this Lease without any continuing
significant interruption, other than interruptions beyond the reasonable
control of Tenant that are not likely to cause the cost of such
construction (and Carrying Costs and construction period ad property taxes
and assessments) to exceed the Maximum Construction Allowance. Also,
Tenant shall have corrected or caused the correction promptly of any
significant defect in such construction.
Evidence of Costs to be Reimbursed. To the extent contemplated
by the Construction Advance request forms attached as Exhibit F and
described in subparagraph , or otherwise required by Landlord at the time a
Construction Advance is to be made, Tenant shall have submitted invoices,
requests for payment from contractors, certifications from Tenant's
architect or construction manager, lien releases and other evidence
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 or constitute property taxes or
assessments assessed against the Leased Property and paid by Tenant prior
to the Last Advance Date with respect to the Leased Property and (B)
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 $3,000,000
or more of (1) the total cost of work with respect to 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 such work for which Tenant has provided to Landlord unconditional
statutory lien releases from all Potential Lien Claimants in form and
substance reasonably satisfactory to Landlord.
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.
No Sale of Landlord's Interest. No sale of Landlord's interest
in the Leased Property shall have occurred pursuant to the Purchase
Agreement.
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 in the form attached as Exhibit F.
Completion Notice. Tenant shall provide a notice to
Landlord (the "Completion Notice") promptly after construction of the
Initial Improvements is substantially complete and more than fifty percent
(50%) of the Initial Improvements are being occupied by Tenant or any
subtenant permitted by Paragraph .
Purchase Agreement, Pledge 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, Pledge Agreement or Environmental Indemnity,
which obligations are intended to be separate, independent and in addition
to, and not in lieu of, the obligations established by this Lease. In the
event of any inconsistency between the terms and provisions of the Purchase
Agreement, Pledge Agreement or Environmental Indemnity and the terms and
provisions of this Lease, the terms and provisions of the Purchase
Agreement, Pledge Agreement or Environmental Indemnity (as the case may be)
shall control.
Use and Condition of Leased Property.
Use. Subject to the Permitted Encumbrances and the terms
hereof, Tenant may use and occupy the Leased Property so long as no Event
of Default occurs hereunder, but only for the following purposes and other
lawful purposes incidental thereto:
research and development of computer-related and other electronic
products;
administrative and office space; and
distribution and warehouse storage of computer-related and other
electronic products; and
assembly of computer-related and other electronic products using
components manufactured elsewhere, but not including the manufacture of
computer chips on-site; and
cafeteria, library, fitness center and other support function uses
that Tenant may provide to its employees.
Although the term "electronic products" in this subparagraph may include
products designed to detect, monitor, neutralize, handle or process
Hazardous Substances, the use of the Leased Property by Tenant shall
not include bringing Hazardous Substances onto the Leased Property for the
purpose of researching, testing or demonstrating any such products.
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 . 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 because of any latent or other 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 kind, such as, but not
limited to, water, steam, heat, gas, hot water, electricity, light or
power.
Consideration of and Scope of Waiver. The provisions of
subparagraph 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.
Other Representations, Warranties and Covenants of Tenant.
Tenant represents, warrants and covenants as follows:
Financial Matters. Tenant is solvent and has no
outstanding liens, suits, garnishments or court actions which could render
Tenant insolvent. 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 significant
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 have
been prepared in accordance with GAAP 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
February 28, 1994.
Existing Contract. Except to the extent required of
Landlord under subparagraph , Tenant shall satisfy all surviving
obligations of 3CD under the Existing Contract and under other agreements
described therein. Tenant agrees to indemnify, defend and hold Landlord
harmless from and against any and all Losses 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 Existing
Contract or the other agreements described therein. THE INDEMNITY SET OUT
IN THIS SUBPARAGRAPH SHALL APPLY EVEN IF THE SUBJECT OF THE INDEMNIFICATION
IS CAUSED BY OR ARISES OUT OF THE ORDINARY NEGLIGENCE (AS DEFINED ABOVE) OF
LANDLORD; provided, such indemnity shall not apply to Losses proximately
caused by (and attributed by any applicable principles of comparative fault
to) the Active Negligence, gross negligence or willful misconduct of
Landlord. Because Tenant hereby assumes and agrees to satisfy all
surviving obligations of 3CD under the Existing Contract and the other
agreements described therein, no failure by Landlord to take any action
required by the Existing Contract or such other agreements (save and except
any actions required of Landlord under subparagraph ) 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.
No Default or Violation. The execution, delivery and
performance by Tenant of this Lease, the Purchase Agreement, the Pledge
Agreement and the Environmental Indemnity do not and will not constitute a
breach or default under any other material agreement or contract to which
Tenant is a party or by which Tenant is bound or which affects the Leased
Property or Tenant's use, occupancy or operation of the Leased Property or
any part thereof and do not, to the knowledge of Tenant, violate or
contravene any law, order, decree, rule or regulation to which Tenant is
subject, and such execution, delivery and performance by Tenant 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.
Compliance with Covenants and Laws. 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 other laws pertaining to disabled
persons, 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.
Environmental Representations. To Tenant's knowledge and
except as otherwise disclosed in the Environmental Report, as of the date
hereof: (i) no Hazardous Substances Activity has occurred prior to the date
of this Lease; (iii) neither Tenant nor any prior owner or 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 release or
discharge of Hazardous Substances on or from the Leased Property or
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; any other Hazardous Substances other than
Permitted Hazardous Substances; or any underground storage tank or tanks.
Further, Tenant represents that to its knowledge the Environmental Report
is not misleading or inaccurate in any material respect.
No Suits. There are no judicial or administrative
actions, suits, proceedings or investigations pending or, to Tenant's
knowledge, threatened that will affect Tenant's intended use of the Leased
Property or the validity, enforceability or priority of this Lease, or
Tenant's 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 and its Subsidiaries taken as a whole or
Tenant's 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.
Condition of Property. The Land as described in Exhibit
A is the same as the land shown on the plat included as part of the
ALTA/ACSM Land Title Survey prepared by Ted L. Wilson, L.S. 6425, Kier &
Wright Civil Engineers & Surveyors, Inc. Job No. 94959, which was delivered
to Landlord at the request of Tenant. When the Initial Improvements are
completed in accordance with the requirements of this Lease, 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.
Organization. Tenant is duly incorporated and legally
existing under the laws of the State of California. Tenant has all
requisite power and has procured or will procure on a timely basis all
governmental certificates of authority, licenses, permits, qualifications
and other documentation required to lease and operate the Leased Property.
Tenant has the corporate power and adequate authority, rights and
franchises to own Tenant's property and to carry on Tenant's business as
now conducted and is duly qualified and in good standing in each state in
which the character of Tenant's business makes such qualification necessary
(including, without limitation, the State of California) or, if it is not
so qualified in a state other than California, such failure does not have a
material adverse effect on the properties, assets, operations or businesses
of Tenant and its Subsidiaries, taken as a whole.
Enforceability. The execution, delivery and performance
of this Lease, the Purchase Agreement, the Pledge 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 Laws or any term or provision of Tenant's articles of
incorporation or bylaws. This Lease, the Purchase Agreement, the Pledge
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 equitable principles of
general application.
Not a Foreign Person. Tenant is not a "foreign person"
within the meaning Sections 1445 and 7701 of the Code (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).
Omissions. To Tenant's knowledge, 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.
Existence. Tenant shall continuously maintain its
existence and its qualification to do business in the State of California.
Tenant Taxes. Tenant shall comply with all applicable
tax laws and pay before the same become delinquent all taxes imposed upon
it or upon its property where the failure to so comply or so pay would have
a material adverse effect on the financial condition or operations of
Tenant; except that Tenant may in good faith by appropriate proceedings
contest the validity, applicability or amount of any such taxes and pending
such contest Tenant shall not be deemed in default under this subparagraph
if (1) Tenant diligently prosecutes such contest to completion in an
appropriate manner, and (2) Tenant promptly causes to be paid any tax
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, in any event such contest shall be concluded and
the tax, penalties, interest and costs shall be paid prior to the date any
writ or order is issued under which any of Tenant's property that is
material to the business of Tenant and its Subsidiaries taken as a whole
may be seized or sold because of the nonpayment thereof.
Operation of Property. Tenant shall operate the Leased
Property in a good and workmanlike manner and in compliance 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 an amount equal to such excess for application as
a Qualified Payment. Tenant shall make any payment required by the
preceding sentence within one hundred eighty (180) days after it is
requested by Landlord, and in any event shall make any such payment before
the end of the Term. 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 by an agreement in form satisfactory to
Landlord. 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 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 written notice or claim from any federal, state or other
governmental entity that the Leased Property is not in compliance in any
material respect with any Applicable Law, or that any action may be taken
against the owner of the Leased Property because the Leased Property does
not comply with 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 a 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 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.
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 under this subparagraph (or subparagraphs or )
because of the contested lien if (1) within sixty (60) days after being
asked to do so by Landlord, Tenant bonds over to Landlord's satisfaction
any contested liens alleged to secure an amount in excess of $500,000
(individually or in the aggregate) (2) Tenant diligently prosecutes such
contest to completion in a manner reasonably satisfactory to Landlord, and
(3) 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 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.
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 prior to
delinquency; 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
of this subparagraph (or subparagraphs or ) because of the contested
Imposition if (1) within sixty (60) days after being asked to do so by
Landlord, Tenant bonds over to the satisfaction of Landlord any lien
asserted against the Leased Property and alleged to secure an amount in
excess of $500,000 because of the contested Imposition, (2) Tenant
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to Landlord, and (3) 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 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.
Repair, Maintenance, Alterations and Additions. Tenant
shall keep 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 shall promptly replace
any worn-out fixtures included within the Leased Property with fixtures
comparable to the replaced fixtures when new and repair any damage caused
by the removal of such fixtures. Further, Tenant shall not, without the
prior written consent of Landlord, (i) remove from the Leased Property any
fixtures of significant value which were paid for with (or for which
reimbursement was provided to Tenant by) a Construction Advance, except
such as are replaced by Tenant by articles of equal value, free and clear
of any Lien (and for purposes of this clause "significant value" will mean
any fixture that has a value of more than $100,000 or that, when considered
together with all other fixtures removed and not replaced by Tenant by
articles of equal suitability and value, has an aggregate value of $500,000
or more) or (ii) make any alteration to any Improvements, after the Initial
Improvements are constructed, which significantly reduce the fair market
value or change the general character of the Leased Property, taken as a
whole, or which impair in any significant manner the useful life or utility
of the Improvements, taken as whole. Upon request of Landlord made at any
time when 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 other than the Permitted Encumbrances described
in Exhibit B.
Insurance and Casualty. Throughout the Term, Tenant will
keep all Improvements (including all alterations, additions and changes
made to the Improvements) which are located within the Leased Property
insured under an all-risk property insurance policy (excluding from
coverage damage by flood or earthquake, but not excluding other 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. Tenant will be responsible
for determining the amount of property insurance to be maintained, but such
coverage will be on an agreed value basis to eliminate the effects of
coinsurance. Such insurance shall be issued by 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 X or better. Any deductible applicable to such insurance shall
not exceed $500,000. Such insurance shall cover not only the value of
Tenant's interest in the Improvements, but also the interest of Landlord,
and such insurance shall include provisions that Landlord must be notified
at least ten (10) days prior to any cancellation or reduction of insurance
coverage. With this Lease Tenant shall deliver to Landlord a certificate
from the applicable insurer or its authorized agent evidencing the
insurance required by this subparagraph and any additional insurance which
shall be taken out upon any part of the Leased Property. Thereafter,
Tenant shall deliver to Landlord certificates from the applicable insurer
or its authorized agent of renewals or replacements of all such policies of
insurance at least five (5) 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.
If Tenant fails to obtain any insurance required by this Lease or to
provide confirmation of any such insurance as required by this Lease,
Landlord shall be entitled (but not required) to obtain the insurance that
Tenant has failed to obtain or for which Tenant has not provided the
required confirmation and, without limiting Landlord's other remedies under
the circumstances, Landlord may require Tenant to reimburse Landlord for
the cost of such insurance and to pay interest thereon computed at the
Default Rate from the date such cost was paid by Landlord until the date of
reimbursement by Tenant. 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
for application as required by Paragraph , and (iii) Landlord's consent
must be obtained for any settlement, adjustment or compromise of any claims
for loss, damage or destruction under any policy or policies of insurance
(provided, that if any such claim is for less than $2,000,000 and no Event
of Default shall have occurred and be continuing, Tenant alone shall have
the right to settle, adjust or compromise the claim as Tenant deems
appropriate; and, provided further, that any disagreement between Landlord
and Tenant about the amount for which any such claim should be settled
shall, at the request of either party, be resolved as provided in
Exhibit I, unless an Event of Default shall have occurred and be
continuing, in which case Landlord alone shall have the right to settle,
adjust or compromise the claim as Landlord deems appropriate). If any
casualty shall result in damage to or loss or destruction of the Leased
Property in excess of $1,000,000, Tenant shall give immediate notice
thereof to Landlord and Paragraph shall apply. Notwithstanding the
foregoing provisions of this subparagraph, if insurance proceeds totaling
not more than $2,000,000 are to be recovered as a result of a fire or other
casualty involving the Leased Property, Tenant may directly receive and
hold such proceeds so long as no Event of Default shall have occurred and
be continuing and so long as Tenant applies such proceeds towards the
restoration, replacement and repair of the Leased Property as required by
Paragraph .
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 governmental or
quasi-governmental 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, diligently
prosecute any such proceedings and shall consult with Landlord, its
attorneys and experts and cooperate with them as reasonably requested 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 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. Notwithstanding the foregoing provisions of this subparagraph, if
condemnation proceeds totaling not more than $2,000,000 are to be recovered
as a result of a taking of less than all or substantially all of the Leased
Property, Tenant may directly receive and hold such proceeds so long as no
Event of Default shall have occurred and be continuing and so long as
Tenant applies such proceeds towards the restoration, replacement and
repair of the remainder of the Leased Property as required by Paragraph .
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 (excluding Permitted Encumbrances, this
Lease and any other encumbrance which is claimed by Landlord or lawfully
claimed 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
cause the removal of any such encumbrance and cure any such defect 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 such encumbrance or
title defect (other than a Lien Tenant is contesting as expressly permitted
by and in accordance with subparagraph or subparagraph ), 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 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.
No Liens on the Leased Property. Tenant shall not,
without the prior written consent of Landlord, 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 Lien (except the lien for property
taxes or assessments assessed against the Leased Property which are not
delinquent and any Lien Tenant is contesting as expressly permitted by and
in accordance with subparagraph or subparagraph ), against or covering the
Leased Property or any part thereof (other than any Lien which is lawfully
claimed 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 prohibited Lien 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 to the satisfaction of Landlord.
