________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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, 1997
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)
Delaware 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 ..........
As of August 31, 1997, 345,948,876 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, 1997 and May 31, 1997
Consolidated Statements of Operations
Quarters Ended August 31, 1997 and 1996
Consolidated Statements of Cash Flows
Quarters Ended August 31, 1997 and 1996
Notes to Consolidated Financial Statements
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
3Com, CoreBuilder, EtherLink, SuperStack and U.S. Robotics are
registered trademarks of 3Com Corporation. Total Control is a
trademark of 3Com Corporation.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
3Com Corporation
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
August 31, May 31,
1997 1997
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 517,657 $ 401,125
Temporary cash investments 490,830 538,706
Trade receivables 1,139,798 1,234,227
Inventories 410,715 402,356
Deferred income taxes 307,233 165,731
Other 160,709 94,419
---------- ----------
Total current assets 3,026,942 2,836,564
Property and equipment-net 621,113 660,025
Deposits and other assets 55,683 112,644
---------- ----------
Total $3,703,738 $3,609,233
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $ - $ 60,700
Accounts payable 295,407 345,304
Accrued and other liabilities 846,820 477,393
Income taxes payable 28,777 189,399
---------- ----------
Total current liabilities 1,171,004 1,072,796
Long-term debt 151,795 162,515
Other long-term obligations 6,573 7,942
Deferred income taxes 66,659 25,858
Stockholders' Equity:
Preferred stock, no par value, 10,000,000
shares authorized; none outstanding - -
Common stock, $.01 par value, 990,000,000
shares authorized; shares outstanding:
August 31, 1997: 345,948,876;
May 31, 1997: 334,558,193 1,447,639 1,178,359
Unamortized restricted stock grants (4,793) (5,165)
Retained earnings 861,286 1,168,941
Unrealized net gain on available-for-sale
securities 2,404 2,320
Accumulated translation adjustments 1,171 (4,333)
---------- ----------
Total stockholders' equity 2,307,707 2,340,122
---------- ----------
Total $3,703,738 $3,609,233
========== ==========
See notes to consolidated financial statements.
3Com Corporation
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Quarters Ended
August 31,
-----------------
1997 1996
---- ----
Sales $1,600,862 $1,250,060
Cost of sales 832,808 658,204
---------- ----------
Gross margin 768,054 591,856
Operating expenses:
Sales and marketing 301,307 207,208
Research and development 142,117 99,765
General and administrative 62,589 47,642
Merger-related charges 426,000 -
---------- ----------
Total 932,013 354,615
---------- ----------
Operating income (loss) (163,959) 237,241
Other income--net 2,961 2,973
---------- ----------
Income (loss) before income taxes (160,998) 240,214
Income tax provision (benefit) (14,178) 88,250
---------- ----------
Net income (loss) $ (146,820) $ 151,964
========== ==========
Net income (loss) per common and
equivalent share:
Primary $ (0.43) $ 0.43
Fully diluted $ (0.43) $ 0.43
Common and equivalent shares used
in computing per share amounts:
Primary 341,973 351,970
Fully diluted 341,973 352,386
See notes to consolidated financial statements.
3Com Corporation
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Quarters Ended
August 31,
----------------
1997 1996
---- ----
Cash flows from operating activities:
Net income (loss) $(146,820) $ 151,964
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 47,098 41,091
Deferred income taxes (100,625) (7,609)
Adjustment to conform fiscal year of pooled
entity - OnStream - 4,850
Adjustment to conform fiscal year of pooled
entity - U.S. Robotics (140,216) 71,632
Adjustment to conform accounting policies - 2,906
Changes in assets and liabilities,
net of effects of acquisitions:
Trade receivables 94,429 (118,535)
Inventories (45,668) (27,228)
Other current assets (66,993) (11,770)
Accounts payable (49,897) (36,961)
Accrued and other liabilities 110,705 62,131
Income taxes payable (39,524) 71,308
Merger-related reserves 426,000 (1,036)
--------- ---------
Net cash provided by operating activities 88,489 202,743
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment (80,131) (101,956)
Purchase of temporary cash investments (102,973) (166,796)
Proceeds from temporary cash investments 149,825 96,543
Other-net 989 (8,980)
--------- ---------
Net cash used for investing activities (32,290) (181,189)
--------- ---------
Cash flows from financing activities:
Common stock issued under stock plans 127,482 12,566
Repayments of notes payable and
capital lease obligations (60,762) (286)
Repayments of long-term debt (10,720) -
Net proceeds from issuance of debt - 316
Other-net 4,333 386
--------- ---------
Net cash provided by financing activities 60,333 12,982
--------- ---------
Increase in cash and cash equivalents 116,532 34,536
Cash and cash equivalents at beginning
of period 401,125 233,573
--------- ---------
Cash and cash equivalents at end of period $ 517,657 $ 268,109
========= =========
Non-cash financing and investing activities:
Tax benefit on stock option
transactions $ 121,098 $ 33,036
Unrealized net gain (loss) on
available-for-sale securities $ 84 $ (1,902)
See notes to consolidated financial statements.
3Com Corporation
Notes to Consolidated Financial Statements
1. Basis of Presentation
On June 12, 1997, 3Com Corporation (the Company)
completed the merger with U.S. Robotics, Inc. (U.S.
Robotics), which was accounted for as a pooling-of-
interests. All financial data of the Company, including
the Company's previously issued financial statements for
the periods presented in this Form 10-Q, have been
restated to include the historical financial information
of U.S. Robotics in accordance with generally accepted
accounting principles and pursuant to Regulation S-X.
The unaudited consolidated financial statements have
been prepared by the Company and include the accounts of
the Company 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, 1997, and
the results of operations and cash flows for the quarters
ended August 31, 1997 and 1996.
On June 1, 1997, the Company adopted a 52-53 week
fiscal year ending on the Sunday nearest to May 31, which
for fiscal 1998 will be May 31, 1998. The Company does
not expect this change to have a material impact on the
Company's financial statements. The results of
operations for the quarter ended August 31, 1997 may not
necessarily be indicative of the results to be expected
for the fiscal year ending May 31, 1998. These financial
statements should be read in conjunction with the
consolidated financial statements and related notes
thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1997.
2. Inventories consisted of (in thousands):
August 31, May 31,
1997 1997
---- ----
Finished goods $ 261,917 $ 262,023
Work-in-process 27,679 35,462
Raw materials 121,119 104,871
---------- ----------
Total $ 410,715 $ 402,356
========== ==========
3. Net Income (Loss) Per Share
Net income (loss) per common and equivalent share is
computed based on the weighted average number of common
shares and the dilutive effects of stock options
outstanding during the period using the treasury stock
method. Common equivalent shares were not included in
the calculation of earnings per share as they were
antidilutive for the quarter ended August 31, 1997. The
effect of the assumed conversion of the 10.25%
convertible subordinated notes was antidilutive for the
periods presented.
4. Business Combinations
On June 12, 1997 the Company merged with U.S. Robotics by
issuing approximately 158 million shares of its common
stock in exchange for all outstanding common stock of
U.S. Robotics. The Company also assumed and exchanged
all options to purchase U.S. Robotics' stock for options
to purchase approximately 31 million shares of the
Company's common stock. The transaction was accounted
for as a pooling-of-interests. U.S. Robotics is the
leading supplier of products and systems for accessing
information across the wide area network, including
modems and remote access products.
All financial data of the Company have been restated to
include the historical financial information of U.S.
Robotics. The consolidated statement of income for the
three months ended August 31, 1996 includes the U.S.
Robotics statement of income for the three months ended
June 30, 1996. The consolidated statement of income for
the year ended May 31, 1997 includes the U.S. Robotics
statement of income for the twelve months ended March 30,
1997. The consolidated statements of income for the
fiscal years ended May 31, 1996 and 1995 include the U.S.
Robotics statements of income for the fiscal years ended
September 29, 1996 and October 1, 1995, respectively.
This presentation has the effect of including U.S.
Robotics' results of operations for the six month period
ended September 29, 1996 in both the combined years ended
May 31, 1997 and 1996, and reflects sales of $1,158.2
million and net income of $76.8 million, which has been
reported as a decrease to the Company's fiscal 1997
retained earnings. The combined balance sheet as of May
31, 1997 includes the U.S. Robotics balance sheet as of
March 30, 1997, and includes an adjustment to decrease
retained earnings by $40.9 million for the cumulative
effect of conforming the companies fixed asset
capitalization policies. Results of operations for U.S.
Robotics for the two months ending May 24, 1997 reflect
sales of $15.2 million and net loss of $160.8 million,
which has been reported as a decrease to the Company's
fiscal 1998 retained earnings. Revenues for the two-
month period were below historical revenue trends due
primarily to the desire to reduce levels of channel
inventory and conform sales return and allowance reserve
philosophies with that of the heritage 3Com organization.
The differences in such reserve methodologies were not
material to the Company's financial statements. The
combined results below reflect reclassifications to
conform financial statement presentation and adjustments
to conform the companies fixed asset capitalization
policies. The companies have conformed other accounting
practices and policies including revenue recognition.
Differences in these practices in the past were deemed
not to be material to the Company's financial statements
and therefore are being conformed only on a prospective
basis. The following information has been prepared for
comparative purposes only and does not purport to be
indicative of what would have occurred had this
transaction not been effected on the date indicated above
or of results which may occur in the future.
Quarter Ended Years Ended
August 31, May 31,
------------- -------------------------------
1996 1997 1996 1995
----------------------------------------------
(Unaudited. In thousands, except per share amounts)
Sales:
3Com $ 710,140 $3,147,106 $2,327,101 $1,593,469
U.S. Robotics 546,785 2,493,791 1,977,512 889,347
Reclassifications to conform
certain accounting policies (6,865) (36,751) (20,105) (3,056)
---------- ---------- ---------- ----------
Combined $1,250,060 $5,604,146 $4,284,508 $2,479,760
========== ========== ========== ==========
Net income:
3Com $ 91,572 $ 373,950 $ 177,854 $ 144,559
U.S. Robotics 63,298 237,258 170,021 65,951
Adjustments to conform
certain accounting policies (2,906) (13,585) (7,259) (6,954)
---------- ---------- ---------- ----------
Combined $ 151,964 $ 597,623 $ 340,616 $ 203,556
========== ========== ========== ==========
Net income per share
(on a fully diluted basis):
3Com $ 0.50 $ 2.01 $ 1.00 $ 0.84
U.S. Robotics (1) 0.37 1.41 1.02 0.43
Adjustments to conform
certain accounting policies (0.01) (0.04) (0.02) (0.02)
---------- ---------- ---------- ----------
Combined $ 0.43 $ 1.69 $ 0.99 $ 0.63
========== ========== ========== ==========
(1) Adjusted for effect of exchange ratio of 1.75 shares
of 3Com Common Stock for each share of U.S. Robotics
common stock.
As a result of the merger, the Company recorded charges
of $426.0 million during the first quarter of fiscal
1998. These charges include approximately $364 million
of integration expenses, $42 million of direct
transaction costs (consisting primarily of investment
banking and other professional fees) and $20 million of
other merger charges. Integration expenses included:
- - $121 million related to the write-off of inventory
associated primarily with the elimination of duplicate
wide area networking and PC Card products, including a
provision for the return of discontinued products in
the distribution channel;
- - $92 million related to the write-off of fixed assets
(including duplicate management information systems and
other corporate assets), purchased technology and
goodwill primarily associated with the elimination of
duplicate wide area networking and PC card products;
- - $81 million related to the closure and elimination
of duplicate owned and leased facilities, primarily
corporate headquarters and domestic and European sales
offices; and
- - $70 million for severance and outplacement costs
specifically related to the merger.
Actual termination benefits paid for approximately
300 employees terminated through August 31, 1997
(approximately 30 percent of the total planned
severances) were approximately $17 million. Total
expected cash expenditures relating to the merger-related
charge are estimated to be approximately $193 million, of
which $55 million was disbursed prior to August 31, 1997.
The remaining $138 million is expected to be paid within
the next twelve months, with the exception of certain
lease-related cash requirements.
5. Litigation
The Company is a party to lawsuits in the normal course
of its business. The Company and its counsel believe
that it has meritorious defenses in all lawsuits in which
the Company or its subsidiaries is a defendant. The
Company notes that (i) litigation in general and patent
litigation in particular can be expensive and disruptive
to normal business operations and (ii) the results of
complex legal proceedings can be very difficult to
predict with any certainty.
On October 13, 1995, the Company acquired Chipcom, which
had already been named as a defendant in the litigation
described below. Five complaints were filed between May
30, 1995 and June 16, 1995 that alleged violations by the
defendants of Sections 10(b) and 20(a) of the Securities
and Exchange Act of 1934, and sought unspecified damages.
The cases were consolidated for pretrial purposes
pursuant to an order entered by the Court on June 15,
1995. The consolidated action is entitled In re: Chipcom
Securities Litigation, Civil Action No. 95-111114-DPW. A
Consolidated Complaint was filed on September 13, 1995,
and an Amended Consolidated Complaint was filed on
November 30, 1995.
The defendants' motion to dismiss the Amended
Consolidated Complaint was granted without leave to amend
on May 1, 1996. The dismissal covers all five cases.
The plaintiffs appealed the order granting the dismissal.
On October 1, 1996, the parties to these cases agreed
upon what the Company considers to be favorable financial
terms for settlement of all five cases, which amount the
Company does not consider material to its operations,
financial position, or liquidity. Pursuant to the
settlement which was approved by the District Court on
June 26, 1997, all claims of all persons which are
related to the subject matter of the Consolidated
Complaint were settled and released.
On March 24, 1997, a putative shareholder class action
lawsuit, entitled Hirsch v. 3Com Corporation, et al.,
Civil Action No. CV764977, was filed against the Company
and certain of its officers and directors in the
California Superior Court, Santa Clara County (the
Superior Court). The complaint alleges, among other
things, fraud, negligent misrepresentation and violations
of the California securities laws, including that during
the putative class period, sales of the Company's stock
by officers and directors of 3Com and acquisitions made
with the Company's stock occurred at inflated prices in
light of undisclosed information. Specifically, the
complaint alleges violations of Sections 25400 and 25500
of the California Corporations Code, Sections 1709 and
1710 of the California Civil Code, and Sections 17200 et
seq. and 17500 et seq. of the California Business and
Professions Code. The complaint, which covers a putative
period of September 24, 1996 through February 10, 1997,
does not specify the damages sought. On July 30, 1997,
the Superior Court sustained in part and overruled in
part the Company's demurrer to the complaint. As a
result of such ruling, the Civil Code and Business and
Professions Codes allegations have been stricken from the
complaint. The Company is in the process of appealing
the Superior Court's ruling with respect to the remaining
Corporations Code allegations. Management believes that
the action is not meritorious and intends to vigorously
contest it. An adverse resolution of the action could
have a material adverse effect on the Company's results
of operations and financial condition in the quarter in
which such adverse resolution occurs.
U.S. Robotics and certain of its directors were named as
defendants in eleven lawsuits relating to the merger
between the Company and U.S. Robotics brought in the
Delaware Chancery Court (In re: U.S. Robotics
Corporation Shareholder's Litigation, Delaware Chancery
Court Consolidated Civil Action No. 15580). The Company
has been named as a defendant in nine of these actions.
The lawsuits, which purport to be stockholder class
actions brought on behalf of all U.S. Robotics
stockholders, allege, inter alia, that the directors of
U.S. Robotics have breached their fiduciary duties by
approving the Merger Agreement, and that the Company
aided and abetted this alleged breach of duty. An
agreement in principle to settle this litigation has been
reached with plaintiffs' counsel on what the Company
considers to be favorable financial terms, which amount
the Company does not consider to be material to its
operations, financial position, or liquidity. Pursuant
to the settlement which was approved by the Delaware
Chancery Court on October 7, 1997, all claims of all
persons which are related to the subject matter were
settled and released.
On February 13, 1997, Motorola, Inc. filed suit against
U.S. Robotics in the United States District Court for the
District of Massachusetts (Motorola, Inc. v. U.S.
Robotics Corporation, et al., Civil Action No. 97-
10339RCL), claiming infringement of eight United States
patents. The complaint alleges willful infringement and
prays for unspecified damages and injunctive relief. In
a separate statement announcing the filing of the lawsuit
published on PRNewswire on the same date, Motorola
alleged that the patents at issue cover "technologies
essential to the International Telecommunications Union
(ITU) V.34 modem standard." In the same statement, a
Motorola officer is quoted as saying that Motorola is
"committed" to making its technology incorporated in
standards available on a "fair, reasonable and non-
discriminatory basis." U.S. Robotics has filed an answer
to Motorola's claims setting forth its defenses and
asserting counterclaims which allege infringement of a
U.S. Robotics patent, violation of antitrust laws,
promissory estoppel and unfair competition. Although the
Company believes it has meritorious defenses to
Motorola's claims and intends to contest this lawsuit
vigorously, an adverse outcome of such litigation could
have a material adverse effect on the business, results
of operations or financial condition of the Company in
the quarter in which such adverse resolution occurs.
On April 26, 1997, Xerox Corporation filed suit against
U.S. Robotics in the United States District Court for the
Western District of New York (Xerox Corporation v. U.S.
Robotics Corporation and U.S. Robotics Access Corp., No.
97-CV-6182T), claiming infringement of one United States
Patent. The complaint alleges willful infringement and
prays for unspecified damages and injunctive relief. In
a press release dated April 30, 1997, Xerox alleged that
its patent, issued January 21, 1997, "covers the use and
recognition of handwritten text using an alphabet system
designed especially for reliable recognition in pen
computers," and that U.S. Robotics' PalmPilot hand-held
computer and "Graffiti" software infringe the Xerox
patent. The Company believes it has meritorious defenses
to Xerox's claims and intends to contest the lawsuit
vigorously. An adverse resolution of the action could
have a material adverse effect on the Company's results
of operations and financial condition in the quarter in
which such adverse resolution occurs.
On April 21, 1997, U.S. Robotics and three of its
customers, Best Buy Co., Inc., Egghead, Inc. and Fry's
Electronics, Inc., were sued in a purported consumer
class action filed in Superior Court in Marin County,
California (Bendall et al v. U.S. Robotics Corporation et
al, No. 170441). The named plaintiffs are residents of
the states of Alabama, California, Tennessee and
Washington and they purport to represent various classes
of persons who have purchased or otherwise acquired U.S.
Robotics' new x2 products and products upgradeable to x2.
Damages, including punitive damages, and other relief are
sought under the California Consumer Legal Remedies Act
and the California Song-Beverly Consumer Warranty Act,
and under various common law theories, including breach
of contract, fraud and deceit, negligent
misrepresentation, breach of implied warranty and unjust
enrichment. The Company believes it has meritorious
defenses to this lawsuit and intends to contest the
lawsuit vigorously. An adverse resolution of the action
could have a material adverse effect on the Company's
results of operations and financial condition in the
quarter in which such adverse resolution occurs.
Another lawsuit, purporting to be "For the interests of
the General Public" was filed against U.S. Robotics in
the same court on March 13, 1997 (Levy v. U.S. Robotics
Corporation, No. 170968). This action alleges that U.S.
Robotics' promotion and advertising of x2 products
constituted unfair competition and deceptive, untrue and
misleading advertising in violation of the California
Business and Professional Code, and seeks injunctive
relief, including "restitution of all revenues" and an
award of attorney fees. Additionally, a purported public
interest plaintiff sued U.S. Robotics on January 29, 1997
in California Superior Court in San Francisco
(Intervention Inc. v. U.S. Robotics Corporation, Case No.
984352) under the same statute, alleging various
misrepresentations in connection with the promotion and
advertising of U.S. Robotics' x2 products, and seeking
injunctive and other relief, including attorney's fees.
The Company believes it has meritorious defenses to this
lawsuit and intends to contest the lawsuit vigorously.
An adverse resolution of the action could have a material
adverse effect on the Company's results of operations and
financial condition in the quarter in which such adverse
resolution occurs.
6. Effects of Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards No. 128 (SFAS 128), "Earnings per Share." This
Statement establishes and simplifies standards for
computing and presenting earnings per share. SFAS 128
will be effective for the Company's third quarter of
fiscal 1998, and requires restatement of all previously
reported earnings per share data that are presented.
Early adoption of this Statement is not permitted. SFAS
128 replaces primary and fully diluted earnings per share
with basic and diluted earnings per share. The Company
expects that basic earnings per share amounts will be
accretive compared to the Company's primary earnings per
share amounts, and diluted earnings per share amounts
will not be materially different from the Company's fully
diluted earnings per share amounts.
In June 1997, the FASB issued SFAS 130, "Reporting
Comprehensive Income." This statement establishes
standards for the reporting and display of comprehensive
income and its components. SFAS 130 will be effective
for the Company's fiscal year 1999 and requires
reclassification of financial statements for earlier
periods for comparative purposes.
zIn June 1997, the FASB issued SFAS 131, "Disclosures
About Segments of an Enterprise and Related Information."
This statement requires that financial information be
reported on the basis used internally for evaluating
segment performance and deciding how to allocate
resources to segments. SFAS 131 is effective for the
Company's fiscal year 1999 and requires restatement of
all previously reported information for comparative
purposes.
3Com Corporation
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Business Combinations
On June 12, 1997, 3Com Corporation (the Company) merged
with U.S. Robotics Corporation (U.S. Robotics) the leading
supplier of products and systems for accessing information
across the wide area network, including modems and remote
access products. The Company issued approximately 158 million
shares of its common stock in exchange for all outstanding
common stock of U.S. Robotics and assumed and exchanged all
options to purchase U.S. Robotics' stock for options to
purchase approximately 31 million shares of the Company's
common stock. The transaction was accounted for as a pooling-
of-interests. See Note 4 of Notes to Consolidated Financial
Statements for additional information on the above business
combination.
Results of Operations
The following table sets forth for the fiscal quarters
indicated, the percentage of total sales represented by the
line items reflected in the Company's consolidated statements
of operations:
Quarters ended August 31,
-------------------------
1997 1996
---- ----
Sales 100.0% 100.0%
Cost of sales 52.0 52.7
----- -----
Gross margin 48.0 47.3
Operating expenses:
Sales and marketing 18.8 16.5
Research and development 8.9 8.0
General and administrative 3.9 3.8
Merger-related charges 26.6 -
----- -----
Total operating expenses 58.2 28.3
----- -----
Operating income (loss) (10.2) 19.0
Other income - net 0.1 0.2
----- -----
Income (loss) before income taxes (10.1) 19.2
Income tax provision (benefit) (0.9) 7.0
----- -----
Net income (loss) (9.2)% 12.2%
----- -----
Excluding merger-related charges:
Total operating expenses 31.6% 28.3%
Operating income 16.4 19.0
Net income 10.8 12.2
Quarters Ended August 31, 1997 and 1996
Sales in the first quarter of fiscal 1998 totaled $1.6
billion, an increase of $350.8 million or 28 percent from the
corresponding quarter a year ago. The Company believes that
the year-over-year increase in first quarter sales is due to
several factors, including growth in the networking market as
the Internet, corporate Intranets, client server applications
and remote access services stimulate customers to migrate from
shared to switched media and to larger bandwidth and higher
speed technologies, such as Fast Ethernet, ATM and Gigabit
Ethernet, to support data, voice and video multimedia traffic.
The Company also believes that the strength of the Company's
product offerings at the edge of the network, including
modems, network interface cards (NICs), workgroup switches and
hubs, the continuous expansion of 3Com's product offerings,
and the ability to deliver complete data networking solutions
for different connectivity environments contributed to the
increase in first quarter sales over the same period a year
ago.
Sales of client access products (modems and NICs) in the
first quarter of fiscal 1998 increased 23 percent from the
same quarter one year ago, and represented 55 percent of total
sales, compared to 58 percent in the first quarter of fiscal
1997. The year-over-year increase in sales of client access
products represented a significant increase in unit volume,
led primarily by the Fast EtherLink (registered trademark) PCI
adapters and Fast EtherLink PC Cards, and an increased mix of the
recently introduced U.S. Robotics (registered trademark) brand
56 Kbps modem with x2 technology. This increase was partially
offset by a decline in average selling prices of certain Fast
EtherLink products and a decline in sales of 10 Mbps Ethernet
NICs as a result of the accelerated transition from 10 Mbps
Ethernet to Fast Ethernet adapters.
Sales of network systems products (i.e. switches,
internetworking, remote access and hubs) in the first quarter
of fiscal 1998 increased 34 percent from the same quarter one
year ago, and represented 45 percent of total sales, compared
to 42 percent in the year ago quarter. The year-over-year
increase in network systems sales was led primarily by the
increase in unit volume of Total Control (trademark) remote
access concentrator, the SuperStack (registered trademark) II
workgroup switching family, the CoreBuilder (registered trademark)
7000 ATM High-Function switching family, and the CoreBuilder 5000
enterprise switching family, partially offset by the year-over-year
declines in average selling prices for remote access and workgroup
switching products. The Company experienced a significant increase
in unit volume in workgroup switching products and Fast Ethernet
stackable hubs, partially offset by a decline in average selling prices
resulting from increased competition and pricing pressures.
International sales for the first quarter of fiscal 1998
comprised 45 percent of total sales compared to 38 percent in
the same period a year ago. International sales increased 49
percent in all major geographic regions, with especially
strong growth in the Asia Pacific and European regions. The
Company believes that the growth in international sales is due
primarily to the Company's continued expansion of operations
and sales force internationally. The Company's operations
were not significantly impacted by fluctuations in foreign
currency exchange rates in the first quarters of fiscal 1998
and 1997. Sales growth in the United States for the first
quarter of fiscal 1998 was 15 percent when compared to the
first quarter of fiscal 1997.
Gross margin as a percentage of sales was 48.0 percent in
the first quarter of fiscal 1998, compared to 47.3 percent for
the first quarter of fiscal 1997. The corresponding
improvement in gross margin in the first quarter of fiscal
1998 primarily reflects an increased mix of higher margin
products, such as the U.S. Robotics brand 56 Kbps modem with
x2 technology, Total Control remote access concentrators and
enterprise switching products. Factors causing the increase
in gross margin were partially offset by a higher mix of
certain lower margin adapter products and workgroup switching
products, for which average selling prices declined during the
period due to competitive pricing pressures.
Total operating expenses in the first quarter of fiscal
1998 were $932.0 million or 58.2 percent of sales, compared to
$354.6 million or 28.3 percent of sales in first quarter of
fiscal 1997. Excluding the pre-tax merger-related charge of
$426.0 million related to the merger with U.S. Robotics (see
Note 4 of Notes to Consolidated Financial Statements), total
operating expenses for the first quarter of fiscal 1998 were
$506.0 million, or 31.6 percent of sales.
Sales and marketing expenses in the first quarter of
fiscal 1998 increased $94.1 million or 45 percent from the
first quarter of fiscal 1997. Sales and marketing expenses as
a percentage of sales increased to 18.8 percent of sales in
the first quarter of fiscal 1998, from 16.5 percent in the
corresponding fiscal 1997 period. The increase in such
expenses reflected increased costs associated with marketing
promotions and customer support programs and an increase in
field sales and marketing personnel.
Research and development expenses in the first quarter of
fiscal 1998 increased $42.4 million or 42 percent from the
year-ago period. Research and development expenses increased
to 8.9 percent in the first quarter of fiscal 1998, compared
to 8.0 percent in first quarter of fiscal 1997. The increase
in research and development expenses was primarily
attributable to the cost of developing 3Com's new products,
primarily switching, network management and remote access, and
the Company's expansion into new technologies and markets.
The Company believes the timely introduction of new
technologies and products is crucial to its success, and plans
to continue to make acquisitions or strategic investments to
accelerate time to market where appropriate.
General and administrative expenses in the first quarter
of fiscal 1998 increased $14.9 million or 31 percent from the
same period a year ago. General and administrative expenses
increased to 3.9 percent in the first quarter of fiscal 1998,
compared to 3.8 percent in the first quarter of fiscal 1997.
The increase in general and administrative expenses primarily
reflected an expansion of the Company's infrastructure and
duplicate levels of corporate administration as a result of
the merger with U.S. Robotics.
Other income (net) remained flat at approximately $3.0
million in the first quarters of fiscal 1998 and 1997.
Interest income increased primarily due to larger cash and
investment balances, but was offset by losses on foreign
exchange translations.
The Company's effective income tax rate on the pre-tax
loss of $161.0 million was a benefit of 8.8 percent in the
first quarter of fiscal 1998 compared to a charge of
approximately 36.7 percent in the first quarter of fiscal
1997. Excluding the pre-tax merger-related charge associated
with U.S. Robotics, which was not fully deductible, the pro
forma income tax rate was 35.0 percent.
Net loss for the first quarter of fiscal 1998 was $146.8
million, or $0.43 per share, compared to net income of $152.0
million, or $0.43 per share, for the first quarter of fiscal
1997. Excluding the merger-related charge associated U.S.
Robotics, net income was $172.2 million, or $0.48 per share
for the first quarter of fiscal 1998.
Business Environment and Risk Factors
This report contains certain forward looking statements,
including statements regarding future trends in sales, gross
margin, expense and liquidity levels. Actual results could
vary materially based upon a number of factors, including but
not limited to those set forth below. 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. In accordance with the provisions of the
Private Securities Litigation Reform Act of 1995, the
cautionary statements set forth below identify important
factors that could affect future results or cause actual
results to differ materially from those in any forward-looking
statements which may be contained in this report. Such trends
and factors include, but are not limited to, the Company's
successful introduction of new products, adverse changes in
general economic conditions or conditions in the specific
markets for the Company's products, governmental regulation or
intervention affecting communications or data networking,
fluctuations in foreign exchange rates, and other factors,
including those listed below.
The Company participates in a highly volatile and rapidly
growing industry which is characterized by vigorous
competition for market share and rapid technological
development carried out amidst uncertainty over adoption of
industry standards and protection of proprietary intellectual
property rights. This has in the past resulted and could in
the future result in aggressive pricing practices and
increased competition, both from start-up companies and from
well-capitalized computer systems and communications
companies. The Company's ability to compete in this
environment depends upon a number of competitive and market
factors, and is subject to the risks set forth in this report
and other factors.
The market for the Company's products is intensely
competitive and characterized by rapidly changing technology.
The Company's success depends, in substantial part, on the
timely and successful introduction of new products. 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 lead to a slowdown in sales of
certain products, and could have a material adverse effect on
the Company's operating results if the Company does not
respond timely and effectively to such changes. The Company
is engaged in research and development activities in certain
emerging LAN and WAN high-speed technologies, such as ATM,
ISDN, DSL, Fast Ethernet, Gigabit Ethernet and data-over-
cable. As the industry standardizes on high-speed
technologies, there can be no assurance that the Company will
be able to respond promptly and cost-effectively to compete in
the marketplace. In addition, if the PC industry migrates
toward standardizing the integration of network interface
capabilities on the PC motherboard, and if the Company does
not manage its business to cost-effectively transition toward
this technology, it could have an adverse impact on the
Company.
The Company recently introduced x2 technology (pulse code
modulation technology permitting downloading of data over
regular analog telephone lines at speeds up to 56 Kbps).
Although the Company was the first to begin shipping in
commercial volumes in March 1997, the Company has experienced
vigorous competition from many of the significant modem and
remote access equipment manufacturers, most of which have
begun shipment of, or announced their intentions to bring
products featuring the same basic 56 Kbps technology and
capabilities to market in the coming weeks and months. The
Company's success depends, in substantial part, on the
adoption of industry standards and on the timely and
successful introduction of upgrades of this product to comply
with emerging industry standards and on the Company's ability
to address competing technological and product developments
carried out by others. Delays in adoption of industry
standards or adoption of standards not fully compatible with
x2 technology could adversely affect the Company's sales of
products incorporating the x2 technology.
Although annual growth rates for the networking
infrastructure industry have recently been in the 30 to 50
percent range, and annual growth rates for the PC industry
have recently been in the high teens, there can be no
assurance that these industry growth rates will continue at
the same level. As both industries affect the Company's
business, a slowdown in either of these industries could
adversely affect the financial results of Company. There can
be no assurance that the Company's results in any particular
quarter will fall within that range.
The Company's customers historically request fulfillment
of orders in a short period of time, resulting in a minimal
backlog. Quarterly sales and results of operations generally
depend on the volume and timing of orders, and the ability to
fulfill them within the quarter. As a result, the lack of
backlog provides limited visibility to the Company's future
sales trends. Should incoming orders rates decline, the
Company's financial results would be adversely affected in
such period. In addition, if the Company is not successful in
meeting its linearity objectives, sales during the quarter may
become back-end loaded which may expose the Company to
potential risk due to unforeseen circumstances, as well as
incremental costs caused by temporary fluctuations in business
operations.
The Company sells its products through a large and
diverse set of direct and indirect (third party) distribution
channels, and the Company considers its broad distribution
capabilities to be a competitive asset. Management of these
distribution channels requires the Company to work with its
channel partners to monitor inventories of the Company's
products held by channel partners and maintain these
inventories at levels which are appropriate to the level of
sales anticipated by each channel partner. Visibility as to
the total levels of inventory held by channel partners is
limited as information from channel partners may not be
complete or accurate. However, based on the limited data
available, the Company believes that channel inventory levels
are at or above the high range of where the Company would like
to operate. If the Company is not successful in working with
its channel partners to monitor and reduce channel inventories
to appropriate levels on an ongoing basis, future results may
be affected.
The non-linearity of sales throughout the quarter, while
improved from the restated quarter ended May 31, 1997,
subjects the Company to business risks due to unexpected
disruptions in functions including but not limited to
manufacturing, order management, information systems and
shipping, and could have an adverse affect on the Company's
results of operations.
The Company operates in an industry in which the ability
to compete is dependent on the development or acquisition of
proprietary technology, which must be protected both to
preserve the benefits of exclusive use of the Company's own
technology, and enable the Company to license technology from
other parties on acceptable terms. The Company attempts to
protect its intellectual property rights through a combination
of patents, copyrights, trademarks and trade secret laws.
There can be no assurance that the steps taken by the Company
will be sufficient to prevent misappropriation of intellectual
properties or that competitors will not independently develop
technologies that are equivalent or superior to the
technologies of the Company.
The Company must, from time to time, and may in the
future, negotiate licenses with third parties with respect to
third-party proprietary technologies that are required for
implementation of certain networking and communication
protocols and standards. In most instances, the owners of
intellectual property rights covering technologies required
for official standards have formally undertaken to license
such rights on fair, reasonable and non-discriminatory terms.
However, there can be no assurance in this regard, and there
is still the potential for disputes and litigation even where
a third party has undertaken to make licenses generally
available.
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 Company distributes a significant portion of its
products through third party distributors and resellers. Due
to consolidation in the distribution and reseller channels and
the Company's increased volume of sales into these channels,
the Company has experienced an increased concentration of
credit risk. While the Company continually monitors and
manages this risk, financial difficulties on the part of one
or more of the Company's resellers may have a material adverse
effect on the Company. Likewise, the Company's expansion into
certain emerging geographic markets, characterized by economic
and political instability and currency fluctuations, may
subject the Company's resellers to financial difficulties
which may have an adverse impact on the Company.
The Company will continue to invest in expanding its
sales, marketing, service, logistics and manufacturing
operations worldwide. The Company's sales and earnings may be
adversely affected unless the Company can successfully
assimilate and train new employees in a timely manner. The
Company may also be adversely affected if it cannot
successfully expand its sales and distribution capabilities,
in particular, the new manufacturing and distribution facility
in the Asia Pacific region, in a timely manner.
Although substantially all of the Company's historical
sales have been denominated in U.S. dollars, the Company does
have operations in other geographic markets and occasionally
transacts business in other currencies. Should the
international environment change such that the Company must
expand its exposure to foreign currencies, despite the fact
that the Company does attempt to mitigate this risk by hedging
foreign currency transactions, a significant fluctuation in
foreign currency could have an adverse impact on the Company.
Recruiting and retaining skilled personnel, especially in
certain locations in which the Company operates, is highly
competitive. Retention of key employees following an
acquisition or merger is typically challenging and the
Company's success in retaining such employees or effectively
recruiting new employees may impact future operations. See
discussion of the U.S. Robotics transaction below. Unless the
Company can successfully recruit and retain such personnel,
the Company's ability to achieve continued growth in sales and
earnings may be adversely affected.
Acquisitions of complementary businesses and
technologies, including technologies and products under
development, are an active part of the Company's overall
business strategy. Certain of the Company's major competitors
have also been engaged in merger and acquisition transactions.
Such consolidations by competitors are creating entities with
increased market share, customer base, technology and
marketing expertise, sales force size, or proprietary
technology in segments in which the Company competes. These
developments may adversely affect the Company's ability to
compete in such segments.
On June 12, 1997, the Company merged with U.S. Robotics,
the largest acquisition in the history of the networking
industry (see Note 4 of Notes to Consolidated Financial
Statements). Large acquisitions are challenging, in general,
and there can be no assurance that products, technologies,
distribution channels, customer support operations, management
information systems, key personnel and businesses of U.S.
Robotics or other acquired companies will be effectively
assimilated into the Company's business or product offerings,
or that such integration will not adversely affect the
Company's business, financial condition or results of
operations. The difficulties of such integration may be
increased by the size and number of future acquisitions and
the requirements of coordinating geographically separated
organizations, such as the U.S. Robotics merger. The
integration of the companies will require the dedication of
management resources which may temporarily distract attention
from the day-to-day business of the combined company. The
inability of management to successfully integrate the
operations of the two companies in a timely manner could have
a material adverse effect on the business, results of
operations, and financial condition of the Company, including,
without limitation, product development cycles and marketing
efforts. In addition, there can be no assurance that any
acquired products, technologies or businesses will contribute
at anticipated levels to the Company's sales or earnings, or
that the sales, earnings and technologies under development
from acquired businesses will not be adversely affected by the
integration process or other general factors. If the Company
is not successful in the integration of such acquisitions,
there could be an adverse impact on the financial results and
financial condition of the Company. For a detailed discussion
of these and other risks related to the U.S. Robotics merger,
see the Joint Proxy Statement/Prospectus dated May 8, 1997 at
pages 21 through 26.
The high-growth nature of the computer networking
industry, coupled with critical time-to-market factors, has
caused increased competition and consolidation. As a result,
there has been a significant increase in the cost of acquiring
computer networking companies. Future acquisitions are
therefore more likely to result in costs that are material to
the Company's operations. There can be no assurance that the
Company will continue to be able to identify and consummate
suitable acquisition transactions in the future. However,
should the Company consummate acquisitions in the future, the
impact may result in increased dilution of the Company's
earnings.
The Company's business is characterized by the continuous
introduction of new products and the management of the
transition of those products from prior generations of
technology or product platforms. In each product transition
cycle, the Company faces the challenge of managing the
inventory of its older products, including materials, work-in-
process, and products held by resellers. If the Company is
not successful in managing these transitions, there could be
an adverse impact on the financial results of the Company.
The Company's products are covered by product warranties
and the Company may be subject to contractual commitments
concerning product features or performance. If unexpected
circumstances arise such that the product does not perform as
intended and the Company is not successful in resolving
product quality or performance issues, there could be an
adverse impact on sales and earnings.
The market price of the Company's common stock has been,
and may continue to be, extremely volatile. Factors such as
new product, pricing or acquisition announcements by the
Company or its competitors, quarterly fluctuations in the
Company's operating results, challenges associated with
integration of businesses and general conditions in the data
networking market, such as a decline in industry growth rates,
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 is in the process of transitioning its
manufacturing requirements planning (MRP), accounts payable,
purchasing and intercompany accounting systems to a new set of
applications which operate on a client server based platform.
In the second quarter of fiscal 1998, the Company plans to
transition to the first installation at several manufacturing
sites. Further development of the client server system will
be required to assure production stability of the new
applications systems. As a result of the transition to the
new client server platform, the Company may experience
processing or financial system disruptions, which may have an
adverse effect on the Company.
Notwithstanding the Company's increased geographical
diversification, the Company's corporate headquarters and a
large portion of its research and development activities and
other critical business operations are located in California,
near major earthquake faults. The Company's business,
financial condition and 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
and performance should not be presumed by investors to be an
accurate indicator of future results or trends.
Liquidity and Capital Resources
Cash, cash equivalents and temporary cash investments at
August 31, 1997 were $1.0 billion, increasing $68.7 million
from May 31, 1997.
For the three months ended August 31, 1997, net cash
generated from operating activities was $88.5 million. Trade
receivables at August 31, 1997 decreased $94.4 million to $1.1
billion from May 31, 1997. Days sales outstanding in
receivables decreased to 64 days at August 31, 1997, compared
to 74 days at May 31, 1997 primarily due to the extended
collection period for the heritage U.S. Robotics organization.
Inventory levels at August 31, 1997 increased $8.4 million
from the prior fiscal year-end to $410.7 million. Inventory
turnover increased to 8.2 turns at August 31, 1997, compared
to 7.5 turns at May 31, 1997.
During the three months ended August 31, 1997, the
Company made $80.1 million in capital expenditures. Major
capital expenditures included upgrades and expansion of the
Company's facilities in Santa Clara, California and the
continuing development of the Company's worldwide information
systems. As of August 31, 1997, the Company had outstanding
approximately $140 million in capital expenditure commitments
primarily associated with the construction and expansion of
office and manufacturing space in Singapore, the U.K. and
Ireland.
During the first quarter of fiscal 1998, the Company
received cash of $127.5 million from the sale of its common
stock to employees through its employee stock purchase and
option plans.
During the first quarter of fiscal 1998, the Company
signed a lease, which replaces a previous land lease, for
300,000 square feet of office and research and development
space and a data center to be built on land adjacent to the
Company's headquarters site. The lease expires in August
2002, with an option to extend the lease term for two
successive periods of five years each. The Company has an
option to purchase the property for $83.6 million, or at the
end of the lease arrange for the sale of the property to a
third party with the Company retaining an obligation to the
owner for the difference between the sale price and $83.6
million, subject to certain provisions of the lease. The
Company began construction of the buildings in July 1997, and
anticipates that it will occupy and begin lease payments in
the second quarter of fiscal 1999.
During the first quarter of fiscal 1998, the Company
signed a lease, which replaces a previous land lease, for
525,000 square feet of office, research and development and
manufacturing space to be built on land in Marlborough,
Massachusetts. The lease expires in August 2002, with an
option to extend the lease term for two successive periods of
five years each. The Company has an option to purchase the
property for $86.0 million, or at the end of the lease arrange
for the sale of the property to a third party with the Company
retaining an obligation to the owner for the difference
between the sale price and $86.0 million, subject to certain
provisions of the lease. The Company began construction of
the buildings in the first quarter of fiscal 1998, and
anticipates that it will occupy and begin lease payments in
the third quarter of fiscal 1999.
During the first quarter of fiscal 1998, the Company
signed a lease for an existing 400,000 square foot building
and for 100,000 square feet to be built on adjacent land in
Rolling Meadows, Illinois. The new and renovated facility
will be used for research and development and office space.
The lease expires in September 2002, with an option to extend
the lease term for two successive periods of five years each.
The Company has an option to purchase the property for $95.0
million, or at the end of the lease arrange for the sale of
the property to a third party with the Company retaining an
obligation to the owner for the difference between the sale
price and $95.0 million, subject to certain provisions of the
lease. The Company expects to begin renovation and
construction of the buildings in the second quarter of fiscal
1998, and anticipates that it will occupy and begin lease
payments in the first quarter of fiscal 1999.
The three aforementioned leases require the Company to
maintain specified financial covenants, all of which the
Company was in compliance with as of August 31, 1997.
The Company has a $100 million revolving bank credit
agreement which expires December 20, 1999. Payment of cash
dividends are permitted under the credit agreement, subject to
certain limitations based on net income levels of the Company.
The Company has not paid and does not anticipate it will pay
cash dividends on its common stock. The credit agreement
requires the Company to maintain specified financial
covenants. As of August 31, 1997, there were no outstanding
borrowings under the credit agreement and the Company was in
compliance with all required covenants. During the quarter
ended August 31, 1997, the Company retired certain debt held
by the heritage U.S. Robotics organization, which included
approximately $170 million of borrowings that occurred during
the April and May time period, which was not reflected in the
restated May 31, 1997 balance sheet. See Note 4 to the
Consolidated Financial Statements for further detail.
In November 1997, the $110 million aggregate principal
amount of convertible subordinated notes become redeemable at
the option of the Company at an initial redemption price of
102.929% of the principal amount. The notes are convertible
at the option of the note holders into the Company's common
stock at an initial conversion price of $34.563 per share.
The Company has reserved 3,182,640 shares of common stock for
the conversion of these notes. The notes mature in 2001, and
interest is payable semi-annually at 10.25 percent per annum.
The Company is evaluating the opportunities for redemption of
these notes.
During the quarter ended August 31, 1997, the Company
completed the merger transaction with U.S. Robotics. As a
result, the Company recorded merger-related charges of $426.0
million. Total expected cash expenditures relating to the
merger-related charges are approximately $193 million, of
which $55 million was disbursed prior to August 31, 1997. The
remaining $138 million is expected to be paid from existing
cash balances within the next twelve months, with the
exception of lease-related cash requirements (see Note 4 of
Notes to Consolidated Financial Statements).
Based on current plans and business conditions, the
Company believes that its existing cash and equivalents,
temporary cash investments, cash generated from operations and
the available revolving credit agreement will be sufficient to
satisfy anticipated operating cash requirements for at least
the next twelve months.
Effects of Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards No. 128 (SFAS 128), "Earnings per Share." This
Statement establishes and simplifies standards for computing
and presenting earnings per share. SFAS 128 will be effective
for the Company's third quarter of fiscal 1998, and requires
restatement of all previously reported earnings per share data
that are presented. Early adoption of this Statement is not
permitted. SFAS 128 replaces primary and fully diluted
earnings per share with basic and diluted earnings per share.
The Company expects that basic earnings per share amounts will
be accretive compared to the Company's primary earnings per
share amounts, and diluted earnings per share amounts will not
be materially different from the Company's fully diluted
earnings per share amounts.
In June 1997, the FASB issued SFAS 130, "Reporting
Comprehensive Income." This statement establishes standards
for the reporting and display of comprehensive income and its
components. SFAS 130 will be effective for the Company's
fiscal year 1999 and requires reclassification of financial
statements for earlier periods for comparative purposes.
In June 1997, the FASB issued SFAS 131, "Disclosures
About Segments of an Enterprise and Related Information." This
statement requires that financial information be reported on
the basis used internally for evaluating segment performance
and deciding how to allocate resources to segments. SFAS 131
is effective for the Company's fiscal year 1999 and requires
restatement of all previously reported information for
comparative purposes.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to lawsuits in the normal course
of its business. The Company and its counsel believe that it
has meritorious defenses in all lawsuits in which the Company
or its subsidiaries is a defendant. The Company notes that
(i) litigation in general and patent litigation in particular
can be expensive and disruptive to normal business operations
and (ii) the results of complex legal proceedings can be very
difficult to predict with any certainty.
On October 13, 1995, the Company acquired Chipcom, which
had already been named as a defendant in the litigation
described below. Five complaints were filed between May 30,
1995 and June 16, 1995 that alleged violations by the
defendants of Sections 10(b) and 20(a) of the Securities and
Exchange Act of 1934, and sought unspecified damages. The
cases were consolidated for pretrial purposes pursuant to an
order entered by the Court on June 15, 1995. The consolidated
action is entitled In re: Chipcom Securities Litigation, Civil
Action No. 95-111114-DPW. A Consolidated Complaint was filed
on September 13, 1995, and an Amended Consolidated Complaint
was filed on November 30, 1995.
The defendants' motion to dismiss the Amended
Consolidated Complaint was granted without leave to amend on
May 1, 1996. The dismissal covers all five cases. The
plaintiffs appealed the order granting the dismissal. On
October 1, 1996, the parties to these cases agreed upon what
the Company considers to be favorable financial terms for
settlement of all five cases, which amount the Company does
not consider material to its operations, financial position,
or liquidity. Pursuant to the settlement which was approved
by the District Court on June 26, 1997, all claims of all
persons which are related to the subject matter of the
Consolidated Complaint were settled and released.
On March 24, 1997, a putative shareholder class action
lawsuit, entitled Hirsch v. 3Com Corporation, et al., Civil
Action No. CV764977, was filed against the Company and certain
of its officers and directors in the California Superior
Court, Santa Clara County (the Superior Court). The complaint
alleges, among other things, fraud, negligent
misrepresentation and violations of the California securities
laws, including that during the putative class period, sales
of the Company's stock by officers and directors of 3Com and
acquisitions made with the Company's stock occurred at
inflated prices in light of undisclosed information.
Specifically, the complaint alleges violations of Sections
25400 and 25500 of the California Corporations Code, Sections
1709 and 1710 of the California Civil Code, and Sections 17200
et seq. and 17500 et seq. of the California Business and
Professions Code. The complaint, which covers a putative
period of September 24, 1996 through February 10, 1997, does
not specify the damages sought. On July 30, 1997, the
Superior Court sustained in part and overruled in part the
Company's demurrer to the complaint. As a result of such
ruling, the Civil Code and Business and Professions Codes
allegations have been stricken from the complaint. The
Company is in the process of appealing the Superior Court's
ruling with respect to the remaining Corporations Code
allegations. Management believes that the action is not
meritorious and intends to vigorously contest it. An adverse
resolution of the action could have a material adverse effect
on the Company's results of operations and financial condition
in the quarter in which such adverse resolution occurs.
U.S. Robotics and certain of its directors were named as
defendants in eleven lawsuits relating to the merger between
the Company and U.S. Robotics brought in the Delaware Chancery
Court (In re: U.S. Robotics Corporation Shareholder's
Litigation, Delaware Chancery Court Consolidated Civil Action
No. 15580). The Company has been named as a defendant in nine
of these actions. The lawsuits, which purport to be
stockholder class actions brought on behalf of all U.S.
Robotics stockholders, allege, inter alia, that the directors
of U.S. Robotics have breached their fiduciary duties by
approving the Merger Agreement, and that the Company aided and
abetted this alleged breach of duty. An agreement in
principle to settle this litigation has been reached with
plaintiffs' counsel on what the Company considers to be
favorable financial terms, which amount the Company does not
consider to be material to its operations, financial position,
or liquidity. This settlement is not yet final and will not
be final until approved by the Court after a hearing.
Pursuant to the settlement which was approved by the Delaware
Chancery Court on October 7, 1997, all claims of all persons
which are related to the subject matter were settled and
released.
On February 13, 1997, Motorola, Inc. filed suit against
U.S. Robotics in the United States District Court for the
District of Massachusetts (Motorola, Inc. v. U.S. Robotics
Corporation, et al., Civil Action No. 97-10339RCL), claiming
infringement of eight United States patents. The complaint
alleges willful infringement and prays for unspecified damages
and injunctive relief. In a separate statement announcing the
filing of the lawsuit published on PRNewswire on the same
date, Motorola alleged that the patents at issue cover
"technologies essential to the International
Telecommunications Union (ITU) V.34 modem standard." In the
same statement, a Motorola officer is quoted as saying that
Motorola is "committed" to making its technology incorporated
in standards available on a "fair, reasonable and non-
discriminatory basis." U.S. Robotics has filed an answer to
Motorola's claims setting forth its defenses and asserting
counterclaims which allege infringement of a U.S. Robotics
patent, violation of antitrust laws, promissory estoppel and
unfair competition. Although the Company believes it has
meritorious defenses to Motorola's claims and intends to
contest this lawsuit vigorously, an adverse outcome of such
litigation could have a material adverse effect on the
business, results of operations or financial condition of the
Company in the quarter in which such adverse resolution
occurs.
On April 26, 1997, Xerox Corporation filed suit against
U.S. Robotics in the United States District Court for the
Western District of New York (Xerox Corporation v. U.S.
Robotics Corporation and U.S. Robotics Access Corp., No. 97-
CV-6182T), claiming infringement of one United States Patent.
The complaint alleges willful infringement and prays for
unspecified damages and injunctive relief. In a press release
dated April 30, 1997, Xerox alleged that its patent, issued
January 21, 1997, "covers the use and recognition of
handwritten text using an alphabet system designed especially
for reliable recognition in pen computers," and that U.S.
Robotics' PalmPilot hand-held computer and "Graffiti" software
infringe the Xerox patent. The Company believes it has
meritorious defenses to Xerox's claims and intends to contest
the lawsuit vigorously. An adverse resolution of the action
could have a material adverse effect on the Company's results
of operations and financial condition in the quarter in which
such adverse resolution occurs.
On April 21, 1997, U.S. Robotics and three of its
customers, Best Buy Co., Inc., Egghead, Inc. and Fry's
Electronics, Inc., were sued in a purported consumer class
action filed in Superior Court in Marin County, California
(Bendall et al v. U.S. Robotics Corporation et al, No.
170441). The named plaintiffs are residents of the states of
Alabama, California, Tennessee and Washington and they purport
to represent various classes of persons who have purchased or
otherwise acquired U.S. Robotics' new x2 products and products
upgradeable to x2. Damages, including punitive damages, and
other relief are sought under the California Consumer Legal
Remedies Act and the California Song-Beverly Consumer Warranty
Act, and under various common law theories, including breach
of contract, fraud and deceit, negligent misrepresentation,
breach of implied warranty and unjust enrichment. The Company
believes it has meritorious defenses to this lawsuit and
intends to contest the lawsuit vigorously. An adverse
resolution of the action could have a material adverse effect
on the Company's results of operations and financial condition
in the quarter in which such adverse resolution occurs.
Another lawsuit, purporting to be "For the interests of
the General Public" was filed against U.S. Robotics in the
same court on March 13, 1997 (Levy v. U.S. Robotics
Corporation, No. 170968). This action alleges that U.S.
Robotics' promotion and advertising of x2 products constituted
unfair competition and deceptive, untrue and misleading
advertising in violation of the California Business and
Professional Code, and seeks injunctive relief, including
"restitution of all revenues" and an award of attorney fees.
Additionally, a purported public interest plaintiff sued U.S.
Robotics on January 29, 1997 in California Superior Court in
San Francisco (Intervention Inc. v. U.S. Robotics Corporation,
Case No. 984352) under the same statute, alleging various
misrepresentations in connection with the promotion and
advertising of U.S. Robotics' x2 products, and seeking
injunctive and other relief, including attorney's fees. The
Company believes it has meritorious defenses to this lawsuit
and intends to contest the lawsuit vigorously. An adverse
resolution of the action could have a material adverse effect
on the Company's results of operations and financial condition
in the quarter in which such adverse resolution occurs.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Special Meeting of Shareholders was held on
June 12, 1997.
(b) The following are the voting results on each of the
proposals:
Proposal I In Favor Opposed Abstain No Vote
To approve and adopt an Amended
and Restated Agreement and Plan
of Merger 114,552,862 754,643 488,536 7,377,365
Proposal II
To approve and adopt an
amendment to the Company's
Articles of Incorporation
to increase the number of
authorized shares of 3Com
capital stock from 403,000,000
to 1,000,000,000 shares 113,176,896 9,103,780 892,730 0
Proposal III
To change 3Com's state of
incorporation from California
to Delaware 89,551,087 25,505,914 739,040 7,377,365
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
3.1 Certificate of Incorporation
3.2 Certificate of Correction Filed to Correct a Certain
Error in the Certificate of Incorporation
3.3 Certificate of Merger
3.4 Bylaws of 3Com Corporation, As Amended
4.1 Indenture Agreement between 3Com Corporation and The
First National Bank of Boston for the private placement
of convertible subordinated notes dated as of November 1,
1994 (Exhibit 5.2 to Form 8-K) (6)
4.2 Placement Agreement for the private placement of
convertible subordinated notes dated November 8, 1994
(Exhibit 5.1 to Form 8-K) (6)
4.3 Amended and Restated Rights Agreement dated December 31,
1994 (Exhibit 10.27 to Form 10-Q) (7)
10.1 1983 Stock Option Plan, as amended (Exhibit 10.1 to
Form 10-K) (3)*
10.2 Amended and Restated Incentive Stock Option Plan (2)*
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) (4)*
10.5 Second Amended and Restated 1984 Employee Stock Purchase
Plan (Exhibit 10.5 to Form 10-Q)(8)*
10.6 3Com Corporation Director Stock Option Plan, as amended
(Exhibit 19.3 to Form 10-Q) (4)*
10.7 Amended 3Com Corporation Director Stock Option Plan
(Exhibit 10.8 to Form 10-Q)(8)*
10.8 3Com Corporation Restricted Stock Plan, as Amended
(Exhibit 10.17 to Form 10-Q)(8)*
10.9 1994 Stock Option Plan (Exhibit 10.22 to Form 10-K) (5)*
10.10 Lease Agreement between BNP Leasing Corporation, as
Landlord, and 3Com Corporation, as Tenant, effective as of
November 20, 1996 (Exhibit 10.37 to Form 10-Q) (10)
10.11 Purchase Agreement between BNP Leasing Corporation and 3Com
Corporation, effective as of November 20, 1996 (Exhibit
10.38 to Form 10-Q) (10)
10.12 Agreement and Plan of Reorganization among 3Com Corporation,
OnStream Acquisition Corporation and OnStream Networks, Inc.
dated as of October 5, 1996 (Exhibit 2.1 to Form S-4) (9)
10.13 Lease Agreement between BNP Leasing Corporation, as Landlord,
and 3Com Corporation, as Tenant, effective as of February 3,
1997 for the Combined Great America Headquarters site
(Exhibit 10.19 to Form 10-Q) (12)
10.14 Purchase Agreement between BNP Leasing Corporation and 3Com
Corporation, effective as of February 3, 1997 for the
Combined Great America Headquarters site (Exhibit 10.20 to
Form 10-Q) (12)
10.15 Credit Agreement dated as of December 20, 1996 among 3Com
Corporation, Bank of America National Trust and Savings
Association, as Agent, and the Other Financial Institutions
Party Hereto Arranged by BA Securities, Inc. (Exhibit 10.21
to Form 10-Q) (12)
10.16 Amended and Restated Agreement and Plan of Merger by and
among 3Com Corporation, TR Acquisitions Corporation, 3Com
(Delaware) Corporation, and U.S. Robotics Corporation, dated
as of February 26, 1997 and amended as of March 14, 1997(11)
10.17 Lease Agreement between BNP Leasing Corporation, as Landlord,
and 3Com Corporation, as Tenant, effective as of July 25,
1997 for the Great America Phase III (PAL) site
10.18 Purchase Agreement between BNP Leasing Corporation and 3Com
Corporation, effective as of July 25, 1997 for the Great
America Phase III (PAL) site
10.19 Lease Agreement between BNP Leasing Corporation, as Landlord,
and 3Com Corporation, as Tenant, effective as of July 29,
1997 for the Marlborough site
10.20 Purchase Agreement between BNP Leasing Corporation and 3Com
Corporation, effective as of July 29, 1997 for the
Marlborough site
10.21 Lease Agreement between BNP Leasing Corporation, as Landlord,
and 3Com Corporation, as Tenant, effective as of August 11,
1997 for the Rolling Meadows site
10.22 Purchase Agreement between BNP Leasing Corporation and 3Com
Corporation, effective as of August 11, 1997 for the Rolling
Meadows site
10.23 First Amendment to Credit Agreement
18.1 Letter Re Change in Accounting Principles
* Indicates a management contract or compensatory plan.
(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 Exhibit 10.2 to Registrant's
Registration Statement on Form S-4 filed on August 31, 1987
(File No. 33-16850)
(3) 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)
(4) 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)
(5) 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)
(6) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's Form
8-K filed on November 16, 1994 (File No. 0-12867)
(7) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's Form
10-Q filed on January 13, 1995 (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 15, 1996 (File No. 0-12867)
(9) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Registration Statement on Form S-4, originally filed on October 11,
1996 (File No. 333-13993)
(10) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's Form
10-Q filed on January 13, 1997 (File No. 0-12867)
(11) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Registration Statement on Form S-4, filed on March 17, 1997 (File
No. 333-23465)
(12) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's Form
10-Q, filed on April 11, 1997 (File No. 0-12867)
(b) Reports on Form 8-K
The Company filed one report on Form 8-K during the fiscal
quarter covered by this report, as follows:
(i) Report on Form 8-K filed on June 26, 1997, reporting
under Item 2 the completion of the merger with U.S. Robotics, Inc.
effective June 12, 1997.
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, 1997 By: /s/ Christopher B. Paisley
-------------------- -------------------------------
Christopher B. Paisley
Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
EXHIBIT 3.1
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 03/10/1997
971077721 - 2725137
CERTIFICATE OF INCORPORATION
OF
3COM CORPORATION
FIRST: The name of the Corporation is 3Com Corporation (hereinafter
sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 15 East North Street, in the City of Dover,
County of Kent. The name of the registered agent at that address is
Incorporating Services, Ltd.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of Delaware.
FOURTH: The Corporation is authorized to issue a total of one
thousand (1,000) shares of stock in one class designated as "Common
Stock", par value $0.001 per share.
FIFTH: The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors. In addition to the
powers and authority expressly conferred upon them by Statute or by this
Certificate of Incorporation or the Bylaws of the Corporation, the directors
are hereby empowered to exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation. Election of
directors need not be by written ballot, unless the Bylaws so provide.
SIXTH: The Board of Directors is authorized to make, adopt, amend,
alter or repeal the Bylaws of the Corporation. The stockholders shall
also have power to make, adopt, amend, alter or repeal the Bylaws of the
Corporation.
SEVENTH: The name and address of the incorporator is as follows:
Andrea Charvet
GRAY CARY WARE & FREIDENRICH
400 Hamilton Avenue
Palo Alto, California 94301
EIGHTH: To the fullest extent permitted by the Delaware General
Corporation Law, a director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. Any repeal or modification of the foregoing
provisions of this Article EIGHTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
NINTH: This Corporation reserves the right to amend or repeal any
of the provisions contained in this Certificate of Incorporation in any
manner now or hereafter permitted by law, and the rights of the
stockholders of this Corporation are granted subject to this reservation.
I, THE UNDERSIGNED, being the incorporator, for the purpose of
forming a corporation under the laws of the State of Delaware, do make,
file and record this Certificate of Incorporation, do certify that the
facts herein stated are true, and accordingly, have hereto set my hand
this 10th day of March, 1997.
/s/ Andrea Charvet
----------------------
Andrea Charvet
Incorporator
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF INCORPORATION OF "3COM CORPORATION", FILED IN THIS
OFFICE ON THE TENTH DAY OF MARCH, A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
KENT COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-----------------------------------_
Edward J. Freel, Secretary of State
2725137 8100 AUTHENTICATION: 8367386
971077721 DATE: 03-11-97
EXHIBIT 3.2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 03/12/1997
971081337 - 2725137
CERTIFICATE OF CORRECTION FILED TO
CORRECT A CERTAIN ERROR IN
THE CERTIFICATE OF INCORPORATION OF
3COM CORPORATION
FILED IN THE OFFICE OF THE SECRETARY OF STATE
OF DELAWARE ON MARCH 10, 1997
Andrea Charvet certifies that:
1. She is the incorporator of 3Com Corporation., a corporation
organized and existing under and by virtue of the General Corporation
Law of the State of Delaware.
2. A Certificate of Incorporation was filed by the Secretary of
State of Delaware on March 10, 1997, and recorded in the office of the
Recorder of Deeds of Kent County on March 11, 1997, and said Certificate
of Incorporation requires correction as permitted by subsection (f) of
Section 103 of the General Corporation Law of the State of Delaware.
3. The first inaccuracy or defect of said Certificate of
Incorporation to be corrected as follows:
The Article FIRST as is set forth below:
"The name of the corporation is:
3Com Corporation."
is corrected to read as follows:
"The name of the corporation is:
3Com (Delaware) Corporation."
4. The second inaccuracy or defect of said Certificate of
Incorporation to be corrected as follows:
The Article FOURTH as is set forth below:
"The Corporation is authorized to issue a total of one
thousand (1,000) shares of stock in one class designated as "Common
Stock", par value $0.001 per share."
is corrected to read as follows:
"The Corporation is authorized to issue a total of one
thousand (1,000) shares of stock in one class designated as "Common
Stock", par value $0.01 per share."
IN WITNESS WHEREOF, the undersigned Incorporator, has hereunto
set her hand this 12th day of March, 1997.