Books and Records. Tenant shall keep books and records
that are accurate and complete in all material respects for the
construction and maintenance of 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. 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 if requested by Landlord at any time when an Event of Default shall
have occurred and be continuing, Tenant shall construct or abstract from
its regularly maintained books and records information required by this
subparagraph relating to the Leased Property.
Financial Statements; Required Notices; Certificates as
to Default. Tenant shall deliver to Landlord and to each Participant of
which Tenant has been notified:
as soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of Tenant, a consolidated
balance sheet of Tenant and its consolidated Subsidiaries as of the end of
such fiscal year and a consolidated income statement and statement of cash
flows of Tenant and its consolidated Subsidiaries for such fiscal year, all
in reasonable detail and all prepared in accordance with GAAP and
accompanied by a report and opinion of accountants of national standing
selected by Tenant, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be
subject to any qualifications or exceptions as to the scope of the audit
nor to any qualification or exception which Landlord determines, in
Landlord's reasonable discretion, is unacceptable; provided that
notwithstanding the foregoing, for so long as Tenant is a company subject
to the periodic reporting requirements of Section 12 of the Securities
Exchange Act of 1934, as amended, Tenant shall be deemed to have satisfied
its obligations under this clause (i) so long as Tenant delivers to
Landlord the same annual report and report and opinion of accountants that
Tenant delivers to its shareholders;
as soon as available and in any event within sixty (60) days after
the end of each of the first three quarters of each fiscal year of Tenant,
the consolidated balance sheet of Tenant and its consolidated Subsidiaries
as of the end of such quarter and the consolidated income statement and the
consolidated statement of cash flows of Tenant and its consolidated
Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, all in reasonable detail and
all prepared in accordance with GAAP and certified by a Responsible
Financial Officer of Tenant (subject to year-end adjustments); provided
that notwithstanding the foregoing, for so long as Tenant is a company
subject to the periodic reporting requirements of Section 12 of the
Securities Exchange Act of 1934, as amended, Tenant shall be deemed to have
satisfied its obligations under this clause (ii) so long as Tenant delivers
to Landlord the same quarterly reports, certified by a Responsible
Financial Officer of Tenant (subject to year-end adjustments), that Tenant
delivers to its shareholders;
together with the financial statements furnished in accordance with
subparagraph and , a certificate of a Responsible Financial Officer of
Tenant in substantially the form attached hereto as Exhibit G: (i)
certifying that to the knowledge of Tenant no Default or Event of Default
under this Lease has occurred and is continuing or, if a Default or Event
of Default has occurred and is continuing, a brief statement as to the
nature thereof and the action which is proposed to be taken with respect
thereto, (ii) certifying that the representations of Tenant set forth in
Paragraph of this Lease are true and correct in all material respects as
of the date thereof as though made on and as of the date thereof or, if not
then true and correct, a brief statement as to why such representations are
no longer true and correct, and (iii) with computations demonstrating
compliance with the financial covenants contained in subparagraph ;
promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which Tenant sends to Tenant's
stockholders, and copies of all regular, periodic and special reports, and
all registration statements (other than registration statements on Form S-8
or any form substituted therefor) which Tenant files with the Securities
and Exchange Commission or any governmental authority which may be
substituted therefor, or with any national securities exchange;
as soon as possible and in any event within five (5) Business Days
after a Responsible Financial Officer of Tenant becomes aware of the
occurrence of each Default or Event of Default with respect to the
Affirmative Financial Covenants described in subparagraph 9.(ae) or the
Negative Covenants described in subparagraph 9.(af), 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;
upon request by 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 has been
paid and either stating that to the knowledge of Tenant no Default or Event
of Default under this Lease has occurred and is continuing or, if a Default
or Event of Default under this Lease has occurred and is continuing, a
brief statement as to the nature thereof; it being intended that any such
statement by Tenant may be relied upon by any prospective purchaser or
mortgagee of the Leased Property and by any Participant; and
such other information respecting the condition or operations,
financial or otherwise, of Tenant, of any of its Subsidiaries or of the
Leased Property as 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 to any
Participant and to any regulatory body having jurisdiction over Landlord
that requires or requests it.
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; (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 any Participants to
comply with the requirements or requests of any agency or authority having
jurisdiction over them.
Fees and Expenses; General Indemnification; Increased
Costs; and Capital Adequacy Charges.
Except for any costs paid by Landlord with the proceeds of the
Initial Funding Advance as part of the Closing Costs, Tenant shall pay (and
shall indemnify and hold harmless Landlord, Landlord's Lender and any
Person claiming through Landlord by reason of a Permitted Transfer from and
against) all Losses incurred by Landlord or Landlord's Lender or any Person
claiming through Landlord through a Permitted Transfer in connection with
or because of (A) the ownership of any interest in or operation of the
Leased Property, (B) the negotiation or administration of this Lease, the
Purchase Agreement, the Pledge Agreement, the Environmental Indemnity or
any Participation Agreements with Participants listed in Schedule 1 or
other Participants which Tenant shall have approved, (C) the making of
Funding Advances, including Attorneys' Fees or other costs incurred to
evaluate lien releases and other information submitted by Tenant with
requests for Construction Advances, or (D) the construction of the Initial
Improvements, whether such Losses are incurred at the time of execution of
this Lease or at any time during the Term. Costs and expenses included in
such Losses may include, without limitation, all appraisal fees, filing and
recording fees, inspection fees, survey fees, taxes (other than Excluded
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 Losses, Tenant shall reimburse Landlord for the same notwithstanding
that Landlord may have already received any payment from any Participant on
account of such Losses, it being understood that the Participant may expect
repayment from Landlord when Landlord does collect the required
reimbursement from Tenant.
Tenant shall also pay (and indemnify and hold harmless Landlord,
Landlord's Lender and any Person claiming through Landlord by reason of a
Permitted Transfer from and against) all Losses, including Attorneys' Fees,
incurred or expended by Landlord or Landlord's Lender or any Person
claiming through Landlord through a Permitted Transfer or in connection
with (A) the breach by Tenant of any covenant of Tenant herein or in any
other instrument executed in connection herewith or (B) Landlord's exercise
in a lawful manner of any of Landlord's remedies hereunder or under
Applicable Law or Landlord's protection of the Leased Property and
Landlord's interest therein as permitted hereunder or under Applicable Law.
(However, the indemnity in the preceding sentence shall not be construed to
make Tenant liable to both Landlord and any Participant or other party
claiming through Landlord for the same damages. For example, so long as
Landlord remains entitled to recover any past due Base Rent from Tenant, no
Participant shall be entitled to collect a percentage of the same Base Rent
from Tenant.) Tenant shall further 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 damage to the property of third parties occurring in or upon or in
the vicinity of the Leased Property through any cause whatsoever. THE
FOREGOING INDEMNITY FOR INJURY, DEATH OR PROPERTY DAMAGE SHALL APPLY EVEN
WHEN INJURY, DEATH OR PROPERTY DAMAGE IN, ON OR IN THE VICINITY OF THE
LEASED PROPERTY RESULTS IN WHOLE OR IN PART FROM THE ORDINARY NEGLIGENCE
(AS DEFINED ABOVE) OF AN INDEMNIFIED PARTY; provided, such indemnity shall
not apply to Losses suffered by an Indemnified Party that were proximately
caused by (and attributed by any applicable principles of comparative fault
to) the Active Negligence, gross negligence or wilful misconduct of such
Indemnified Party.
If, after the date hereof, due to either (A) 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 (B) 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 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 clear and demonstrable error.
Landlord's Lender or any Participant may demand additional payments
(herein called "Capital Adequacy Charges") if Landlord's Lender or the
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. To the extent that Landlord's Lender or the
Participant demands Capital Adequacy Charges as compensation for the
additional capital requirements reasonably allocable to such advances,
Tenant shall pay to Landlord for the account of the Landlord's Lender or
the Participant, as the case may be, the amount so demanded.
Any amount to be paid to Landlord, Landlord's Lender or any
Indemnified Party under this subparagraph shall be a demand obligation
owing by Tenant. Tenant's indemnities and obligations under this
subparagraph shall survive the termination or expiration of this Lease
with respect to any circumstance or event existing or occurring prior to
such termination or expiration.
Liability Insurance. Tenant shall maintain one or more
policies of commercial general liability insurance against claims for
bodily injury or death and property damage occurring or resulting from any
occurrence in or upon 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 X or better, such insurance to afford
immediate protection, to the aggregate 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 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 (including any 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 written confirmation (in form satisfactory to Landlord) with
respect to such insurance from the applicable insurer or its authorized
agent, which confirmation must provide that insurance coverage will not be
canceled or reduced without at least ten (10) days notice to Landlord. Not
less than five (5) 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.
Permitted Encumbrances. Except to the extent expressly
required of Landlord by subparagraph , 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. 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 Permitted 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 by agreement in
form satisfactory to Landlord.
Environmental.
Environmental Covenants. Tenant covenants:
not to 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;
not to conduct or authorize others to conduct
Hazardous Substance Activities on the Leased Property, except Permitted
Hazardous Substance Use;
to the extent required by Environmental Laws, to
remove Hazardous Substances from the Leased Property (or if removal is
prohibited by law, to take whatever action is required by law) promptly
upon discovery; and
not to discharge or authorize the discharge of
anything (including Permitted Hazardous Substances) from the Leased
Property into groundwater or surface water that would require any permit
under applicable Environmental Laws, other than storm water runoff.
If Tenant's failure to cure any breach of the covenants listed above in
this subparagraph (i) continues beyond the Environmental Cure Period (as
defined below), Landlord may, in addition to any other remedies available
to it, after notifying Tenant of the remediation efforts Landlord believes
are needed, cause the Leased Property to be freed from all Hazardous
Substances (or if removal is prohibited by law, to take whatever action is
required by law), and the cost of the removal shall be a demand obligation
owing by Tenant to Landlord. Further, subject to the provisions of
subparagraph below, Tenant agrees to indemnify Landlord against all Losses
incurred by or asserted or proven against Landlord in connection therewith.
As used in this subparagraph, "Environmental Cure Period" means the period
ending on the earlier of: (1) one hundred and eighty days (180) after
Tenant is notified of the breach which must be cured within such period, or
such longer period as is reasonably required for any cure that Tenant
pursues with diligence pursuant to and in accordance with an Approved Plan
(as defined below), (2) 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 the breach which must be cured
within such period, (3) the end of the Term. As used in this subparagraph,
an "Approved Plan" means a plan of remediation of a violation Environmental
Laws for which Tenant has obtained, within one hundred and eighty days
(180) after Tenant is notified of the applicable breach of the covenants
listed above in this subparagraph (i), the written approval of the
governmental authority with primary jurisdiction over the violation and
with respect to which no other governmental authority asserting
jurisdiction has claimed such plan is inadequate.
Environmental Inspections and Reviews. 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 in violation of the preceding
subparagraph (i), 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
its Affiliates; 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 the preceding subparagraph (i). 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 any 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 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 its Affiliates; 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 the preceding subparagraph (i).
Notice of Environmental Problems. Tenant shall immediately
advise Landlord of (i) any discovery of any event or circumstance which
would render any of the representations contained in subparagraph
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, (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 (iv) any investigation or inquiry
affecting the Leased Property by any governmental authority in connection
with any Environmental Laws. 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, if any, to bring
the Leased Property into compliance with Environmental Laws or to correct
any breach by Tenant of the covenants listed above in subparagraph (i),
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.
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 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.
Affirmative Financial Covenants.
Quick Ratio. Tenant shall maintain a ratio of (A) Quick Assets of
Tenant and its Subsidiaries (determined on a consolidated basis) to (B) the
sum of Current Liabilities of Tenant and its Subsidiaries (determined on a
consolidated basis), of not less than 1.00 to 1.00 through
February 28, 1995, and of not less than 1.25 to 1.00 thereafter. As used
in this Paragraph , "Quick Assets" means the sum (without duplication of
any item) of the collateral held under the Custodial Agreement and pledged
under the Pledge Agreement, plus unencumbered cash, plus unencumbered short
term cash investments, plus other unencumbered marketable securities which
are classified as short term investments according to GAAP, plus the fair
market value of unencumbered Long-Term Investments, plus unencumbered
current net accounts receivable. As used herein "Long-Term Investments"
means those investments described below, provided that such investments
shall have maturities of not longer than two years, and shall not be rated
less than AA- or SP-1 by Standard & Poor's Corporation or less than Aa3 or
MIG-1/VMIG-1 by Moody's Investors Service, Inc.:
(1) Securities issued or fully guaranteed or fully insured by the
United States government or any agency thereof and backed by the full faith
and credit of the United States;
(2) Certificates of deposit, time deposits, eurodollar time
deposits, repurchase agreements, or banker's acceptances that are (i) rated
at least AA- by Standard & Poor's Corporation or Aa3 by Moody's Investors
Service, Inc., and (ii) issued by either one of the 30 largest (in assets)
banks in the United States or by one of the 100 largest (in assets) banks
in the world;
(3) Commercial paper and money market preferred instruments of an
issuer rated at least A-1 by Standard & Poor's Corporation or at least P-1
by Moody's Investor's Service, Inc.;
(4) Investments in taxable or tax-exempt money market funds with
assets greater than $500,000,000 and whose assets have average maturities
less than or equal to 90 days; and
(5) Notes and municipal bonds which are rated at least AA- by
Standard & Poor's Corporation or at least Aa3 by Moody's Investors Service,
Inc.
As used in this Paragraph , "Current Liabilities" means, with respect to
any Person, all liabilities of such Person treated as current liabilities
in accordance with GAAP, including without limitation (a) all obligations
payable on demand or within one year after the date in which the
determination is made and (b) installment and sinking fund payments
required to be made within one year after the date on which determination
is made, but excluding all such liabilities or obligations which are
renewable or extendable at the option of such Person to a date more than
one year from the date of determination.
Total Liabilities to Consolidated Tangible Net Worth Ratio.
Throughout the Term Tenant shall maintain a ratio of Total Liabilities of
Tenant and its Subsidiaries (determined on a consolidated basis) to
Consolidated Tangible Net Worth of not more than 1.00 to 1.00. As used in
this Paragraph , "Total Liabilities" means total liabilities as determined
in accordance with GAAP. As used in this Paragraph , "Consolidated
Tangible Net Worth" means, at any date of determination thereof, the excess
of consolidated total assets on such date over consolidated total
liabilities on such date; provided, however, that Intangible Assets on such
date shall be excluded from any determination of consolidated total assets
on such date. As used in this Paragraph , "Intangible Assets" means, as of
the date of any determination thereof, the total amount of all assets of
Tenant and its consolidated Subsidiaries that are properly classified as
"intangible assets" in accordance with GAAP and, in any event, shall
include, without limitation, goodwill, patents, trade names, trademarks,
copyrights, franchises, experimental expense, organization expense,
unamortized debt discount and expense, and deferred charges other than
prepaid insurance and prepaid taxes and current deferred taxes which are
classified on the balance sheet of Tenant and its consolidated Subsidiaries
as a current asset in accordance with GAAP and in which classification
Tenant's independent public accountants concur.