3COM (DELAWARE) CORPORATION
/s/ Andrea Charvet
----------------------------_
Andrea Charvet, Incorporator
State of Delaware
Office of the Secretary of State
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF CORRECTION OF "3COM CORPORATION", CHANGING ITS NAME FROM
"3COM CORPORATION" TO "3COM (DELAWARE) CORPORATION", FILED IN THIS OFFICE
ON THE TWELFTH DAY OF MARCH, A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2725137 8100 AUTHENTICATION: 8375265
971081337 DATE: 03-17-97
EXHIBIT 3.3
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 02:01 PM 06/12/1997
971192951 - 2725137
CERTIFICATE OF MERGER
OF
3COM CORPORATION
(A CALIFORNIA CORPORATION)
INTO
3COM (DELAWARE) CORPORATION
(A DELAWARE CORPORATION)
(UNDER SECTION 252 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
The undersigned corporation, a Delaware corporation, does hereby
certify:
First: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
Name State of Incorporation
__________________________ ______________________
3Com Corporation California
3Com (Delaware) Corporation Delaware
Second: That an Agreement and Plan of Merger and Reincorporation
dated as of March 14, 1997 by and between 3Com Corporation and 3Com
(Delaware) Corporation has been approved, adopted, certified, executed
and acknowledged by each of the constituent corporations in accordance
with the provisions of Section 252 of the General Corporation Law of
the State of Delaware.
Third: That the name of the surviving corporation of the merger is
3Com (Delaware) Corporation, a Delaware corporation (the "Surviving
Corporation").
Fourth: That the Certicate of Incorporation of 3Com (Delaware)
Corporation in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation of the Surviving Corporation, and that
Articles First and Fourth are hereby amended to read in their entirety
as follows:
"FIRST. The name of the Corporation is 3Com Corporation (hereinafter
sometimes referred to as the "Corporation").
FOURTH:
A. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is One
Billion Shares (1,000,000,000) consisting of:
1. Nine Hundred Ninety Million (990,000,000) shares of
Common Stock, par value one cent ($.01) per share
(the "Common Stock"); and
2. Ten Million (10,000,000) shares of Preferred Stock,
par value one cent ($.01) per share (the "Preferred
Stock").
B. The Board of Directors is authorized, subject to any
limitations prescribed by law, to provide for the issuance
of shares of Preferred Stock in one or more series and,
by filing a certificate pursuant to the applicable law of
the State of Delaware, from time to time to determine the
designation of any series, to fix the number of shares of
any series, to determine or alter the rights, preferences,
privileges and powers granted to any wholly unissued
series of Preferred Stock and any qualifications, limitations
or restrictions imposed thereon, and, within the limits of
restrictions stated in any resolution or resolutions of the
Board of Directors originally fixing the number of shares
constituting any series, to increase or decrease (but not
below the number of shares of any such series then outstanding)
the number of shares of any such series subsequent to the
issue of shares of that series."
Fifth: That the Bylaws, as amended, of 3Com (Delaware) Corporation
as in effect immediately prior to the Effective Time shall be the Bylaws
of the Surviving Corporation.
Sixth: That the directors (including their respective denomination
as Class I or Class II directors) and officers of 3Com Corporation
immediately prior to the Effective Time shall be the initial directors
and officers of the Surviving Corporation, until their respective
successors are duly elected or appointed.
Seventh: That the executed Agreement and Plan of Merger and
Reincorporation is on file at the principal place of business of the
Surviving Corporation. The address of said principal place of business
is 5400 Bayfront Plaza, Santa Clara, California 95052.
Eighth: That a copy of the Agreement and Plan of Merger and
Reincorporation will be furnished by the Surviving Corporation upon
request and without charge to any stockholder of any constituent
corporation.
Ninth: The authorized capital Stock of 3Com Corporation is
400,000,000 shares of Common Stock, $0.01 par value, and 3,000,000
shares of Preferred Stock, without par value.
Tenth: That this Certificate of Merger shall be effective on
June 12, 1997 at 4:45 p.m. (Eastern Time).
IN WITNESS WHEREOF, the undersigned has caused this Certificate
to be executed by its President and attested by its Secretary this
11th day of June, 1997.
3COM (DELAWARE) CORPORATION
(a Delaware corporation)
By: /s/ Mark D. Michael
---------------------------
Mark D. Michael, President
Dated: June 11, 1997
ATTESTED TO BY:
/s/ Mark D. Michael
- ----------------------------
Mark D. Michael, Secretary
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF MERGER, WHICH MERGES:
"3COM CORPORATION", A CALIFORNIA CORPORATION,
WITH AND INTO "3COM (DELAWARE) CORPORATION" UNDER THE NAME OF
"3COM CORPORATION", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS
OF THE STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE
TWELFTH DAY OF JUNE, A.D. 1997, AT 2:01 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
KENT COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
-------------------------------------
Edward J. Freel, Secretary of State
2725137 8100M AUTHENTICATION: 8508751
971192951 DATE: 06-12-97
EXHIBIT 3.4
BYLAWS
OF
3COM CORPORATION
TABLE OF CONTENTS
_________________
ARTICLE I STOCKHOLDERS
Section 1.1. Annual Meeting
Section 1.2. Special Meetings
Section 1.3. Notice of Meetings
Section 1.4. Quorum
Section 1.5. Organization
Section 1.6. Conduct of Business
Section 1.7. Notice of Stockholder Business
Section 1.8. Proxies and Voting
Section 1.9. Stock List
Section 1.10. Stockholder Action by Written Consent
ARTICLE II BOARD OF DIRECTORS
Section 2.1. Number and Term of Office
Section 2.2. Vacancies and Newly Created Directorships
Section 2.3. Removal
Section 2.4. Regular Meetings
Section 2.5. Special Meetings
Section 2.6. Quorum
Section 2.7. Participation in Meetings by Conference Telephone
Section 2.8. Conduct of Business
Section 2.9. Powers
Section 2.10. Action Without Meeting
Section 2.11. Compensation of Directors
Section 2.12. Nomination of Director Candidates
ARTICLE III COMMITTEES
Section 3.1. Committees of the Board of Directors
Section 3.2. Conduct of Business
ARTICLE IV OFFICERS
Section 4.1. Generally
Section 4.2. Chairman of the Board
Section 4.3. President
Section 4.4. Vice President
Section 4.5. Chief Financial Officer
Section 4.6. Secretary
Section 4.7. Delegation of Authority
Section 4.8. Removal
Section 4.9. Action With Respect to Securities of
Other Corporations
ARTICLE V STOCK
Section 5.1. Certificates of Stock
Section 5.2. Transfers of Stock
Section 5.3. Record Date
Section 5.4. Lost, Stolen or Destroyed Certificates
Section 5.5. Regulations
ARTICLE VI NOTICES
Section 6.1. Notices
Section 6.2. Waivers
ARTICLE VII MISCELLANEOUS
Section 7.1. Facsimile Signatures
Section 7.2. Corporate Seal
Section 7.3. Reliance Upon Books, Reports and Records
Section 7.4. Fiscal Year
Section 7.5. Time Periods
ARTICLE VIII INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 8.1. Right to Indemnification
Section 8.2. Right of Claimant to Bring Suit
Section 8.3. Indemnification of Employees and Agents
Section 8.4 Non-Exclusivity of Rights
Section 8.5. Indemnification Contracts
Section 8.6. Insurance
Section 8.7. Effect of Amendment
Section 8.8. Savings Clause
ARTICLE IX AMENDMENTS
BYLAWS
OF
3Com CORPORATION
ARTICLE I
STOCKHOLDERS
Section 1.1. Annual Meeting.
An annual meeting of the stockholders of 3Com Corporation
(the "Corporation"), for the election of directors and for the
transaction of such other business as may properly come before
the meeting, shall be held at such place, on such date, and at
such time as the Board of Directors shall each year fix, which
date shall be within thirteen months after the organization of
the Corporation or after its last annual meeting of
stockholders.
Section 1.2. Special Meetings.
Special meetings of the stockholders, for any purpose or
purposes prescribed in the notice of the meeting, may be
called by (a) the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in
previously authorized directorships at the time any such
resolution is presented to the Board for adoption), (b) the
Chairman of the Board, (c) the President or (d) the holders of
shares entitled to cast not less than twenty percent (20%) of
the votes at the meeting, and shall be held at such place, on
such date, and at such time as they shall fix. Business
transacted at special meetings shall be confined to the
purpose or purposes stated in the notice.
Section 1.3. Notice of Meetings.
Written notice of the place, date, and time of all
meetings of the stockholders shall be given, not less than ten
(10) nor more than sixty (60) days before the date on which
the meeting is to be held, to each stockholder entitled to
vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required
from time to time by the Delaware General Corporation Law or
the Certificate of Incorporation of the Corporation).
When a meeting is adjourned to another place, date or
time, written notice need not be given of the adjourned
meeting if the place, date and time thereof are announced at
the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more
than thirty (30) days after the date for which the meeting was
originally noticed, or if a new record date is fixed for the
adjourned meeting, written notice of the place, date, and time
of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be
transacted which might have been transacted at the original
meeting.
Section 1.4. Quorum.
At any meeting of the stockholders, the holders of a
majority of all of the shares of the stock entitled to vote at
the meeting, present in person or by proxy, shall constitute a
quorum for all purposes, unless or except to the extent that
the presence of a larger number may be required by law or by
the Certificate of Incorporation.
If a quorum shall fail to attend any meeting, the
chairman of the meeting or the holders of a majority of the
shares of stock entitled to vote who are present, in person or
by proxy, may adjourn the meeting to another place, date, or
time.
If a notice of any adjourned special meeting of
stockholders is sent to all stockholders entitled to vote
thereat, stating that it will be held with those present
constituting a quorum, then except as otherwise required by
law, those present at such adjourned meeting shall constitute
a quorum, and all matters shall be determined by a majority of
the votes cast at such meeting.
Section 1.5. Organization.
Such person as the Board of Directors may have designated
or, in the absence of such a person, the President of the
Corporation or, in his absence, such person as may be chosen
by the holders of a majority of the shares entitled to vote
who are present, in person or by proxy, shall call to order
any meeting of the stockholders and act as chairman of the
meeting. The secretary of the meeting shall be such person as
the chairman appoints.
Section 1.6. Conduct of Business.
The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and
the conduct of discussion as seem to him in order.
Section 1.7. Notice of Stockholder Business.
At an annual or special meeting of the stockholders, only
such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before a
meeting, business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (b) properly brought
before the meeting by or at the direction of the Board of
Directors, or (c) properly brought before an annual meeting by
a stockholder and if, and only if, the notice of a special
meeting provides for business to be brought before the meeting
by stockholders, properly brought before the special meeting
by a stockholder. For business to be properly brought before
a meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal offices
of the Corporation no later than (i) in the case of an annual
meeting, ninety (90) days before the anticipated date of the
next annual meeting, under the assumption that the next annual
meeting will occur on the same calendar day as the day of the
most recent annual meeting, and (ii) in the case of a special
meeting, ten (10) days prior to date of such meeting. A
stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the
annual or special meeting (1) a brief description of the
business desired to be brought before the annual or special
meeting and the reasons for conducting such business at the
annual or special meeting, (2) the name and address, as they
appear on the Corporation's books, of the stockholder
proposing such business, (3) the class and number of shares of
the Corporation which are beneficially owned by the
stockholder, and (4) any material interest of the stockholder
in such business. Notwithstanding anything in the Bylaws to
the contrary, no business shall be conducted at an annual or
special meeting except in accordance with the procedures set
forth in this Section 1.7. The chairman of an annual or
special meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought
before the meeting and in accordance with the provisions of
this Section 1.7, and if he should so determine, he shall so
declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
Section 1.8. Proxies and Voting.
At any meeting of the stockholders, every stockholder
entitled to vote may vote in person or by proxy authorized by
an instrument in writing filed in accordance with the
procedure established for the meeting.
Each stockholder shall have one vote for every share of
stock entitled to vote which is registered in his name on the
record date for the meeting, except as otherwise provided
herein or required by law.
All voting, including on the election of directors, and
except where otherwise required by law, may be by a voice
vote; provided, however, that upon demand therefor by a
stockholder entitled to vote or by his proxy, a stock vote
shall be taken. Every stock vote shall be taken by ballots,
each of which shall state the name of the stockholder or proxy
voting and such other information as may be required under the
procedure established for the meeting. Every vote taken by
ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the
votes cast, and except as otherwise required by law or the
Certificate of Incorporation or the Bylaws of this
Corporation, all other matters shall be determined by a
majority of the votes cast.
Section 1.9. Stock List.
A complete list of stockholders entitled to vote at any
meeting of stockholders, arranged in alphabetical order for
each class of stock and showing the address of each such
stockholder and the number of shares registered in his name,
shall be open to the examination of any such stockholder, for
any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the
meeting is to be held.
The stock list shall also be kept at the place of the
meeting during the whole time thereof and shall be open to the
examination of any such stockholder who is present. This list
shall presumptively determine the identity of the stockholders
entitled to vote at the meeting and the number of shares held
by each of them.
Section 1.10. Stockholder Action by Written Consent.
An action which may be taken at any annual or special
meeting of stockholders may be taken without a meeting and
without prior notice, if a consent in writing, setting forth
the actions so taken, is signed by the holders of outstanding
shares having not less than the minimum number of votes which
would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were
present and voted. All such consents shall be filed with the
Secretary of the Corporation and shall be maintained in the
corporate records. Prompt notice of the taking of a corporate
action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not
consented in writing.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1. Number and Term of Office.
The authorized number of directors shall initially be one
(1) and thereafter shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized
directors. The Board of Directors shall be comprised of eleven
(11) Directors. The number of Directors provided in this
Section 2.1 may be changed by a Bylaw duly adopted by the
affirmative vote of a majority of the outstanding shares
entitled to vote.
Section 2.2. Vacancies and Newly Created Directorships.
Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting
from death, resignation, retirement, disqualification, or
other cause (other than removal from office by a vote of the
stockholders) may be filled only by a majority vote of the
directors then in office, though less than a quorum, and
directors so chosen shall hold office for a term expiring at
the next annual meeting of stockholders. No decrease in the
number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
Section 2.3. Removal.
Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time,
with or without cause, but only by the affirmative vote of the
holders of at least a majority of the voting power of the then
outstanding shares of stock of the Corporation entitled to
vote generally in the election of directors, voting together
as a single class. Vacancies in the Board of Directors
resulting form such removal may be filled by (i) a majority of
the directors then in office, though less than a quorum, or
(ii) the stockholders at a special meeting of the stockholders
properly called for that purpose, by the vote of the holders
of a plurality of the shares entitled to vote at such special
meeting. Directors so chosen shall hold office until the next
annual meeting of stockholders.
Section 2.4. Regular Meetings.
Regular meetings of the Board of Directors shall be held
at such place or places, on such date or dates, and at such
time or times as shall have been established by the Board of
Directors and publicized among all directors. A notice of
each regular meeting shall not be required.
Section 2.5. Special Meetings.
Special meetings of the Board of Directors may be called
by a majority of the directors then in office (rounded up to
the nearest whole number), by the Chairman of the Board or by
the President and shall be held at such place, on such date,
and at such time as they or he shall fix. Notice of the
place, date, and time of each such special meeting shall be
given to each director who does not waive the right to a
notice by (i) mailing written notice not less than five (5)
days before the meeting, (ii) sending notice one (1) day
before the meeting by an overnight courier service and two (2)
days before the meeting if by overseas courier service, or
(iii) by telephoning, telecopying, telegraphing or personally
delivering the same not less than twenty-four (24) hours
before the meeting. Unless otherwise indicated in the notice
thereof, any and all business may be transacted at a special
meeting.
Section 2.6. Quorum.
At any meeting of the Board of Directors, a majority of
the total number of authorized directors shall constitute a
quorum for all purposes. If a quorum shall fail to attend any
meeting, a majority of those present may adjourn the meeting
to another place, date, or time, without further notice or
waiver thereof.
Section 2.7. Participation in Meetings by Conference Telephone.
Members of the Board of Directors, or of any committee of
the Board of Directors, may participate in a meeting of such
Board or committee by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other and such
participation shall constitute presence in person at such
meeting.
Section 2.8. Conduct of Business.
At any meeting of the Board of Directors, business shall
be transacted in such order and manner as the Board may from
time to time determine, and all matters shall be determined by
the vote of a majority of the directors present, except as
otherwise provided herein or required by law.
Section 2.9. Powers.
The Board of Directors may, except as otherwise required
by law, exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation,
including, without limiting the generality of the foregoing,
the unqualified power:
(1) To declare dividends from time to time in accordance
with law;
(2) To purchase or otherwise acquire any property,
rights or privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in
such form as it may determine, of written obligations of every
kind, negotiable or non-negotiable, secured or unsecured, and
to do all things necessary in connection therewith;
(4) To remove any officer of the Corporation with or
without cause, and from time to time to pass on the powers and
duties of any officer upon any other person for the time
being;
(5) To confer upon any officer of the Corporation the
power to appoint, remove and suspend subordinate officers,
employees and agents;
(6) To adopt from time to time such stock option, stock
purchase, bonus or other compensation plans for directors,
officers, employees and agents of the Corporation and its
subsidiaries as it may determine;
(7) To adopt from time to time such insurance,
retirement, and other benefit plans for directors, officers,
employees and agents of the Corporation and its subsidiaries
as it may determine; and
(8) To adopt from time to time regulations, not
inconsistent with these Bylaws, for the management of the
Corporation's business and affairs.
Section 2.10. Action Without Meeting.
Any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a
meeting, if all members of the Board shall individually or
collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the
proceedings of the Board. Such action by written consent
shall have the same force and effect as a unanimous vote of
such directors.
Section 2.11. Compensation of Directors.
Directors, as such, may receive, pursuant to resolution
of the Board of Directors, fixed fees and other compensation
for their services as directors, including, without
limitation, their services as members of committees of the
Board of Directors.
Section 2.12. Nomination of Director Candidates.
Subject to any limitations stated in the Certificate of
Incorporation of this Corporation, nominations for the
election of directors may be made by the Board of Directors or
a proxy committee appointed by the Board of Directors or by
any stockholder entitled to vote in the election of directors.
ARTICLE III
COMMITTEES
Section 3.1. Committees of the Board of Directors.
The Board of Directors, by a vote of a majority of the
whole Board, may from time to time designate one or more
committees of the Board, with such lawfully delegable powers
and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others
provided for herein, elect a director or directors to serve as
the member or members, designating, if it desires, other
directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any
committee so designated may exercise the power and authority
of the Board of Directors to declare a dividend, to authorize
the issuance of stock or to adopt a certificate of ownership
and merger if the resolution which designates the committee or
a supplemental resolution of the Board of Directors shall so
provide. In the absence or disqualification of any member of
any committee and any alternate member in his place, the
member or members of the committee present at the meeting and
not disqualified from voting, whether or not he or they
constitute a quorum, may by unanimous vote appoint another
member of the Board of Directors to act at the meeting in the
place of the absent or disqualified member.
Section 3.2. Conduct of Business.
Each committee may determine the procedural rules for
meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or
required by law. Adequate provision shall be made for notice
to members of all meetings; one-half of the authorized members
shall constitute a quorum unless the committee shall consist
of one or two members, in which event all members of the
committee shall constitute a quorum; and all matters shall be
determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members
thereof consent thereto in writing. Such written consent or
consents shall be filed with the minutes of the proceedings of
such committee.
ARTICLE IV
OFFICERS
Section 4.1. Generally.
The officers of the Corporation shall consist of a
President, a Secretary and a Chief Financial Officer. The
Corporation may also have, at the discretion of the Board of
Directors, a Chairman of the Board, one or more Vice
Presidents, and such other officers as may from time to time
be appointed by the Board of Directors. Officers shall be
elected by the Board of Directors, which shall consider that
subject at its first meeting after every annual meeting of
stockholders. Each officer shall hold office at the pleasure
of the Board, until his successor is elected and qualified or
until his earlier resignation or removal. Any number of
offices may be held by the same person.
Section 4.2. Chairman of the Board.
The Chairman of the Board, if there shall be such an
officer, shall, if present, preside at all meetings of the
Board of Directors, and exercise and perform such other powers
and duties as may be from time to time assigned to him by the
Board of Directors or as provided by these Bylaws.
Section 4.3. President.
Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman of the Board,
if there be such an officer, the President shall be the
general manager and chief executive officer of the Corporation
and shall, subject to the control of the Board of Directors,
have general supervision, direction, and control of the
business and other officers, employees and agents of the
Corporation. He shall preside at all meetings of the
stockholders. He shall be an ex-officio member of all the
standing committees, including the executive committee, if
any, and shall have the general powers and duties of
management usually vested in the office of president of a
corporation, and shall have such other powers and duties as
may be prescribed by the Board of Directors or by these
Bylaws. He shall have power to sign all stock certificates,
contracts and other instruments of the Corporation which are
authorized by the Board of Directors.
Section 4.4. Vice President.
In the absence or disability of the President, the Vice
Presidents, if any, in order of their rank as fixed by the
Board of Directors, or if not ranked, the Vice President
designated by the Board of Directors, shall perform the duties
of the President, and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the
President. The Vice Presidents, if any, shall have such other
powers and perform such other duties as from time to time may
be prescribed for them respectively by the Board of Directors
or these Bylaws.
Section 4.5. Chief Financial Officer.
The Chief Financial Officer shall keep and maintain or
cause to be kept and maintained, adequate and correct
financial books and records of account of the Corporation in
written form or any other form capable of being converted into
written form.
The Chief Financial Officer shall deposit all monies and
other valuables in the name and to the credit of the
Corporation with such depositories as may be designated by the
Board of Directors. He shall disburse all funds of the
Corporation as may be ordered by the Board of Directors, shall
render to the President and the Board of Directors, whenever
they request it, an account of all of his transactions as
Chief Financial Officer and of the financial condition of the
Corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or
by these Bylaws.
Section 4.6. Secretary.
The Secretary shall keep, or cause to be kept, a book of
minutes in written form of the proceedings of the Board of
Directors, committees of the Board, and stockholders. Such
minutes shall include all waivers of notice, consents to the
holding of meetings, or approvals of the minutes of meetings
executed pursuant to these Bylaws or the General Delaware
Corporation Law. The Secretary shall keep, or cause to be
kept at the principal executive office or at the office of the
Corporation's transfer agent or registrar, a record of its
stockholders, giving the names and addresses of all
stockholders and the number and class of shares held by each.
The Secretary shall give or cause to be given, notice of
all meetings of the stockholders and of the Board of Directors
required by these Bylaws or by law to be given, and shall keep
the seal of the Corporation in safe custody, and shall have
such other powers and perform such other duties as may be
prescribed by the Board of Directors or these Bylaws.
Section 4.7. Delegation of Authority.
The Board of Directors may from time to time delegate the
powers or duties of any officer to any other officers or
agents, notwithstanding any provision hereof.
Section 4.8. Removal.
Any officer of the Corporation may be removed at any
time, with or without cause, by the Board of Directors.
Section 4.9. Action With Respect to Securities of Other
Corporations.
Unless otherwise directed by the Board of Directors, the
President or any officer of the Corporation authorized by the
President shall have power to vote and otherwise act on behalf
of the Corporation, in person or by proxy, at any meeting of
stockholders of or with respect to any action of stockholders
of any other corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and
powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
ARTICLE V
STOCK
Section 5.1. Certificates of Stock.
Each stockholder shall be entitled to a certificate
signed by, or in the name of the Corporation by, the President
or a Vice President, and the Secretary, an Assistant Secretary
or the Chief Financial Officer, certifying the number of
shares owned by him or her. Any or all the signatures on the
certificate may be facsimile.
Section 5.2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer
books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the
stock of the Corporation. Except where a certificate is
issued in accordance with Section 5.4 of these Bylaws, an
outstanding certificate for the number of shares involved
shall be surrendered for cancellation before a new certificate
is issued therefor.
Section 5.3. Record Date.
The Board of Directors may fix a record date, which shall
not be more than sixty (60) nor fewer than ten (10) days
before the date of any meeting of stockholders, nor more than
sixty (60) days prior to the time for the other action
hereinafter described, as of which there shall be determined
the stockholders who are entitled: to notice of or to vote at
any meeting of stockholders or any adjournment thereof; to
express consent to corporate action in writing without a
meeting; to receive payment of any dividend or other
distribution or allotment of any rights; or to exercise any
rights with respect to any change, conversion or exchange of
stock or with respect to any other lawful action.
Section 5.4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any
certificate of stock, another may be issued in its place
pursuant to such regulations as the Board of Directors may
establish concerning proof of such loss, theft or destruction
and concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 5.5. Regulations.
The issue, transfer, conversion and registration of
certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.
ARTICLE VI
NOTICES
Section 6.1. Notices.
Except as otherwise specifically provided herein or
required by law, all notices required to be given to any
stockholder, director, officer, employee or agent shall be in
writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice
in the mails, postage paid, or by sending such notice by
prepaid telegram, mailgram or commercial courier service. Any
such notice shall be addressed to such stockholder, director,
officer, employee or agent at this last known address as the
same appears on the books of the Corporation. The time when
such notice is received by such stockholder, director,
officer, employee or agent, or by any person accepting such
notice on behalf of such person, if hand delivered, or
dispatched, if delivered through the mails or by telegram,
courier or mailgram, shall be the time of the giving of the
notice.
Section 6.2. Waivers.
A written waiver of any notice, signed by a stockholder,
director, officer, employee or agent, whether before or after
the time of the event for which notice is to be given, shall
be deemed equivalent to the notice required to be given to
such stockholder, director, officer, employee or agent.
Neither the business nor the purpose of any meeting need be
specified in such a waiver. Attendance of a person at a
meeting shall constitute a waiver of notice for such meeting,
except when the person attends a meeting for the express
purpose of objecting, and does in fact object, at the
beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Facsimile Signatures.
In addition to the provisions for use of facsimile
signatures elsewhere specifically authorized in these Bylaws,
facsimile signatures of any officer or officers of the
Corporation may be used whenever and as authorized by the
Board of Directors or a committee thereof.
Section 7.2. Corporate Seal.
The Board of Directors may provide a suitable seal,
containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the
Board of Directors or a committee thereof, duplicates of the
seal may be kept and used by the Chief Financial Officer or by
an Assistant Secretary or other officer designated by the
Board of Directors.
Section 7.3. Reliance Upon Books, Reports and Records.
Each director, each member of any committee designated by
the Board of Directors, and each officer of the Corporation
shall, in the performance of his duties, be fully protected in
relying in good faith upon the books of account or other
records of the Corporation, including reports made to the
Corporation by any of its officers, by an independent
certified public accountant, or by an appraiser.
Section 7.4. Fiscal Year.
The fiscal year of the Corporation shall be as fixed by
the Board of Directors.
Section 7.5. Time Periods.
In applying any provision of these Bylaws which require
that an act be done or not done a specified number of days
prior to an event or that an act be done during a period of a
specified number of days prior to an event, calendar days
shall be used, the day of the doing of the act shall be
excluded, and the day of the event shall be included.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 8.1. Right to Indemnification.
Each person who was or is made a party or is threatened
to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal
representative, is or was a director or officer of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust
or other enterprise, including service with respect to
employee benefit plans, whether the basis of such Proceeding
is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while
serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the
fullest extent authorized by the General Corporation Law of
Delaware, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader
indemnification rights than said Law permitted the Corporation
to provide prior to such amendment) against all expenses,
liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided,
however, that, except as provided in Section 8.2, the
Corporation shall indemnify any such person seeking indemnity
in connection with a Proceeding (or part thereof) initiated by
such person only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. Such
right shall be a contract right and shall include the right to
be paid by the Corporation expenses incurred in defending any
such Proceeding in advance of its final disposition; provided,
however, that, if required by the General Corporation Law of
Delaware, the payment of such expenses incurred by a director
or officer in his or her capacity as a director or officer
(and not in any other capacity in which service was or is
rendered by such person while a director or officer,
including, without limitation, service to an employee benefit
plan) in advance of the final disposition of such Proceeding,
shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be
indemnified under this Section or otherwise.
Any indemnification as provided herein (unless ordered by
a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification
of a director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in the General Corporation Law of Delaware.
Such determination shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or
(3) by the stockholders.
Section 8.2. Right of Claimant to Bring Suit.
If a claim under Section 8.1 is not paid in full by the
Corporation within ninety (90) days after a written claim has
been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the
expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a
claim for expenses incurred in defending any Proceeding in
advance of its final disposition where the required
undertaking, if any, has been tendered to the Corporation)
that the claimant has not met the standards of conduct which
make it permissible under the General Corporation Law of
Delaware for the Corporation to indemnify the claimant for the
amount claimed. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel,
or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in the
General Corporation Law of Delaware, nor an actual
determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders)
that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a
presumption that claimant has not met the applicable standard
of conduct.
Section 8.3. Indemnification of Employees and Agents.
The Corporation may, to the extent authorized from time
to time by the Board of Directors, grant rights to
indemnification, and to the advancement of related expenses,
to any employee or agent of the Corporation to the fullest
extent of the provisions of this Article with respect to the
indemnification of and advancement of expenses to directors
and officers of the Corporation.
Section 8.4 Non-Exclusivity of Rights.
The rights conferred on any person by Sections 8.1, 8.2
and 8.3 shall not be exclusive of any other right which such
persons may have or hereafter acquire under any statute,
provisions of the Certificate of Incorporation, bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise.
Section 8.5. Indemnification Contracts.
The Board of Directors is authorized to enter into a
contract with any director, officer, employee or agent of the
Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, including employee benefit plans, providing
for indemnification rights equivalent to those provided for in
this Article VIII.
Section 8.6. Insurance.
The Corporation may maintain insurance, at its expense,
to protect itself and any such director, officer, employee or
agent of the Corporation or another corporation, partnership,
joint venture trust or other enterprise against any such
expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such
expenses, liability or loss under Delaware General Corporation
Law.
Section 8.7. Effect of Amendment.
Any amendment, repeal or modification of any provision of
this Article VIII by the stockholders or the directors of the
Corporation shall not adversely affect any right or protection
of a director or officer of the Corporation existing at the
time of such amendment, repeal or modification.
Section 8.8. Savings Clause.
If this Article or any portion hereof shall be
invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless
indemnify each director, officer, employee and agent of the
Corporation as to costs, charges and expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to
the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the
fullest extent permitted by applicable law.
ARTICLE IX
AMENDMENTS
The Board of Directors is expressly empowered to adopt,
amend, alter or repeal Bylaws of the Corporation, subject to
the right of the stockholders to adopt, amend, alter or repeal
the Bylaws of the Corporation. Any adoption, amendment or
repeal of Bylaws of the Corporation by the Board of Directors
shall require the approval of a majority of the total number
of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time
any resolution providing for adoption, amendment or repeal is
presented to the Board). The stockholders shall also have
power to adopt, amend, alter or repeal the Bylaws of the
Corporation.
EXHIBIT 10.17
The transactions contemplated in this Lease Agreement have been
made possible by the following banks, acting in the capacities
indicated:
Banque Nationale de Paris ABN Amro Bank N.V.,
as Administrative/Documentation as Syndication Agent and
Agent and Arranger Co-Arranger
$83,600,000
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
AS LANDLORD
AND
3COM CORPORATION,
AS TENANT
EFFECTIVE AS OF JULY 25, 1997
(Pal Site - Phase III)
This Lease Agreement amends, restates and replaces the Lease Agreement
between the Landlord and Tenant dated June 12, 1997, covering the Land
(as described in Exhibit A attached hereto).