Minimum Tangible Net Worth. Throughout the Term Tenant shall
maintain a Consolidated Tangible Net Worth of not less than: (A) ninety
percent (90%) of Consolidated Tangible Net Worth as of February 28, 1994;
plus (B) seventy-five percent (75%) of net income earned by Tenant after
February 28, 1994 (excluding any quarterly losses from net income for
purposes of this clause (B)); plus (C) all net proceeds of any sale or
issue of stock of Tenant or any of its Subsidiaries by Tenant or any such
Subsidiary (other than proceeds from a sale or issue of stock to Tenant
itself or one of its Subsidiaries) after February 28, 1994; less (D) all
payments made by Tenant or its Subsidiaries after February 28, 1994 (but
not in excess of the maximum specified in the next sentence), to any Person
other than Tenant or its Subsidiaries to repurchase stock of Tenant or any
of its Subsidiaries. For purposes of determining compliance with this
subparagraph , payments described in clause (D) of the preceding sentence
shall not exceed the sum of: ten percent (10%) of Consolidated Tangible Net
Worth as of February 28, 1994; plus twenty-five percent (25%) of net income
earned by Tenant after February 28, 1994 (excluding any quarterly losses
from net income); plus any net proceeds described in clause (C) of the
preceding sentence; less cash dividends, if any, paid by Tenant or its
Subsidiaries to anyone other than Tenant or its Subsidiaries after
February 28, 1994.
Fixed Charge Ratio. Throughout the Term Tenant shall maintain as of
the last day of each fiscal quarter of Tenant a ratio of (A) Adjusted EBIT
of Tenant and its Subsidiaries (determined on a consolidated basis) for the
twelve (12) month period ending on such date, to (B) Fixed Charges of
Tenant and its Subsidiaries (determined on a consolidated basis) for the
twelve (12) month period ending on such date, of not less than 2.00 to
1.00. As used in this clause (iv), "Adjusted EBIT" means, for any
accounting period, net income (or net loss), plus the amounts (if any)
which, in the determination of net income (or net loss) for such period,
have been deducted for (a) gross interest expense, (b) income tax expense
(c) rent expense under leases of property (excluding rent expense payable
under any "Minor Lease", which shall mean a lease under which rent is less
than $1,000,000 per annum), (d) depreciation, and (e) non-recurring charges
taken in connection with the acquisition of in-process technologies, in
each case determined in accordance with GAAP. As used in this clause (iv),
"Fixed Charges" means, for any accounting period, the sum of (a) gross
interest expense, plus (b) amortization of principal or debt discount in
respect of all Debt during such period, plus (c) rent payable under all
leases of property during such period (excluding rent payable under any
Minor Lease), plus (d) taxes payable during such period.
Negative Covenants. Without the prior written consent of
Landlord in each case, neither Tenant nor any of its Subsidiaries shall:
Liens. Create, incur, assume or suffer to exist any Lien, upon or
with respect to any of its properties, now owned or hereafter acquired;
provided, however, that the following shall be permitted except to the
extent that they would encumber any interest in the Leased Property in
violation of other provisions of this Lease or would encumber collateral
covered by the Pledge Agreement:
Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if they are being contested
in good faith by appropriate proceedings and for which appropriate reserves
are maintained;
Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than thirty (30) days, or which are being contested
in good faith by appropriate proceedings and for which appropriate reserves
have been established;
Liens under workmen's compensation, unemployment
insurance, social security or similar legislation (other than ERISA);
Liens, deposits or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations arising in
the ordinary course of business;
judgment and other similar Liens arising in connection
with court proceedings; provided that the execution or other enforcement of
such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;
easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by Tenant or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business
or materially impair the value of the property subject thereto;
Liens securing obligations of such a Subsidiary to
Tenant or to another such Subsidiary;
Liens incurred after the date of this Lease given to
secure the payment of the purchase price and/or other direct costs incurred
in connection with the acquisition, construction, improvement or
rehabilitation of assets, including Liens existing on such assets at the
time of acquisition thereof or at the time of acquisition by Tenant or a
Subsidiary of any business entity (including a Subsidiary) then owning such
assets, whether or not such existing Liens were given to secure the payment
of the purchase price of the assets to which they attach, provided that (i)
except in the case of Liens existing on assets at the time of acquisition
of a Subsidiary then owning such assets, the Lien shall be created within
six (6) months of the later of the acquisition of, or the completion of the
construction or improvement in respect of, such assets and shall attach
solely to such assets, and (ii) except in the case of Liens existing on
assets at the time of acquisition of a Subsidiary then owning such assets,
at the time of the incurrence of such Lien, the aggregate amount remaining
unpaid on all Debt secured by Liens on such assets whether or not assumed
by Tenant or a Subsidiary shall not exceed an amount equal to seventy-five
percent (75%) of the lesser of the total purchase price or fair market
value, at the time such Debt is incurred, of such assets;
existing mortgages and deeds of trust as of the date of
this Lease;
Liens not otherwise permitted by this subsection (and
not encumbering the Leased Property or encumbering any property covered by
the Pledge Agreement) incurred in connection with the incurrence of
additional Debt, provided that (i) immediately after giving effect to the
incurrence of any such Lien, the sum of the aggregate principal amount of
all outstanding Debt secured by liens incurred pursuant to this clause (xi)
shall not exceed $5,000,000; and
Liens incurred in connection with any renewals,
extensions or refundings of any Debt secured by Liens described in the
other clauses of this subsection , provided that there is no increase in
the aggregate principal amount of Debt secured thereby from that which was
outstanding as of the date of such renewal, extension or refunding and no
additional property is encumbered.
Transactions with Affiliates. Enter into any transactions that
individually or in the aggregate are material to Tenant (including, without
limitation, the purchase, sale or exchange of property or the rendering of
any service) with any Affiliates, except upon fair and reasonable terms no
less favorable to Tenant than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate.
Mergers; Sales of Assets.
Except to the extent permitted by the last sentence
of this subparagraph , liquidate or dissolve, or merge, consolidate with or
into, or convey, transfer, lease, or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired), to any Person, or enter
into any joint venture, partnership or other combination which involves the
investment, sale, lease, loan, or other disposition of the business or all
of the assets of Tenant and its Subsidiaries or so much thereof as, in the
reasonable opinion of Landlord, constitutes a substantial portion of such
business or assets.
b) Except to the extent permitted by the last sentence
of this subparagraph , acquire the assets or business of any Person, other
than in the ordinary course of Tenant's business as presently conducted.
Sale of Receivables. Sell for less than the full face value of, or
otherwise sell for consideration other than cash, any of its notes or
accounts receivable. However, this subparagraph (iv) shall not prohibit:
discounted sales of receivables for cash during any fiscal year of Tenant
that, when considered in the aggregate, neither (1) provide for a total
discount from the face value of the receivables sold exceeding fifteen
percent (15%) of the total face value of all receivables of Tenant and its
consolidated Subsidiaries at the commencement of such fiscal year, or (2)
affect more than fifteen percent (15%) of the individual accounts
(excluding intercompany accounts) comprising the receivables of Tenant and
its consolidated Subsidiaries; any license or sale of products or services
in the ordinary course of business where payment for such transactions is
made by credit card, provided that the fees and discounts incurred by the
Tenant or the Subsidiary in connection therewith shall not exceed the
normal and customary fees and discounts incurred for general credit card
transactions through major credit card issuers; or the delivery and
endorsement to banks in the ordinary course of business by Tenant or any of
its Subsidiaries of promissory notes received in payment of trade
receivables, where delivery and endorsement are made prior to the date of
maturity of such promissory notes, and the retention by such banks of
normal and customary fees and discounts therefor, provided such practice is
usual and customary in the country where such activity occurs.
Change of Business. Permit any significant change in the nature of
the business of Tenant and its Subsidiaries, taken as whole, from that
presently conducted.
Notwithstanding any contrary provisions of subparagraph , Tenant may engage
in any of the following transactions, provided that immediately prior to
and immediately after giving effect thereto, no Default or Event of Default
exists or would exist:
(i) merge with another entity if Tenant is the corporation
surviving the merger;
(ii) enter into joint ventures;
(iii) acquire the assets or business of another Person; or
(iv) liquidate or dissolve Subsidiaries to the extent that
such liquidations and dissolutions would not, in the aggregate, result in a
material adverse effect on the properties, assets, operations or businesses
of Tenant and its Subsidiaries, taken as a whole.
ERISA.
Each Plan is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable Federal
or state law, and as of the date hereof no event or condition is occurring
or exists which would require a notice from Tenant under clause .
Tenant shall provide a notice to Landlord as soon as possible after,
and in any event within ten (10) days after Tenant becomes aware that, any
of the following has occurred, with respect to which the potential
aggregate liability to Tenant relating thereto is $2,000,000 or more, and
such notice shall include a statement signed by a senior financial officer
of Tenant setting forth details of the following and the response, if any,
which Tenant or its ERISA Affiliate proposes to take with respect thereto
(and a copy of any report or notice required to be filed with or given to
Pension Benefit Guaranty Corporation by Tenant or an ERISA Affiliate with
respect to any of the following or the events or conditions leading up it):
(A) the assertion, to secure any Unfunded Benefit Liabilities, of any Lien
against the assets of Tenant, against the assets of any Plan of Tenant or
any ERISA Affiliate of Tenant or against any interest of Landlord or Tenant
in the Leased Property or the collateral covered by the Pledge Agreement,
or (B) the taking of any action by the Pension Benefit Guaranty Corporation
or any other governmental authority action against Tenant to terminate any
Plan of Tenant or any ERISA Affiliate of Tenant or to cause the appointment
of a trustee or receiver to administer any such Plan.
Representations, Warranties and Covenants of Landlord.
Landlord represents, warrants and covenants as follows:
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 during the Term without the prior written consent of
Tenant. Landlord further agrees that if any encumbrance or title defect
affecting the Leased Property is lawfully claimed through or under
Landlord, 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 through
or under Landlord) or any other encumbrances not lawfully claimed through
or under Landlord, (ii) any encumbrances or title defects claimed by,
through or under Tenant or any Participant listed in Schedule 1 or any
other Participant which Tenant shall have approved, or (iii) any
encumbrance or title defect arising because of Landlord's compliance with
subparagraph or any request made by Tenant.
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 of Landlord by the Permitted Encumbrances or
otherwise required of Landlord by Applicable Laws or reasonably requested
by Tenant (including granting any utility easements required in connection
with construction of Improvements); 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 Tenant or any third party (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 specific
and 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 compromise or constitute a waiver of Landlord's rights
hereunder or under the Purchase Agreement, the Pledge Agreement or
Environmental Indemnity or otherwise be reasonably objectionable to
Landlord. Any Losses incurred by Landlord because of any action taken
pursuant to this subparagraph shall be covered by the indemnification set
forth in subparagraph . 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
connection with the closing under the Existing Contract or the execution,
administration or enforcement of any Construction Document.
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.
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.
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.
Enforceability. The execution, delivery and performance
of this Lease, the Purchase Agreement and the Pledge Agreement by Landlord
are duly authorized, are not in contravention of or conflict with any term
or provision of Landlord's articles of incorporation or bylaws and do not,
to Landlord's knowledge, require the consent or approval of any
governmental body or other regulatory authority that has not heretofore
been obtained or conflict with any Applicable Laws. This Lease, the
Purchase Agreement and the Pledge Agreement are valid, binding and legally
enforceable obligations of Landlord except as such enforcement is affected
by bankruptcy, insolvency and similar laws affecting the rights of
creditors, generally, and equitable principles of general application;
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.
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 that state to the extent necessary for the
performance of Landlord's obligations hereunder.
Not a Foreign Person. Landlord is not a "foreign person"
within the meaning of the Sections 1445 and 7701 of the Code (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), and Landlord is not
subject to withholding under California Revenue and Taxation Code Sections
18805, 18815, and 26131.
Assignment and Subletting.
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 Tenant
shall be entitled without Landlord's consent to sublet less than 103,000
square feet of useable space in then existing and completed Improvements if
(i) any sublease by Tenant is made expressly subject and subordinate to the
terms hereof, (ii) such sublease has a term less than or equal to the
remainder of the then effective term of this Lease, and (iii) the use
permitted by such sublease is expressly limited to general office or other
uses approved in advance by Landlord. Such approval of other uses by
Landlord will not be unreasonably withheld, but Tenant acknowledges that
Landlord's withholding of such consent shall be reasonable if Landlord
determines in good faith that the other uses may increase Landlord's risk
of liability for any existing or future environmental problem.
Transfers in Violation of ERISA. Notwithstanding
anything to the contrary contained in this Lease, the Purchase Agreement or
any other document executed in connection herewith, no sale, assignment or
transfer of any direct or indirect interest in Tenant shall be permitted
which would negate Tenant's representations in this Lease regarding ERISA
or cause this Lease, the Purchase Agreement or such other documents (or any
exercise of Landlord's rights hereunder or thereunder) to constitute a
violation of any provision of ERISA or of any applicable state statute
regulating a governmental plan, as determined in the sole discretion of
Landlord, (ii) no direct or indirect transfer of the Leased Property or any
interest therein by Tenant (including, without limitation, any Lien against
Tenant's leasehold interest hereunder) shall be permitted which would cause
this Lease, the Purchase Agreement or any such other documents (or any
exercise of Landlord's rights hereunder or thereunder) to constitute a
violation of ERISA or any applicable state statute regulating a
governmental plan, as determined by Landlord, and (iii) not less than
fifteen (15) days before consummation of a transfer of title to all or part
of Tenant's leasehold interest in the Leased Property or of an interest in
Tenant, or of any direct or indirect right, title or interest in either of
them (a "Transfer"), or of the placing of any Lien or encumbrance on
Tenant's interest in the Leased Property, Tenant shall obtain from the
proposed transferee or lienholder a representation to Landlord in form and
substance satisfactory to Landlord that the provisions of this
subparagraph will be true after the Transfer. Further, any proposed
transferee of any lien against Tenant's leasehold which may be permitted by
this Lease must agree that any direct or indirect transfer of its Lien or
any interest therein will be governed by the provisions of this Lease
relating to ERISA.
Consent Not a 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.
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 by any conveyance that
constitutes a Permitted Transfer. (However, any Permitted Transfer shall
be subject to all of the provisions of each and every agreement concerning
the Leased Property then existing between Landlord and Tenant, including
without limitation this Lease and the Purchase Agreement.) Without
limiting the foregoing, Tenant's consent shall not be required for any
Participation Agreements with the Participants listed in Schedule 1, if
any. In the event Landlord sells or otherwise transfers the Leased
Property and assigns its rights under this Lease, the Purchase Agreement
and the Pledge Agreement, and if Landlord's successor in interest confirms
its liability for the obligations imposed upon Landlord by this Lease, the
Purchase Agreement and the Pledge 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 obligations thereafter arising under
this Lease, the Purchase Agreement and the Pledge 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. Further, during the Term and so long as no Event of
Default has occurred and is continuing, Landlord shall not decrease the
percentage of Base Rent it (and/or its Affiliates) is entitled to receive
and retain under the Participation Agreements below fifty-one percent (51%)
without Tenant's consent, which consent will not be unreasonably withheld.
Environmental Indemnification.
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 below.
Assumption of Defense.
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 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 selected by Tenant but 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 been advised in
writing by counsel 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,
proceeding, investigation or allegation on its own behalf, and Tenant shall
pay or reimburse the Indemnified Party for all Attorney's Fees incurred by
the Indemnified Party because of the selection of such separate counsel.
If any claim, demand, action, proceeding, investigation or allegation
arises as to which the indemnity provided for in this Paragraph applies,
and Tenant fails to assume promptly (and in any event within fifteen (15)
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 settle, with the prior written consent of
Tenant, which consent will not be unreasonably withheld) the claim, demand,
action, proceeding, investigation or allegation at Tenant's expense using
counsel selected by the Indemnified Party; provided, that if any such
failure by Tenant continues for thirty (30) days or more after Tenant is
notified thereof, 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 so long as, in
the written opinion of reputable counsel to the Indemnified Party, the
settlement or payment in full is clearly advisable.
Notice of Environmental Losses. If an Indemnified Party
receives a written notice of Environmental Losses that such Indemnified
Party believes are covered by this Paragraph , then such Indemnified Party
will be expected to 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 ; 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
such Indemnified Party (and any Affiliate of such Indemnified Party)
against Environmental Losses, if any, which would not have been incurred
but for such failure. For example, if Landlord fails to provide Tenant
with a copy of a notice of an obligation covered by the indemnity set out
in subparagraph and Tenant is not otherwise already aware of such
obligation, and if as a result of such failure Landlord 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 Landlord (or any Affiliate of Landlord) to pay the excess.
Rights Cumulative. The rights of each Indemnified Party
under this Paragraph 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).
Survival of the Indemnity. Tenant's obligations under
this Paragraph shall survive the termination or expiration of this Lease.
All obligations of Tenant under this Paragraph 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.
Landlord's Right of Access.
Landlord and Landlord's representatives may enter the Leased
Property, after five (5) Business Days advance written notice to Tenant
(except in the event of an emergency, when no advance notice will be
required), for the purpose of making inspections or performing any work
Landlord is authorized to undertake by the next subparagraph. So long as
Tenant remains in possession of the Leased Property, Landlord or Landlord's
representative will, before making any such inspection or performing any
such work on the Leased Property, if then requested to do so by Tenant to
maintain Tenant's security: (i) sign in at Tenant's security or information
desk if Tenant has such a desk on the premises, (ii) wear a visitor's badge
or other reasonable identification provided by Tenant when Landlord or
Landlord's representative first arrives at the Leased Property, (iii)
permit an employee of Tenant to observe such inspection or work, and (iv)
comply with other similar reasonable nondiscriminatory security
requirements of Tenant that do not, individually or in the aggregate,
interfere with or delay inspections or work of Landlord authorized by this
Lease.
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. Any expenses so incurred
by Landlord, and any 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. But nothing herein
shall imply any duty upon the part of Landlord to do any 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 such work permitted by
Landlord hereunder 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 (except for liability in connection with death or injury or damage to
the property of third parties caused by the Active Negligence, gross
negligence or wilful misconduct of Landlord or its officers, employees, or
agents in connection therewith), and the obligations of Tenant under this
Lease shall not thereby be affected in any manner.
Events of Default.
Definition of Event of Default. Each of the following
events shall be deemed to be an "Event of Default" by Tenant under this
Lease:
Tenant shall fail to pay when due any installment of Rent due
hereunder and such failure shall continue for three (3) Business Days after
Tenant is notified thereof.
Tenant shall fail to cause any representation or warranty of Tenant
contained herein that is false or misleading in any material respect when
made to be made true and not misleading (other than as described in the
other clauses of this subparagraph ), or 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 ), and in either case shall not cure
such failure prior to the earlier of (A) thirty (30) 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 thirty day
period, and if Tenant shall promptly have commenced to cure the same and
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 sixty (60) days) as shall
be necessary for the curing thereof with reasonable diligence.
Tenant shall fail to comply with any term, provision or condition of
the Purchase Agreement, the Pledge Agreement or the Environmental
Indemnity.
Tenant shall abandon any portion of the Leased Property.
Tenant shall fail to make any payment or payments of principal,
premium or interest, on any Debt of Tenant described in the next sentence
when due (taking into consideration the time Tenant may have to cure such
failure, if any, under the documents governing such Debt). As used in this
clause , "Debt" shall mean only Debts of Tenant now existing or arising in
the future (a) payable to Landlord or any Participant or any Affiliate of
Landlord or any Participant, or (B) payable to any other Person and with
respect to which $5,000,000 or more is actually due and payable because of
acceleration or otherwise.
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, 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).
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.
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 GAAP) 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 GAAP) 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.
A final judgment or order for the payment of money in an amount (not
covered by insurance) which exceeds $3,000,000 shall be rendered against
Tenant or any of its Subsidiaries and 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.
Any ERISA Termination Event that Landlord determines might
constitute grounds for the termination of any Plan or for the appointment
by the appropriate United States district court of a trustee to administer
any Plan shall have occurred and be continuing thirty (30) days after
written notice to such effect shall have been given to Tenant by Landlord,
or any Plan shall be terminated, or a trustee shall be appointed by an
appropriate United States district court to administer any Plan, or the
Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any Plan or to appoint a trustee to administer any Plan.
A Change of Control Event not approved in advance by Landlord
shall occur.
Notwithstanding the foregoing, any Default that could become an Event of
Default under clause may be cured within the earlier of the periods
described in clauses (A) and (B) thereof 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 the next following date
which is either an Advance Date or a Base Rental Date and which is at least
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 any 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 subparagraph and the environmental indemnity set
forth in Paragraph shall survive the payment of such amounts by Tenant to
Landlord and the conveyance of Landlord's interest in the Leased Property
to Tenant.
Remedies. Upon the occurrence of an Event of Default
which is not cured within any applicable period expressly permitted by
subparagraph , 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 :
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.
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.
Upon termination of Tenant's right to possession, this Lease
shall terminate and Landlord may recover from Tenant:
The worth at the time of award of the unpaid Rent which
had been earned at the time of termination;
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;
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
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
and subparagraph shall be 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
shall be 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%).
Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable California
law.
The Landlord shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in force even after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has
right to sublet or assign, subject only to reasonable limitations).
Accordingly, 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 hereof. The following shall not
constitute a termination of Tenant's right to possession:
Acts of maintenance or preservation or efforts to relet
the Leased Property;
The appointment of a receiver upon the initiative of
Landlord to protect Landlord's interest under this Lease; or
Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment by Tenant.
Enforceability. This Paragraph shall be enforceable to
the maximum extent not prohibited by Applicable Law, and the
unenforceability of any provision in this Paragraph shall not render any
other provision unenforceable.
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 under Applicable Law or in equity. In addition to other remedies
provided in this Lease, 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 to be performed by Tenant, or to a
decree compelling performance of any of the other covenants, agreements,
conditions or provisions of this Lease to be performed by Tenant, or to any
other remedy allowed to Landlord under Applicable Law or in equity.
Nothing contained in this Lease shall limit or prejudice the right of
Landlord to prove for and obtain in proceedings for bankruptcy or
insolvency of Tenant by reason of the termination of this Lease, an amount
equal to the maximum allowed by any statute or rule of law in effect at the
time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater, equal to, or less than the
amount of the loss or damages referred to above. 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, the Pledge Agreement or the Environmental Indemnity.
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.
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.
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.
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 or encumbrances not lawfully made 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, subject to the other provisions of this Lease, render Landlord
liable to Tenant for any monetary damages proximately caused thereby, but
as more specifically provided in Paragraph 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.
Surrender Upon Termination. Unless Tenant or an Applicable
Purchaser purchases 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 (including Permitted Hazardous Substances) and
tenancies and, to the extent required by Landlord, with all Initial
Improvements in the same condition as of 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.
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 without Landlord's written consent,
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, three percent (3%) 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.
Miscellaneous.
Notices. Each provision of this Lease, or of any Applicable Laws
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:
All Rent required to be paid by Tenant to Landlord hereunder shall
be paid to Landlord in immediately available funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris
ABA #: 121027234
Reference: 3COM Lease.
or at such other place and in such other manner as Landlord may designate
in a notice to Tenant (provided Landlord will not unreasonably designate a
method of payment other than wire transfer). Time is of the essence as to
all payments and other obligations of Tenant under this Lease.
All Construction Advances required to be paid to Tenant by Landlord
hereunder shall be paid to Tenant in immediately available funds by wire
transfer to:
Account Name: 3Com Corporation
Account Number: 14848-01985
ABA #: 121000358
Reference: Construction Advance
or at such other place and in such other manner as Tenant may designate in
a notice to Landlord (provided Tenant will not unreasonably designate a
method of payment other than wire transfer). Time is of the essence as to
the payment of all Construction Advances required of Landlord under this
Lease.
All notices, demands and other communications to be made hereunder
to the parties hereto shall be in writing (at the addresses set forth
below, or in the case of communications to existing Participants, if any,
at the addresses set forth in Schedule 1) and shall be given by any of the
following means: (A) personal service, with proof of delivery or attempted
delivery retained; (B) electronic communication, whether by telex, telegram
or telecopying (if confirmed in writing sent by United States first 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 (C) hereof shall be
deemed received (whether or not actually received) upon first attempted
delivery at the proper notice address on any Business Day between 9:00 A.M.
and 5:00 P.M., and any notice or other communication sent pursuant to
clause (B) hereof shall be deemed received upon dispatch by electronic
means.
Address of Landlord:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Telecopy: (214) 969-0060
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
Telecopy: (214) 969-1550
Address of Tenant:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Legal Dept.
Telecopy: (408) 764-6434
With copies to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Real Estate Dept.
Telecopy: (408) 764-5718; and
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Treasury Dept.
Telecopy: (408) 764-5939; and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Jonathan E. Rattner, Esq.
Telecopy: (415) 327-3699
Severability. If any term or provision of this Lease or the
application thereof shall to any extent be held by a court of competent
jurisdiction to 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.
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, unless all Persons with an interest in the Leased Property that
would be adversely affected by any such merger specifically agree in
writing that such a merger shall occur.
NO IMPLIED REPRESENTATIONS BY LANDLORD. 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, THE PURCHASE AGREEMENT
AND THE PLEDGE AGREEMENT.
Entire Agreement. This Lease and the instruments referred to
herein supersede any prior negotiations and agreements between the parties
concerning the Leased Property and no amendment or modification of this
Lease shall be binding or valid unless expressed in a writing executed by
both parties hereto.
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.
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 subparagraph .
Termination of Prior Rights. Without limiting the rights and
obligations of Tenant under this Lease, Tenant acknowledges 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 rights or interests Tenant has in or to the
Land, the improvements to the Land and to any other property included in
the Leased Property other than the rights and interests created by this
Lease and the Purchase Agreement.
Governing Law. This Lease shall be governed by and construed
in accordance with the laws of the State of California.
Waiver of a Jury Trial. 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.
Tax Reporting. Landlord and Tenant shall report this Lease and
the Purchase Agreement for federal income tax purposes as a conditional
sale unless prohibited from doing so by the Internal Revenue Service.
Similarly, Tenant shall report all interest earned on Escrowed Proceeds or
the collateral by the Pledge Agreement 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.
IN WITNESS WHEREOF, this Lease is hereby executed in multiple
originals as of the effective date above set forth.
"Landlord"
BNP LEASING CORPORATION
By: /s/ David C. Schad
Name: David C. Schad
Title: President
"Tenant"
3COM CORPORATION
By: /s/ Christopher B. Paisley
Name: Christopher B. Paisley
Title: Chief Financial Officer
Exhibit A
Property Description
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State of
California, described as follows:
1. Parcel Three:
Parcel B, as shown on that certain Parcel Map recorded July 7, 1989, Book
602 of Maps, at pages 34 and 35, Records of Santa Clara County, California,
excepting therefrom that portion described in that certain Lot Line
Adjustment and Deeded August 16, 1991 in Book L826, at page 0826 of
Official Records and described as follows:
Beginning at a point on the most Northerly Southeasterly line of said
Parcel "B" which bears South 66 degrees 32' 39" West a distance of 226.19 feet
from the most Easterly corner thereof; thence South 10 degrees 57' 34" East a
distance of 218.69 feet; thence North 89 degrees 47' 24" West a distance of
324.26 feet; thence North 77 degrees 17' 24" West a distance of 141.24 feet;
thence North 66 degrees 32' 39" East a distance of 458.33 feet to the point
of beginning.
Also excepting therefrom that parcel Deeded to the State of California in
Book L826 at page 889 and being described as follows:
Commencing at the most Northerly corner of said Parcel B; thence along the
general Easterly line of said Parcel B the following courses: S. 10 degrees
04' 48" E., 80.00 feet, N. 79 degrees 55' 12" E., 30.00 feet, and S 10
degrees 04'48" E., 195.61 feet to the Northerly corner of Parcel A; thence
leaving said general Easterly line S. 67 degrees 25' 20" W. along the
Northerly line of Parcel A and its Westerly prolongation, 814.32 feet;
thence from a tangent that bears S. 61 degrees 04' 32" W., along the
Northerly line of Parcel A on a curve to the right with a radius of 8999.52
feet through an angle of 00 degrees 30' 19", an arc length of 79.36 feet;
thence leaving said line S. 01 degrees 05' 17" W., 3.47 feet, thence from a
tangent that bears S. 63 degrees 16' 34" W., along a curve to the right with
a radius of 10,136.00 feet, through an angle of 05 degrees 40' 34", an arc
length of 1,004.14 feet to a point on the Westerly line of said Parcel B;
thence along last said line N. 00 degrees 50' 30" E., 113.93 feet to the
Northwesterly corner of said Parcel B; thence along the general Northerly
line of last said parcel N. 60 degrees 54' 13" E., 1,641.25 feet and N. 63
degrees 04' 12" E., 253.25 feet to the point of commencement.