TABLE OF CONTENTS
1. Definitions
(a) Active Negligence
(b) Additional Rent
(c) Administrative Fee
(d) Advance Date
(e) Affiliate
(f) Applicable Laws
(g) Applicable Purchaser
(h) Approved Participants
(i) Attorneys' Fees
(j) Base Rent
(k) Base Rent Date
(l) Breakage Costs
(m) Business Day
(n) Capital Adequacy Charges
(o) Carrying Costs
(p) Carrying Costs Accrual Termination Date
(q) Cash Collateral
(r) Certificate of Deposit Collateral Percentage
(s) Closing Costs
(t) Change of Control Event
(u) Code
(v) Collateral
(w) Commitment Fee
(x) Completion Deadline
(y) Completion Notice
(z) Construction Advances
(aa) Construction Allowance
(ab) Construction Documents
(ac) Construction Periods
(ac) Custodial Agreement
(ad) Debt
(ae) Default
(af) Default Rate
(ag) Defaulting Participant
(ah) Designated Improvements
(ai) Designated Sale Date
(aj) Effective Rate
(ak) Environmental Indemnity
(al) Environmental Laws
(am) Environmental Losses
(an) Environmental Report
(ao) ERISA
(ap) ERISA Affiliate
(aq) ERISA Termination Event
(ar) Escrowed Proceeds
(as) Eurocurrency Liabilities
(at) Eurodollar Rate Reserve Percentage
(au) Event of Default
(av) Excluded Taxes
(aw) Fair Market Value
(ax) Fed Funds Rate
(ay) Funding Advances
(az) GAAP
(ba) Hazardous Substance
(bb) Hazardous Substance Activity
(bc) Impositions
(bd) Improvements
(be) Indemnified Party
(bf) Initial Investment
(bg) Landlord's Parent
(bh) Last Advance Date
(bi) LIBOR
(bj) LIBOR Period Election
(bk) Lien
(bl) Losses
(bm) Maximum Construction Allowance
(bn) Notice of Last Advance
(bo) Ordinary Negligence
(bp) Outstanding Construction Allowance
(bq) Participant
(br) Participation Agreement
(bs) Period
(bt) Permitted Encumbrances
(bu) Permitted Hazardous Substance Use
(bv) Permitted Hazardous Substances
(bw) Permitted Transfer
(bx) Person
(by) Plan
(bz) Pledge Agreement
(ca) Prime Rate
(cb) Purchase Agreement
(cc) Purchase Documents
(cd) Purchase Price
(ce) Qualified Payments
(cf) Qualifying Security Interest
(cg) Remaining Proceeds
(ch) Rent
(ci) Responsible Financial Officer
(cj) Scope Change
(ck) Securities Collateral
(cl) Securities Collateral Percentage
(cm) Spread
(cn) Stipulated Loss Value
(co) Subsidiary
(cp) Tenant's Knowledge
(cq) Term
(cr) Unfunded Benefit Liabilities
(cs) Upfront Fee
(ct) Voluntary Minimum Pledge Commitment
(cu) Other Terms and References
2. Term
3. Rental
(a) Base Rent
(b) Upfront Fee
(c) Commitment Fees
(d) Administrative Agency Fees
(e) Additional Rent
(f) Interest and Order of Application
(g) Net Lease
(h) No Demand or Setoff
(i) Overdrawn Allowance
4. Insurance and Condemnation Proceeds
5. No Lease Termination
(a) Status of Lease
(b) Waiver By Tenant
6. Construction Allowance
(a) Advances; Outstanding Construction Allowance
(b) Designated Improvements
(i) Responsibility for Construction.
(ii) Scope Changes.
(iii) Value Added.
(iv) Estoppel Letters Required.
(v) Advances Not a Waiver.
(c) Conditions to Construction Advances
(i) Prior Notice
(ii) Amount of the Advances
(iii) Insurance
a) Title Insurance
b) Builder's Risk Insurance
(iv) Progress of Construction
(v) Evidence of Costs to be Reimbursed
(vi) No Event of Default or Change of Control Event
(vii) No Sale of Landlord's Interest
(viii) Certificate of No Default
(ix) Removal of Open Space Restrictions
(x) Payments by Approved Participants
(d) Completion Notice
7. Purchase Documents and Environmental Indemnity
8. Use and Condition of Leased Property
(a) Use
(b) Condition
(c) Consideration of and Scope of Waiver
9. Other Representations, Warranties and Covenants of Tenant
(a) Financial Matters
(b) Existing Contract
(c) No Default or Violation
(d) Compliance with Covenants and Laws
(e) Environmental Representations
(f) No Suits
(g) Condition of Property
(h) Organization
(i) Enforceability
(j) Not a Foreign Person
(k) Omissions
(l) Existence
(m) Tenant Taxes
(n) Operation of Property
(o) Debts for Construction
(p) Impositions
(q) Repair, Maintenance, Alterations and Additions
(r) Insurance and Casualty
(s) Condemnation
(t) Protection and Defense of Title
(u) No Liens on the Leased Property
(v) Books and Records
(w) Financial Statements; Required Notices;
Certificates as to Default
(x) Further Assurances
(y) Fees and Expenses; General Indemnification;
Increased Costs; and Capital Adequacy Charges
(z) Liability Insurance
(aa) Permitted Encumbrances
(ab) Environmental
(ac) Affirmative Financial Covenants
(ad) Negative Covenants
(i) Liens
(ii) Transactions with Affiliates
(iii) Mergers; Sales of Assets
(v) Change of Business
(ae) ERISA
10. Representations, Warranties and Covenants of Landlord
(a) Title Claims By, Through or Under Landlord
(b) Actions Required of the Title Holder
(c) No Default or Violation
(d) No Suits
(e) Organization
(f) Enforceability
(g) Existence
(h) Not a Foreign Person
11. Assignment and Subletting
(a) Consent Required
(b) Standard for Landlord's Consent to Assignments
and Certain Other Matters
(c) Consent Not a Waiver
(d) Landlord's Assignment
12. Environmental Indemnification
(a) Indemnity
(b) Assumption of Defense
(c) Notice of Environmental Losses
(d) Rights Cumulative
(e) Survival of the Indemnity
13. Landlord's Right of Access
14. Events of Default
(a) Definition of Event of Default
(b) Remedies
(c) Enforceability
(d) Remedies Cumulative
(e) Waiver by Tenant
(f) No Implied Waiver
15. Default by Landlord
16. Quiet Enjoyment
17. Surrender Upon Termination
18. Holding Over by Tenant
19. Miscellaneous
(a) Notices
(b) Severability
(c) No Merger
(d) NO IMPLIED REPRESENTATIONS BY LANDLORD
(e) Entire Agreement
(f) Binding Effect
(g) Time is of the Essence
(h) Termination of Prior Rights
(i) Governing Law
(j) Waiver of a Jury Trial
(k) Not a Partnership, Etc
(l) Tax Reporting
Exhibits and Schedules
Exhibit A Legal Description
Exhibit B Encumbrance List
Exhibit C Permitted Hazardous Substances
Exhibit D Resolution of Disputed Insurance Claims
Exhibit E Covenant Compliance Certificate
Exhibit F Certificate Setting Forth the Calculation of the Spread
Exhibit G List of Environmental Reports
Exhibit H Information Concerning Designated Improvements
Exhibit I Contractor's Estoppel Letter
Exhibit J Architect's Estoppel Letter
Exhibit K Draw Request Forms
Exhibit L Notice to Accelerate the Carrying Costs Accrual
Termination Date
Exhibit M Notice of Libor Period Election
Schedule 1 List of Approved Participants
LEASE AGREEMENT
This LEASE AGREEMENT (hereinafter called this "Lease"),
made to be effective as of July 25, 1997 (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 Delaware corporation (hereinafter called
"Tenant");
W I T N E S E T H T H A T:
WHEREAS, pursuant to an Offer to Purchase Real Property
and Agreement for the Sale of Real Property Located in the City
of Santa Clara dated as of April 19, 1996 (as amended,
hereinafter called the "Existing Contract") between Tenant and
the City of Santa Clara, California, a chartered municipal
corporation (hereinafter called "Seller"), concerning the land
described in Exhibit A attached hereto (hereinafter called the
"Land") and the improvements on such Land, if any, Landlord
acquired the Land and improvements (if any) from Seller
contemporaneously with the execution of the Original Lease
(hereinafter defined);
WHEREAS, Tenant assigned its rights under the Existing
Contract to Landlord on or about June 12, 1997; Landlord
acquired the Land on or about June 12, 1997; and Landlord
leased the Land and any improvements thereon to Tenant pursuant
to a Lease Agreement between Landlord and Tenant dated as of
June 12, 1997 (as supplemented or amended to the date hereof,
the "Original Lease");
WHEREAS, by this Lease Landlord and Tenant desire to
amend, restate and replace the Original Lease;
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 and Tenant hereby amend and
restate the Original Lease in its entirety, and Landlord does
hereby LEASE, DEMISE and LET unto Tenant for the term
hereinafter set forth the Land, together with:
(i) Landlord's interest in any and all buildings and
improvements now existing 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");
(ii) 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;
(iii) 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 (i) through
(iii) 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 assignable interests or rights in, to or under
the following that have been transferred to Landlord by Seller
under the Existing Contract: (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 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:
1. Definitions. As used herein, the terms "Lease,"
"Landlord," "Tenant," "Existing Contract," "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:
(a) 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 Documents.
(b) Additional Rent. "Additional Rent" shall have the meaning
assigned to it in subparagraph 3.(e) below.
(c) Administrative Fee. "Administrative Fee" shall have the
meaning assigned to it in subparagraph 3.(d) below.
(d) 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, 1997 and continuing regularly thereafter to and
including the Carrying Costs Accrual Termination Date;
provided, that if the Carrying Costs Accrual Termination Date
occurs before the Last Advance Date (as defined below), then
after the Carrying Costs Accrual Termination Date each Base
Rent Date upon which commences a new Base Rent Period (and only
such Base Rent Dates) through and including the Last Advance
Date shall also constitute an "Advance Date" hereunder. In any
event, no Advance Date shall occur after the Last Advance Date.
(e) Affiliate. "Affiliate" of any Person means any other
Person controlling, controlled by or under common control with
such Person. For purposes of this definition, the term
"control" when used with respect to any Person means the power
to direct the management of policies of such Person, directly
or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
(f) Applicable Laws. "Applicable Laws" shall have the meaning
assigned to it in subparagraph 9.(d) below.
(g) 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.
(h) Approved Participants. "Approved Participants" means (1)
the existing Participants and prospective participants listed
on Schedule 1 attached hereto; and (2) any other party which
Tenant shall have approved as a Participant, which approval
shall not be unreasonably withheld for any party that Landlord
proposes as a new Participant to replace, in whole or in part,
an Approved Participant under the Participation Agreement and
the Pledge Agreement; provided, the party proposed by Landlord
as a new Participant is a commercial bank operating in the
United States of America having capital and surplus in excess
of $500,000,000 or an Affiliate of such a bank; and, provided
further, the replacement will not reduce the aggregate
Percentages of Landlord and Landlord's Parent under and as
defined in the Participation Agreement below the minimum
percentage specified in paragraph 14.2 of the Participation
Agreement.
(i) 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.
(j) Base Rent. "Base Rent" means the rent payable by Tenant
pursuant to subparagraph 3.(a) below.
(k) Base Rent Date. "Base Rent Date" means a date upon which
Base Rent must be paid under the Lease, all of which dates
shall be the first Business Day of a calendar month. The first
Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one
month is in effect on the Carrying Costs Accrual
Termination Date, then the first Business Day of the
first calendar month following the Carrying Costs
Accrual Termination Date shall be the first Base Rent
Date.
b) If a LIBOR Period Election of two
months is in effect on the Carrying Costs Accrual
Termination Date, then the first Business Day of the
second calendar month following the Carrying Costs
Accrual Termination Date shall be the first Base Rent
Date.
c) If the LIBOR Period Election in
effect on the Carrying Costs Accrual Termination Date
is three months or six months, then the first
Business Day of the third calendar month following
the Carrying Costs Accrual Termination Date shall be
the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date
shall be the first Business Day of the first, second or third
calendar month following the calendar month which includes the
preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one
month is in effect on a Base Rent Date, then the
first Business Day of the first calendar month
following such Base Rent Date shall be the next
following Base Rent Date.
(2) If a LIBOR Period Election of two
months is in effect on a Base Rent Date, then the
first Business Day of the second calendar month
following such Base Rent Date shall be the next
following Base Rent Date.
(3) If a LIBOR Period Election of
three months or six months is in effect on a Base
Rent Date, then the first Business Day of the third
calendar month following such Base Rent Date shall be
the next following Base Rent Date.
Thus, for example, if the Carrying Costs Accrual Termination
Date falls on the first Business Day of June, 1999 and a LIBOR
Period Election of six months commences on the Carrying Costs
Accrual Termination Date, then the first Base Rent Date shall
be the first Business Day of September, 1999, and the second
Base Rent Date shall be the first Business Day of December,
1999.
"Base Rent Period" means a period for which Base Rent must
be paid under the Lease, each of which periods shall correspond
to the LIBOR Period Election for such period. The first Base
Rent Period shall begin on and include the Carrying Costs
Accrual Termination Date, and each successive Base Rent Period
shall begin on and include the Base Rent Date upon which the
preceding Base Rent Period ends. Each Base Rent Period,
including the first Base Rent Period, shall end on but not
include the first or second Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
(1) If the LIBOR Period Election for
a Base Rent Period is one month, two months or three
months, then such Base Rent Period shall end on the
first Base Rent Date after the Base Rent Date upon
which such period began.
(2) If the LIBOR Period Election for
a Base Rent Period is six months, then such Base Rent
Period shall end on the second Base Rent Date after
the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by
two examples:
1) If Tenant makes a LIBOR Period
Election of three months for a hypothetical Base Rent
Period beginning on the first Business Day in
January, 2000, then such Base Rent Period will end on
but not include the first Base Rent Date after it
begins; that is, such Base Rent Period will end on
the first Business Day in April, 2000, the third
calendar month after January, 2000.
2) If, however, Tenant makes a LIBOR
Period Election of six months for the hypothetical
Base Rent Period beginning the first Business Day in
January, 2000, then such Base Rent Period will end on
but not include the second Base Rent Date after it
begins; that is, the first Business Day in July,
2000.
(l) Breakage Costs. "Breakage Costs" means any and all costs,
losses or expenses incurred or sustained by Landlord's Parent
or any other Participant, for which Landlord's Parent or the
other 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 2 or
any sale of the Leased Property pursuant to the Purchase
Agreement, if such termination or sale is effective as of any
day other than a Base Rent Date. Breakage Costs will include
losses attributable to any decline in LIBOR as of the effective
date of termination or sale as compared to LIBOR used to
determine the Effective Rate then in effect. (However, if
Landlord's Parent or another 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 for the account of Landlord's Parent or the applicable
Participant under this Lease.) Each determination by
Landlord's Parent of Breakage Costs shall, in the absence of
clear and demonstrable error, be conclusive and binding upon
Landlord and Tenant.
(m) 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).
(n) Capital Adequacy Charges. "Capital Adequacy Charges"
means any additional amounts Landlord's Parent or any other
Participant requires Landlord to pay as compensation for an
increase in required capital as provided in subparagraph
9.(y)(iv).
(o) Carrying Costs. "Carrying Costs" means the charges added
to and made a part of the Outstanding Construction Allowance
from time to time on and before the Carrying Costs Accrual
Termination Date pursuant to and as more particularly described
in subparagraph 6.(a)(ii) below.
(p) Carrying Costs Accrual Termination Date. "Carrying Costs
Accrual Termination Date" means the earlier of (1) the Last
Advance Date or (2) the first Advance Date that occurs at least
ten (10) days after Landlord has received a notice from Tenant,
in the form of Exhibit L attached hereto, stating that Tenant
irrevocably elects to accelerate the Carrying Costs Accrual
Termination Date and thereby accelerate the commencement of
Base Rent accruals and the termination of accruals of Carrying
Costs. It is understood that Tenant may, but shall not be
required, to give such a notice at any time.
(q) Cash Collateral. "Cash Collateral" shall have the meaning
assigned to it in the Pledge Agreement.
(r) Certificate of Deposit Collateral Percentage.
"Certificate of Deposit Collateral Percentage" for each Period
means the Certificate of Deposit Collateral Percentage for such
Period (as defined in and determined in accordance with the
Pledge Agreement); provided, however, for purposes of this
Lease, the Certificate of Deposit Collateral Percentage for any
Period shall not exceed a fraction, the numerator of which
fraction shall equal the Value (as defined in and determined in
accordance with the Pledge Agreement) of all Cash Collateral
that is, on the first day of such Period, held by the Deposit
Takers under (and as defined in) the Pledge Agreement, subject
to a Qualifying Security Interest and free from claims or
security interests held or asserted by any third party, and the
denominator of which fraction shall equal the Stipulated Loss
Value on the first day of such 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).
(s) Closing Costs. "Closing Costs" means an amount requested
by Tenant, not to exceed $200,000, advanced by or on behalf of
Landlord on the effective date of this Lease to pay on behalf
of Tenant (i) the Upfront Fee, (ii) "Base Rent" and "Breakage
Costs" which have accrued and are due under (and as are defined
in) the Original Lease, and (iii) expenses incurred in
connection with the preparation and negotiation of this Lease,
the Purchase Documents, the Environmental Indemnity, the
Participation Agreement and related documents. To the extent
that Landlord does not itself apply funds advanced as provided
in this definition, the remainder thereof will be advanced to
Tenant, with the expectation that Tenant shall use any such
amount advanced for one or more of the following purposes: (1)
the payment of the Upfront Fee and expenses incurred in
connection with the preparation and negotiation of this Lease,
the Purchase Documents, the Environmental Indemnity, the
Participation Agreement and related documents; (2) the payment
or reimbursement of other expenses incurred by Tenant in
connection with any improvements Tenant may elect to make to
the Leased Property in accordance with the requirements and
limitations imposed by this Lease, including the planning,
design, engineering and permitting of thereof; (3) the
maintenance of the Leased Property; or (4) the payment of Rents
next due. The advance described in this definition shall
constitute part of the Initial Investment, and the amount
thereof may be confirmed by Landlord and Tenant in a separate
closing certificate.
(t) 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 subparagraph
9.(ad)(iii).
(u) Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(v) Collateral. "Collateral" shall have the meaning assigned
to it in the Pledge Agreement.
(w) Commitment Fee. "Commitment Fee" shall have the meaning
assigned to it in subparagraph 3.(c) below.
(x) Completion Deadline. "Completion Deadline" means the
first Business Day in August, 1999.
(y) Completion Notice. "Completion Notice" shall have the
meaning assigned to it in subparagraph 6.(d) below.
(z) Construction Advances. "Construction Advances" means
actual advances of funds made by or on behalf of Landlord
pursuant to Paragraph 6.(a)(i) below for costs incurred to
construct the Designated Improvements or for property taxes and
assessments assessed against the Leased Property paid prior to
the Last Advance Date.
(aa) 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 Designated Improvements as more
particularly described in Paragraph 6 below.
(ab) 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 Designated
Improvements.
(ac) Construction Periods. The first "Construction
Period" shall be the 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 Carrying Costs Accrual Termination Date, which
shall be coterminous with Base Rent Periods) 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.
(ac) 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.
(ad) 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 of such Person, contingent
or otherwise, under any lease of real property or related
documents (including a separate purchase agreement) which
provide that such Person must purchase or cause another to
purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to
the lessor; (vi) 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 (v) above, (vii) 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 (viii) Unfunded Benefit Liabilities.
(ae) 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.
(af) 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.
(ag) Defaulting Participant. "Defaulting Participant" means
any Approved Participant that shall have breached the
Participation Agreement 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 the Participation Agreement, 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.)
(ah) Designated Improvements. "Designated 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 as described in
Paragraph 6 below.
(ai) Designated Sale Date. "Designated Sale Date" shall have
the meaning assigned to it in the Purchase Agreement.
(aj) Effective Rate. "Effective Rate" means, for each Period,
the per annum rate determined by dividing (A) LIBOR for such
Period, by (B) 100% minus the Eurodollar Rate Reserve
Percentage for such Period; provided, however, for each day
during the short first Construction Period ending on August 1,
1997, the Effective Rate will equal the per annum rate which is
fifty basis points (50/100 of 1%) above the Fed Funds Rate on
that day.
If LIBOR or the Eurodollar Rate Reserve Percentage changes from
Period to Period, then the Effective Rate shall be
automatically increased or decreased, as the case may be, as of
the date of the change from Period to Period. If for any
reason Landlord's Parent determines that it is impossible or
unreasonably difficult to determine the Effective Rate with
respect to a given Period in accordance with the preceding
sentences, then the "Effective Rate" for that Period shall
equal any published index or per annum interest rate determined
reasonably and in good faith by Landlord's Parent to be a
comparable rate 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 Parent's comparison of
past eurodollar market rates to past yields on such Treasury
obligations. Any determination by Landlord's Parent of the
Effective Rate hereunder shall, in the absence of clear and
demonstrable error, be conclusive and binding.
(ak) 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.
(al) 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").
(am) 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 1.(am), 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.
(an) Environmental Report. "Environmental Report" means,
collectively, the reports listed on Exhibit G attached hereto.
(ao) 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.
(ap) 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.
(aq) ERISA Termination Event. "ERISA Termination Event" means
(i) the occurrence with respect to any Plan of a) a reportable
event described in Sections 4043(b)(5) or (6) of ERISA or b)
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 (ii) 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 (iii) 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 (iv) the
institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or
(v) 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.
(ar) 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 4 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 Rent 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 4 below or applied as a Qualified Payment
or as reimbursement for costs incurred in connection with a
Qualified Payment, Landlord shall keep the same deposited in an
interest bearing account, and all interest earned on such
account shall be added to and made a part of Escrowed Proceeds.
(as) 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.
(at) Eurodollar Rate Reserve Percentage. "Eurodollar Rate
Reserve Percentage" means, for purposes of determining the
Effective Rate for any Period, the reserve percentage
applicable two Business Days before the first day of such
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 period.
(au) Event of Default. "Event of Default" shall have the
meaning assigned to it in subparagraph 14.(a) below.
(av) Excluded Taxes. "Excluded Taxes" shall mean (1) all
federal, state and local income taxes upon the Base Rent, the
Upfront Fee, the Commitment Fee, Administrative Fees and any
interest paid to Landlord pursuant to subparagraph 3.(f), (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 this Lease, the
Purchase Documents, or the Leased Property, but excluding any
such taxes assessed because of any Permitted Transfer.
(aw) Fair Market Value. "Fair Market Value" shall have the
meaning assigned to it in the Purchase Agreement.
(ax) 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 Parent from three Federal funds brokers of
recognized standing selected by Landlord's Parent. All
determinations of the Fed Funds Rate by Landlord's Parent
shall, in the absence of clear and demonstrable error, be
binding and conclusive upon Landlord and Tenant.
(ay) Funding Advances. "Funding Advances" means (1) advances
(equal in the aggregate to the Initial Investment) made on or
prior to the date hereof by Landlord's Parent and other
Participants to or on behalf of Landlord to permit Landlord to
acquire or maintain its investment in the Leased Property and
to allow Landlord to provide the advance described in the
definition of Closing Costs in subparagraph 1.(s), (2) future
advances (which, together with the Funding Advances described
in the preceding clauses (1), are expected to total
$83,600,000) made by Landlord's Parent or any Participant to or
on behalf of Landlord to allow Landlord to provide Construction
Advances hereunder and to cover Carrying Costs, and (3) future
advances made by Landlord's Parent or any Participant to or on
behalf of Landlord in replacement of or renewal and extension
of other Funding Advances. For example, if after the date
hereof a new Participant advances funds on behalf of Landlord
to Landlord's Parent or another then existing Participant in
repayment of all or part of Funding Advances previously made by
Landlord's Parent or the other Participant, such advance of
funds by the new Participant shall constitute a Funding Advance
hereunder, and the prior Funding Advances so repaid to
Landlord's Parent or the other Participant shall thereupon
cease to constitute Funding Advances for purposes of this
Lease.
(az) 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 9.(w) (except for changes concurred in by Tenant's
independent public accountants).
(ba) 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.
(bb) 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.
(bc) Impositions. "Impositions" shall have the meaning
assigned to it in subparagraph 9.(p) below.
(bd) 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.
(be) 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 through or under
an assignment from Landlord that does not constitute a
Permitted Transfer), (2) the Participants, and (3) any
Affiliate, officer, agent, director, employee or servant of any
of the parties described in clause (1) or (2) preceding.
(bf) Initial Investment. "Initial Investment" means
$10,200,000, being equal to the $10,000,000 "Stipulated Loss
Value" under and as defined in the Original Lease, plus the
advance described in the definition of Closing Costs in
subparagraph 1.(s) above.
(bg) Landlord's Parent. "Landlord's Parent" 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 Funding Advances, and
any successors of such bank and such Affiliates.
(bh) Last Advance Date. "Last Advance Date" means the earlier
of (1) the Completion Deadline (or - if the Completion Deadline
is not an Advance Date, which could occur if Tenant exercises
its rights hereunder to accelerate the Carrying Costs Accrual
Termination Date and to thereafter designate a LIBOR Period
Election of more than one month - then the latest Advance Date
prior to the Completion Deadline), (2) the first Advance Date
that occurs at least ten (10) days after Landlord has received
a Completion Notice or a Notice of Last Advance, or (3) the
Designated Sale Date.
(bi) LIBOR. "LIBOR" means, for purposes of determining the
Effective Rate for each Period, the rate determined by
Landlord's Parent 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 Parent in the London interbank market at
approximately 11:00 a.m. (London time) on the second Business
Day preceding the first day of such period. Landlord shall
instruct Landlord's Parent 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 Period, (ii) in an amount equal or comparable to the
total (projected on the applicable date of determination by
Landlord's Parent) Stipulated Loss Value on the first day of
such Period, and (iii) for a period of time equal or comparable
to the appropriate Period. If Landlord's Parent 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 Parent determines that it is impossible or
unreasonably difficult to determine LIBOR with respect to a
given Period in accordance with the preceding sentences, or if
Landlord's Parent shall determine that it is unlawful (or any
central bank or governmental authority shall assert that it is
unlawful) for Landlord, Landlord's Parent or any other
Participant to provide or maintain any Funding Advances
hereunder during any Period for which Base Rent is computed by
reference to LIBOR, then "LIBOR" for that 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 Parent shall, in the absence of clear and
demonstrable error, be binding and conclusive upon Landlord and
Tenant.
(bj) LIBOR Period Election. "LIBOR Period Election" for any
Base Rent Period means a period of one month, two months, three
months or six months as designated by Tenant at least ten
Business Days prior to the commencement of such Base Rent
Period by a notice given to Landlord in the form of Exhibit M
attached to this Lease. (For purposes of this Lease a LIBOR
Period Election for any Base Rent Period shall also be
considered the LIBOR Period Election in effect on (1) the date
[whether the Carrying Costs Accrual Termination Date or a Base
Rent Date] upon which such Base Rent Period begins and (2)
subsequent Base Rent Dates, if any, which occur before the date
upon which such Base Rent Period ends.) Any LIBOR Period
Election shall remain in effect not only for the entire first
Base Rent Period for which it is designated or becomes
effective, but also for subsequent Base Rent Periods until a
new designation by Tenant becomes effective in accordance with
the provisions set forth in this definition. Notwithstanding
the foregoing, however: (1) any LIBOR Period Election that
would cause a Base Rent Period to extend beyond the end of the
scheduled Term will be shortened as necessary to cause such
Base Rent Period to end when the scheduled Term ends; (2)
changes in the LIBOR Period Election shall become effective
only upon the commencement of a new Base Rent Period; (3) until
such time as Tenant designates another LIBOR Period Election
consistent with the foregoing requirements, Tenant will be
considered to have designated a LIBOR Period Election of one
month; and (4) if an Event of Default shall have occurred and
be continuing on the third Business Day preceding the
commencement of any Base Rent Period, the LIBOR Period Election
for such Base Rent Period shall be one month.
(bk) 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.
(bl) 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.
(bm) Maximum Construction Allowance. "Maximum Construction
Allowance" means $83,600,000, minus the Initial Investment.
(bn) 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.
(bo) 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.
(bp) Outstanding Construction Allowance. "Outstanding
Construction Allowance" means at any time the amount equal to
(1) the total Construction Advances made by Landlord, PLUS (2)
all Carrying Costs added to the Outstanding Construction
Allowance under subparagraph 6.(a)(ii) on or prior to the date
in question, LESS (3) the amount (if any) of Qualified Payments
paid to Landlord and applied to the Outstanding Construction
Allowance on or prior to such date, and LESS (4) any payments
previously made by Tenant to Landlord pursuant to
subparagraph 3.(i).
(bq) Participant. "Participant" means any Person, including
Landlord's Parent, 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 Documents.
As of the effective date hereof, the only Participants are
those which have executed the Participation Agreement, but such
Participants and Landlord may agree to share in risks and
rewards of this Lease and the Purchase Documents with other
Participants in the future. However, no Person other than
Landlord's Parent and the Approved Participants shall qualify
as a Participant for purposes of this Lease, the Purchase
Documents or any other agreement to which Tenant is a party
unless, with Tenant's prior written approval or when an Event
of Default had occurred and was continuing, such Person became
a party to the Pledge Agreement and to the Participation
Agreement by executing supplements to those agreements as
contemplated therein.
(br) Participation Agreement. "Participation Agreement" means
the Participation Agreement dated the date hereof among
Landlord, Landlord's Parent, and the Participants named
therein, pursuant to which Landlord's Parent and such
Participants have agreed to participate in certain risks and
rewards to Landlord of this Lease and the Purchase Agreement,
as such Participation Agreement may be extended, supplemented,
amended, restated or otherwise modified from time to time in
accordance with its terms.
(bs) Period. "Period" means a Construction Period or a Base
Rent Period, as the context requires.
(bt) 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 (but not any deed of trust, mortgage or
other agreement given to secure the repayment of borrowed
funds), 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.
(bu) 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 Improvements permitted by this Lease and
for the operation of the Leased Property for the purposes
expressly permitted under subparagraph 8.(a); 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.
(bv) Permitted Hazardous Substances. "Permitted Hazardous
Substances" means Hazardous Substances used and reasonably
required for Tenant's operation of the Leased Property for the
purposes expressly permitted by subparagraph 8.(a) 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 C attached hereto.
(bw) Permitted Transfer. "Permitted Transfer" means any one or
more of the following: (1) the creation or conveyance of
rights and interests under the Participation Agreement in favor
of Landlord's Parent or Participants; (2) subject to the last
sentence of subparagraph 11.(d), any 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 Documents 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 Sale Date.
(bx) 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.
(by) 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.
(bz) Pledge Agreement. "Pledge Agreement" means the Pledge
Agreement dated as of the date hereof between Landlord and
Tenant, pursuant to which Tenant may pledge certificates of
deposit and/or securities as security for Tenant's obligations
under the Purchase Agreement (and for the corresponding
obligations of Landlord to the Participants under the
Participation Agreement), as such Pledge Agreement may be
extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
(ca) Prime Rate. "Prime Rate" means the prime interest
rate or equivalent charged by Landlord's Parent in the United
States as announced or published by Landlord's Parent from time
to time, which need not be the lowest interest rate charged by
Landlord's Parent. If for any reason Landlord's Parent does
not announce or publish a prime rate or equivalent, the prime
rate or equivalent announced or published by ABN AMRO Bank N.V.
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.
(cb) 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 in accordance with its terms.
(cc) Purchase Documents. "Purchase Documents" means
collectively the Purchase Agreement, the Pledge Agreement, and
the Custodial Agreement.
(cd) Purchase Price. "Purchase Price" shall have the
meaning assigned to it in the Purchase Agreement.
(ce) 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 Rent 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 Rent 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 Rent Date
in accordance with Paragraph 4 below. (Landlord shall have no
obligation to readvance any portion of the Outstanding
Construction Allowance reduced by Qualified Payments.)
(cf) Qualifying Security Interest. "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 risk weighting of no more
than twenty percent to a portion of their collective investment
in the Leased Property equal to the Value (as defined in and
determined in accordance with the Pledge Agreement) of the
Collateral encumbered by such an interest.
(cg) Remaining Proceeds. "Remaining Proceeds" shall have
the meaning assigned to it in subparagraph 4.(a)(ii).
(ch) Rent. "Rent" means the Base Rent and all Additional
Rent.
(ci) Responsible Financial Officer. "Responsible
Financial Officer" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of Tenant.
(cj) Scope Change. A "Scope Change" means a material
addition to, deletion from or other modification to the
quality, function or capacity of the Designated Improvements as
delineated in Exhibit H 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 shall mean any change that (a)
is reasonably likely to substantially reduce the fair market
value of the Leased Property (after completion of the
Designated Improvements), or (b) will change the general
character of the Designated Improvements from that described in
Exhibit H.
(ck) Securities Collateral. "Securities Collateral" shall
have the meaning assigned to it in the Pledge Agreement.