2. Parcel Four:
That portion of Parcel A, as shown on that certain Parcel Map recorded July
7, 1989, Book 602 of Maps at pages 34 and 35, records of Santa Clara
County, California and described in that certain Lot Line Adjustment and
Deeded August 16, 1991 in Book L826, page 0826 of Official Records and
described as follows:
Beginning at the Southwest corner of said Parcel "A"; thence on the
Westerly and Northerly lines of said Parcel "A" the following 5 courses:
1. North 00 degrees 12' 36" East a distance of 665.00 feet;
2. North 45 degrees 12' 36" East a distance of 64.00 feet;
3. North 00 degrees 12' 36" East a distance of 82.98 feet to a poin
on a non-tangent curve the center of which bears North 29 degrees 17' 50"
West a distance of 9000.00 feet;
4. Northeasterly a distance of 79.37 feet on the arc of said curve to
the left through a central angle of 00 degrees 30' 19" (chord bears North 60
degrees 27' 01" East a distance of 79.37 feet, to a point on said curve;
5. North 66 degrees 32' 39" East, departing said curve, a distance of
75.89 feet;
Thence South 62 degrees 07' 20" West a distance of 104.00 feet to a point of
curvature; thence Southwesterly a distance of 9.53 feet on the arc of said
10136.00 foot radius curve to the right through a central angle of 00 degrees
03' 14" (chord bears South 62 degrees 08' 57" West a distance of 9.53 feet)
to a point on said curve; thence South 00 degrees 12' 36" West a distance of
809.62 feet to a point on the South line of said Parcel "A"; thence North 89
degrees 47' 24" West, on said South line, a distance of 83.50 feet to the
point of beginning.
Exhibit B
Permitted Encumbrances
This conveyance is subject to the following matters, but only to the
extent the same are still valid and in full force and effect:
Easement for the purposes stated herein and incidents thereto
Purpose: Constructing, installing, repairing, replacing, and
maintaining any and all sanitary sewer lines, pipes, mains, manholes and
conduits
Granted to: City of Santa Clara, California, a municipal corporation
Recorded: May 16, 1984 in Book 1548, Page 186, Official
Records
Affects: Parcel Three.
Easement shown on filed map, and incidents thereto
Purpose: Ten (10) foot public utility easement
Affects: Parcel Three and Parcel Four
Easement shown on filed map, and incidents thereto
Purpose: Twenty (20) foot public utility easement
Affects: Parcel Three.
Recital shown on filed map, and incidents thereto
Purpose: Future Highway 237 right-of-way
Affects: Parcel Three.
Declaration of Reciprocal Easements, Covenants, and Restrictions for the
purpose stated therein and subject to the terms and conditions therein,
executed by Dairy Associates, L.P., a California Limited Partnership,
recorded July 7, 1989 in Book L013, Page 971, Official Records. Amendment
No. 1 of Declaration of Reciprocal Easements, Covenants, and Restrictions
recorded August 16, 1991 in Book L826, Page 830, Official Records.
Agreement on the terms and conditions contained therein
For: Deferred improvements
Between: City of Santa Clara, a California municipal corporation
And: Dairy Associates, L.P., a California Limited Partnership
Recorded: February 9, 1990 in Book L255, Page 806, Official
Records.
Agreement on the terms and conditions contained therein
For: Development
Between: The City of Santa Clara, a municipal corporation
And: Dairy Associates, L.P., a California Limited Partnership
Recorded: March 6, 1990 in Book L278, Page 2239, Official Records.
By Ordinance No. 1607, the City of Santa Clara has approved the Development
Agreement as disclosed by Instrument recorded May 1, 1991 in Book L696,
Page 1524, Official Records.
Agreement on the terms and conditions contained therein
For: Covenant running with the land
Between: City of Santa Clara, California, a municipal corporation
And: Dairy Associates, L.P.
Recorded: December 17, 1990 in Book L568, Page 1565, Official
Records.
Lack of Abutter's Rights to and from Route 237-South Bay Freeway, lying
adjacent to the Northerly line of Parcels Three and Four, said rights
having been released and relinquished
By: Dairy Associates, L.P., a California Limited Partnership
To: The State of California
Recorded: August 16, 1991 in Book L826, Page 839, Official Records.
Easement for the purposes stated herein and incidents thereto
Purpose: An easement for cut and fill slope purposes
Granted to: The State of California
Recorded: August 16, 1991 in Book L826, Page 839, Official Records
Affects: Parcel Three.
Exhibit C
DESCRIPTION OF RENDERINGS OF THE INITIAL IMPROVEMENTS
Reference is made to the following, which are incorporated in Exhibit as if
fully set forth here:
Phase 2, Building 500 Plans prepared by Studios Architecture, San
Francisco, California, dated June 6, 1994 (Project No. 93552.10),
consisting of:
1. Cover Sheet
2. Sheet A.1.00 - Overall Site Plan
3. Sheet A.2.01 - First Floor Plan
4. Sheet A.2.02 - Second Floor Plan
5. Sheet A.3.01 - Elevations
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:
The undersigned has entered into that certain [****Construction
Contract] (the "Construction Contract") by and between the undersigned and
3Com Corporation ("Tenant") dated , 199__ for the
construction of the multiuse complex to be constructed on the campus leased
by Tenant (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, being herein collectively referred
to as the "Project").
The undersigned has been advised that BNP owns the Land.
The undersigned has also received a copy of the Lease Agreement
dated as of July 14, 1994 (the "Lease"), pursuant to which BNP is leasing
the Project to Tenant, and BNP has agreed, subject to the terms and
conditions of the Lease, to provide a construction allowance for Tenant's
construction of the Improvements. The Lease also requires Tenant 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.
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.
The undersigned has not sent to Tenant or received from Tenant
any notice of default or any other notice for the purpose of terminating
the Construction Contract, nor is there any existing circumstance or 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 Tenant'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 Tenant's right to possession of the
Project under the Lease, including but not limited to any eviction of
Tenant 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 Tenant's rights and obligations
under the Construction Contract, cure any defaults by Tenant thereunder and
enforce the Construction Contract and all rights of the ["Owner"]
thereunder. Within ten (10) days of receiving notice from BNP that
Tenant'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 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 Tenant 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 Tenant'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 Tenant), all other material relating to the work
which belongs to BNP or Tenant, 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 Tenant.
e) The undersigned agrees promptly to notify BNP of any material
default or claimed material default by Tenant 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 TENANT'S
DEFAULT UNDER CONSTRUCTION AGREEMENT WITH 3COM CORPORATION - SANTA CLARA
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 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
Tenant under the Construction Contract, the time permitted by the
undersigned for cure by BNP will include the time necessary to terminate
Tenant's right to possession of the Project and evict Tenant, 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 Tenant.
Very truly yours,
By:
Name:
Title:
Tenant 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 Tenant is evicted from the Project.
3Com Corporation
By:
Name:
Title:
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:
The undersigned has entered into that certain
[****Architects/Engineers Agreement] (the "Agreement") by and between the
undersigned and 3Com Corporation ("Tenant") dated , 199__
for the [***design] of the multiuse complex to be constructed on the Santa
Clara campus leased by Tenant (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, being herein
collectively referred to as the "Project").
The undersigned has been advised that BNP owns the Land.
The undersigned has also received a copy of the Lease Agreement
dated as of July 14, 1994 (the "Lease"), pursuant to which BNP is leasing
the Project to Tenant, and BNP has agreed, subject to the terms and
conditions of the Lease, to provide a construction allowance for Tenant's
construction of the Improvements. The Lease also requires Tenant 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.
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.
The undersigned has not sent to Tenant or received from Tenant
any notice of default or any other notice for the purpose of terminating
the Agreement, nor is there any existing circumstance or event which, 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 Tenant'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 Tenant's right to possession of the
Project under the Lease, including but not limited to any eviction of
Tenant 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 Tenant's rights and obligations
under the Agreement, cure any defaults by Tenant thereunder and enforce the
Agreement and all rights of the ["Owner"] thereunder. Within ten (10) days
of receiving notice from BNP that Tenant'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 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. 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 Tenant 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
Tenant'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 Tenant), all other
material relating to the work which belongs to BNP or Tenant, 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 Tenant.
e) The undersigned agrees promptly to notify BNP of any material
default or claimed material default by Tenant 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 TENANT'S DEFAULT UNDER
AGREEMENT WITH 3COM CORPORATION - SANTA CLARA 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 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 Tenant under the
Agreement, the time permitted by the undersigned for cure by BNP will
include the time necessary to terminate Tenant's right to possession of the
Project and evict Tenant, 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 Tenant.
Very truly yours,
By:
Name:
Title:
Tenant 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
Tenant is evicted from the Project.
3Com Corporation
By:
Name:
Title:
Exhibit F
Draw Request Forms
, 199
BNP Leasing Corporation
c/o Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Ms. Jennifer Cho
Re: Construction Advance Request No.
by 3Com Corporation
Ladies and Gentlemen:
Reference is made to the Lease Agreement between BNP Leasing
Corporation (herein "Landlord") and 3Com Corporation (herein "Tenant")
dated as of July 14, 1994 (herein "the Lease"). Capitalized terms defined
in the Lease and used but not defined in this letter are intended to have
the meanings assigned to them in the Lease.
Tenant hereby makes request for a Construction Advance in the amount
of
$ (herein the "Current Advance"). Included herewith are:
1. An Application and Certificate for Payment based on AIA Form
G702 (herein the "Contractor's Application") from Tenant's general
contractor, attached to which is a schedule of values listing all
subcontractors, suppliers and other parties to whom the general contractor
has or will make payments from the draw requested in the Contractor's
Application. The Contractor's Application evidences an obligation incurred
by (and previously paid by) Tenant for construction of Improvements and for
which Tenant is entitled to reimbursement from the Current Advance.
2. A list of any costs paid by Tenant, other than to the general
contractor, for which Tenant is entitled to reimbursement from the proceeds
of the Current Advance (herein the "Other Costs List").
3. Invoices and requests for payments from the subcontractors and
others entitled to payment from the general contractor for construction and
related work covered by the Contractor's Application; excluding, however,
invoices or requests from some or all subcontractors and others that,
according to the Contractor's Application, are to be paid less than
$300,000 from the draw requested in Contractor's Application. Such
invoices and requests for payments are consistent with the detail shown in
the schedule of values attached to the Contractor's Application.
4. Invoices or other evidence of the costs (if any) included in
the Other Costs List.
5. A list of any "checks on hold" (i.e., payments withheld from
subcontractors or suppliers by Tenant's general contractor because of some
defect or deficiency in the payee's request for payment or in the work or
materials provided by the payee) in excess of $50,000.
6. An up-to-date list of the names and addresses of any
subcontractors that have actually filed a claim of lien against the Leased
Property, together with, to the extent not already provided with a prior
request for a Construction Advance, a copy of the claim of lien filed.
7. A certification of an officer of Tenant as required by
Paragraph of the Lease.
We hereby confirm that Landlord will not be responsible for the
application of any funds advanced to Tenant or to any other party at our
request.
Sincerely,
3Com Corporation
By:
Name:
Title:
cc: BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Clint Shouse
Thompson & Knight,
a Professional Corporation
3300 First City Center
1700 Pacific Avenue
Dallas, Texas 75201
Construction Advance Certificate
Pursuant to Paragraph of the Lease dated as of July 14, 1994 (the "Lease")
between 3Com Corporation ("Tenant") and BNP Leasing Corporation
("Landlord"), Tenant does hereby represent, warrant and certify to Landlord
in connection with Tenant's request for Construction Advance No.
that:
a) no Event of Default has occurred and is continuing,
b) the representations and warranties of Tenant contained in the
Lease are true and correct in all material respects on and as of the date
hereof as though made on and as of the date hereof, subject only to the
following exceptions:
[LIST EXCEPTIONS HERE, OR IF THERE ARE NO EXCEPTIONS, INSERT "NONE"]
c) Construction of the Initial Improvements has commenced and is
progressing without any significant continuing interruption in a good and
workmanlike manner and substantially in accordance with the requirements of
the Lease and all Applicable Laws and Tenant has corrected or is diligently
pursuing the correction of any significant defect in such construction,
d) all costs and expenses for which Tenant is requesting
reimbursement by the Construction Advance referenced above constitute
actual costs and expenses incurred by Tenant for the Initial Improvements
or for property taxes or assessments assessed against and paid with respect
to the Leased Property, and
e) Potential Lien Claimants have been paid all sums for which
prior Construction Advances have been advanced, and the advance being
requested will not result in an excess of $3,000,000 or more of (1) the
total cost of work with respect to 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 such work for
which Tenant has provided to Landlord unconditional statutory lien releases
from all Potential Lien Claimants.
Capitalized terms used herein which are defined in the Lease but not in
this Certificate shall have the meanings assigned to them in the Lease.
In witness whereof, this Certificate is executed by an officer of 3Com
Corporation as of
, 19 .
3Com Corporation
By:
Name:
Title:
List of Liens For Which a Claim of Lien Has Actually Been Filed
(Construction Advance Request No. )
Liens for which a claim of lien has actually been filed are as follows:
1.
2.
3.
Other Costs List
(Construction Advance Request No. )
Costs paid - other than to Tenant's general contractor - by Tenant and for
which Tenant is entitled to reimbursement from the Current Advance being
requested are as follows:
1.
2.
3.
Exhibit G
FINANCIAL COVENANT COMPLIANCE CERTIFICATE
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho
Re: 3Com Lease Agreement
Gentlemen:
I, the undersigned, the [chief financial officer, controller,
treasurer or the assistant treasurer] of 3Com Corporation, does hereby
certify, represent and warrant that:
1. This Certificate is furnished pursuant to subparagraph of that
certain Lease Agreement dated as of July 14, 1994 (the "Lease Agreement,"
the terms defined therein being used herein as therein defined) between
3Com Corporation (the "Tenant"), and you.
2. Annex 1 attached hereto sets forth financial data and
computations evidencing the Tenant's compliance with certain covenants of
the Lease Agreement, all of which data and computations are complete, true
and correct.
3. To the knowledge of Tenant no Default or Event of Default under
the Lease Agreement has occurred and is continuing.
4. The representations of Tenant set forth in the Lease Agreement
are true and correct in all material respects as of the date hereof as
though made on and as of the date hereof.
Executed this day of , 19 .
3Com Corporation
Name:
Title:
[cc all Participants]
Annex 1 To Compliance Certificate
For the Ended , 19
I. PARAGRAPH : Quick Ratio
A. Unencumbered Cash and Cash Equivalents
and other "Quick Assets" as defined in
Paragraph of the Lease: $________
B. "Current Liabilities" as defined in
Paragraph of the Lease: $________
C. Ratio of A to B: _____ to 1.00
F. Minimum ratio computed as provided in
Paragraph of the Lease: _____ to 1.00
II. PARAGRAPH : Leverage Ratio
A. "Total Liabilities" as
defined in Paragraph
of the Lease: $_____________
B. Consolidated Tangible Net Worth
(from calculation below): $_____________
C. Ratio of A to B: _____ to 1.00
D. Maximum ratio: 1.00 to 1.00
III. PARAGRAPH : Minimum Tangible Net Worth
A. Reported stockholders equity: $_____________
B. "Intangible Assets" as
defined in Paragraph
of the Lease: $_____________
D. Consolidated Tangible Net Worth
(A - B): $_____________
E. Minimum computed as
provided in Paragraph
of the Lease: $_____________
IV. PARAGRAPH : Fixed Charge Ratio
A. "Adjusted EBIT" as
defined in Paragraph
of the Lease: $_____________
B. "Fixed Charges" as
defined in Paragraph
of the Lease: $_____________
C. Ratio of A to B: _____ to 1.00
D. Minimum ratio: 2.00 to 1.00
Exhibit H
PERMITTED HAZARDOUS SUBSTANCES
(NOT a Comprehensive List)
It is anticipated that the following Hazardous Substances, and others
necessary for the use, occupancy, and operation of the Leased Property in
accordance with the terms and conditions of this Lease, will be used by
Tenant at the Leased Property:
Description C.A.S.#
Solder bars (lead) 7439-92-1
Solder paste
Lead 7439-91-1
Tin 7440-31-5
Solder paste remover
Sodium hydroxide 1310-73-2
Isopropyl alcohol
Isopropanol 67-63-0
S32-10M
Isopropanol 67-63-0
Methanol 67-56-1
Exhibit I
RESOLUTION OF DISPUTED INSURANCE CLAIMS
If Landlord and Tenant cannot agree upon the amount for which any
insurance claim against an insurer should be settled after damage to the
Leased Property by fire or other casualty, and so long as neither Tenant
nor Landlord is authorized to determine such amount without the consent of
the other pursuant to subparagraph , then either party may require that the
amount be determined as follows:
Landlord and Tenant shall each appoint an experienced architect
who is familiar with construction costs for comparable properties in the
vicinity of the Leased Property. Each party will make the appointment no
later than 10 days after receipt of notice from the other party that the
dispute resolution process described in this Exhibit has been invoked. The
agreement of the two architects as to the appropriate amount of the
insurance settlement will be binding upon Landlord and Tenant. If the two
architects cannot agree upon the settlement amount within 30 days following
their appointment, they shall within another 10 days agree upon a third
architect. Immediately thereafter, each of the first two architects will
submit his best estimate of the appropriate settlement amount (together
with a written report supporting such estimate) to the third architect and
the third architect will choose between the two estimates. The estimate
chosen by the third architect as the closest to the amount needed to repair
and restore the Leased Property will be binding upon Landlord and Tenant as
the amount for which the applicable insurance claim should be settled.
(However, no such estimate and nothing contained in this Exhibit will limit
Tenant's liability under other provisions of this Lease for the repair and
restoration of the Leased Property.) Notification in writing of the
estimate chosen by the third architect shall be made to Landlord and Tenant
within 15 days following the selection of the third architect.
If architects must be selected under the procedure set out
above and either Tenant or Landlord fails to appoint an architect or fails
to notify the other party of such appointment within 10 days after receipt
of notice that the prescribed time for appointing the architects has
passed, then the other party's architect will determine the appropriate
settlement amount. All architects selected for the dispute resolution
process set out in this Exhibit will be disinterested, reputable, qualified
architects with at least 15 years experience designing and overseeing the
construction of properties comparable to the Leased Property.
If a third architect must be chosen under the procedure set out
above, he will be chosen on the basis of objectivity and competence, not on
the basis of his relationship with the other architects or the parties to
this Lease, and the first two architects will be so advised. Although the
first two architects will be instructed to attempt in good faith to agree
upon the third architect, if for any reason they cannot agree within the
prescribed time, either Landlord or Tenant may require the first two
architects to immediately submit its top choice for the third architect to
the then highest ranking officer of the San Francisco Bar Association who
will agree to help and who has no attorney/client or other significant
relationship to either Landlord or Tenant. Such officer will have complete
discretion to select the most objective and competent third architect from
between the choice of each of the first two architects, and will do so
within 20 days after such choices are submitted to him.
Either Landlord or Tenant may notify the architect selected by
the other party to demand the submission of an estimate of the appropriate
settlement amount or a choice of a third architect as required under the
procedure described above; and if the submission of such an estimate or
choice is required but the other party's architect fails to comply with the
demand within 5 days after receipt of such notice, then the settlement
amount or choice of the third architect, as the case may be, selected by
the other architect (i.e., the notifying party's architect) will be binding
upon Landlord and Tenant.
For the purposes of this Exhibit, "appropriate settlement
amount" and words of like effect means the amount required to restore the
Leased Property, less any insurance deductible that clearly applies under
the policy of insurance which provides the coverage to be settled; and all
architects and other persons involved in the determination of the
settlement amount will be so advised.
Schedule 1
Banks Pre-approved to be Participants
1. ABNoAmro Bank N.V.
2. The Industrial Bank of Japan, Limited
()
EXHIBIT 10.24
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is made as of July 14,
1994, by 3COM CORPORATION, a California corporation ("3COM") and BNP
LEASING CORPORATION, a Delaware corporation ("BNP").
R E C I T A L S
A. BNP is acquiring the land described in Exhibit A attached
hereto and the improvements and certain fixtures located thereon and is
leasing the same to 3COM pursuant to that certain Lease Agreement (as from
time to time supplemented, amended or restated, the "Lease") between 3COM
and BNP dated as of the date hereof. (The land 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. BNP is also concurrently herewith receiving a separate
environmental indemnity from 3COM pursuant to an Environmental Indemnity
Agreement (as from time to time supplemented, amended or restated, the
"Environmental Indemnity") between 3COM and BNP dated as of the date
hereof.
C. 3COM has requested an option to purchase the Property, which
BNP is willing to provide on and subject to the terms and conditions set
out herein.
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:
Definitions. As used herein, the terms "3COM", "BNP",
"Property", "Lease" and "Environmental Indemnity" shall have the meanings
indicated above; terms with initial capitals defined in the Lease and used
but not defined herein shall have the meanings assigned to them in the
Lease; and the terms listed immediately below shall have the following
meanings:
Applicable Purchaser. "Applicable Purchaser" means any third
party designated by 3COM to purchase the interest of BNP in the Property as
provided in Paragraph 2(a)(ii) below.
Closing Deadline. "Closing Deadline" means August 1, 1999, or
if August 1, 1999 is not a Business Day, then the next following Business
Day.
Designated Payment Date. "Designated Payment Date" means the
earlier of:
(1) the effective date of any termination of the Lease by Tenant
pursuant to Paragraph 2 thereof;
(2) any date designated by BNP in a written notice given by BNP to
3COM when an Event of Default by 3COM is continuing, provided the notice of
the date so designated is given by BNP at least thirty (30) days before the
date so designated; or
(3) the Closing Deadline.
Fair Market Value. "Fair Market Value" means the fair market
value of the Property on or about the Designated Payment Date (calculated
under the assumptions, whether or not then accurate, that 3COM has
maintained the Property in compliance with all Applicable Laws [including
Environmental Laws]; that 3COM has completed all Construction Projects, the
construction of which was commenced prior to the Designated Payment Date;
that 3COM has repaired and restored the Property after any damage following
fire or other casualty; that 3COM has restored the remainder of the
Property after any partial taking by eminent domain; that 3COM has
completed any contests of and paid any taxes due [other than Excluded
Taxes] or other amounts secured by or allegedly secured by a lien against
the Property other than Prohibited Encumbrances; that 3COM has complied
with all Permitted Encumbrances and cured any title defects affecting the
Property other than Prohibited Encumbrances, all in accordance with the
standards and requirements of the Lease as though the Lease were continuing
in force; and that the owner of the Property will then be able to control
the designation of the "Manager" under the Declaration of Easements,
Covenants and Restrictions included in the Permitted Encumbrances) as
determined by an independent MAI appraiser selected by BNP, which appraiser
must have five (5) years or more experience appraising similar properties
in northern California.
Purchase Price. "Purchase Price" means an amount equal to
Stipulated Loss Value 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 BNP hereunder or in connection
with collecting sales proceeds due hereunder.
Prohibited Encumbrance. "Prohibited Encumbrance" means any
lien or other title defect encumbering the Property that is claimed by BNP
itself or lawfully claimed by a third party through or under BNP, including
any judgment lien lawfully filed against BNP and including any tax lien
assessed because of BNP's failure to pay Excluded Taxes, but excluding the
Lease and any lien or other title defect that (i) is a Permitted
Encumbrance (as defined in the Lease), regardless of whether claimed by,
through or under BNP, (ii) is claimed by, through or under 3COM or any of
the prospective Participants listed in Schedule 1 to the Lease or any other
Participant approved by Tenant, or (iii) exists because of any breach by
3COM of the Lease, because of anything done or not done by BNP in an effort
to satisfy subparagraph 10(b) of the Lease, or because of anything done or
not done by BNP at the request of 3COM.
Remarketing Notice. "Remarketing Notice" shall have the
meaning assigned to it in Paragraph 2(b)(1) below.
Required Documents. "Required Documents" means the grant deed
and other documents that BNP must tender pursuant to Paragraph 3 below.
Shortage Amount. "Shortage Amount" means any amount payable to
BNP by 3COM, rather than by the Applicable Purchaser, pursuant to clause
2(a)(ii) below.
3COM's Options and Obligations on the Designated Payment Date.
(a) Choices. On the Designated Payment Date 3COM shall have the
right and the obligation to either:
(i) purchase BNP's interest in the Property and in Escrowed
Proceeds, if any, for a net cash price equal to the Purchase Price; or
(ii) cause the Applicable Purchaser to purchase BNP'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 of the Property or (b)
fourteen percent (14%) of Stipulated Loss Value outstanding immediately
prior to the purchase. If, however, the Fair Market Value is less than
fourteen percent (14%) of Stipulated Loss Value, BNP may elect to keep the
Property and any Escrowed Proceeds rather than sell to the Applicable
Purchaser, in which case 3COM shall pay BNP an amount equal to (A) eighty-
six percent (86%) of Stipulated Loss Value, less (B) any Escrowed Proceeds
then held and to be retained by BNP. Unless BNP elects to keep the
Property pursuant to the preceding sentence, 3COM must make a supplemental
payment to BNP on the Designated Payment Date equal to the excess (if any)
of the Purchase Price over the net cash price actually paid to BNP on the
Designated Payment Date by the Applicable Purchaser for BNP's interest in
the Property and in Escrowed Proceeds, if any. However, provided no Event
of Default has occurred and is continuing under the Lease, and provided
further that neither 3COM nor any Applicable Purchaser has failed to pay
any amount required to be paid by this Agreement on the date such amount
first became due, any supplemental payment required by the preceding
sentence shall not exceed eighty-six percent (86%) of Stipulated Loss Value
on the Designated Payment Date. Any supplemental payment payable to BNP by
3COM, rather than by the Applicable Purchaser, pursuant to this clause (ii)
is hereinafter referred to as the "Shortage Amount." If the net cash price
actually paid by the Applicable Purchaser to BNP exceeds the Purchase Price
and all other sums that are then due from 3COM to BNP, 3COM shall be
entitled to such excess.
(b) Election by 3COM. 3COM shall have the right to elect whether
it will satisfy the obligations set out in clause (i) or (ii) of the
preceding Paragraph 2(a); provided, however, that the following conditions
are satisfied:
(1) To give BNP the opportunity to have the Fair Market Value
determined by an appraiser as provided in Paragraph 1(d) before the
Designated Payment Date, 3COM must, unless 3COM agrees that Fair Market
Value will not be less than fourteen percent (14%) of Stipulated Loss Value
on the Designated Payment Date, provide BNP with a Remarketing Notice.
"Remarketing Notice" means a notice given by 3COM to BNP (and to each of
the Participants) no earlier than one hundred eighty (180) days before the
Designated Payment Date and no later than ninety (90) days before the
Designated Payment Date, specifying that 3COM does not agree that the Fair
Market Value is equal to or greater than fourteen percent (14%) of the
Stipulated Loss Value. A Remarketing Notice will be required only if 3COM
does not agree that Fair Market Value will equal or exceed fourteen percent
(14%) of Stipulated Loss Value on the Designated Payment Date. But if for
any reason (including but not limited to any acceleration of the Designated
Payment Date pursuant to clause (2) of the definition of Designated Payment
Date above) 3COM fails to provide a Remarketing Notice within the time
periods specified in the definition of Remarketing Notice above, Fair
Market Value shall, for purposes of this Agreement, be deemed to be no less
than fourteen percent (14%) of Stipulated Loss Value on the Designated
Payment Date.
(2) To give BNP the opportunity to prepare the Required Documents
before the Designated Payment Date, 3COM must, if it is to elect to satisfy
the obligations set forth in clause (ii) of Paragraph 2(a), irrevocably
specify an Applicable Purchaser in notice to BNP given at least seven (7)
days prior to the Designated Payment Date. If for any reason 3COM fails to
so specify an Applicable Purchaser, 3COM shall be deemed to have
irrevocably elected to satisfy the obligations set forth in clause (i) of
Paragraph 2(a).
(c) Termination of 3COM's Option To Purchase. Without limiting
BNP's right to require 3COM to satisfy the obligations imposed by Paragraph
2(a), 3COM shall have no further option hereunder to purchase the Property
if either:
(1) 3COM shall have elected to satisfy its obligations under
clause (ii) of Paragraph 2(a) on a Designated Payment Date and BNP shall
have elected to keep the Property on such Designated Payment Date in
accordance with clause (ii) of Paragraph 2(a); or
(2) 3COM shall have failed on a Designated Payment Date to
make or cause to be made all payments to BNP 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 BNP does not receive all payments due under the Lease and all payments
required hereunder on a Designated Payment Date, 3COM may nonetheless
tender to BNP the full Purchase Price and all amounts then due under the
Lease, 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, BNP must accept it and promptly thereafter deliver
any Escrowed Proceeds and a deed and all other Required Documents listed in
Paragraph 3.
(d) Payment to BNP. All amounts payable under the preceding
Paragraphs 2(a) or 2(c) by 3COM and, if applicable, by the Applicable
Purchaser must be paid directly to BNP, and no payment to any other party
shall be effective for the purposes of this Agreement. In addition to the
payments required under Paragraph 2(a) hereunder, on the Designated Payment
Date 3COM must pay all amounts then due to BNP under the Lease. BNP will
remit any excess amounts due 3COM pursuant to the last sentence of clause
(ii) of Paragraph 2(a) promptly after BNP's receipt of the same.
(e) Effect of Options on Subsequent Title Encumbrances. It is the
intent of BNP and 3COM that any conveyance of the Property to 3COM or any
Applicable Purchaser pursuant to this Agreement shall cut off and terminate
any interest in the Property claimed by, through or under BNP, including
the Participants (but not any unsatisfied obligations to BNP under the
Lease, the Environmental Indemnity or this Agreement), including but not
limited to any Prohibited Encumbrances and any leasehold or other interests
conveyed by BNP in the ordinary course of BNP's business. Anyone accepting
or taking any interest in the Property by or through BNP after the date of
this Agreement shall acquire such interest subject to the rights and
options granted 3COM hereby. Further, 3COM and any Applicable Purchaser
shall be entitled to pay any payment required by this Agreement for the
purchase of the Property directly to BNP notwithstanding any prior
conveyance or assignment by BNP, voluntary or otherwise, of any right or
interest in this Agreement or the Property, and neither 3COM nor any
Applicable Purchaser shall be responsible for the proper distribution or
application of any such payments by BNP.