(cl) Securities Collateral Percentage. "Securities
Collateral Percentage" for each Period means the Securities
Collateral Percentage for such Period (as defined in and
determined in accordance with the Pledge Agreement); provided,
however, for purposes of this Lease, the Securities Collateral
Percentage:
(i) for any Period ending on or prior to the Last Advance
Date shall be zero; and
(ii) for any Period ending after the Last Advance Date
shall not exceed the lesser of
(A) one minus the Certificate of
Deposit Collateral Percentage for such Period, or
(B) a fraction, the numerator of which
fraction shall equal the Value (as defined below) of
all Securities Collateral that is, on the first day
of such Period, held by the Custodian under the
Custodial Agreement, subject to a Qualifying Security
Interest and free from claims or security interests
held or asserted by any third party, and the
denominator of which fraction shall equal the
Stipulated Loss Value on the first day of such Period
(computed after the subtraction of any Qualified
Payments applied on such first day). "Value" means,
for purposes of determining the Securities Collateral
Percentage under this definition for each Period, the
Value (as defined in and determined in accordance
with the Pledge Agreement) on the Valuation Date (as
defined in the Custodial Agreement) upon which such
Period commences or, if such Period does not commence
upon a Valuation Date, on the most recent Valuation
Date prior to the commencement of such Period.
(cm) Spread. The "Spread" on any date will depend upon a
computation involving (a) the rating by Standard and Poor's
Corporation (the "S&P Rating") or the rating by Moody's
Investor Service, Inc. (the "Moody's Ratings"), whichever
rating is higher, of Tenant's senior, unsecured debt on that
date (whether such ratings are express or published, implied
ratings), and (b) the Debt to Capital Ratio (as defined below)
on that date, such computation to be as follows:
(i) If (1) there is no S&P Rating for the senior,
unsecured debt of Tenant (express or published, implied)
or the S&P Rating is below BBB-, AND (2) there is no
Moody's Rating for senior, unsecured debt of Tenant
(express or published, implied) or the Moody's Rating is
below Baa3, AND (3) the Debt to Capital Ratio is greater
than 0.30, then the Spread will be sixty basis points
(.600%).
(ii) If (1) the S&P Rating is BBB-, OR (2) the Moody's
Rating is Baa3, OR (3) the Debt to Capital Ratio is equal
to or less than 0.30 and more than 0.15, and if Tenant
does not qualify for a lower Spread pursuant to clause
(iii), (iv) or (v) below, then the Spread will be forty-
five basis points (.450%).
(iii) If (1) the S&P Rating is BBB, OR (2) the Moody's
Rating is Baa2, OR (3) the Debt to Capital Ratio is equal
to or less than 0.15, and if Tenant does not qualify for a
lower Spread pursuant to clause (iv) or (v) below, then
the Spread will be thirty-seven and one-half basis points
(.375%).
(iv) If (1) the S&P Rating is BBB+, OR (2) the Moody's
Rating is Baa1, and if Tenant does not qualify for a lower
Spread pursuant to clause (v) below, then the Spread will
be thirty basis points (.300%).
(v) If (1) the S&P Rating is above BBB+, OR (2) the
Moody's Rating is above Baa1, then the Spread will be
twenty-seven and one-half basis points (.275%).
For purposes of calculating the Spread, "Debt to Capital Ratio"
means the quotient determined by dividing (A) funded Senior
Debt (as defined in subparagraph 9.(ac)(ii)), by (B) the total
Capitalization (as defined in subparagraph 9.(ac)(ii)),
including Subordinated Debt (as defined in subparagraph 9.(ac)(ii)).
The parties believe it improbable that the ratings systems used by
Standard and Poor's Corporation and by Moody's Investor Service,
Inc. will be discontinued or changed, but if such ratings systems
are discontinued or changed, Landlord shall be entitled to select
and use a comparable ratings systems as a substitute for the
S&P Rating or the Moody Rating, as the case may be, for
purposes of determining the Spread. All determinations of the
Spread by Landlord shall, in the absence of clear and
demonstrable error, be binding and conclusive for purposes of
this Lease. Further Landlord may, but shall not be required,
to rely on the determination of the Spread set forth in any
certificate delivered by Tenant pursuant to
subparagraph 9.(w)(iv) below, and no reduction in the Spread
will be effective because of an improvement in the S&P Rating,
the Moody's Rating or the Debt to Capital Ratio before Tenant
has notified Landlord thereof by delivery of such a
certificate.
(cn) Stipulated Loss Value. "Stipulated Loss Value" means
at any time the amount equal to (1) the Initial Investment PLUS
(2) the Outstanding Construction Allowance at such time, LESS
(3) the aggregate amount (if any) of Qualified Payments paid to
Landlord in excess of any Qualified Payments deducted in the
computation of such Outstanding Construction Allowance. Under
no circumstances will any payment of Base Rent, the Upfront
Fee, Commitment Fees or Administrative Fees reduce Stipulated
Loss Value.
(co) 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.
(cp) 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: Alan Groves, Vice President and Corporate
Controller; Christopher B. Paisley, Chief Financial Officer;
Abe Darwish, Vice President of Worldwide Real Estate and Site
Services; and Paul Murray, Director of Worldwide Safety and
Environmental Health. 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.
(cq) Term. "Term" shall have the meaning assigned to it
in Paragraph 2 below.
(cr) 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.
(cs) Upfront Fee. "Upfront Fee" shall have the meaning
assigned to it in subparagraph 3.(b).
(ct) Voluntary Minimum Pledge Commitment. "Voluntary
Minimum Pledge Commitment" means an agreement in form and
substance reasonably satisfactory to Landlord and the other
parties to the Pledge Agreement which Tenant may elect to
execute in connection with a casualty, condemnation or sale in
lieu of condemnation affecting the Leased Property and which
modifies the Pledge Agreement by establishing a Minimum
Collateral Percentage (as defined therein) sufficient to
require Tenant to maintain Collateral under the Pledge
Agreement with a value of no less than the insurance,
condemnation or sale proceeds paid or to be paid because of the
casualty, condemnation or sale in lieu of condemnation until
Tenant has completed any related repairs or restoration
required by this Lease.
(cu) 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. Unless required by the
context in which it is used, the word "or" is not exclusive.
Other capitalized terms are defined in the provisions that
follow.
2. Term. The term of this Lease (herein called the "Term")
shall commence on and include the effective date hereof, and
end at 8:00 A.M. on the first Business Day of August, 2002,
unless extended or sooner terminated as herein provided.
Notwithstanding any other provision of this Lease which may
expressly restrict the early termination hereof, and 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 Sale Date, Tenant may notify Landlord of
Tenant's election to terminate this Lease before the first
Business Day of August, 2002, 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.
The Term may be extended at the option of Tenant for two
successive periods of five (5) years each; provided, however,
that prior to any such extension the following conditions must
have been satisfied: (A) at least one hundred eighty (180) days
prior to the commencement of any such extension, Landlord and
Tenant must have agreed in writing upon, and received the
written consent and approval of Landlord's Parent and all other
Participants to (1) a corresponding extension of the date
specified in clause (iii) of the definition of Designated Sale
Date in the Purchase Agreement, and (2) an adjustment to the
Rent that Tenant will be required to pay for the extension, it
being expected that the Rent for the extension may be different
than the Rent required for the original Term, and it being
understood that the Rent for any extension must in all events
be satisfactory to both Landlord and Tenant, each in its sole
and absolute discretion; (B) there must be no Event of Default
continuing hereunder at the time of Tenant's exercise of its
option to extend; and (C) immediately prior to any such
extension, this Lease must remain in effect. With respect to
the condition that Landlord and Tenant must have agreed upon
the Rent required for any extension of the Term, neither Tenant
nor Landlord is willing to submit itself to a risk of liability
or loss of rights hereunder for being judged unreasonable.
Accordingly, both Tenant and Landlord hereby disclaim any
obligation express or implied to be reasonable in negotiating
the Rent for any such extension. Subject to the changes to the
Rent payable during any extension of the Term as provided in
this Paragraph, if Tenant exercises its option to extend the
Term as provided in this Paragraph, this Lease shall continue
in full force and effect, and the leasehold estate hereby
granted to Tenant shall continue without interruption and
without any loss of priority over other interests in or claims
against the Leased Property that may be created or arise after
the date hereof and before the extension.
3. Rental.
(a) Base Rent. Tenant shall pay Landlord rent (herein called
"Base Rent") in arrears, in currency that at the time of
payment is legal tender for public and private debts in the
United States of America, in installments on each Base Rent
Date through the end of the Term. Each payment of Base Rent
must be received by Landlord no later than 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 Rent
Period (or portion thereof) ending on the date on which the
installment is due. Landlord shall notify Tenant in writing of
the Base Rent due for each Base Rent Period at least fifteen
(15) days prior to the Base Rent 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.
For all Base Rent Periods subject to a LIBOR Period
Election of one month, two months or three months, Base Rent
shall be due in one installment on the Base Rent Date upon
which the Base Rent Period ends. For Base Rent Periods subject
to a LIBOR Period Election of six months, Base Rent shall be
payable in two installments, with the first installment
becoming due on the Base Rent Date that occurs on the first
Business Day of the third calendar month following the
commencement of such Base Rent Period, and with the second
installment becoming due on the Base Rent Date upon which the
Base Rent Period ends. Notwithstanding the foregoing, if
Tenant or any Applicable Purchaser purchases Landlord's
interest in the Property pursuant to the Purchase Agreement,
any accrued unpaid Base Rent and all outstanding Additional
Rent shall be due on the date of purchase in addition to the
purchase price and other sums due Landlord under the Purchase
Agreement.
The Base Rent for each Base Rent Period shall equal the
sum of:
(1) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) one minus the sum of the
Certificate of Deposit Collateral Percentage for such Base
Rent Period and the Securities Collateral Percentage for
such Base Rent Period, times (C) the sum of (i) the
Effective Rate for such Base Rent Period and (ii) the
Spread calculated on the tenth (10th) Business Day prior
to the day upon which such Base Rent Period commences,
times (D) the number of days in such Base Rent Period,
divided by (E) three hundred sixty (360); PLUS
(2) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) the Certificate of
Deposit Collateral Percentage for such Base Rent Period,
times (C) twenty-two and one-half basis points (22.5/100
of 1%), times (D) the number of days in such Base Rent
Period, divided by (E) three hundred sixty (360); PLUS
(3) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) the Securities Collateral
Percentage for such Base Rent Period, times (C) the sum of
(i) the Effective Rate for such Base Rent Period and (ii)
twenty-two and one-half basis points (22.5/100 of 1%),
times (D) the number of days in such Base Rent Period,
divided by (E) three hundred sixty (360).
To ease the administrative burden of this Lease and the
Pledge Agreement, clause (2) in the formula above for
calculating Base Rent reflects a reduction in the Base Rent
equal to the interest that would accrue on any Cash Collateral
required by the Pledge Agreement from time to time if the
Accounts (as defined in the Pledge Agreement) bore interest at
the Effective Rate. Landlord has agreed to such reduction in
the Base Rent to provide Tenant with the economic equivalent of
interest on such Cash Collateral, and in return Tenant has
agreed to the provisions of the Pledge Agreement that excuse
the actual payment of interest on the Accounts. By
incorporating such reduction of Base Rent into the formula
above, and by providing for noninterest bearing Accounts in the
Pledge Agreement, the parties will avoid an unnecessary and
cumbersome periodic exchange of equal payments. It is not,
however, the intent of Landlord or Tenant to understate Base
Rent or interest for financial reporting purposes.
Accordingly, for purposes of determining Tenant's compliance
with the affirmative financial covenants set forth in
subparagraph 9.(ac), and for purposes of any financial reports
that this Lease requires of Tenant from time to time, Tenant
may report Base Rent as if there had been no such reduction and
as if the Cash Collateral from time to time required by the
Pledge Agreement had been maintained in Accounts bearing
interest at the Effective Rate.
Assume, only for the purpose of illustration of the
calculation of Base Rent: that after the Carrying Costs Accrual
Termination Date, a hypothetical Base Rent Period contains
exactly ninety (90) days; that, after taking into account all
Qualified Payments, the Stipulated Loss Value on the first day
of such Base Rent Period is $50,000,000; that the Certificate
of Deposit Collateral Percentage for such Base Rent Period is
twenty percent (20%); that the Securities Collateral Percentage
for such Base Rent Period is thirty percent (30%); that the
Effective Rate for the applicable Base Rent Period is 5.5%; and
that the Spread for the applicable Base Rent Period is 0.5%.
Under such assumptions, the Base Rent for the hypothetical Base
Rent Period will equal:
$50,000,000 x 50% x (5.5% + 0.5%) x 90/360,
or $375,000, PLUS
$50,000,000 x 20% x .225% x 90/360, or
$5,625, PLUS
$50,000,000 x 30% x (5.5% + .225%) x
90/360, or $214,687.5, = $595,312.5
(b) Upfront Fee. Upon execution and delivery of this Lease by
Landlord, Tenant shall pay Landlord an upfront fee (the
"Upfront Fee") as provided in the letter dated July 10, 1997
from Landlord to Tenant, which Tenant executed and returned to
Landlord to indicate (among other things) Tenant's willingness
to proceed with negotiations for this Lease (the "Nonbinding
Term Sheet"). (Tenant shall, however, be entitled to an
appropriate credit against the Upfront Fee for the deposit
already paid by Tenant as provided in the Nonbinding Term
Sheet, as well as a credit equal to the Upfront Fee paid under
and as defined in the Original Lease.) The Upfront Fee shall
represent Additional Rent for the first Base Rent Period.
(c) Commitment Fees. For each Construction Period, Tenant
shall pay Landlord a fee (herein called a "Commitment Fee")
equal to (1) twelve and one-half basis points (12.5/100 of 1%),
times (2) the difference at the end of the first day of such
Construction Period between (A) the 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 under this Lease and all Carrying Costs that
have been added to and made a part of the Outstanding
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 the first
Business Day of February, May, August and November of each
calendar year, beginning with the first Business Day in
November, 1997 and continuing regularly thereafter to and
including the first of such Business Days 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 Sale
Date, such accrued unpaid Commitment Fees shall be due on the
Designated Sale Date.
(d) Administrative Agency Fees. Upon execution and delivery
of this Lease by Landlord, and again on each anniversary of the
date hereof, Tenant shall pay to Landlord an administrative
agency fee (an "Administrative Fee") in the amount equal to one
third of the total per annum administrative agency fees
specified in the Nonbinding Term Sheet. Each Administrative
Fee shall represent Additional Rent for the Construction Period
or Base Rent Period during which it is paid.
(e) 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").
(f) 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.
(g) 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 3.(g), 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.
(h) 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.
(i) Overdrawn Allowance. On any Advance Date on which (1) the
Outstanding Construction Allowance (including any Carrying
Costs added thereto on such Advance Date), plus any Qualified
Payments that have been applied to reduce the Outstanding
Construction Allowance on or prior to such Advance Date, exceed
(2) the Maximum Construction Allowance, Tenant shall pay to
Landlord the amount of such excess. Each payment required by
this subparagraph must be received by Landlord no later than
12:00 noon (San Francisco time) on the Advance 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. Landlord shall notify Tenant in writing of any
payment due pursuant to this subparagraph at least fifteen (15)
days prior to the Advance Date upon which it becomes due. 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. Nothing in this subparagraph shall be construed
to require Landlord to make Construction Advances which could
result in payments required by this subparagraph.
4. Insurance and Condemnation Proceeds.
(a) Subject to Landlord's rights under this Paragraph 4, and
so long as no Event of Default shall have occurred and be
continuing, Tenant shall be entitled to use all casualty
insurance and condemnation proceeds payable with respect to the
Leased Property during the Term for the restoration and repair
of the Leased Property or any remaining portion thereof.
Except as provided in the last sentence of subparagraph 9.(r)
and the last sentence of subparagraph 9.(s), 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 applied as follows:
(i) First, such proceeds shall be used to reimburse
Landlord for any costs and expenses, including Attorneys'
Fees, incurred in connection with the collection of such
proceeds.
(ii) Second, the remainder of such proceeds (the
"Remaining Proceeds"), shall be held by Landlord as
Escrowed Proceeds and applied to reimburse Tenant for the
actual cost of the repair, restoration or replacement of
the Leased Property. However, any Remaining Proceeds not
needed for such purpose shall be applied by Landlord as
Qualified Payments after Tenant notifies Landlord that
they are not needed for repairs, restoration or
replacement.
Notwithstanding the foregoing, 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) apply such proceeds
(net of the deductions described in clause (i) above) as
Qualified Payments.
(b) Any Remaining Proceeds held by Landlord as Escrowed
Proceeds shall be deposited by Landlord in an interest bearing
account as provided in the definition of Escrowed Proceeds and
shall be paid to Tenant upon completion of the applicable
repair, restoration or replacement and upon compliance by
Tenant with such terms, conditions and requirements as may be
reasonably imposed by Landlord, but in no event shall Landlord
be required to pay any Escrowed Proceeds to Tenant in excess of
the actual cost to Tenant of the applicable repair, restoration
or replacement, it being understood that Landlord may retain
any such excess as a Qualified Payment. In any event, Tenant
will not be entitled to any abatement or reduction of the Base
Rent or any other amount due hereunder except to the extent
that such excess Remaining Proceeds result in Qualified
Payments which reduce Stipulated Loss Value (and thus payments
computed on the basis of Stipulated Loss Value) as provided in
the definitions set out above. Further, notwithstanding 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 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 4.
(c) In the event of any taking of all or substantially all of
the Leased Property, Landlord shall be entitled to apply all
Remaining Proceeds as a Qualified Payment, notwithstanding the
foregoing. In addition, if Stipulated Loss Value immediately
prior to any taking of all or substantially all of the Leased
Property by condemnation exceeds the sum of the Remaining
Proceeds resulting from such condemnation, then Landlord shall
be entitled to recover the excess from Tenant upon demand as an
additional Qualified Payment, whereupon this Lease shall
terminate.
(d) Nothing herein contained shall be construed to prevent
Tenant from obtaining 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 2 and purchasing such excess
(which will then be held by Landlord as Escrowed Proceeds),
together with any remaining interest of Landlord in the Leased
Property, pursuant to the Purchase Agreement.
(e) Landlord and Tenant each waive any right of recovery
against the other, and the other's agents, officers or
employees, for any damage to the Leased Property or to the
personal property situated from time to time in or on the
Leased Property resulting from fire or other casualty covered
by a valid and collectible insurance policy; provided, however,
that the waiver set forth in this subparagraph 4.(e) shall be
effective insofar, but only insofar, as compensation for such
damage or loss is actually recovered by the waiving party (net
of costs of collection) under the policy notwithstanding the
waivers set out in this paragraph. Tenant shall cause the
insurance policies required of Tenant by this Lease to be
properly endorsed, if necessary, to prevent any loss of
coverage because of the waivers set forth in this paragraph.
If such endorsements are not available, the waivers set forth
in this paragraph shall be ineffective to the extent that such
waivers would cause required insurance with respect to the
Leased Property to be impaired.
5. No Lease Termination.
(a) Status of Lease. Except as expressly provided herein,
this Lease shall not terminate, nor shall Tenant have any right
to terminate this Lease, nor shall Tenant be entitled to any
abatement of the Rent, nor shall the obligations of Tenant
under this Lease be excused, for any reason whatsoever,
including without limitation any of the following: (i) any
damage to or the destruction of all or any part of the Leased
Property from whatever cause, (ii) the taking of the Leased
Property or any portion thereof by eminent domain or otherwise
for any reason, (iii) the prohibition, limitation or
restriction of Tenant's use of all or any portion of the Leased
Property or any interference with such use by governmental
action or otherwise, (iv) any eviction of Tenant or 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 15 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 15, (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.
(b) 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.
6. Construction Allowance.
(a) Advances; Outstanding Construction Allowance.
(i) 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 Designated
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
Construction Advances which may be required of Landlord, when
added to Carrying Costs accrued or projected by Landlord to
accrue prior to the Carrying Costs Accrual Termination Date
as described below, exceed the Maximum Construction
Allowance. 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.
(ii) Charges (herein collectively called "Carrying Costs")
shall accrue as described below for each Construction Period
ending on or prior to the Carrying Costs Accrual Termination
Date, and 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).
(iii) For the first short Construction Period ending
August 1, 1997, Carrying Costs shall equal the sum of
Carrying Costs for all days during such period, and the
Carrying Costs accruing for each day during such period shall
equal (A) the Initial Investment, times (B) the sum of (i)
the Effective Rate for such day and (ii) the Spread
calculated on the date of this Lease, divided by (C) three
hundred sixty (360).
For each Construction Period after the first short
Construction Period and prior to or ending on the Carrying
Costs Accrual Termination Date, Carrying Costs shall equal:
(1)(A) Stipulated Loss Value as of the first day
of such Construction Period, times (B) one minus the
Certificate of Deposit Collateral Percentage in effect
during such Construction Period, times (C) the sum of
(i) the Effective Rate in effect during such
Construction Period and (ii) the Spread calculated on
the tenth (10th) Business Day prior to the day upon
which such Construction Period commences, times (D) the
number of days in such Construction Period, divided by
(E) three hundred sixty (360); PLUS
(2)(A) Stipulated Loss Value as of the first day
of such Construction Period, times (B) the Certificate
of Deposit Collateral Percentage in effect during such
Construction Period, times (C) twenty-two and one-half
basis points (22.5/100 of 1%), times (D) the number of
days in such Construction Period, divided by (E) three
hundred sixty (360).
(iv) To ease the administrative burden of this Lease and
the Pledge Agreement, clause (2)(A) in the formula set forth
in the preceding clause 6.(a)(iii) for calculating Carrying
Costs reflects a reduction in the Carrying Costs equal to the
interest that would accrue on any Cash Collateral required by
the Pledge Agreement from time to time if the Accounts (as
defined in the Pledge Agreement) bore interest at the
Effective Rate. Landlord has agreed to such reduction in the
Carrying Costs to provide Tenant with the economic equivalent
of interest on such Cash Collateral, and in return Tenant has
agreed to the provisions of the Pledge Agreement that excuse
the actual payment of interest on the Accounts. By
incorporating such reduction of Carrying Costs into the
formula above, and by providing for noninterest bearing
Accounts in the Pledge Agreement, the parties will avoid an
unnecessary and cumbersome periodic exchange of equal
payments. It is not, however, the intent of Landlord or
Tenant to understate Carrying Costs or interest for financial
reporting purposes. Accordingly, for purposes of determining
Tenant's compliance with the affirmative financial covenants
set forth in subparagraph 9.(ac), and for purposes of any
financial reports that this Lease requires of Tenant from
time to time, Tenant may report its financial statements as
if there had been no such reduction and as if the Cash
Collateral from time to time required by the Pledge Agreement
had been maintained in Accounts bearing interest at the
Effective Rate.
(b) Designated Improvements.
(i) Responsibility for Construction. Tenant shall construct
all Designated Improvements in a good and workmanlike manner,
in accordance with (1) the descriptions and renderings
attached as Exhibit H, (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 10.(b) (though this clause (2)
shall not be construed to require Tenant to 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 Designated
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 Designated Improvements, it
being understood that Landlord's obligation with respect to
the Designated Improvements shall be limited to the making of
advances under and subject to the conditions set forth in
this Paragraph 6. 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
Designated Improvements, Tenant warrants that it shall cause
all Designated Improvements with respect to which it receives
any Construction Advances to be completed on or prior to the
Completion Deadline.
(ii) Scope Changes. Before making any Scope Change to the
Designated Improvements contemplated in Exhibit H, 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.
(iii) Value Added. The Designated 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 Designated
Improvements which will in the aggregate satisfy this
requirement. For purposes hereof, the Designated
Improvements will be deemed to have added value
"commensurate" with the Construction Allowance used by Tenant
if, when the Designated Improvements are substantially
complete, the Leased Property has a fair market value with
the Designated Improvements that exceeds the fair market
value which the Leased Property would have without the
Designated Improvements by an amount equal to no less than
fifty percent (50%) of the Carrying Costs and Construction
Advances added to the Outstanding Construction Allowance.
(iv) Estoppel Letters Required. If requested by Landlord
prior to the substantial completion of the Designated
Improvements, Tenant shall cause the contractor under each
significant general construction contract for the Designated
Improvements to execute and deliver to Landlord an estoppel
letter in the form of Exhibit I attached hereto. Similarly,
if requested by Landlord prior to the substantial completion
of the Designated Improvements, Tenant shall also cause the
architect and engineer under any material architectural or
engineering contract for the Designated Improvements to
execute and deliver to Landlord an estoppel letter in the
form of Exhibit J 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 Designated 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.
(v) Advances Not a Waiver. No funding of Construction
Advances and no failure of Landlord to object to Designated
Improvements proposed or constructed by Tenant shall
constitute a waiver by Landlord of the requirements contained
in this subparagraph 6.(b).
(c) Conditions to Construction Advances. Landlord's
obligation to make Construction Advances from time to time
under this Paragraph 6 shall be subject to the following terms
and conditions, all of which are intended for the sole benefit
of Landlord:
(i) Prior Notice. Tenant must make a request in
substantially the form attached to this Lease as Exhibit K
for any Construction Advance at least ten (10) Business Days
prior to the Advance 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 Designated
Improvements.
(ii) Amount of the Advances. No Construction Advance
shall exceed the lesser of:
a) the Maximum Construction Allowance, less the sum of
(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
b) (1) the actual costs and expenses previously
incurred and paid by Tenant for the Designated
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 6 to
Tenant as reimbursement for such costs and expenses.
Further, no Construction Advance shall be required that
would cause the cost of completing all Designated
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
Outstanding 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.
(iii) 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 9.(z) below):
a) 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 one or more 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
b) Builder's Risk Insurance. Builder's 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 $1,000,000 (or such other amount as Landlord and
Tenant may agree upon in writing from time to time),
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 Designated Improvements.
(iv) Progress of Construction. Construction of the
Designated 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 and
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.
(v) Evidence of Costs to be Reimbursed. To the extent
contemplated by the Construction Advance request forms
attached as Exhibit K and described in subparagraph 6.(c)(i),
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
Designated 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 under this Lease or
the Original Lease. Without limiting the foregoing, Landlord
may decline to advance any amount that would result in an
excess of $5,000,000 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.
(vi) No Event of Default or Change of Control Event. No
Event of Default shall have occurred and be continuing under
this Lease and no Change of Control Event shall have
occurred.
(vii) No Sale of Landlord's Interest. No sale of
Landlord's interest in the Leased Property shall have
occurred pursuant to the Purchase Agreement.
(viii) Certificate of No Default. Landlord shall have
received, together with the notice requesting the
Construction Advance described in clause (i) above, a current
certificate of a Responsible Financial Officer of Tenant in
the form attached as Exhibit F.
(ix) Removal of Open Space Restrictions. With respect to
any advance requested after the Outstanding Construction
Allowance exceeds $10,000,000, Landlord shall have received
confirmation in form and substance reasonably satisfactory to
it that any restrictions against construction contemplated
herein on the Land in the Permitted Encumbrances have been
formally released. (In this regard, responding to a concern
of Landlord over restrictions in the Permitted Encumbrances
referenced in item 4 of Exhibit B, which requires the use of
the Land as "open space," Tenant has advised Landlord that
Tenant already has informal assurances that the open space
requirement will be released. Tenant covenants to obtain
such a release prior to any Designated Sale Date on which
neither Tenant nor any Applicable Purchaser purchases the
Leased Property pursuant to the Purchase Agreement for a
price to Landlord (when taken together with any additional
payments made by Tenant pursuant to Paragraph 2(a)(ii) of the
Purchase Agreement, in the case of a purchase by an
Applicable Purchaser) of not less than the Purchase Price.)
If requested by Tenant, Landlord will confirm in writing
whether Tenant has satisfied this condition.
(x) Payments by Approved Participants. None of the
Approved Participants (other than Landlord's Parent) shall
have failed to advance to Landlord their respective
percentage shares of the Construction Advance being requested
as required by Section 3.2 of the Participation Agreement.
However, any such failure shall excuse Landlord's obligation
to provide the Construction Advance requested only to the
extent of the funds that the applicable Defaulting
Participant or Participants should have advanced (but did not
advance) to Landlord. Moreover, in the event of any such
failure:
a) Landlord will, to the extent possible, postpone
reductions of Construction Advances because of the
failure by any one or more Defaulting Participants to
make required advances under Section 3.2 of the
Participation Agreement by adjusting (and readjusting
from time to time, as required) the funding
"Percentages" of other Participants, and by requesting
the other Participants to make advances to Landlord on
the basis of such adjusted Percentages, in each case as
provided in Section 4 of the Participation Agreement;
however, so long as a Defaulting Participant's failure
to make required advances continues, no Construction
Advance shall be required that would cause the
Outstanding Construction Allowance (plus Carrying Costs
to accrue thereafter as projected by BNPLC) to exceed
(a) the Maximum Construction Allowance available under
this Lease, less (b) all amounts that should have been,
but have not been, advanced by a Defaulting Participant
as required by Section 3.2 of the Participation
Agreement.
b) Tenant may exercise its rights under Section 3.1.3
of the Pledge Agreement to require Landlord to attempt
in good faith, on and subject to the terms and
conditions set forth in that Section, to assist Tenant
in identifying one or more new Participants to replace
the Defaulting Participants.
(d) Completion Notice. Tenant shall provide a notice to
Landlord (the "Completion Notice") promptly after construction
of the Designated Improvements is substantially complete and
more than fifty percent (50%) of the Designated Improvements
are being occupied by Tenant or any subtenant permitted by
Paragraph 11.(a).
7. Purchase Documents 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 Documents 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
Documents or Environmental Indemnity and the terms and
provisions of this Lease, the terms and provisions of the
Purchase Documents or Environmental Indemnity (as the case may
be) shall control.
8. Use and Condition of Leased Property.
(a) Use. Subject to the Permitted Encumbrances and the terms
hereof, Tenant may use and occupy the Leased Property so long
as no Event of Default occurs hereunder, but only for the
following purposes and other lawful purposes (including
parking) incidental thereto:
(i) research and development of computer-related and other
electronic products; and
(ii) administrative and office space; and
(iii) distribution and warehouse storage of computer-related
and other electronic products; and
(iv) assembly of computer-related and other electronic
products using components manufactured elsewhere, but not
including the manufacture of computer chips on-site; and
(v) cafeteria, library, fitness center and other support
function uses that Tenant may provide to its employees; and
(vi) a data center.
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.
(b) Condition. Tenant accepts the Leased Property (and will
accept the same upon any purchase of the Landlord's interest
therein) in its present state, AS IS, and without any
representation or warranty, express or implied, as to the
condition of such property or as to the use which may be made
thereof. Tenant also accepts the Leased Property without any
representation or warranty, express or implied, by Landlord
regarding the title thereto or the rights of any parties in
possession of any part thereof, except as set forth in
subparagraph 10.(a). Landlord shall not be responsible for any
latent or other defect or change of condition in the Land,
Improvements, fixtures and personal property forming a part of
the Leased Property, and the Rent hereunder shall in no case be
withheld or diminished 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.
(c) Consideration of and Scope of Waiver. The provisions of
subparagraph 8.(b) above have been negotiated by the Landlord
and Tenant after due consideration for the Rent payable
hereunder and are intended to be a complete exclusion and
negation of any representations or warranties of the Landlord,
express or implied, with respect to the Leased Property that
may arise pursuant to any law now or hereafter in effect, or
otherwise. However, such exclusion of representations and
warranties by Landlord is not intended to impair any
representations or warranties made by other parties, including
Seller, the benefit of which is to pass to Tenant during the
Term because of the definition of Personal Property and Leased
Property above.
9. Other Representations, Warranties and Covenants of Tenant.
Tenant represents, warrants and covenants as follows:
(a) Financial Matters. Tenant is solvent 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 May 31, 1997.
(b) Existing Contract. Except to the extent required of
Landlord under subparagraph 10.(b), Tenant shall satisfy all
surviving obligations of Tenant 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 Tenant 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 10.(b)) shall, for the purposes of this
indemnity, be deemed to be caused by the Active Negligence,
gross negligence or willful misconduct of Landlord. The
foregoing indemnity is in addition to the other indemnities set
out herein and shall not terminate upon the closing of any sale
of Landlord's interest in the Leased Property pursuant to the
provisions of the Purchase Agreement or the termination of this
Lease.
(c) No Default or Violation. The execution, delivery and
performance by Tenant of this Lease, the Purchase Documents 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.
(d) 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.