3. Terms of Conveyance Upon Purchase. Immediately after receipt
of all payments to BNP required pursuant to the preceding Paragraph 2, BNP
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 3COM or the Applicable Purchaser,
as the case may be, subject only to the Permitted Encumbrances (as defined
in the Lease) and any other encumbrances that do not constitute Prohibited
Encumbrances. However, such conveyance shall not include the right to
receive any payment under the Lease then due BNP or that may become due
thereafter because of any expense or liability incurred by BNP 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, 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, BNP shall also tender to 3COM or the Applicable Purchaser,
as the case may be, the following, each fully executed and, where
appropriate, acknowledged on BNP's behalf by an officer of BNP: (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 Acknowledgment of Disclaimer of
Representations and Warranties, in the form attached as Exhibit E, which
3COM or the Applicable Purchaser must execute and return to BNP, (5) a
Documentary Transfer Tax Request in the form attached as Exhibit F, (6) a
Secretary's Certificate in the form attached as Exhibit G, (7) a letter to
the title insurance company insuring title to the Property in the form
attached as Exhibit H, and (8) a certificate concerning tax withholding in
the form attached as Exhibit I.
4. Survival of 3COM's Obligations.
(a) Status of this Agreement. Except as expressly provided in the
last sentence of this subparagraph and elsewhere herein, this Agreement
shall not terminate, nor shall 3COM have any right to terminate this
Agreement, nor shall 3COM be entitled to any reduction of the Purchase
Price hereunder, nor shall the obligations of 3COM to BNP under Paragraph 2
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 3COM'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
3COM or any party claiming under 3COM by paramount title or otherwise, (v)
3COM's prior acquisition or ownership of any interest in the Property, (vi)
any default on the part of BNP under this Agreement, the Lease or any other
agreement to which BNP 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 3COM hereunder (including 3COM's obligation to make
payments under - and, if applicable, to cause the Applicable Purchaser to
make payments under - Paragraph 2) shall be separate and independent of the
covenants and agreements of BNP. Accordingly, the Purchase Price and the
Shortage Amount, as the case may be under Paragraph 2, shall continue to be
payable in all events, and the obligations of 3COM hereunder shall continue
unaffected by any breach of this Agreement by BNP. However, nothing in
this subparagraph, nor the performance without objection by 3COM of its
obligations hereunder, shall be construed as a waiver by 3COM of any right
3COM may have at law or in equity, following any failure by BNP to tender a
grant deed and the other Required Documents as required by Paragraph 3 upon
the tender by 3COM and/or the Applicable Purchaser of the payments required
by Paragraph 2 and of the other documents to be executed in favor of BNP at
the closing of the sale hereunder, to (i) recover monetary damages
proximately caused by such failure of BNP if BNP does not cure the failure
within thirty (30) days after Tenant demands a cure by written notice to
BNP, or (ii) a decree compelling performance of BNP's obligation to so
tender a grant deed and the Required Documents.
(b) Remedies Under the Lease and the 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 3COM of its liabilities and obligations hereunder, all of which
shall survive the exercise of remedies under the Lease and Environmental
Indemnity. 3COM acknowledges that the consideration for this Agreement is
separate and independent of the consideration for the Lease and the
Environmental Indemnity, and 3COM's obligations hereunder shall not be
affected or impaired by any event or circumstance that would excuse 3COM
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 BNP is intended to be exclusive of any other right or remedy
BNP 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, either party
shall be entitled, to the extent permitted by applicable law, to a decree
compelling performance of any of the other party'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 BNP 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 either party of any provision of this
Agreement shall be deemed to have been made unless expressed in writing and
signed by the waiving party.
7. Attorneys' Fees and Legal Expenses. If either party commences
any legal action or other proceeding to enforce any of the terms of this
Agreement or the documents and agreements referred to herein, or because of
any breach by the other party or dispute hereunder or thereunder, the
successful or prevailing party, shall be entitled to recover from the
nonprevailing party all Attorneys' Fees incurred in connection therewith,
whether or not such controversy, claim or dispute is prosecuted to a final
judgment. Any such Attorneys' Fees incurred by either party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately
from such judgment, and the obligation for such Attorneys' Fees is intended
to be severable from other provisions of this Agreement and not to be
merged into any such judgment.
8. Estoppel Certificate. 3COM and BNP will each, upon not less
than twenty (20) days' prior written request by the other, 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 no
default exists hereunder or specifying each such default of which the
signer may have knowledge. Any such statement may be relied upon by any
Participant or prospective purchaser or assignee of BNP with respect to the
Property. Neither 3COM nor BNP shall be required to provide such a
certificate more frequently than once in any six month period; provided,
however, that if either 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, the other shall provide a certificate upon request
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 BNP, shall be deemed to be complied with when and if the
following steps are taken:
(a) All payments required to be made by 3COM or the Applicable
Purchaser to BNP hereunder shall be paid to BNP in immediately available
funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris
ABA #: 121027234
Reference: 3COM.
or at such other place and in such other manner as BNP may designate in a
notice to 3COM (provided BNP will not unreasonably designate a method of
payment other than wire transfer). Time is of the essence as to all
payments to BNP under this Agreement. Any payments required to be made by
BNP to 3COM pursuant to the last sentence of clause (ii) of Paragraph 2(a)
shall be paid to 3COM in immediately available funds at the address of 3COM
set forth below or as 3COM may otherwise direct by written notice sent in
accordance herewith.
(b) All notices, demands 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: (A) personal
service, with proof of delivery or attempted delivery retained; (B)
electronic communication, whether by telex, telegram or telecopying (if
confirmed in writing sent by United States first 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 (C) hereof shall be deemed
received (whether or not actually received) upon first attempted delivery
at the proper notice address on any Business Day between 9:00 A.M. and 5:00
P.M., and any notice or other communication sent pursuant to clause (B)
hereof shall be deemed received upon dispatch by electronic means.
Address of BNP:
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Telecopy: (214) 969-0060
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
Telecopy: (214) 969-1550
Address of 3COM:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Legal Dept.
Telecopy: (408) 764-6434
With copies to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Real Estate Dept.
Telecopy: (408) 764-5718; and
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Treasury Dept.
Telecopy: (408) 764-5939; and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Jonathan E. Rattner, Esq.
Telecopy: (415) 327-3699
10. Severability. Each and every covenant and agreement of 3COM
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 3COM hereunder,
to the maximum extent possible, shall be deemed to be separate, independent
and in addition to, not in lieu of, the obligations of 3COM 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.
15. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon 3COM and BNP and their respective
permitted successors and assigns and shall inure to the benefit of 3COM and
BNP and all permitted transferees, mortgagees, successors and assignees of
3COM and BNP with respect to the Property; provided, that the rights of BNP
hereunder shall not pass to 3COM or any Applicable Purchaser or any
subsequent owner claiming through them. Prior to the Designated Payment
Date BNP may transfer, assign and convey, in whole or in part, the Property
and any and all of its rights under this Agreement (subject to the terms of
this Agreement) by any conveyance that constitutes a Permitted Transfer,
but not otherwise. If BNP sells or otherwise transfers the Property and
assigns its rights under this Agreement and the Lease pursuant to a
Permitted Transfer, and if BNP's successor in interest confirms its
liability for the obligations imposed upon BNP by this Agreement and the
Lease on and subject to the express terms set out herein and therein, then
BNP shall thereby be released from any further obligations thereafter
arising under this Agreement and the Lease, and 3COM agrees to look solely
to each successor in interest of BNP for performance of such obligations.
16. WAIVER OF JURY TRIAL. BNP AND 3COM 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. 3COM
and BNP 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. 3COM and BNP 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. Security. 3COM's obligations under this Agreement are
secured by the Pledge Agreement, reference to which is hereby made for a
description of the Collateral (as defined in the Pledge Agreement) covered
thereby and the rights and remedies provided to BNP thereby. Although BNP
shall be entitled to hold all Collateral as security for the full and
faithful performance by 3COM of 3COM's covenants and obligations under this
Agreement, the Collateral shall not be considered an advance payment of the
Purchase Price or any Shortgage Amount or a measure of BNP's damages should
3COM breach this Agreement. If 3COM does breach this Agreement and fails
to cure the same within any time specified herein for the cure, BNP may,
from time to time, without prejudice to any other remedy and without notice
to 3COM, immediately apply the proceeds of any disposition of the
Collateral (and any cash included in the Collateral) to amounts then due
hereunder from 3COM. If BNP assigns its interest in the Leased Property
before the Designated Payment Date, BNP may also assign BNP's interest in
the Collateral to the assignee.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
"BNP"
BNP LEASING CORPORATION, a Delaware
corporation
By: /s/ David C. Schad
---------------------------
David C. Schad, President
"3COM"
3COM CORPORATION, a California corporation
By: /s/ Christopher B. Paisley
----------------------------
Christopher B. Paisley
Chief Financial Officer
Exhibit A
LEGAL DESCRIPTION
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State of
California, described as follows:
1. Parcel Three:
Parcel B, as shown on that certain Parcel Map recorded July 7, 1989, Book
602 of Maps, at pages 34 and 35, Records of Santa Clara County, California,
excepting therefrom that portion described in that certain Lot Line
Adjustment and Deeded August 16, 1991 in Book L826, at page 0826 of
Official Records and described as follows:
Beginning at a point on the most Northerly Southeasterly line of said
Parcel "B" which bears South 66 degrees 32' 39" West a distance of 226.19 feet
from the most Easterly corner thereof; thence South 10 degrees 57' 34" East a
distance of 218.69 feet; thence North 89 degrees 47' 24" West a distance of
324.26 feet; thence North 77 degrees 17' 24" West a distance of 141.24 feet;
thence North 66 degrees 32' 39" East a distance of 458.33 feet to the point of
beginning.
Also excepting therefrom that parcel Deeded to the State of California in
Book L826 at page 889 and being described as follows:
Commencing at the most Northerly corner of said Parcel B; thence along the
general Easterly line of said Parcel B the following courses: S. 10 degrees
04' 48" E., 80.00 feet, N. 79 degrees 55' 12" E., 30.00 feet, and S 10 degrees
04'48" E., 195.61 feet to the Northerly corner of Parcel A; thence leaving said
general Easterly line S. 67 degrees 25' 20" W. along the Northerly line of
Parcel A and its Westerly prolongation, 814.32 feet; thence from a tangent that
bears S. 61_ 04' 32" W., along the Northerly line of Parcel A on a curve to
the right with a radius of 8999.52 feet through an angle of 00 degrees 30' 19",
an arc length of 79.36 feet; thence leaving said line S. 01 degrees 05' 17" W.,
3.47 feet, thence from a tangent that bears S. 63 degrees 16' 34" W., along a
curve to the right with a radius of 10,136.00 feet, through an angle of 05
degrees 40' 34", an arc length of ,004.14 feet to a point on the Westerly line
of said
Parcel B; thence along last said line N. 00 degrees 50' 30" E., 113.93 feet to
the
Northwesterly corner of said Parcel B; thence along the general Northerly
line of last said parcel N. 60 degrees 54' 13" E., 1,641.25 feet and N. 63
degrees 04'
12" E., 253.25 feet to the point of commencement.
2. Parcel Four:
That portion of Parcel A, as shown on that certain Parcel Map recorded July
7, 1989, Book 602 of Maps at pages 34 and 35, records of Santa Clara
County, California and described in that certain Lot Line Adjustment and
Deeded August 16, 1991 in Book L826, page 0826 of Official Records and
described as follows:
Beginning at the Southwest corner of said Parcel "A"; thence on the
Westerly and Northerly lines of said Parcel "A" the following 5 courses:
1. North 00 degrees 12' 36" East a distance of 665.00 feet;
2. North 45 degrees 12' 36" East a distance of 64.00 feet;
3. North 00 degrees 12' 36" East a distance of 82.98 feet to a point on a
non-
tangent curve the center of which bears North 29 degrees 17' 50" West a
distance
of 9000.00 feet;
4. Northeasterly a distance of 79.37 feet on the arc of said curve to
the left through a central angle of 00 degrees 30' 19" (chord bears North 60
degrees 27'
01" East a distance of 79.37 feet, to a point on said curve;
5. North 66 degrees 32' 39" East, departing said curve, a distance of
75.89
feet;
Thence South 62 degrees 07' 20" West a distance of 104.00 feet to a point of
curvature; thence Southwesterly a distance of 9.53 feet on the arc of said
10136.00 foot radius curve to the right through a central angle of 00 degrees
03' 14" (chord bears South 62 degrees 08' 57" West a distance of 9.53 feet) to
a point
on said curve; thence South 00 degrees 12' 36" West a distance of 809.62 feet
to a
point on the South line of said Parcel "A"; thence North 89 degrees 47' 24"
West,
on said South line, a distance of 83.50 feet to the point of beginning.
Exhibit B
[Use printed form deed provided by California counsel, but expressly
subject to encumbrances described in Annex B]
Annex A
(to Deed)
LEGAL DESCRIPTION
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State of
California, described as follows:
1. Parcel Three:
Parcel B, as shown on that certain Parcel Map recorded July 7, 1989, Book
602 of Maps, at pages 34 and 35, Records of Santa Clara County, California,
excepting therefrom that portion described in that certain Lot Line
Adjustment and Deeded August 16, 1991 in Book L826, at page 0826 of
Official Records and described as follows:
Beginning at a point on the most Northerly Southeasterly line of said
Parcel "B" which bears South 66 degrees 32' 39" West a distance of 226.19 feet
from the most Easterly corner thereof; thence South 10 degrees 57' 34" East a
distance of 218.69 feet; thence North 89 degrees 47' 24" West a distance of
324.26
feet; thence North 77 degrees 17' 24" West a distance of 141.24 feet; thence
North
66 degrees 32' 39" East a distance of 458.33 feet to the point of beginning.
Also excepting therefrom that parcel Deeded to the State of California in
Book L826 at page 889 and being described as follows:
Commencing at the most Northerly corner of said Parcel B; thence along the
general Easterly line of said Parcel B the following courses: S. 10 degrees
04'
48" E., 80.00 feet, N. 79 degrees 55' 12" E., 30.00 feet, and S 10 degrees 04'
48" E.,
195.61 feet to the Northerly corner of Parcel A; thence leaving said
general Easterly line S. 67 degrees 25' 20" W. along the Northerly line of
Parcel
A and its Westerly prolongation, 814.32 feet; thence from a tangent that
bears S. 61 degrees 04' 32" W., along the Northerly line of Parcel A on a
curve to
the right with a radius of 8999.52 feet through an angle of 00 degrees 30' 19",
an
arc length of 79.36 feet; thence leaving said line S. 01 degrees 05' 17" W.,
3.47
feet, thence from a tangent that bears S. 63 degrees 16' 34" W., along a curve
to
the right with a radius of 10,136.00 feet, through an angle of 05 degrees 40'
34",
an arc length of 1,004.14 feet to a point on the Westerly line of said
Parcel B; thence along last said line N. 00 degrees 50' 30" E., 113.93 feet
to the
Northwesterly corner of said Parcel B; thence along the general Northerly
line of last said parcel N. 60 degrees 54' 13" E., 1,641.25 feet and N. 63
degrees 04'
12" E., 253.25 feet to the point of commencement.