(e) 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.
(f) 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.
(g) Condition of Property. The Land as described in Exhibit A
is shown on the plat included as part of the A.L.T.A. Survey
prepared by Kier & Wright, last revised June 5, 1997,
certification dated June 5, 1997, Job No. 96112, which was
delivered to Landlord at the request of Tenant. All material
improvements on the Land as of the date hereof are as shown on
that survey, and except as shown on that survey there are no
easements or encroachments visible or apparent from an
inspection of the Real Property. Adequate provision has 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. The Leased Property is
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.
(h) Organization. Tenant is duly incorporated and legally
existing under the laws of the State of Delaware. 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.
(i) Enforceability. The execution, delivery and performance
of this Lease, the Purchase Documents, 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 Documents, 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.
(j) 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).
(k) 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.
(l) Existence. Tenant shall continuously maintain its
corporate existence, and Tenant shall continuously maintain its
qualification to do business in the State of California.
(m) 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.
(n) 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.
(o) Debts for Construction. Tenant shall cause all debts and
liabilities incurred in the construction, maintenance,
operation and development of the Leased Property, including
without limitation all debts and liabilities for labor,
material and equipment and all debts and charges for utilities
servicing the Leased Property, to be promptly paid.
Notwithstanding the foregoing, Tenant may in good faith by
appropriate proceedings contest the validity, applicability or
amount of any asserted mechanic's or materialmen's lien and
pending such contest Tenant shall not be deemed in default
under this subparagraph (or subparagraphs 9.(t) or 9.(u))
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 $3,000,000 (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.
(p) Impositions. Tenant shall reimburse Landlord for (or, if
requested by Landlord, will pay or cause to be paid prior to
delinquency) all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes,
levies, fees, charges, surcharges, assessments or penalties
which arise out of or are attributable to this Lease or which
are imposed upon Landlord or the Leased Property because of the
ownership, leasing, occupancy, sale or operation of the Leased
Property, or any part thereof, or relating to or required to be
paid by the terms of any of the Permitted Encumbrances
(collectively, herein called the "Impositions"), excluding only
Excluded Taxes. If Landlord requires Tenant to pay any
Impositions directly to the applicable taxing authority or
other party entitled to collect the same, Tenant shall furnish
Landlord with receipts showing payment of such Impositions and
other amounts 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 9.(t) or 9.(u)) 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
$1,000,000 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.
(q) 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, 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 $500,000 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 $1,000,000 or more) or (ii)
make any alteration to any Improvements 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 Leased Property 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.
(r) 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 $1,000,000 (or such other amount as Landlord and Tenant
may agree upon in writing from time to time). 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 4, 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 D, 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
$3,000,000, Tenant shall give immediate notice thereof to
Landlord and Paragraph 4 shall apply.
Notwithstanding the foregoing provisions of this
subparagraph 9.(r), following any fire or other casualty
involving the Leased Property, if insurance proceeds totaling
not more than $2,000,000 are to be recovered as a result
thereof, or if in connection therewith Tenant shall have
executed a Voluntary Minimum Pledge Commitment and delivered
any additional Collateral required to satisfy such Voluntary
Minimum Pledge Commitment, Tenant shall be entitled to receive
directly and hold such insurance 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
subparagraph 4.(b).
(s) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the
Leased Property or any portion thereof, or any other similar
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 4 above. Landlord is hereby
authorized, in the name of Tenant, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree
or award concerning condemnation of any of the Leased Property.
Landlord shall not be, in any event or circumstances, liable
or responsible for failure to collect, or to exercise diligence
in the collection of, any such proceeds, judgments, decrees or
awards.
Notwithstanding the foregoing provisions of this
subparagraph 9.(s), following any condemnation or sale in lieu
of condemnation involving the Leased Property, if condemnation
or sale proceeds totaling not more than $2,000,000 are to be
recovered as a result thereof, or if in connection therewith
Tenant shall have executed a Voluntary Minimum Pledge
Commitment and delivered any additional Collateral required to
satisfy such Voluntary Minimum Pledge Commitment, Tenant shall
be entitled to receive directly and hold such condemnation or
sale 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
subparagraph 4.(b).
(t) Protection and Defense of Title. If any encumbrance or
title defect whatsoever affecting Landlord's fee interest in
the Leased Property is claimed or discovered (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 9.(o) or subparagraph 9.(p)), 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.
For purposes of this subparagraph 9.(t), Tenant shall be
deemed to be acting promptly to remove any encumbrance or to
cure any title defect, other than a Lien which Tenant has
itself granted or authorized, so long as Tenant (or a title
insurance company obligated to do so) is in good faith by
appropriate proceedings contesting the validity and
applicability of the encumbrance or defect, and pending such
contest Tenant shall not be deemed in default under this
subparagraph because of the encumbrance or defect; provided,
with respect to a contest of any encumbrance or title defect
which is the subject of subparagraphs 9.(o) or 9.(p), Tenant
(or the applicable title insurance company) must satisfy the
conditions and requirements for a permitted contest set forth
in those subparagraphs, and with respect to a contest of any
other encumbrance or title defect, Tenant (or the applicable
title insurance company) must:
(1) diligently prosecute the contest to completion in
a manner reasonably satisfactory to Landlord;
(2) immediately remove the encumbrance or cure the
defect, as and to the extent reasonably required to preserve
Landlord's indefeasible fee estate in the Leased Property and
to prevent any significant adverse impact the encumbrance or
defect may have on the value of the Leased Property, upon a
final determination by a court of competent jurisdiction that
the encumbrance or defect is valid and applicable to the
Leased Property; and
(3) in any event conclude the contest and remove the
encumbrance or cure the defect and pay any claims asserted
against Landlord or the Leased Property because of such
encumbrance or defect, all prior to (i) any Designated Sale
Date on which neither Tenant nor any Applicable Purchaser
purchases the Leased Property pursuant to the Purchase
Agreement for a price to Landlord (when taken together with
any additional payments made by Tenant pursuant to
Paragraph 2(a)(ii) of the Purchase Agreement, in the case of
a purchase by an Applicable Purchaser) of not less than the
Purchase Price, (ii) the date any criminal charges may be
brought against Landlord or any of its directors, officers or
employees because of such encumbrance or defect or (iii) the
date any action may be taken against Landlord or any property
owned by Landlord (including the Leased Property) by any
governmental authority or any other Person who has or claims
rights superior to Landlord because of the encumbrance or
defect.
(u) 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 Permitted Encumbrances, 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
9.(o) or subparagraph 9.(p)), 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.
(v) 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; provided that so long as
Tenant remains in possession of the Leased Property, Landlord
or Landlord's representative will, before making any such
inspection or copying any such documents, 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 copying by Landlord authorized by this
subparagraph.. 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.
(w) Financial Statements; Required Notices; Certificates as to
Default. Tenant shall deliver to Landlord and to each
Participant of which Tenant has been notified:
(i) 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;
(ii) 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;
(iii) together with the financial statements furnished in
accordance with subparagraph 9.(w)(ii) and 9.(w)(i), a
certificate of a Responsible Financial Officer of Tenant in
substantially the form attached hereto as Exhibit E: (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 9 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 9.(ac);
(iv) promptly after any change in the rating of Tenant's
senior, unsecured debt by Standard and Poor's Corporation or
Moody's Investor Service, Inc. or in Tenant's Debt to Capital
Ratio (as defined in subparagraph 1.(cm)), which will result
in a change in the Spread (as defined in
subparagraph 1.(cm)), a certificate of a Responsible
Financial Officer of Tenant in substantially the form
attached hereto as Exhibit F with computations evidencing
Tenant's calculation of the Spread after giving effect to
such changes;
(v) 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;
(vi) 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;
(vii) 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
(viii) 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 9.(w) to any Participant and to any regulatory
body having jurisdiction over Landlord that requires or
requests it.
(x) Further Assurances. Tenant shall, on request of Landlord,
(i) promptly correct any defect, error or omission which may be
discovered in the contents of this Lease or in any other
instrument executed in connection herewith or in the execution
or acknowledgment thereof; (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 Parent and other Participants to
comply with the requirements or requests of any agency or
authority having jurisdiction over them.
(y) Fees and Expenses; General Indemnification; Increased
Costs; and Capital Adequacy Charges.
(i) Except for any costs paid by Landlord with the proceeds
of the advance described in subparagraph 1.(s) as part of the
Closing Costs, Tenant shall pay (and shall indemnify and hold
harmless Landlord, Landlord's Parent and any Person claiming
through Landlord by reason of a Permitted Transfer from and
against) all Losses incurred by Landlord or Landlord's Parent
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
Documents, the Environmental Indemnity or the Participation
Agreement, (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, (D) the construction of
the Designated Improvements, whether such Losses are incurred
at the time of execution of this Lease or at any time during
the Term, or (E) Tenant's request for assistance in
identifying any new Participant pursuant to Paragraph 18 of
the Purchase Agreement, 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
Parent for any such Losses, Tenant shall reimburse Landlord
for the same notwithstanding that Landlord may have already
received any payment from any other Participant on account of
such Losses, it being understood that the other Participant
may expect repayment from Landlord when Landlord does collect
the required reimbursement from Tenant.
(ii) Tenant shall also pay (and indemnify and hold harmless
Landlord, Landlord's Parent 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 Parent 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.
(iii) 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
Parent or any other 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 Parent or such other Participant, as
the case may be, additional amounts sufficient to compensate
Landlord's Parent or the Participant for such increased cost.
An increase in costs resulting from any imposition or
increase of reserve requirements applicable to Collateral
held from time to time by Landlord's Parent or other
Participants pursuant to the Pledge Agreement would be an
increase covered by the preceding sentence. A certificate as
to the amount of any increased cost covered by this
subparagraph, submitted to Landlord and Tenant by Landlord's
Parent or the other Participant, shall be conclusive and
binding for purposes of determining Tenant's obligations
hereunder, absent clear and demonstrable error.
(iv) Landlord's Parent or any other Participant may demand
additional payments (herein called "Capital Adequacy
Charges") if Landlord's Parent or the other 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
Funding 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 Parent or the other 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 Landlord's
Parent or the other Participant, as the case may be, the
amount so demanded.
(v) Any amount to be paid to Landlord, Landlord's Parent or
any other Indemnified Party under this subparagraph 9.(y)
shall be a demand obligation owing by Tenant. Tenant's
indemnities and obligations under this subparagraph 9.(y)
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.
(z) 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 $1,000,000 (or such other amount as Landlord
and Tenant may agree upon in writing from time to time)
self-insured retention. Such commercial general liability
insurance shall include blanket contractual liability coverage
which insures contractual liability under the indemnifications
set forth in this Lease (other than the indemnifications set
forth in Paragraph 12 concerning environmental matters), but
such coverage or the amount thereof shall in no way limit such
indemnifications. The policy evidencing such insurance shall
name as additional insureds Landlord and all Participants of
which Tenant has been notified (including Landlord's Parent and
the Participants). 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.
(aa) Permitted Encumbrances. Except to the extent expressly
required of Landlord by subparagraph 10.(b), Tenant shall
comply with and will cause to be performed all of the
covenants, agreements and obligations imposed upon the owner of
the Leased Property in the Permitted Encumbrances in accordance
with their respective terms and provisions. Tenant shall not,
without the prior written consent of Landlord, modify or permit
any modification of any Permitted Encumbrance in any manner
that could impose significant monetary obligations upon
Landlord or any subsequent owner of the Leased Property, could
significantly and adversely affect the value of the Leased
Property, could impose any lien to secure payment or
performance obligations against any part of the Leased Property
or would otherwise be material and adverse to Landlord.
(ab) Environmental.
(i) Environmental Covenants. Tenant covenants:
a) 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;
b) not to conduct or authorize others to conduct
Hazardous Substance Activities on the Leased Property,
except Permitted Hazardous Substance Use;
c) 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
d) 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
12.(c) 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 of
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.
(ii) 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).
(iii) 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 9.(e) inaccurate in any material
respect if made at the time of such discovery, (ii) any
remedial action taken by Tenant in response to any (A)
discovery of any Hazardous Substances other than Permitted
Hazardous Substances on, under or about the Leased Property
or (B) any claim for damages resulting from Hazardous
Substance Activities, (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.
(ac) Affirmative Financial Covenants.
(i) 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. As used in this
subparagraph 9.(ac), "Quick Assets" means the sum (without
duplication of any item) of the Collateral held 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. For purposes
of determining Quick Assets, assets will be deemed to be
"unencumbered" if they are actually unencumbered or if they
are encumbered only by Liens, from which, at the time of the
applicable determination of Quick Assets, Tenant is entitled
to a release of such assets upon no more than ninety days'
notice, without any payment (other than the payment of
ministerial fees and costs), without subjecting other assets
to any Lien and without otherwise satisfying any condition
that is beyond Tenant's control. As used herein "Long-Term
Investments" means those investments described below (to the
extent that they are not classified as short term investments
in accordance with GAAP), provided that such investments
shall have maturities of not longer than two years, and shall
be rated not less than A- by Standard & Poor's Corporation or
less than A 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 issued by
either one of the 50 largest (in assets) banks in the
United States or by one of the 100 largest (in assets)
banks in the world; and
(3) Notes and municipal bonds.
As used in this subparagraph 9.(ac), "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.
(ii) Maximum Senior Debt to Capitalization. Throughout the
Term Tenant shall maintain a ratio of Senior Debt to
Capitalization of not more than 0.35 to 1.00. As used in
this subparagraph 9.(ac):
"Senior Debt" means the outstanding Debt of
Tenant and its Subsidiaries (determined on a
consolidated basis), minus the aggregate principal
amount of the Subordinated Debt.
"Capitalization" means the sum of the Debt of
Tenant and its Subsidiaries (determined on a
consolidated basis), including the aggregate principal
amount of the Subordinated Debt, plus Consolidated
Tangible Net Worth of Tenant and its Subsidiaries
(determined on a consolidated basis).
"Subordinated Debt" means the following
unsecured Debt of Tenant: (i) unsecured Debt in respect
of the $110,000,000 aggregate principal amount at
maturity of 10 1/14% Convertible Subordinated Notes due
2001 issued pursuant to the Indenture (in this
definition called the "Existing Subordinated Notes")
but only so long as such unsecured Debt remains
expressly and unconditionally subordinated to the
payment and performance obligations of Tenant in
transactions of the type and structure contemplated by
this Lease and the Purchase Agreement; (ii) other
unsecured Debt of Tenant which is expressly and
unconditionally subordinated to the obligations of
Tenant under this Lease and the Purchase Agreement on
the same terms as the Existing Subordinated Notes or on
other terms approved by the Majority, as defined in the
Participation Agreement (such approval not to be
unreasonably withheld), which together with the
Existing Subordinated Notes, does not exceed at any
time an aggregate amount equal to fifteen percent (15%)
of Tenant's Consolidated Tangible Net Worth at such
time; and (iii) other unsecured Debt of Tenant in an
amount approved in writing by the Majority and which is
expressly and unconditionally subordinated to the
obligations of Tenant under this Lease and the Purchase
Agreement on terms approved in writing by the Majority,
in each case in its sole discretion.
"Consolidated Tangible Net Worth" means, at any
date of determination thereof, the excess determined in
accordance with GAAP 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.
"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.
"Indenture" means the Indenture dated as of
November 1, 1994 by and between Tenant and the First
National Bank of Boston, as trustee.
(iii) Minimum Tangible Net Worth. Tenant shall not permit
its Consolidated Tangible Net Worth, on a consolidated basis,
at the end of any fiscal quarter to be less than the sum of:
(A) eighty percent (80%) of Consolidated Tangible Net Worth
of Tenant as of May 31, 1997 (restated to give effect to
Tenant's subsequent merger with U.S. Robotics, such that
"Consolidated Tangible Net Worth" as used in this clause (A)
reflects not only Tenant's May 31, 1997 Consolidated Tangible
Net Worth as reported prior to the merger, but also the
March 30, 1997 Consolidated Tangible Net Worth of U.S.
Robotics reported prior to the merger); plus (B) fifty
percent (50%) of Tenant's net income (but without deducting
any net losses for any period) earned in each fiscal quarter,
starting with the quarter ended August 31, 1997, and ending
with the quarter which, at such time, is the most recently
ended fiscal quarter; less (C) the amount of write-offs
resulting from acquisitions after May 31, 1997, such amount
not to exceed an aggregate, cumulative amount of
$550,000,000.
(iv) 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 acquisitions, 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.
(ad) Negative Covenants. Without the prior written consent of
Landlord in each case, neither Tenant nor any of its
Subsidiaries shall:
(i) 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:
a) 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;
b) Liens that secure obligations incurred in the
ordinary course of business, that are not past due for
more than thirty (30) days (or that are being contested
in good faith by appropriate proceedings and for which
appropriate reserves have been established) and that:
(1) are imposed by law, such as mechanic's,
materialmen's, landlord's, warehousemen's and
carrier's Liens, and other similar Liens; or
(2) encumber only equipment or other tangible
personal property and any proceeds thereof
(including Liens created by equipment leases) and
are imposed to secure the payment of the purchase
price or other direct costs of acquiring the
equipment or other tangible personal property they
encumber;
c) Liens under workmen's compensation, unemployment
insurance, social security or similar legislation
(other than ERISA);
d) 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;
e) 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;
f) 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;
g) Liens securing obligations of such a Subsidiary to
Tenant or to another such Subsidiary;
h) Liens incurred after the date of this Lease given to
secure the payment of the purchase price 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 such Liens are imposed, 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;
i) existing mortgages and deeds of trust as of the date
of this Lease;
j) Liens created by any real property lease (including
this Lease), or related documents (including the
Purchase Agreement and other separate purchase
agreements), that require Tenant or its Subsidiaries to
purchase or cause another to purchase any interest in
the property covered thereby and thus guarantee a
minimum residual value of the property to the landlord;
provided, that the value of all such leases (including
this Lease) shall not exceed an aggregate, cumulative
amount of $700,000,000 (for purposes of this Section
(ad)(i), the "value" of a lease means the amount,
determined as of the date the lease became effective,
equal to the greater of (1) the present value of
rentals and other minimum lease payments required in
connection with such lease [calculated in accordance
with FASB Statement 13 and other GAAP relevant to the
determination of the whether such lease must be
accounted for as capital leases, and calculated under
the assumption that any allowance for construction to
be provided by the landlord will be fully funded] or
(2) the fair value of the property covered thereby);
k) Liens imposed to secure Debt incurred to finance the
acquisition of property which has been leased or sold
by Tenant or one of its Subsidiaries to another Person
(other than Tenant or a Subsidiary of Tenant) pursuant
to a lease or sales agreement providing for payments
sufficient to pay such Debt in full, provided such Debt
is not a general obligation of Tenant or its
Subsidiaries, but rather is payable only from the
rentals or other sums payable under the lease or sales
agreement or from the property sold or leased
thereunder;
l) Liens not otherwise permitted by this
subparagraph 9.(ad)(i) (and not encumbering the Leased
Property or any Collateral) which secure the payment of
Debt, provided that (i) at no time does the sum of the
aggregate amount of all outstanding Debt secured by
such Liens exceed $50,000,000, and (i) such Liens do
not constitute Liens against Tenant's interest in any
material Subsidiary or blanket Liens against all or
substantially all of the inventory, receivables,
general intangibles or equipment of Tenant or of any
material Subsidiary of Tenant (for purposes of this
clause, a "material Subsidiary" means any subsidiary
whose assets represent a substantial part of the total
assets of Tenant and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP); and
m) Liens incurred in connection with any renewals,
extensions or refundings of any Debt secured by Liens
described in the other clauses of this subparagraph
9.(ad)(i), 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.
(ii) 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.
(iii) Mergers; Sales of Assets.
a) Except to the extent permitted by the last sentence
of this subparagraph 9.(ad), 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 9.(ad), acquire the
assets or business of any Person, other than in the
ordinary course of Tenant's business as presently
conducted.
(iv) 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: a) a sale of
receivables for cash at a discount which is less than fifteen
percent (15%) of the face value of all receivables then
outstanding on the books of Tenant and its consolidated
Subsidiaries, if such sale and all other discounted sales of
receivables permitted by this clause a) during the same
fiscal year of Tenant do not affect more than fifteen percent
(15%) of the individual accounts (excluding intercompany
accounts) comprising the receivables of Tenant and its
Subsidiaries; b) 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 c) 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.
(v) 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
9.(ad)(iii), 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.
(ae) ERISA.
(i) 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
9.(ae)(ii).
(ii) 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.
10. Representations, Warranties and Covenants of Landlord.
Landlord represents, warrants and covenants as follows:
(a) Title Claims By, Through or Under Landlord. Except by a
Permitted Transfer, Landlord shall not assign, transfer,
mortgage, pledge, encumber or hypothecate this Lease or any
interest of Landlord in and to the Leased Property 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, an Approved
Participant, or any other Participant (other than Landlord's
Parent) which Tenant shall have approved, or (iii) any
encumbrance or title defect arising because of Landlord's
compliance with subparagraph 10.(b) or any request made by
Tenant.
(b) Actions Required of the Title Holder. So long as no Event
of Default shall have occurred and be continuing, Landlord
shall take any and all action required 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 Documents, 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
9.(y). Further, for purposes of such indemnification, any
action taken by Landlord will be deemed to have been made at
the request of Tenant if made pursuant to any request of
Tenant's counsel or of any officer of Tenant (or with their
knowledge, and without their objection) in connection with the
closing under the Existing Contract or the execution,
administration or enforcement of any Construction Document.
(c) No Default or Violation. The execution, delivery and
performance of this Lease do not contravene, result in a breach
of or constitute a default under any material contract or
agreement to which Landlord is a party or by which Landlord is
bound and do not, to the knowledge of Landlord, violate or
contravene any law, order, decree, rule or regulation to which
Landlord is subject.
(d) No Suits. To Landlord's knowledge there are no judicial
or administrative actions, suits or proceedings involving the
validity, enforceability or priority of this Lease, and to
Landlord's knowledge no such suits or proceedings are
threatened.
(e) Organization. Landlord is duly incorporated and legally
existing under the laws of Delaware and is or, if necessary,
will become duly qualified to do business in the State of
California. Landlord has or will obtain, at Tenant's expense
pursuant to the other provisions of this Lease, all requisite
power and all material governmental certificates of authority,
licenses, permits, qualifications and other documentation
necessary to own and lease the Leased Property and to perform
its obligations under this Lease.
(f) Enforceability. The execution, delivery and performance
of this Lease and the Purchase Documents 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 and the Purchase
Documents 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.
(g) Existence. Landlord will continuously maintain its
existence and, after qualifying to do business in the State of
California if Landlord has not already done so, Landlord will
continuously maintain its right to do business in that state to
the extent necessary for the performance of Landlord's
obligations hereunder.
(h) Not a Foreign Person. Landlord is not a "foreign person"
within the meaning of the 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.
11. Assignment and Subletting.
(a) Consent Required. During the term of this Lease, without
the prior written consent of Landlord first had and received,
Tenant shall not assign, transfer, mortgage, pledge or
hypothecate this Lease or any interest of Tenant hereunder and
shall not sublet all or any part of the Leased Property, by
operation of law or otherwise; provided, that, so long as no
Event of Default has occurred and is continuing, Tenant shall
be entitled without the consent of Landlord to sublet all or
any portion of the space in any then completed Improvements if:
(i) any sublease by Tenant is made expressly
subject and subordinate to the terms hereof;
(ii) no sublease has a term longer than the
remainder of the then effective term of this Lease;
(iii) the use permitted by such sublease is
expressly limited to general office use or other uses
approved in advance by Landlord as uses that will not present
extraordinary risks of uninsured environmental or other
liability; and
(iv) no more than forty-five percent (45%) of
the total space of completed Improvements shall be subleased
without Landlord's prior consent to any Person that is
neither (A) an Affiliate of Tenant nor (B) the operator of a
business in the subleased space that is related to the
operation of Tenant's own business (such as another venturer
in a joint venture with Tenant).
(b) Standard for Landlord's Consent to Assignments and Certain
Other Matters. Consents and approvals of Landlord which are
required by this Paragraph 11 will not be unreasonably
withheld, but Tenant acknowledges that Landlord's withholding
of such consent or approval shall be reasonable if Landlord
determines in good faith that (1) giving the approval may
increase Landlord's risk of liability for any existing or
future environmental problem, (2) giving the approval is likely
to substantially increase Landlord's administrative burden of
complying with or monitoring Tenant's compliance with the
requirements of this Lease, or (3) any transaction for which
Tenant has requested the consent or approval would negate
Tenant's representations in this Lease regarding ERISA or cause
this Lease or the other documents referenced herein to
constitute a violation of any provision of ERISA.
(c) 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.
(d) Landlord's Assignment. Landlord shall have the right to
transfer, assign and convey, in whole or in part, the Leased
Property and any and all of its rights under this Lease 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.) If
Landlord sells or otherwise transfers the Leased Property and
assigns its rights under this Lease and the Purchase Documents
pursuant to a Permitted Transfer, then to the extent Landlord's
successor in interest confirms its liability for the
obligations imposed upon Landlord by this Lease and the
Purchase Documents on and subject to the express terms and
conditions set out herein and therein, the original Landlord
shall thereby be released from any obligations thereafter
arising under this Lease and the Purchase Documents, and Tenant
will 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 aggregate of its and Landlord's Parent's
Percentages under and as defined in the Participation Agreement
below the minimum percentage require by paragraph 14.2 of the
Participation Agreement.
12. Environmental Indemnification.
(a) Indemnity. Tenant hereby agrees to assume liability for
and to pay, indemnify, defend, and hold harmless each and every
Indemnified Party from and against any and all Environmental
Losses, subject only to the provisions of subparagraph 12.(c)
below.
(b) Assumption of Defense.
(i) If an Indemnified Party notifies Tenant of any claim,
demand, action, administrative or legal proceeding,
investigation or allegation as to which the indemnity
provided for in this Paragraph 12 applies, Tenant shall
assume on behalf of the Indemnified Party and conduct with
due diligence and in good faith the investigation and defense
thereof and the response thereto with counsel 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.
(ii) If any claim, demand, action, proceeding,
investigation or allegation arises as to which the indemnity
provided for in this Paragraph 12 applies, and Tenant fails
to assume promptly (and in any event within 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 12 so long as, in the written
opinion of reputable counsel to the Indemnified Party, the
settlement or payment in full is clearly advisable.
(c) Notice of Environmental Losses. If an Indemnified Party
receives a written notice of Environmental Losses that such
Indemnified Party believes are covered by this Paragraph 12,
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 12; provided, that if
Tenant is unaware of the matters described in the notice and
such failure renders unavailable defenses that Tenant might
otherwise assert, or precludes actions that Tenant might
otherwise take, to minimize its obligations hereunder, then
Tenant shall be excused from its obligation to indemnify 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 12.(a) 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.
(d) Rights Cumulative. The rights of each Indemnified Party
under this Paragraph 12 shall be in addition to any other
rights and remedies of such Indemnified Party against Tenant
under the other provisions of this Lease or under any other
document or instrument now or hereafter executed by Tenant, or
at law or in equity (including, without limitation, any right
of reimbursement or contribution pursuant to CERCLA).
(e) Survival of the Indemnity. Tenant's obligations under
this Paragraph 12 shall survive the termination or expiration
of this Lease. All obligations of Tenant under this Paragraph
12 shall be payable upon demand, and any amount due upon demand
to any Indemnified Party by Tenant which is not paid shall bear
interest from the date of such demand at a floating interest
rate equal to the Default Rate, but in no event in excess of
the maximum rate permitted by law.
13. Landlord's Right of Access.
(a) 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.
(b) 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.
14. Events of Default.
(a) Definition of Event of Default. Each of the following
events shall be deemed to be an "Event of Default" by Tenant
under this Lease:
(i) Tenant shall fail to pay when due any installment of Rent
due hereunder and such failure shall continue for three (3)
Business Days after Tenant is notified thereof.
(ii) 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 14.(a)), 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 14.(a)), 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.
(iii) Tenant shall fail to comply with any term, provision or
condition of the Purchase Documents and, if any Purchase
Document expressly provides a time within which Tenant may
cure such failure, Tenant shall not cure the failure within
such time.
(iv) Tenant shall abandon the Leased Property.
(v) 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 14.(a)(v), "Debt" shall mean only a Debt of
Tenant now existing or arising in the future, (A) payable to
Landlord or any Participant or any Affiliate of Landlord or
any Participant, the outstanding balance of which has become
due by reason of acceleration or maturity, or (B) payable to
any Person, with respect to which $20,000,000 or more is
actually due and payable because of acceleration or
otherwise.
(vi) Tenant or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against Tenant or
any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief,
or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period of thirty
(30) consecutive days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an
order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for
any substantial part of its property) shall occur; or Tenant
or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this
clause (vi).
(vii) Any order, judgment or decree is entered in any
proceedings against Tenant or any Subsidiary decreeing the
dissolution of Tenant or such Subsidiary and such order,
judgment or decree remains unstayed and in effect for more
than sixty (60) days.
(viii) Any order, judgment or decree is entered in any
proceedings against Tenant or any Subsidiary decreeing a
split-up of Tenant or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the consolidated assets of
Tenant and its Subsidiaries (determined in accordance with
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.
(ix) One or more non-interlocutory judgments, non-
interlocutory orders, decrees, or arbitration awards is
entered against Tenant or any of its Subsidiaries involving
in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer
does not dispute coverage) as to any single or related series
of transactions, incidents, or conditions, of $20,000,000 or
more, and the same shall remain unvacated and unstayed
pending appeal for a period of ten days after the entry
thereof;
(x) 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.
(xi) A Change of Control Event not approved in advance by
Landlord shall occur.
(xii) The subordination provisions of the Indenture (as
defined in subparagraph 9.(ac)(ii) of this Lease) or any
other agreement or instrument governing the Subordinated Debt
(as defined in subparagraph 9.(ac)(ii) of this Lease) shall
be for any reason revoked or invalidated, or otherwise cease
to be in full force and effect; or the Tenant or any of its
Subsidiaries shall contest in any manner the validity or
enforceability of such subordination provisions or shall deny
that it has any further liability or obligation thereunder;
or the obligations of Tenant hereunder or under the Purchase
Documents shall be for any reason subordinated to such
Subordinated Debt or shall not have the priority over such
Subordinated Debt as contemplated by this Lease or by the
Indenture or by such subordination provisions.
Notwithstanding the foregoing, any Default that could become an
Event of Default under clause 14.(a)(ii) 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 Sale Date the next
following date which is an Advance Date or Base Rent 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 Sale 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 9.(y) and the environmental
indemnity set forth in Paragraph 12 shall survive the payment
of such amounts by Tenant to Landlord and the conveyance of
Landlord's interest in the Leased Property to Tenant.
(b) Remedies. Upon the occurrence of an Event of Default
which is not cured within any applicable period expressly
permitted by subparagraph 14.(a), at Landlord's option and
without limiting Landlord in the exercise of any other right or
remedy Landlord may have on account of such default, and
without any further demand or notice except as expressly
described in this subparagraph 14.(b):
(i) By notice to Tenant, Landlord may terminate Tenant's
right to possession of the Leased Property. A notice given
in connection with unlawful detainer proceedings specifying a
time within which to cure a default shall terminate Tenant's
right to possession if Tenant fails to cure the default
within the time specified in the notice.
(ii) Upon termination of Tenant's right to possession and
without further demand or notice, Landlord may re-enter the
Leased Property and take possession of all improvements,
additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property in
the Leased Property may be removed and stored in a warehouse
or elsewhere at the expense and risk of and for the account
of Tenant.
(iii) Upon termination of Tenant's right to possession, this
Lease shall terminate and Landlord may recover from Tenant:
a) The worth at the time of award of the unpaid Rent
which had been earned at the time of termination;
b) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount
of such rental loss that Tenant proves could have been
reasonably avoided;
c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the scheduled Term
after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably
avoided; and
d) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's
failure to perform Tenant's obligations under this
Lease or which in the ordinary course of things would
be likely to result therefrom, including, but not
limited to, the costs and expenses (including
Attorneys' Fees, advertising costs and brokers'
commissions) of recovering possession of the Leased
Property, removing persons or property therefrom,
placing the Leased Property in good order, condition,
and repair, preparing and altering the Leased Property
for reletting, all other costs and expenses of
reletting, and any loss incurred by Landlord as a
result of Tenant's failure to perform Tenant's
obligations under the Purchase Agreement.
The "worth at the time of award" of the
amounts referred to in subparagraph 14.(b)(iii)a) and
subparagraph 14.(b)(iii)b) 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
14.(b)(iii)c) 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%).
e) Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by
applicable California law.
(iv) 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 14.(b)(i) hereof. The following shall not
constitute a termination of Tenant's right to possession:
a) Acts of maintenance or preservation or efforts to
relet the Leased Property;
b) The appointment of a receiver upon the initiative of
Landlord to protect Landlord's interest under this
Lease; or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment
by Tenant.
(c) 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.
(d) 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
Documents or the Environmental Indemnity.
(e) Waiver by Tenant. To the extent permitted by law, Tenant
hereby waives and surrenders for itself and all claiming by,
through and under it, including creditors of all kinds, (i) any
right and privilege which it or any of them may have under any
present or future constitution, statute or rule of law to have
a continuance of this Lease for the term hereby demised after
termination of Tenant's right of occupancy by order or judgment
of any court or by any legal process or writ, or under the
terms of this Lease, or after the termination of this Lease as
herein provided, and (ii) the benefits of any present or future
constitution, or statute or rule of law which exempts property
from liability for debt or for distress for rent, and (iii) the
provisions of law relating to notice and/or delay in levy of
execution in case of eviction of a lessee for nonpayment of
rent.
(f) 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.
15. 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.
16. Quiet Enjoyment. Provided no Event of Default has
occurred and is continuing, 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 5 above, no such breach shall entitle
Tenant to terminate this Lease or excuse Tenant from its
obligation to pay Base Rent and other amounts hereunder.
17. 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 Leased Property, 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 Improvements in
the same condition as of the date hereof, 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.
18. 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) the unpaid Purchase Price on
the day in question, times (ii) the Holdover Rate (as defined
below) for such day, 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; provided, however, following any
breach by Landlord of its obligations to tender a deed and
other documents on the Designated Sale Date as provided in the
Purchase Agreement, Tenant may at its option continue its
possession and use of the Leased Property pursuant to this
Lease, as if the Term had been extended, for a period not to
exceed 180 days after the Designated Sale Date or such longer
time as may be proscribed by Applicable Law.
As used herein, the "Holdover Rate" means:
(1) for any day prior to the date on which Landlord
tenders a deed and other documents as required by the
Purchase Agreement (or is excused from its obligation to
tender by Tenant's breach or anticipatory repudiation of the
Purchase Agreement), a rate equal to the Fed Funds Rate on
that day plus one hundred basis points;
(2) for any day on which or within ninety days after
Landlord tenders a deed and other documents as required by
the Purchase Agreement (or is excused from its obligation to
tender by Tenant's breach or anticipatory repudiation of the
Purchase Agreement), the per annum Prime Rate in effect for
such day; and
(3) for any day after the ninety days described in
the preceding clause, a rate which is three percent (3%)
above the per annum Prime Rate.
19. Miscellaneous.
(a) 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:
(i) All Rent required to be paid by Tenant to Landlord
hereunder shall be paid to Landlord in immediately available
funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris
ABA #: 121027234
Reference: 3COM - Phase III
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.
(ii) 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/3COM - Phase III
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.
(iii) 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 Participants, at the addresses for notice
established by the Participation Agreement) 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 or Will
La Herran
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of Tenant:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Legal Dept. MS - 1308
Telecopy: (408) 764-6434
With copies to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Real Estate Dept. MS - 1220
Telecopy: (408) 764-5718; and
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Treasury Dept. MS - 1307
Telecopy: (408) 764-8403; and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Jonathan E. Rattner, Esq.
Telecopy: (415) 328-3029
(b) 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.
(c) 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.
(d) 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, AND THE PURCHASE
DOCUMENTS.
(e) 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.
(f) 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.
(g) 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
14.(a).
(h) 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.
(i) Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the State of
California.
(j) 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.
(k) Not a Partnership, Etc. NOTHING IN THIS LEASE IS
INTENDED TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR
OTHER JOINT ENTERPRISE BETWEEN LANDLORD AND TENANT. NEITHER
THE EXECUTION OF THIS LEASE NOR THE ADMINISTRATION OF THIS
LEASE OR OTHER DOCUMENTS REFERENCED HEREIN BY LANDLORD, NOR ANY
OTHER RIGHT, DUTY OR OBLIGATION OF LANDLORD UNDER OR PURSUANT
TO THIS LEASE OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE
ANY FIDUCIARY OBLIGATIONS OF LANDLORD TO TENANT.
(l) 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 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.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, this Lease is hereby executed in multiple
originals as of July 25, 1997.
"Landlord"
BNP LEASING CORPORATION, a Delaware corporation
By: /s/ Lloyd G. Cox
----------------------------
Lloyd G. Cox, Vice President
[Continuation of signature pages to Lease Agreement dated to be
effective July 25, 1997]
"Tenant"
3COM CORPORATION, a Delaware corporation
By: /s/ Mark D. Michael
-------------------------------------
Name: Mark D. Michael
-------------------------------
Title:SVP, Gen. Counsel & Secretary
-------------------------------
Exhibit A
Legal Description
All that real property, situate in the City of Santa Clara,
County of Santa Clara, State of California, being a portion of
the lands of the City of Santa Clara Land Fill Corporation and
the City of Santa Clara described as Parcel B in that Deed of
Gift recorded August 30, 1967 in Book 7840 at Page 204,
Official Records of Santa Clara County and being a portion of
the lands of the City of Santa Clara as described in the deed
recorded in Book 9458 at page 115, Official Records of Santa
Clara County, said real property being more particularly
described as follows:
Beginning at the brass pin monument located at the intersection
of the monument line of Great America Parkway (125 feet wide)
and the centerline Old Mountain View - Alviso Road (60 feet
wide) as shown on that Parcel Map filed for record in Book 602
of Maps at Page 34, Santa Clara County Records;
Thence along the centerline of Old Mountain View - Alviso Road,
North 89 47'24" West 259.00 feet to the Southerly prolongation
of the Easterly line of the lands of Santa Clara Valley Water
District, described as Parcel 1 in the Grant Deed recorded in
Book D928 at Page 706, Official Records of Santa Clara County;
Thence along said prolongated line, North 10 57'34" West 30.58
feet to the Southeasterly corner of said lands of Santa Clara
Valley Water District and the True Point of Beginning, said
point being on the Northerly line of said Old Mt. View - Alviso
Road as shown on that Parcel Map filed for record in Book 413
of Maps at Page 13, Santa Clara County Records;
Thence along the Easterly line of San Tomas Aquino Creek,
conveyed to the Santa Clara Valley Water District as Parcel 1
in that Grant Deed recorded in Book D928 at Page 706, Official
Records of Santa Clara County, and in that Quitclaim recorded
in Book D928 at Page 716, Official Records of Santa Clara
County, North 10 57'34" West 1325.72 feet to the Southerly
corner of that parcel described in the Grant Deed from the City
of Santa Clara to the Santa Clara Valley Water District,
recorded
February 14, 1997, Document 13613165, Official Records of Santa
Clara County;
Thence along the Southeasterly line of said parcel, North
19 14'15" East 105.25 feet to the Southeasterly line of that
parcel described as Parcel 1 in that Grant Deed from the City
of Santa Clara to the State of California, recorded
February 10, 1997, Document 13607858, Official Records of Santa
Clara County;
Thence along the general Southerly boundary of the last said
parcel the following six (6) courses:
North 63 34'28" East 51.54 feet;
North 62 02'11" East 153.02 feet;
North 61 29'12" East 230.90 feet;
Easterly and Southeasterly along a tangent curve to the right,
having a radius of 32.00 feet, through a central angle of
100 07'12", an arc length of 55.92 feet to a point of compound
curvature;
Southerly along a tangent curve to the right, having a radius
of 282.00 feet, through a central angle of 18 23'50", an arc
length of 90.55 feet;
South 00 00'14" West 55.36 feet to the Westerly line of said
Great America Parkway, shown as "Proposed Great America
Parkway" on that Record of Survey filed for record in Book 34
of Maps at Pages 1 through 8, Santa Clara County Records;
Thence along said Westerly line, South 01 05'29" West 1395.20
feet;
Thence along a tangent curve to the right, having a radius of
50.00 feet, through a central angle of 89 07'07", for an arc
length of 77.77 feet to a point of tangency on said Northerly
line of Old Mt. View - Alviso Road;
Thence along said Northerly line, North 89 47'24" West 150.14
feet to said True Point of Beginning.
Exhibit B
Permitted Encumbrances
1. PROPERTY TAXES, including any assessments collected
with taxes, for the fiscal year 1996-1997, a lien not yet
due or payable.
2. THE LIEN of supplemental taxes arising as the result
of an event or occurrence on or after the date of this
Policy assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code.
No supplemental taxes now due and payable.
3. EASEMENT for the purposes stated herein and incidents
thereto
Purpose : Gas pipe line
Granted to : Pacific Gas and Electric Company,
a California corporation
Recorded : January 9, 1932 in Book 598, page 183,
Official Records of Santa Clara County,
California
Affects : As follows:
The Route of said pipe line shall be as follows:
Beginning at a point in the Westerly boundary line of
said premises, distant thereon 35.0 feet Southerly from
said iron pipe marking the Northwest corner of said
premises, and running thence South 89 46' East 552.2
feet, thence North 50 5 1/2' East 500 feet more or less,
to the point in the Easterly boundary line of said
premises.
The width of said easement is not disclosed of
record.
4. The Effect of the Redevelopment Plan for the North
Bayshore Project and contains the provisions permitted by
Section 33670 of the Health and Safety Code of the State
of California, recorded December 31, 1973 in Book 0708,
Page 585, Official Records of Santa Clara County,
California.
5. A Resolution Dedicating Land of the City of Santa
Clara to Particular Public Uses recorded October 1, 1974
in Book B111, page 1 of Official Records of Santa Clara
County, California and described as follows:
An easement for slope purposes described as follows:
Beginning at a point on the Westerly line of said
Proposed Great America Parkway distant thereon N 1 05'37"
E 1836.01 feet from the intersection of said Westerly line
with the Southerly line of the lands described in the Deed
recorded in Book 9458 of Official Records of Santa Clara
County at page 115, thence from said Point of Beginning
leaving said Westerly line N. 0 35'28" W. 170.07 feet;
thence N 0 39'04" E 927.68 feet to a point on the Westerly
line of said Proposed Mission College Boulevard; thence
Southeasterly and Southerly along last said line from a
tangent that bears S 58 01'04" E along the arc of a curve
to the right having a radius of 25.00 feet and a central
angle of 59 06'41", an arc distance of 25.79 feet and
tangent to the preceding curve S 1 05'37" W 1076.20 feet
to the Point of Beginning.
6. ANY RIGHTS, interests, or claims adverse to those of
the vestee herein which may exist or arise by reason of
the following facts shown on a survey plat entitled
"ALTA/ACSM LAND TITLE SURVEY", dated August 21,1996, last
revised June 5, 1997, prepared by Kier & Wright, Job No.
96112.
a) The fact that various drains empty onto
this property along the Easterly boundary.
b) The fact that an overhead line and poles
exist on said land.
7. EASEMENT for the purposes stated herein and incidents
thereto
Purpose : Slope Purposes
Granted to : State of California
Recorded : February 10, 1997 under Series No. 13607858,
Official Records of Santa Clara County,
California
Affects : as follows
Beginning at the most Northerly comer of that certain
3.709 acre tract of land described in the Quitclaim Deed
from the City of Santa Clara to the Santa Clara Valley
Water District recorded July 23, 1979 in Book E245 of
Official Records at page 470, Santa Clara County Records;
thence from said point of beginning along the Easterly
line of said 3.709 acre tract, the following course: S.
10 04'48" E.109.99 feet; S. 79 55'12" W. 25.00 feet; and
S. 10 04'48" W. 154.82 feet; thence leaving said Easterly
line N. 65 31'00" E. 7.36 feet; thence N. 84 16'00" E.
45.94 feet to the true point of beginning for this
description; thence from said true point of beginning N.
64 27'28" E. 51.54 feet; thence N. 62 55'11" E. 153.01
feet; thence N. 62 22'12" E. 230.89 feet; thence along a
tangent curve to the right, with a radius of 32.00 feet,
through a central angle of 100 07'12" for an arc distance
of 55.92 feet to a point of compound curvature; thence
along a tangent curve to the right, with a radius of
282.00 feet through a central angle of 18 23'50" for an
arc distance of 90.55 feet; thence S. 0 53'14" W. 55.36
feet; thence N. 88 01'31" W. 15.00 feet; thence parallel
with above said course having a length of 55.36 feet, N.
0 53'14" E. 55.08 feet; thence concentric with and distant
15.00 feet Westerly, measured radially, from above said
course having a length of 90.55 feet along a tangent curve
to the left, with a radius of 267.00 feet, through a
central angle of 18 41'22" for an arc length of 87.09
feet; thence leaving said parallel line N. 81 17'26" W.
23.55 feet; thence S. 61 32'45" W. 229.43 feet; thence S.
63 33'03" W. 227.87 feet; thence N. 20 07'00" E. 32.19
feet to the true point of beginning.
8. LACK OF ABUTTER'S RIGHTS to and from Rte.237, lying
adjacent to the Northerly line of said land, said rights
having been relinquished in the Deed
To : State of California
Recorded : February 10,1997 under Series No. 13607858,
Official Records of Santa Clara
County, California.
9. Certificate of Compliance executed by the City of
Santa Clara which confirms that this property is a legal
parcel under the California Subdivision Map Act, recorded
in the Official Records of Santa Clara County, California
on June 12, 1997 as Document No. 13739108.
10. Development Agreement executed by the City of Santa
Clara and 3Com Corporation, recorded in the Official
Records of Santa Clara County, California on June 12, 1997
as Document No. 13739112.
Exhibit C
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 D
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 9.(r), then either party may require that the
amount be determined as follows:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
Exhibit E
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 or Will La Herran
Re: 3Com Lease Agreement
Gentlemen:
I, the undersigned, the [chief financial officer,
controller, treasurer or the assistant treasurer] of 3Com
Corporation, do hereby certify, represent and warrant that:
1. This Certificate is furnished pursuant to
subparagraph 9.(w)(iii) of that certain Lease Agreement dated
as of July 25, 1997 (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 ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Annex 1 To Compliance Certificate
For the _________________ Ended ________________, ____
I. PARAGRAPH 9.(ac)(i): Quick Ratio
A. Unencumbered Cash and Cash Equivalents
and other "Quick Assets" as defined in
Paragraph 9.(ac)(i) of the Lease: $_____________
B. "Current Liabilities" as defined in
Paragraph 9.(ac)(i) of the Lease: $_____________
C. Ratio of A to B: _____ to 1.00
F. Minimum ratio computed as provided in
Paragraph 9.(ac)(i) of the Lease: 1.00 to 1.00
II. PARAGRAPH 9.(ac)(ii): Maximum Senior Debt to Capitalization
A. Total "Debt" as defined
in Paragraph 1.(ad) of
Tenant and its consolidated
Subsidiaries: $_____________
B. "Subordinated
Debt" as defined in
Paragraph 9.(ac)(ii) of the Lease: $_____________
C. "Senior Debt" as
defined in Paragraph 9.(ac)(ii)
of the Lease
(A - B): $_____________
D. Consolidated Tangible Net Worth
(from calculation below): $_____________
E. Capitalization as defined in
Paragraph 9.(ac)(ii) of the Lease
(A + D): $_____________
F. Ratio of B to E: _____ to 1.00
D. Maximum ratio: 0.35 to 1.00
III. PARAGRAPH 9.(ac)(iii): Minimum Tangible Net Worth
A. Reported stockholders equity: $_____________
B. "Intangible Assets" as
defined in Paragraph 9.(ac)(iii)
of the Lease: $_____________
D. Consolidated Tangible Net Worth
(A - B): $_____________
E. Minimum computed as
provided in Paragraph 9.(ac)(iii)
of the Lease: $_____________
IV. PARAGRAPH 9.(ac)(iv): Fixed Charge Ratio
A. "Adjusted EBIT" as
defined in Paragraph 9.(ac)(iv)
of the Lease: $_____________
B. "Fixed Charges" as
defined in Paragraph 9.(ac)(iv)
of the Lease: $_____________
C. Ratio of A to B: _____ to 1.00
D. Minimum ratio: 2.00 to 1.00
Exhibit F
CERTIFICATE OF TENANT'S CALCULATION OF THE SPREAD
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: 3Com Lease Agreement
Gentlemen:
I, the undersigned, the [chief financial officer,
controller, treasurer or the assistant treasurer] of 3Com
Corporation, do hereby certify, represent and warrant that:
1. This Certificate is furnished pursuant to
subparagraph 9.(w)(iv) of that certain Lease Agreement dated as
of July 25, 1997 (the "Lease Agreement," the terms defined
therein being used herein as therein defined) between 3Com
Corporation, and you.
2. Annex 1 attached hereto sets forth financial data and
computations evidencing the Tenant's computation of the Spread,
all of which data and computations are complete, true and
correct.
Executed this _____ day of ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Annex 1 To Certificate of Tenant's Calculation of the Spread
As of the ________________, ____
I. S&P'S RATING OF TENANT'S SENIOR UNSECURED DEBT: _____________
II. MOODY'S RATING OF TENANT'S SENIOR UNSECURED DEBT: _____________
III. CALCULATION OF TENANT'S DEBT TO CAPITAL RATIO: _____________
A. Funded "Senior Debt" as defined in
Paragraph 9.(ac)(ii) of the Lease: $_____________
B. Other outstanding Debt as defined in
Paragraph 1.(ad) of the Lease: $_____________
C. Outstanding "Subordinated Debt" as
defined in Paragraph 9.(ac)(ii) of
the Lease: $_____________
D. Debt for purposes of this ratio
(A + B - C): $_____________
E. Reported stockholders equity: $_____________
F. "Intangible Assets" as
defined in Paragraph 9.(ac)(iii)
of the Lease: $_____________
G. Consolidated Tangible Net Worth
(E - F): $_____________
H. Capital for purposes of this test
(A + B + G): $_____________
I. D divided by H: _____________
III. SPREAD AS DEFINED IN PARAGRAPH 1.(cm) OF THE LEASE: _____________
Exhibit G
LIST OF ENVIRONMENTAL REPORTS
As used in this Lease, "Environmental Report" means,
collectively, the following reports provided to Landlord by
3COM or acquired by Landlord from its own consultants:
1. Phase I Environmental Site Assessment for the former
Policeman's Athletic League, Motocross Site, Great America
Parkway and Old Mountain View-Alviso Road, Santa Clara, CA,
September 22, 1995.
2. Phase II Investigation Results of the former Policeman's
Athletic League, Motocross Site, Great America Parkway and Old
Mountain View-Alviso Road, Santa Clara, CA, November 15, 1995.
Exhibit H
DESCRIPTION OF RENDERINGS OF THE DESIGNATED IMPROVEMENTS
Designated Improvements to the Leased Property will consist of
the following improvements:
(1) three new buildings to be used as a
corporate office, electronics research and development
facility, data center and cafeteria;
(2) an 350 foot span elevated walkway between such
buildings and Tenant's corporate campus.
For a better description of the Designated Improvements,
reference is made to the Entitlements Package dated 03.05.97
for 3COM's PAL Site, which includes elevations and a conceptual
site plan among other information, and which was delivered to
Landlord's counsel by 3COM's counsel contemporaneously with the
execution and delivery of this Lease.
Exhibit I
Estoppel From Contractors
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents
to BNP Leasing Corporation, a Delaware corporation ("BNP"), and
covenants with BNP as follows:
1. The undersigned has entered into that certain
[Construction Contract] (the "Construction Contract") by and
between the undersigned and 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").
2. The undersigned has been advised that BNP owns the Land.
3. The undersigned has also received a copy of the Lease
Agreement dated as of July 25, 1997 (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.
4. A complete and correct copy of the Construction Contract
is attached to this letter. The Construction Contract is in
full force and effect and has not been modified or amended.
5. The undersigned has not sent 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 J
Estoppel From Architects/Engineers
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents
to BNP Leasing Corporation, a Delaware corporation ("BNP"), and
covenants with BNP as follows:
1. The undersigned has entered into that certain
[Architect's/Engineer's 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").
2. The undersigned has been advised that BNP owns the Land.
3. The undersigned has also received a copy of the Lease
Agreement dated as of July 25, 1997 (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.
4. A complete and correct copy of the Agreement is attached
to this letter. The Agreement is in full force and effect and
has not been modified or amended.
5. The undersigned has not sent 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, HEADER FOLLOWS THIS COMMENT BOX --
MOVE TO FIT PAGE NUMBERINGbut 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 K
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 25, 1997 (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 6.(c)(viii) 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 6.(c)(viii) of the Lease dated as of
July 25, 1997 (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 Designated 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
Designated 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 L
Notice to Accelerate the Carrying Costs Accrual Termination Date
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: Lease Agreement/3COM Phase III
Gentlemen:
This notice is furnished pursuant to subparagraph 1.(p) of
that certain Lease Agreement dated as of July 25, 1997 (the
"Lease Agreement," the terms defined therein being used herein
as therein defined) between 3Com Corporation and you. I, the
undersigned, the [chief financial officer, controller,
treasurer or the assistant treasurer] of 3Com Corporation, do
hereby notify you that 3COM Corporation irrevocably elects to
accelerate the Carrying Costs Accrual Termination Date and
thereby accelerate the commencement of Base Rent accruals and
the termination of accruals of Carrying Costs. Because of this
notice, the Carrying Costs Accrual Termination Date will occur
on the next following Advance Date that is at least ten (10)
days after the date you receive this notice.
Executed this _____ day of ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Exhibit M
Notice of LIBOR Period Election
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: Lease Agreement dated as of July 25, 1997, between
3COM Corporation, as tenant, and BNP Leasing Corporation, as
landlord
Gentlemen:
Capitalized terms used in this letter are intended to have
the meanings assigned to them in the Lease referenced above.
This letter constitutes notice to you that the LIBOR Period
Election under the Lease shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or
after:
______________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE
NUMBER OF MONTHS SPECIFIED ABOVE IS NOT A PERMITTED NUMBER
UNDER THE DEFINITION OF "LIBOR PERIOD ELECTION" IN THE LIST OF
DEFINED TERMS ATTACHED TO THE LEASE, OR IF THE DATE SPECIFIED
ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION
IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS
NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR
ANY REASON YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 19___.
3COM CORPORATION
Name:______________________________
Title:________________________
[cc all Participants]
Schedule 1
LIST OF APPROVED PARTICIPANTS
"Approved Participants" as used in this Lease will include the
existing Participants, Banque Nationale de Paris and ABN Amro
Bank N.V., and the following prospective participants, to the
extent that any one or more of the following may at the request
of Landlord become parties to the Participation Agreement and
the Pledge Agreement by executing supplements to those
agreements as therein provided:
Credit Suisse First Boston
Industrial Bank of Japan, Limited
Mellon Bank, N.A.
Societe Generale
The Toronto-Dominion Bank
The Bank of Nova Scotia
Union Bank of California
EXHIBIT 10.18
The transactions contemplated in this Purchase Agreement have been
made possible by the following banks, acting in the capacities indicated:
Banque Nationale de Paris, ABN Amro Bank N.V.,
as Administrative/Documentation as Syndication Agent and
Agent and Arranger Co-Arranger
$83,600,000
PURCHASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
AS SELLER
AND
3COM CORPORATION,
AS PURCHASER
EFFECTIVE AS OF JULY 25, 1997
(Pal Site - Phase III)
This Purchase Agreement amends, restates and replaces the Purchase
Agreement between the Seller and Purchaser dated June 12, 1997,
covering the Land (as described in Exhibit A attached hereto).
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is made as of
July 25, 1997, by 3COM CORPORATION, a Delaware corporation
("3COM") and BNP LEASING CORPORATION, a Delaware corporation
("BNPLC").
R E C I T A L S
---------------
A. BNPLC acquired the land described in Exhibit A
attached hereto and the improvements and fixtures located
thereon, if any, and has leased the same to 3COM pursuant to
that certain Lease Agreement (as from time to time
supplemented, amended or restated, the "Original Lease")
between 3COM Corporation, a California corporation, the
predecessor in interest to 3Com, and BNPLC dated as June 12,
1997.
B. By a Lease Agreement dated of even date herewith (as
from time to time supplemented, amended or restated, the
"Lease"), BNPLC and 3Com have amended, restated and replaced
the Original Lease. (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".)
C. BNPLC 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 BNPLC dated as of the date
hereof.
D. 3COM has requested an option to purchase the
Property, which BNPLC 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:
1. Definitions. As used herein, the terms "3COM",
"BNPLC", "Original Lease", "Lease", "Leased Property",
"Property", 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" means any third party designated
by 3COM to purchase the interest of BNPLC in the Property as
provided in Paragraph 2(a)(ii) below.
"Deposit Taker" shall have the meaning assigned to it in
the Pledge Agreement.
"Deposit Taker Losses" shall have the meaning assigned to
it in the Pledge Agreement.
"Designated Sale Date" means the earlier of:
(1) the effective date of any termination of
the Lease by 3COM pursuant to Paragraph 2 thereof;
(2) any date designated by BNPLC in a written
notice given by BNPLC to 3COM when an Event of Default by
3COM is continuing, provided the notice of the date so
designated is given by BNPLC at least thirty (30) days
before the date so designated; or
(3) the first Business Day in August, 2002.
"Direct Payments to Participants" means the amounts paid
or required to be paid directly to Participants on the
Designated Sale Date as provided in Section 6.2 of the Pledge
Agreement at the direction of and for 3COM by the collateral
agent appointed pursuant to the Pledge Agreement from all or
any part of the Collateral described therein.
"Fair Market Value" means the fair market value of the
Property on or about the Designated Sale 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
the construction of any Improvements which was commenced prior
to the Designated Sale Date; that all such Improvements are
self-sufficient in the sense that any easements or offsite
facilities needed for their use will be available at no
additional cost to the owner of the Improvements; 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 no conditions or
circumstances on or about the Property [such as the presence
of an endangered species] is discovered that will impede the
use or any development of the Property permitted by the Lease;
that any use or development of the Property as permitted by
the Lease will not be hindered or delayed because of the
limited availability of utilities or water; that without undue
cost or delay any purchaser paying fair market value for the
Property can obtain any necessary permits or licenses needed
to use the Property for the purposes permitted by the Lease;
and that 3COM has 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) as determined by an
independent MAI appraiser selected by BNPLC, which appraiser
must have five (5) years or more experience appraising similar
properties in northern California.
"Qualified Deposit Taker" means one of the fifty largest
(measured by total assets) U.S. banks, or one of the one
hundred largest (measured by total assets) banks in the world,
with debt ratings of at least (i) A- (in the case of long term
debt) and A-1 (in the case of short term debt) or the
equivalent thereof by Standard and Poor's Corporation, and
(ii) A (in the case of long term debt) and P-1 (in the case of
short term debt) or the equivalent thereof by Moody's Investor
Service, Inc. The parties believe it improbable that the
ratings systems used by Standard and Poor's Corporation and by
Moody's Investor Service, Inc. will be discontinued or
changed, but if such ratings systems are discontinued or
changed, 3COM shall be entitled to select and use a comparable
ratings systems as a substitute for the S&P Rating or the
Moody Rating, as the case may be, for purposes of determining
the status of any bank as a Qualified Deposit Taker.
"Purchase Price" means an amount equal to Stipulated Loss
Value outstanding on the Designated Sale Date, plus all costs
and expenses (including appraisal costs, withholding taxes (if
any) and reasonable Attorneys' Fees, as defined in the Lease)
incurred in connection with any sale of the Property by BNPLC
hereunder or in connection with collecting sales proceeds due
hereunder, less the aggregate amounts (if any) of Direct
Payments to Participants and Deposit Taker Losses.
"Prohibited Encumbrance" means any lien or other title
defect encumbering the Property that is claimed by BNPLC
itself or lawfully claimed by a third party through or under
BNPLC, including any judgment lien lawfully filed against
BNPLC and including any tax lien assessed because of BNPLC'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 BNPLC, (ii) is claimed by, through or under
3COM or any of the Participants approved by 3COM (other than
Landlord's Parent), or (iii) exists because of any breach by
3COM of the Lease, because of anything done or not done by
BNPLC in an effort to satisfy subparagraph 9(b) of the Lease,
or because of anything done or not done by BNPLC at the
request of 3COM.
"Remarketing Notice" shall have the meaning assigned to
it in Paragraph 2(b)(1) below.
"Required Documents" means the grant deed and other
documents that BNPLC must tender pursuant to Paragraph 3
below.
"Shortage Amount" means any amount payable to BNPLC by
3COM, rather than by the Applicable Purchaser, pursuant to
clause 2(a)(ii) below.
2. 3COM's Options and Obligations on the Designated
Sale Date.
(a) Choices. On the Designated Sale Date 3COM shall
have the right and the obligation to either:
(i) purchase BNPLC'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
BNPLC's interest in the Property and in Escrowed
Proceeds, if any, for a net cash price not less than
the lesser of (a) the Fair Market Value of the
Property, (b) fifteen percent (15%) of Stipulated
Loss Value outstanding immediately prior to the
purchase or (c) the Purchase Price. If, however,
the Fair Market Value is less than fifteen percent
(15%) of Stipulated Loss Value and less than the
Purchase Price, BNPLC may elect to keep the Property
and any Escrowed Proceeds rather than sell to the
Applicable Purchaser, in which case 3COM shall pay
BNPLC an amount equal to (A) eighty-five percent
(85%) of Stipulated Loss Value, less (B) the sum of
(x) any Escrowed Proceeds then held and to be
retained by BNPLC, (y) any Direct Payments to
Participants and (z) any Deposit Taker Losses.
Unless BNPLC elects to keep the Property pursuant to
the preceding sentence, 3COM must make a
supplemental payment to BNPLC on the Designated Sale
Date equal to the excess (if any) of the Purchase
Price over the net cash price actually paid to BNPLC
on the Designated Sale Date by the Applicable
Purchaser for BNPLC'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 (1) eighty-five percent
(85%) of Stipulated Loss Value on the Designated
Sale Date, less (2) any Direct Payments to
Participants and any Deposit Taker Losses. Any
supplemental payment payable to BNPLC 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 BNPLC exceeds
the Purchase Price and all other sums that are then
due from 3COM to BNPLC, 3COM shall be entitled to
such excess.
If any amount payable to BNPLC pursuant to this subparagraph
2(a) is not actually paid to BNPLC on the Designated Sale
Date, 3COM shall pay interest on the past due amount computed
at the Default Rate from the Designated Sale Date. However,
3Com shall be entitled to a reduction of the interest required
by the preceding sentence equal to the Base Rent, if any, paid
by 3Com as provided in Paragraph 17 of the Lease for any
holdover period after the Designated Sale Date.
(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 BNPLC the opportunity to have the
Fair Market Value determined by an appraiser as provided
in the definition of Fair Market Value above before the
Designated Sale Date, 3COM must, unless 3COM concedes
that Fair Market Value will not be less than fifteen
percent (15%) of Stipulated Loss Value on the Designated
Sale Date, provide BNPLC with a Remarketing Notice.
"Remarketing Notice" means a notice given by 3COM to
BNPLC (and to each of the Participants) no earlier than
one hundred eighty (180) days before the Designated Sale
Date and no later than ninety (90) days before the
Designated Sale Date, specifying that 3COM does not
concede that the Fair Market Value is equal to or greater
than fifteen percent (15%) of the Stipulated Loss Value.
A Remarketing Notice will be required only if 3COM does
not concede that Fair Market Value will equal or exceed
fifteen percent (15%) of Stipulated Loss Value on the
Designated Sale Date. But if for any reason (including
but not limited to any acceleration of the Designated
Sale Date pursuant to clause (2) of the definition of
Designated Sale 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 fifteen percent (15%) of Stipulated Loss
Value on the Designated Sale Date.
(2) To give BNPLC the opportunity to prepare
the Required Documents before the Designated Sale 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 BNPLC given
at least seven (7) days prior to the Designated Sale
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 BNPLC'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 Sale Date and BNPLC shall have elected to keep the
Property on such Designated Sale Date in accordance with
clause (ii) of Paragraph 2(a); or
(2) 3COM shall have failed on a Designated Sale
Date to make or cause to be made all payments to BNPLC
required by this Agreement or by the Lease and such failure
shall have continued beyond the thirty (30) day period for
tender specified in the next sentence.