2. Parcel Four:
That portion of Parcel A, as shown on that certain Parcel Map recorded July
7, 1989, Book 602 of Maps at pages 34 and 35, records of Santa Clara
County, California and described in that certain Lot Line Adjustment and
Deeded August 16, 1991 in Book L826, page 0826 of Official Records and
described as follows:
Beginning at the Southwest corner of said Parcel "A"; thence on the
Westerly and Northerly lines of said Parcel "A" the following 5 courses:
1. North 00 degrees 12' 36" East a distance of 665.00 feet;
2. North 45 degrees 12' 36" East a distance of 64.00 feet;
3. North 00 degrees 12' 36" East a distance of 82.98 feet to a point
on a non-
tangent curve the center of which bears North 29 degrees 17' 50" West a
distance
of 9000.00 feet;
4. Northeasterly a distance of 79.37 feet on the arc of said curve to
the left through a central angle of 00 degrees 30' 19" (chord bears North 60
degrees 27'
01" East a distance of 79.37 feet, to a point on said curve;
5. North 66 degrees 32' 39" East, departing said curve, a distance of
75.89
feet;
Thence South 62 degrees 07' 20" West a distance of 104.00 feet to a point of
curvature; thence Southwesterly a distance of 9.53 feet on the arc of said
10136.00 foot radius curve to the right through a central angle of 00 degrees
03'
14" (chord bears South 62 degrees 08' 57" West a distance of 9.53 feet) to a
point
on said curve; thence South 00 degrees 12' 36" West a distance of 809.62 feet
to a
point on the South line of said Parcel "A"; thence North 89 degrees 47' 24"
West,
on said South line, a distance of 83.50 feet to the point of beginning.
Annex B
(to Deed)
PERMITTED ENCUMBRANCES
This conveyance is subject to the following matters to the extent
the same are still valid and in force:
Easement for the purposes stated herein and incidents thereto
Purpose: Constructing, installing, repairing, replacing, and maintaining
any and all sanitary sewer lines, pipes, mains, manholes and conduits
Granted to: City of Santa Clara, California, a municipal corporation
Recorded: May 16, 1984 in Book I548, Page 186, Official Records
Affects: Parcel Three.
Easement shown on filed map, and incidents thereto
Purpose: Ten (10) foot public utility easement
Affects: Parcel Three and Parcel Four
Easement shown on filed map, and incidents thereto
Purpose: Twenty (20) foot public utility easement
Affects: Parcel Three.
Recital shown on filed map, and incidents thereto
Purpose: Future Highway 237 right-of-way
Affects: Parcel Three.
Declaration of Reciprocal Easements, Covenants, and Restrictions for the
purpose stated therein and subject to the terms and conditions therein,
executed by Dairy Associates, L.P., a California Limited Partnership,
recorded July 7, 1989 in Book L013, Page 971, Official Records. Amendment
No. 1 of Declaration of Reciprocal Easements, Covenants, and Restrictions
recorded August 16, 1991 in Book L826, Page 830, Official Records.
Agreement on the terms and conditions contained therein
For: Deferred improvements
Between: City of Santa Clara, a California municipal corporation
And: Dairy Associates, L.P., a California Limited Partnership
Recorded: February 9, 1990 in Book L255, Page 806, Official Records.
Agreement on the terms and conditions contained therein
For: Development
Between: The City of Santa Clara, a municipal corporation
And: Dairy Associates, L.P., a California Limited Partnership
Recorded: March 6, 1990 in Book L278, Page 2239, Official Records.
By Ordinance No. 1607, the City of Santa Clara has approved the Development
Agreement as disclosed by Instrument recorded May 1, 1991 in Book L696,
Page 1524, Official Records.
Agreement on the terms and conditions contained therein
For: Covenant running with the land
Between: City of Santa Clara, California, a municipal corporation
And: Dairy Associates, L.P.
Recorded: December 17, 1990 in Book L568, Page 1565, Official Records.
Lack of Abutter's Rights to and from Route 237-South Bay Freeway, lying
adjacent to the Northerly line of Parcels Three and Four, said rights
having been released and relinquished
By: Dairy Associates, L.P., a California Limited Partnership
To: The State of California
Recorded: August 16, 1991 in Book L826, Page 839, Official Records.
Easement for the purposes stated herein and incidents thereto
Purpose: An easement for cut and fill slope purposes
Granted to: The State of California
Recorded: August 16, 1991 in Book L826, Page 839, Official Records
Affects: Parcel Three.
[IF THE CONVEYANCE IS TO AN APPLICABLE PURCHASER:
11. Lease Agreement dated as of July 14, 1994 by and between BNP Leasing
Corporation, as lessor, and 3COM Corporation, as lessee.
12. Any encumbrances claimed by, through or under 3COM Corporation]
[ADD A LIST OF ANY OTHER KNOWN ENCUMBRANCES FOR WHICH BNP IS NOT
RESPONSIBLE UNDER PARAGRAPH 10(A) OF THE LEASE.]
Exhibit C
[Printed Form of Change of Ownership Report to be attached]
Exhibit D
BILL OF SALE, ASSIGNMENT OF CONTRACT
RIGHTS AND INTANGIBLE ASSETS
Reference is made to that certain letter agreement dated April 6,
1994 (the "Agreement") between 3Com Corporation, a California Corporation,
and Dairy Associates, L.P., a California limited partnership ("Dairy"),
pursuant to which 3Com Corporation named BNP LEASING CORPORATION
("Assignor") as its designee and Dairy Associates, L. P. conveyed to
Assignor the real property described in Annex A attached hereto (the
"Property).
Assignor hereby sells, transfers and assigns unto [3COM OR THE
APPLICABLE PURCHASER, AS THE CASE MAY BE], a _____________ ("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 Dairy
thereunder to the extent related to the Property;
(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 Purchase Agreement
between Assignor and 3Com Corporation dated as of July 14, 1994 (the
"Purchase Agreement") (pursuant to which this document is being delivered),
(ii) the 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) agreements between Assignor and Participants, as defined
in the Lease, or any modification or extension thereof, 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 [3COM].
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:
[3COM, OR THE APPLICABLE PURCHASER],
a _________ corporation
By:
Its:
Annex A
LEGAL DESCRIPTION
REAL PROPERTY in the City of Santa Clara, County of Santa Clara, State of
California, described as follows:
1. Parcel Three:
Parcel B, as shown on that certain Parcel Map recorded July 7, 1989, Book
602 of Maps, at pages 34 and 35, Records of Santa Clara County, California,
excepting therefrom that portion described in that certain Lot Line
Adjustment and Deeded August 16, 1991 in Book L826, at page 0826 of
Official Records and described as follows:
Beginning at a point on the most Northerly Southeasterly line of said
Parcel "B" which bears South 66_ 32' 39" West a distance of 226.19 feet
from the most Easterly corner thereof; thence South 10 degrees 57' 34" East a
distance of 218.69 feet; thence North 89_ 47' 24" West a distance of 324.26
feet; thence North 77 degrees 17' 24" West a distance of 141.24 feet; thence
North
66 degrees 32' 39" East a distance of 458.33 feet to the point of beginning.
Also excepting therefrom that parcel Deeded to the State of California in
Book L826 at page 889 and being described as follows:
Commencing at the most Northerly corner of said Parcel B; thence along the
general Easterly line of said Parcel B the following courses: S. 10 degrees
04'
48" E., 80.00 feet, N. 79 degrees 55' 12" E., 30.00 feet, and S 10 degrees 04'
48" E.,
195.61 feet to the Northerly corner of Parcel A; thence leaving said
general Easterly line S. 67 degrees 25' 20" W. along the Northerly line of
Parcel
A and its Westerly prolongation, 814.32 feet; thence from a tangent that
bears S. 61 degrees 04' 32" W., along the Northerly line of Parcel A on a curve
to
the right with a radius of 8999.52 feet through an angle of 00 degrees 30'
19", an
arc length of 79.36 feet; thence leaving said line S. 01 degrees 05' 17" W.,
3.47
feet, thence from a tangent that bears S. 63 degrees 16' 34" W., along a curve
to
the right with a radius of 10,136.00 feet, through an angle of 05 degrees 40'
34",
an arc length of 1,004.14 feet to a point on the Westerly line of said
Parcel B; thence along last said line N. 00 degrees 50' 30" E., 113.93 feet to
the
Northwesterly corner of said Parcel B; thence along the general Northerly
line of last said parcel N. 60 degrees 54' 13" E., 1,641.25 feet and N. 63
degrees 04'
12" E., 253.25 feet to the point of commencement.
2. Parcel Four:
That portion of Parcel A, as shown on that certain Parcel Map recorded July
7, 1989, Book 602 of Maps at pages 34 and 35, records of Santa Clara
County, California and described in that certain Lot Line Adjustment and
Deeded August 16, 1991 in Book L826, page 0826 of Official Records and
described as follows:
Beginning at the Southwest corner of said Parcel "A"; thence on the
Westerly and Northerly lines of said Parcel "A" the following 5 courses:
1. North 00 degrees 12' 36" East a distance of 665.00 feet;
2. North 45 degrees 12' 36" East a distance of 64.00 feet;
3. North 00 degrees 12' 36" East a distance of 82.98 feet to a point on a
non-tangent curve the center of which bears North 29 degrees 17' 50" West a
distance of 9000.00 feet;
4. Northeasterly a distance of 79.37 feet on the arc of said curve to
the left through a central angle of 00 degrees 30' 19" (chord bears North 60
degrees 27' 01" East a distance of 79.37 feet, to a point on said curve;
5. North 66 degrees 32' 39" East, departing said curve, a distance of
75.89 feet; Thence South 62 degrees 07' 20" West a distance of 104.00 feet to a
point of curvature; thence Southwesterly a distance of 9.53 feet on the arc of
said 10136.00 foot radius curve to the right through a central angle of 00
degrees 03' 14" (chord bears South 62 degrees 08' 57" West a distance of 9.53
feet) to a point on said curve; thence South 00 degrees 12' 36" West a distance
of 809.62 feet to a point on the South line of said Parcel "A"; thence North 89
degrees 47' 24" West, on said South line, a distance of 83.50 feet to the point
of beginning.
Exhibit E
ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(this "Certificate") is made as of ___________________, 199___, by [3COM or
the Applicable Purchaser, as the case may be], a ___________________
("Grantee").
Contemporaneously with the execution of this Certificate, BNP Leasing
Corporation, a Delaware corporation ("BNP"), is executing and delivering to
Grantee (1) a Corporation Grant Deed and (2) a Bill of Sale, Assignment of
Contract Rights and Intangible Assets (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 BNP 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 BNP 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, except for damages proximately caused by (and
attributed by any applicable principles of comparative fault to) the wilful
misconduct, Active Negligence or gross negligence of BNP, its agents or
employees. As used in the preceding sentence, "Active Negligence" of a
party means, and is limited to, the negligent conduct of activities
actually on or about the Property by that party in a manner that
proximately causes actual bodily injury or property damage to be incurred.
"Active negligence" shall not include (1) any negligent failure of BNP to
act when the duty to act would not have been imposed but for BNP's status
as owner of the Subject Property or as a party to the transactions pursuant
to which BNP is delivering this instrument (the "Applicable Transactions"),
(2) any negligent failure of any other party to act when the duty to act
would not have been imposed but for such party's contractual or other
relationship to BNP or participation or facilitation in any manner,
directly or indirectly, of the Applicable Transactions, or (3) the exercise
in a lawful manner by BNP (or any party lawfully claiming through or under
BNP) of any remedy provided in connection with the Applicable Transactions.
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 BNP is entitled to rely and is relying on
this Certificate.
EXECUTED as of ________________, 199___.
, a
By:
Name:
Title:
Exhibit F
DOCUMENTARY TRANSFER TAX REQUEST
ACCOUNTABLE FORM #
DATE:
To: _________ County Recorder
Subject: REQUEST THAT DOCUMENTARY TRANSFER TAX DECLARATION BE MADE IN
ACCORDANCE WITH 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 ___________________.
It is requested that the amount paid not 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.)
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.
Exhibit G
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 or her 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]
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement (herein called
the "Purchase Agreement") dated as of July 14, 1994, by and between BNP
Leasing Corporation (the "Corporation") and [3COM OR THE APPLICABLE
PURCHASER AS THE CASE MAY BE] ("Purchaser"), the Corporation agreed to sell
and Purchaser 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 Santa Clara, California more
particularly described therein.
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation, in its best business judgment, deems it in the best interest
of the Corporation and its shareholders that the Corporation convey the
Property to Purchaser 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]
Exhibit H
BNP LEASING CORPORATION
717 N. HARWOOD
SUITE 2630
DALLAS, TEXAS 75201
, 199
[Title Insurance Company]
_________________
_________________
_________________
Re: Recording of Grant Deed to [3COM or the Applicable Purchaser]
("Purchaser")
Ladies and Gentlemen:
BNP Leasing Corporation has executed and delivered to 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 Purchaser.
Sincerely,
Exhibit I
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 [____________________ 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,
BNP 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: BNP MUST INCLUDE EITHER ONE, BUT ONLY ONE, OF THE FOLLOWING
REPRESENTATIONS IN THE FIRPTA STATEMENT, BUT IF THE ONE INCLUDED STATES
THAT BNP IS DEEMED EXEMPT FROM CALIFORNIA INCOME AND FRANCHISE TAX, THEN
BNP 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.
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:
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000738076
<NAME> 3COM CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> AUG-31-1994
<CASH> 75,237
<SECURITIES> 62,954
<RECEIVABLES> 110,156
<ALLOWANCES> 11,618
<INVENTORY> 57,335
<CURRENT-ASSETS> 359,608
<PP&E> 172,354
<DEPRECIATION> 99,696
<TOTAL-ASSETS> 447,214
<CURRENT-LIABILITIES> 149,234
<BONDS> 913
<COMMON> 222,148
0
0
<OTHER-SE> 74,919
<TOTAL-LIABILITY-AND-EQUITY> 447,214
<SALES> 249,280
<TOTAL-REVENUES> 249,280
<CGS> 118,154
<TOTAL-COSTS> 51,051
<OTHER-EXPENSES> 34,621
<LOSS-PROVISION> 937
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 44,517
<INCOME-TAX> 16,026
<INCOME-CONTINUING> 28,491
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,491
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