If BNPLC does not receive all payments due under the Lease and
all payments required hereunder on a Designated Sale Date,
3COM may nonetheless tender to BNPLC 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 Sale Date to the date of tender, and
if presented with such a tender within thirty (30) days after
the applicable Designated Sale Date, BNPLC 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 BNPLC. 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 BNPLC,
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
Sale Date 3COM must pay all amounts then due to BNPLC under
the Lease. BNPLC will remit any excess amounts due 3COM
pursuant to the last sentence of clause (ii) of Paragraph 2(a)
promptly after BNPLC's receipt of the same and in no event
later than thirty (30) days thereafter.
(e) Effect of Options on Subsequent Title Encumbrances.
It is the intent of BNPLC 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 BNPLC, including the
Participants (but not any unsatisfied obligations to BNPLC
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
BNPLC in the ordinary course of BNPLC's business. Anyone
accepting or taking any interest in the Property by or through
BNPLC 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 BNPLC notwithstanding any
prior conveyance or assignment by BNPLC, 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 BNPLC.
3. Terms of Conveyance Upon Purchase. Immediately
after receipt of all payments to BNPLC required pursuant to
the preceding Paragraph 2, BNPLC must, unless it is to keep
the Property as permitted by Paragraph 2(a)(ii), deliver all
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 BNPLC or that may
become due thereafter because of any expense or liability
incurred by BNPLC resulting in whole or in part from events or
circumstances occurring before such conveyance. All costs of
such purchase and conveyance of every kind whatsoever, both
foreseen and unforeseen, shall be the responsibility of the
purchaser, and the form of grant deed used to accomplish such
conveyance shall be substantially in the form attached as
Exhibit B. With such grant deed, BNPLC shall also tender to
3COM or the Applicable Purchaser, as the case may be, the
following, each fully executed and, where appropriate,
acknowledged on BNPLC's behalf by an officer of BNPLC: (1) a
Preliminary Change of Ownership Report in the form attached as
Exhibit C, (2) a Bill of Sale and Assignment of Contract
Rights and Intangible Assets in the form attached as Exhibit
D, (3) an 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 BNPLC, (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 BNPLC 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 BNPLC under this
Agreement, the Lease or any other agreement to which BNPLC is
a party, or (vii) any other cause, whether similar or
dissimilar to the foregoing, any existing or future law to the
contrary notwithstanding. It is the intention of the parties
hereto that the obligations of 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 BNPLC. 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 BNPLC. 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 BNPLC 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 BNPLC at the closing of the sale
hereunder, to (i) recover monetary damages proximately caused
by such failure of BNPLC if BNPLC does not cure the failure
within thirty (30) days after 3COM demands a cure by written
notice to BNPLC, or (ii) a decree compelling performance of
BNPLC'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 BNPLC is intended to be
exclusive of any other right or remedy BNPLC has with respect
to the Property, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given
hereunder or now or hereafter existing at law or in equity or
by statute. In addition to other remedies available under
this Agreement, 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 BNPLC of any payment hereunder with knowledge of the breach
of this Agreement shall not be deemed a waiver of such breach,
and no waiver by 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 BNPLC 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 BNPLC with respect to the Property.
Neither 3COM nor BNPLC 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 BNPLC, 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 BNPLC hereunder shall be paid to BNPLC
in immediately available funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris
ABA #: 121027234
Reference: 3COM (Phase III Site)
or at such other place and in such other manner as
BNPLC may designate in a notice to 3COM (provided BNPLC
will not unreasonably designate a method of payment other
than wire transfer). Time is of the essence as to all
payments to BNPLC under this Agreement. Any payments
required to be made by BNPLC 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 BNPLC:
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 or William J.
La Herran
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of 3COM:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Legal Dept. Mail Stop 1308
Telecopy: (408) 764-6434
With copies to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Real Estate Dept. Mail Stop 1220
Telecopy: (408) 764-5718; and
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Treasury Dept. Mail Stop 1307
Telecopy: (408) 764-8403; and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Jonathan E. Rattner, Esq.
Telecopy: (415) 328-3029
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
BNPLC and their respective permitted successors and assigns
and shall inure to the benefit of 3COM and BNPLC and all
permitted transferees, mortgagees, successors and assignees of
3COM and BNPLC with respect to the Property; provided, that
the rights of BNPLC hereunder shall not pass to 3COM or any
Applicable Purchaser or any subsequent owner claiming through
them. Prior to the Designated Sale Date BNPLC 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 BNPLC sells or
otherwise transfers the Property and assigns its rights under
this Agreement and the Lease pursuant to a Permitted Transfer,
then to the extent BNPLC's successor in interest confirms its
liability for the obligations imposed upon BNPLC by this
Agreement and the Lease on and subject to the express terms
set out herein and therein, BNPLC shall thereby be released
from any further obligations thereafter arising under this
Agreement and the Lease, and 3COM will look solely to each
successor in interest of BNPLC for performance of such
obligations.
16. WAIVER OF JURY TRIAL. BNPLC 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 BNPLC each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each
has already relied on the waiver in entering into this
Agreement and the other documents referred to herein, and that
each will continue to rely on the waiver in their related
future dealings. 3COM and BNPLC each further warrant and
represent that it has reviewed this waiver with its legal
counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LEASE, THIS AGREEMENT OR THE ENVIRONMENTAL
INDEMNITY. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
17. Security for 3COM's Obligations. 3COM's
obligations under this Agreement are secured by the Pledge
Agreement, reference to which is hereby made for a description
of the Collateral covered thereby and the rights and remedies
provided to BNPLC thereby. Although the collateral agent
appointed for BNPLC as provided in the Pledge Agreement 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
Shortage Amount or a measure of BNPLC'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, BNPLC may, from time to time, without prejudice to
any other remedy and without notice to 3COM, require the
collateral agent to 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 BNPLC
assigns its interest in the Property before the Designated
Sale Date, BNPLC may also assign BNPLC's interest in the
Collateral to the assignee.
18. Replacement of Participants Proposed by 3COM. So
long as no Event of Default has occurred and is continuing,
BNPLC shall not unreasonably withhold its approval for a
substitution under the Participation Agreement of a new
Participant proposed by 3COM for any Participant, the Deposit
Taker for whom has ceased to be a Qualified Deposit Taker;
provided, however, that (A) the proposed substitution can be
accomplished without a release or breach by BNPLC of its
rights and obligations under the Participation Agreement or
the "Underlying Documents" described therein (including this
Purchase Agreement); (B) the new Participant will agree (by
executing Supplements to the Participation Agreement and
Pledge Agreement as therein contemplated and by other
agreements as may be reasonably required by BNPLC and 3COM) to
become a party to the Participation Agreement and to the
Pledge Agreement, to designate a Qualified Deposit Taker as
the Deposit Taker for it under the Pledge Agreement and to
accept a Percentage under the Participation Agreement equal to
the Percentage of the Participant to be replaced; (C) the new
Participant (or 3COM) will provide the funds required to pay
the termination fee by Section 6.4 of the Participation
Agreement to accomplish the substitution; (D) 3COM (or the new
Participant) agrees in writing to indemnify and defend BNPLC
for any and all Losses incurred by BNPLC in connection with or
because of the substitution, including the cost of preparing
supplements to the Participation Agreement and the Pledge
Agreement and including any cost of defending and paying any
claim asserted by the Participant to be replaced because of
the substitution (but not including any liability of BNPLC to
such Participant for damages caused by BNPLC's bad faith or
gross negligence in the performance of BNPLC's obligations
under the Participation Agreement prior to the substitution);
and (E) the new Participant shall be a reputable financial
institution having a net worth of no less than seven and one
half percent (7.5%) of total assets and total assets of no
less than $10,000,000,000.00 (all according to then recent
audited financial statements). BNPLC shall attempt in good
faith to assist (and cause its Affiliate, Banque Nationale de
Paris, to attempt in good faith to assist) 3COM in identifying
a new Participant that 3COM may propose to substitute for an
existing Participant pursuant to this Paragraph, as 3COM may
reasonably request from time to time. However, in no event
shall BNPLC itself, or any of its Affiliates, be required to
take the Percentage of any Participant to be replaced.
19. Security for BNPLC's Obligations. To secure 3COM's
right to recover any damages caused by a breach of Paragraph 3
by BNPLC, including any such breach caused by a rejection or
termination of this Agreement in any bankruptcy or insolvency
proceeding instituted by or against BNPLC, as debtor, BNPLC
does hereby grant to 3COM a lien and security interest against
all rights, title and interests of BNPLC from time to time in
and to the Property. 3COM may enforce such lien and security
interest judicially after any such breach by BNPLC, but not
otherwise. 3COM waives any right it has to seek a deficiency
judgement against BNPLC in any action brought for a judicial
foreclosure of such lien and security interest, and in
connection therewith, BNPLC hereby acknowledges that it shall
have no right of redemption following any such judicial
foreclosure pursuant to Cal. Code Civ. Procedure Section 729.
Contemporaneously with the execution of this Agreement, 3COM
and BNPLC will execute a memorandum of this Agreement which is
in recordable form and which specifically references the lien
granted in this Paragraph, and 3COM shall be entitled to
record such memorandum at any time prior to the Designated
Sale Date.
20. Not a Partnership, Etc. NOTHING IN THIS PURCHASE
AGREEMENT IS INTENDED TO BE OR TO CREATE ANY PARTNERSHIP,
JOINT VENTURE, OR OTHER JOINT ENTERPRISE BETWEEN BNPLC AND
3COM. NEITHER THE EXECUTION OF THIS PURCHASE AGREEMENT NOR
THE ADMINISTRATION OF THIS PURCHASE AGREEMENT OR OTHER
DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY OTHER RIGHT,
DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS PURCHASE
AGREEMENT OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE ANY
FIDUCIARY OBLIGATIONS OF BNPLC TO 3COM.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this
Purchase Agreement as of July 25, 1997.
"BNPLC"
BNP LEASING CORPORATION, a Delaware corporation
By: /s/ Lloyd G. Cox
----------------------------
Lloyd G. Cox, Vice President
[Continuation of signature pages to Purchase Agreement dated
to be effective July 25, 1997]
"3COM"
3COM CORPORATION, a Delaware corporation
By: /s/ Mark D. Michael
-------------------------------------
Name: Mark D. Michael
Title: Sr. VP, General Counsel & Sec.
Exhibit A
Legal Description
All that real property, situate in the City of Santa Clara,
County of Santa Clara, State of California, being a portion of
the lands of the City of Santa Clara Land Fill Corporation and
the City of Santa Clara described as Parcel B in that Deed of
Gift recorded August 30, 1967 in Book 7840 at Page 204,
Official Records of Santa Clara County and being a portion of
the lands of the City of Santa Clara as described in the deed
recorded in Book 9458 at page 115, Official Records of Santa
Clara County, said real property being more particularly
described as follows:
Beginning at the brass pin monument located at the
intersection of the monument line of Great America Parkway
(125 feet wide) and the centerline Old Mountain View - Alviso
Road (60 feet wide) as shown on that Parcel Map filed for
record in Book 602 of Maps at Page 34, Santa Clara County
Records;
Thence along the centerline of Old Mountain View - Alviso
Road, North 89 47'24" West 259.00 feet to the Southerly
prolongation of the Easterly line of the lands of Santa Clara
Valley Water District, described as Parcel 1 in the Grant Deed
recorded in Book D928 at Page 706, Official Records of Santa
Clara County;
Thence along said prolongated line, North 10 57'34" West 30.58
feet to the Southeasterly corner of said lands of Santa Clara
Valley Water District and the True Point of Beginning, said
point being on the Northerly line of said Old Mt. View -
Alviso Road as shown on that Parcel Map filed for record in
Book 413 of Maps at Page 13, Santa Clara County Records;
Thence along the Easterly line of San Tomas Aquino Creek,
conveyed to the Santa Clara Valley Water District as Parcel 1
in that Grant Deed recorded in Book D928 at Page 706, Official
Records of Santa Clara County, and in that Quitclaim recorded
in Book D928 at Page 716, Official Records of Santa Clara
County, North 10 57'34" West 1325.72 feet to the Southerly
corner of that parcel described in the Grant Deed from the
City of Santa Clara to the Santa Clara Valley Water District,
recorded February 14, 1997, Document 13613165, Official Records of
Santa Clara County;
Thence along the Southeasterly line of said parcel, North
19 14'15" East 105.25 feet to the Southeasterly line of that
parcel described as Parcel 1 in that Grant Deed from the City
of Santa Clara to the State of California, recorded
February 10, 1997, Document 13607858, Official Records of
Santa Clara County;
Thence along the general Southerly boundary of the last said
parcel the following six (6) courses:
North 63 34'28" East 51.54 feet;
North 62 02'11" East 153.02 feet;
North 61 29'12" East 230.90 feet;
Easterly and Southeasterly along a tangent curve to the right,
having a radius of 32.00 feet, through a central angle of
100 07'12", an arc length of 55.92 feet to a point of compound
curvature;
Southerly along a tangent curve to the right, having a radius
of 282.00 feet, through a central angle of 18 23'50", an arc
length of 90.55 feet;
South 00 00'14" West 55.36 feet to the Westerly line of said
Great America Parkway, shown as "Proposed Great America
Parkway" on that Record of Survey filed for record in Book 34
of Maps at Pages 1 through 8, Santa Clara County Records;
Thence along said Westerly line, South 01 05'29" West 1395.20
feet;
Thence along a tangent curve to the right, having a radius of
50.00 feet, through a central angle of 89 07'07", for an arc
length of 77.77 feet to a point of tangency on said Northerly
line of Old Mt. View - Alviso Road;
Thence along said Northerly line, North 89 47'24" West 150.14
feet to said True Point of Beginning.
Exhibit B
CORPORATION GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NAME: [3Com Corporation or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
MAIL TAX STATEMENTS TO:
NAME: [3Com Corporation or the Applicable Purchaser]
ADDRESS: ___________________
ATTN: ___________________
CITY: ___________________
STATE: ___________________
Zip: ___________________
CORPORATION GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, BNP LEASING CORPORATION, a Delaware corporation
("BNPLC"), hereby grants to [3COM or the Applicable Purchaser]
all of BNPLC's interest in the land situated in the County of
Santa Clara, State of California, described on Annex A
attached hereto and hereby made a part hereof, together with
the improvements currently located on such land and any
easements, rights-of-way, privileges, appurtenances and other
rights pertaining to such land; provided, however, that this
grant is subject to the following, as well as the Permitted
Encumbrances described on Annex B:
1. Real Estate Taxes not yet due and payable;
2. General or Special Assessments due and payable
after the date hereof; and
3. Encroachments, variations in area or in
measurements, boundary line disputes, roadways and
other matters not of record which would be disclosed by
a survey and inspection of the property conveyed
hereby.
BNP LEASING CORPORATION
Date: As of ____________ By:______________________________
Its: Vice President
Attest:__________________________
Its: Assistant Secretary
STATE OF TEXAS )
) SS
COUNTY OF DALLAS )
On ___________________ before me, ____________________________,
personally appeared ______________________ and _______________________,
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the persons whose names are subscribed to the within
instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument
the person, or the entity upon behalf of which the persons acted,
executed the instrument.
WITNESS my hand and official seal.
Signature ______________________________
Annex A
LEGAL DESCRIPTION
All that real property, situate in the City of Santa Clara,
County of Santa Clara, State of California, being a portion of
the lands of the City of Santa Clara Land Fill Corporation and
the City of Santa Clara described as Parcel B in that Deed of
Gift recorded August 30, 1967 in Book 7840 at Page 204,
Official Records of Santa Clara County and being a portion of
the lands of the City of Santa Clara as described in the deed
recorded in Book 9458 at page 115, Official Records of Santa
Clara County, said real property being more particularly
described as follows:
Beginning at the brass pin monument located at the
intersection of the monument line of Great America Parkway
(125 feet wide) and the centerline Old Mountain View - Alviso
Road (60 feet wide) as shown on that Parcel Map filed for
record in Book 602 of Maps at Page 34, Santa Clara County
Records;
Thence along the centerline of Old Mountain View - Alviso
Road, North 89 47'24" West 259.00 feet to the Southerly
prolongation of the Easterly line of the lands of Santa Clara
Valley Water District, described as Parcel 1 in the Grant Deed
recorded in Book D928 at Page 706, Official Records of Santa
Clara County;
Thence along said prolongated line, North 10 57'34" West 30.58
feet to the Southeasterly corner of said lands of Santa Clara
Valley Water District and the True Point of Beginning, said
point being on the Northerly line of said Old Mt. View -
Alviso Road as shown on that Parcel Map filed for record in
Book 413 of Maps at Page 13, Santa Clara County Records;
Thence along the Easterly line of San Tomas Aquino Creek,
conveyed to the Santa Clara Valley Water District as Parcel 1
in that Grant Deed recorded in Book D928 at Page 706, Official
Records of Santa Clara County, and in that Quitclaim recorded
in Book D928 at Page 716, Official Records of Santa Clara
County, North 10 57'34" West 1325.72 feet to the Southerly
corner of that parcel described in the Grant Deed from the
City of Santa Clara to the Santa Clara Valley Water District,
recorded February 14, 1997, Document 13613165, Official Records of
Santa Clara County;
Thence along the Southeasterly line of said parcel, North
19 14'15" East 105.25 feet to the Southeasterly line of that
parcel described as Parcel 1 in that Grant Deed from the City
of Santa Clara to the State of California, recorded
February 10, 1997, Document 13607858, Official Records of
Santa Clara County;
Thence along the general Southerly boundary of the last said
parcel the following six (6) courses:
North 63 34'28" East 51.54 feet;
North 62 02'11" East 153.02 feet;
North 61 29'12" East 230.90 feet;
Easterly and Southeasterly along a tangent curve to the right,
having a radius of 32.00 feet, through a central angle of
100 07'12", an arc length of 55.92 feet to a point of compound
curvature;
Southerly along a tangent curve to the right, having a radius
of 282.00 feet, through a central angle of 18 23'50", an arc
length of 90.55 feet;
South 00 00'14" West 55.36 feet to the Westerly line of said
Great America Parkway, shown as "Proposed Great America
Parkway" on that Record of Survey filed for record in Book 34
of Maps at Pages 1 through 8, Santa Clara County Records;
Thence along said Westerly line, South 01 05'29" West 1395.20
feet;
Thence along a tangent curve to the right, having a radius of
50.00 feet, through a central angle of 89 07'07", for an arc
length of 77.77 feet to a point of tangency on said Northerly
line of Old Mt. View - Alviso Road;
Thence along said Northerly line, North 89 47'24" West 150.14
feet to said True Point of Beginning.
Annex B
Permitted Encumbrances
[NOTE: TO THE EXTENT THAT SPECIFIC ENCUMBRANCES (OTHER THAN
"PROHIBITED LIENS") ARE IDENTIFIED IN ADDITION TO THOSE
DESCRIBED BELOW, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO
THE LIST BELOW AND THIS "NOTE" WILL BE DELETED BEFORE THIS
DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES
APPROVED BY BNPLC AS "PERMITTED ENCUMBRANCES" FROM TIME TO
TIME BECAUSE OF 3COM'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL
TO AN ADJUSTMENT AS PROVIDED IN THE LEASE.]
This conveyance is subject to any encumbrances that do
not constitute "Prohibited Encumbrances" (as defined in the
Purchase Agreement pursuant to which this Deed is being
delivered), including County and city taxes for the Fiscal
Year 1997, a lien not yet due or payable, and including the
following matters to the extent the same are still valid and
in force:
1. PROPERTY TAXES, including any assessments collected
with taxes, for the fiscal year 1996-1997, a lien not yet
due or payable.
2. THE LIEN of supplemental taxes arising as the result
of an event or occurrence on or after the date of this
Policy assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code. No
supplemental taxes now due and payable.
3. EASEMENT for the purposes stated herein and incidents thereto
Purpose : Gas pipe line
Granted to : Pacific Gas and Electric Company,
a California corporation
Recorded : January 9, 1932 in Book 598, page 183,
Official Records of Santa Clara County,
California
Affects : As follows:
The Route of said pipe line shall be as follows:
Beginning at a point in the Westerly boundary line of
said premises, distant thereon 35.0 feet Southerly from
said iron pipe marking the Northwest corner of said
premises, and running thence South 89 46' East 552.2 feet,
thence North 50 5 1/2' East 500 feet more or less, to the
point in the Easterly boundary line of said premises.
The width of said easement is not disclosed of record.
4. The Effect of the Redevelopment Plan for the North
Bayshore Project and contains the provisions permitted by
Section 33670 of the Health and Safety Code of the State of
California, recorded December 31, 1973 in Book 0708, Page
585, Official Records of Santa Clara County, California.
5. A Resolution Dedicating Land of the City of Santa
Clara to Particular Public Uses recorded October 1, 1974 in
Book B111, page 1 of Official Records of Santa Clara
County, California and described as follows:
An easement for slope purposes described as follows:
Beginning at a point on the Westerly line of said
Proposed Great America Parkway distant thereon N 1 05'37" E
1836.01 feet from the intersection of said Westerly line
with the Southerly line of the lands described in the Deed
recorded in Book 9458 of Official Records of Santa Clara
County at page 115, thence from said Point of Beginning
leaving said Westerly line N. 0 35'28" W. 170.07 feet;
thence N 0 39'04" E 927.68 feet to a point on the Westerly
line of said Proposed Mission College Boulevard; thence
Southeasterly and Southerly along last said line from a
tangent that bears S 58 01'04" E along the arc of a curve
to the right having a radius of 25.00 feet and a central
angle of 59 06'41", an arc distance of 25.79 feet and
tangent to the preceding curve S 1 05'37" W 1076.20 feet to
the Point of Beginning.
6. ANY RIGHTS, interests, or claims adverse to those of
the vestee herein which may exist or arise by reason of the
following facts shown on a survey plat entitled "ALTA/ACSM
LAND TITLE SURVEY", dated August 21, 1996, last revised
June 5, 1997, prepared by Kier & Wright, Job No. 96112.
a) The fact that various drains empty onto this
property along the Easterly boundary.
b) The fact that an overhead line and poles exist
on said land.
7. EASEMENT for the purposes stated herein and
incidents thereto
Purpose : Slope Purposes
Granted to : State of California
Recorded : February 10, 1997 under Series No. 13607858,
Official Records of Santa Clara County,
California
Affects : as follows
Beginning at the most Northerly comer of that certain
3.709 acre tract of land described in the Quitclaim Deed
from the City of Santa Clara to the Santa Clara Valley
Water District recorded July 23, 1979 in Book E245 of
Official Records at page 470, Santa Clara County Records;
thence from said point of beginning along the Easterly line
of said 3.709 acre tract, the following course: S.
10 04'48" E.109.99 feet; S. 79 55'12" W. 25.00 feet; and S.
10 04'48" W. 154.82 feet; thence leaving said Easterly line
N. 65 31'00" E. 7.36 feet; thence N. 84 16'00" E. 45.94
feet to the true point of beginning for this description;
thence from said true point of beginning N. 64 27'28" E.
51.54 feet; thence N. 62 55'11" E. 153.01 feet; thence N.
62 22'12" E. 230.89 feet; thence along a tangent curve to
the right, with a radius of 32.00 feet, through a central
angle of 100 07'12" for an arc distance of 55.92 feet to a
point of compound curvature; thence along a tangent curve
to the right, with a radius of 282.00 feet through a
central angle of 18 23'50" for an arc distance of 90.55
feet; thence S. 0 53'14" W. 55.36 feet; thence N. 88 01'31"
W. 15.00 feet; thence parallel with above said course
having a length of 55.36 feet, N. 0 53'14" E. 55.08 feet;
thence concentric with and distant 15.00 feet Westerly,
measured radially, from above said course having a length
of 90.55 feet along a tangent curve to the left, with a
radius of 267.00 feet, through a central angle of 18 41'22"
for an arc length of 87.09 feet; thence leaving said
parallel line N. 81 17'26" W. 23.55 feet; thence S.
61 32'45" W. 229.43 feet; thence S. 63 33'03" W. 227.87
feet; thence N. 20 07'00" E. 32.19 feet to the true point
of beginning.
8. LACK OF ABUTTER'S RIGHTS to and from Rte.237, lying
adjacent to the Northerly line of said land, said rights
having been relinquished in the Deed
To : State of California
Recorded : February 10,1997 under Series No. 13607858,
Official Records of Santa Clara County,
California.
9. Certificate of Compliance executed by the City of
Santa Clara which confirms that this property is a legal
parcel under the California Subdivisions Map Act, recorded
in the Official Records of Santa Clara County, California
on June 12, 1997 as Document No. 13739108.
10. Development Agreement executed by the City of Santa
Clara and 3Com Corporation, recorded in the Official
Records of Santa Clara County, California on June 12, 1997
as Document No. 13739112.
EXHIBIT C
PRELIMINARY CHANGE OF OWNERSHIP REPORT
THIS REPORT IS NOT A PUBLIC DOCUMENT
(To be completed by transferee (buyer) THIS SPACE FOR RECORDER'S USE
prior to transfer of the subject
property in accordance with Section 480.3
of the Revenue and Taxation Code.)
SELLER/TRANSFEROR:
SELLER RECORDING DATE: DOCUMENT NO.
BUYER/TRANSFEREE:
ASSESSOR'S IDENTIFICATION NUMBER(S) LA ______ Page Parcel
PROPERTY ADDRESS OR LOCATION: No Street
City State Zip Code
MAIL TAX INFORMATION TO:
NAME:
ADDRESS:
Street No City State Zip Code
FOR ASSESSOR'S USE ONLY
Cluster
OC1____________ OC2____________
DT_____________ INT____________
RC_____________ SP$____________
DTT $__________ # Pcl._________
A Preliminary Change in Ownership
Report must be filed with each
conveyance in the County Recorder's
office for the county where the
property is located; this particular
form may be used in all 58 counties
of California.
NOTICE: A lien for property taxes applies to your property on March 1
of each year for the taxes owing in the following fiscal year, July 1
through June 30. One-half of those taxes is due November 1 and one-
half is due February 1. The first installment becomes delinquent on
December 10 and the second installment becomes delinquent on April 10.
One tax bill is mailed before November 1 to the owner of record. IF
THIS TRANSFER OCCURS AFTER MARCH 1 AND ON OR BEFORE DECEMBER 31, YOU
MAY BE RESPONSIBLE FOR THE SECOND INSTALLMENT OF TAXES ON FEBRUARY 1.
The property which you acquired may be subject to a supplemental tax
assessment in an amount to be determined by the Santa Clara County
Assessor. For further information on your supplemental roll
obligation, please call the Santa Clara County Assessor at (___) ___-
____.
PART I: TRANSFER INFORMATION Please answer all questions.
YES NO
A. Is this transfer solely between husband and
wife (Addition of a spouse, death of a spouse, divorce
settlement, etc.)?
B. Is this transaction only a correction of the name(s)
of the person(s) holding title to the property (For
example, a name change upon marriage)?
C. Is this document recorded to create, terminate, or
reconvey a lender's interest in the property?
D. Is this transaction recorded only to create,
terminate, or reconvey a security interest (e.g.,
cosigner)?
E. Is this document recorded to substitute a trustee
under a deed of trust, mortgage, or other similar
document?
F. Did this transfer result in the creation of a joint
tenancy in which the seller (transferor) remains as
one of the joint tenants?
G. Does this transfer return property to the person who
created the joint tenancy (original transferor)?
H. Is this transfer of property:
1. to a trust for the benefit of the grantor,
or grantor's spouse?
2. to a trust revocable by the transferor?
3. to a trust from which the property reverts
to the grantor within 12 years?
I. If this property is subject to a lease, is the
remaining lease term 35 years or more including
written options?
J. Is this a transfer from parents to children or from
children to parents?
K. Is this transaction to replace a principal residence
by a person 55 years of age or older?
L. Is this transaction to replace a principal residence
by a person who is severely disabled as defined by
Revenue and Taxation Code Section 69.5?
If you checked yes to J, K or L, an applicable claim form must be filed
with the County Assessor.
Please provide any other information that would help the Assessor to
understand the nature of the transfer.
IF YOU HAVE ANSWERED "YES" TO ANY OF THE ABOVE QUESTIONS EXCEPT J, K, OR
L, PLEASE SIGN AND DATE.
OTHERWISE COMPLETE BALANCE OF THE FORM.
PART II: OTHER TRANSFER INFORMATION
A. Date of transfer if other than recording date.____________________
B. Type of transfer. Please check appropriate box.
___ Purchase ___ Foreclosure ___ Gift ___ Trade or Exchange
___ Merger, Stock or Partnership Acquisition
___ Contract of Sale - Date of Contract____________________
___ Inheritance - Date of Contract_________________________
___ Other: Please explain:________________________________
___ Creation of a lease: ___ Assignment of a lease;
___ Termination of a lease
___ Date lease began___________________________________
___ Original term in years (including written options)
___________________________________________________
___ Remaining term in years (including written options)
___________________________________________________
C. Was only a partial interest in the property transferred?
___ Yes ___ No
If yes, indicate the percentage transferred ______%
Please answer, to the best of your knowledge, all applicable questions,
sign and date. If a question does not apply, indicate with "N/A".
PART III.: PURCHASE PRICE & TERMS OF SALE
A. CASH DOWN PAYMENT OR Value of Trade or Exchange
(excluding closing cost) Amount $__________
B. FIRST DEED OF TRUST @ ______% interest for
____ years. Pymts./Mo. = $____________
(Prin. & Int. only) Amount $__________
___ FHA ___ Fixed Rate ___ New Loan
___ Conventional ___ Variable Rate ___ Assumed Existing Loan Balance
___ VA ___ All Inclusive D.T. ($__________ Wrapped)
___ Bank or Savings & Loan
___ Cal-Vet ___ Loan Carried by Seller ___ Finance Company
Balloon Payment ___ Yes ___ No Due Date____________________
Amount $__________
C. SECOND DEED OF TRUST @ ______% interest for ______ years.
Pymts./Mo. = $__________ (Prin. & Int. only) Amount $_________
___ Bank or Savings & Loan ___ Fixed Rate ___ New Loan
___ Loan Carried by Seller ___ Variable Rate
___ Assumed Existing Loan Balance
___ Balloon Payment ___ Yes ___ No
Due Date ____________ Amount $__________
D. OTHER FINANCING: Is other financing involved not covered in
(b) or (c) above? ___ Yes ___ No Amount $__________
Type__________ @ ______% interest for ______ years.
Pymts./Mo. = $__________ (Prin. & Int. only)
___ Bank or Savings & Loan ___ Fixed Rate ___ New Loan
___ Loan Carried by Seller ___ Variable Rate
___ Assumed Existing Loan Balance
Balloon Payment ___ Yes ___ No Due Date________________
Amount $__________
E. IMPROVEMENT BOND ___ Yes ___ No Outstanding Balance:
Amount $__________
F. TOTAL PURCHASE PRICE: (or acquisition price,
if traded or exchanged, include real estate $
commission if paid.)
Total items A through E
G. PROPERTY PURCHASED: ___ Through a broker; ___ Direct form
seller; ___ Other (Explain)________________________________
If purchased through a broker, provide broker's name and phone
no.:_________________________
Please explain any special terms or financing and many other
information that would help the Assessor understand the purchase
price and terms of sale.
PART IV.: PROPERTY INFORMATION
A. IS PERSONAL PROPERTY INCLUDED IN THE PURCHASE PRICE
(other than a mobilehome subject to local property tax)?
___ Yes ___ No
If yes, enter the value of the personal property included in the
purchase price $____________ (Attach itemized list of personal
property)
B. IS THIS PROPERTY INTENDED AS YOUR PRINCIPAL RESIDENCE? ___ Yes
___ No
If yes, enter date of occupancy __________ (Month) / ______ (Day) /,
19____ or intended occupancy __________ (Month) / ______ (Day)/,
19____
C. TYPE OF PROPERTY TRANSFERRED:
___ Single-Family residence ___ Agricultural ___ Timeshare
___ Multiple-Family residence (no. of units:____) ___ Coop/
Own-your-own ___ Mobilehome ___ Commercial/Industrial
___ Condominium ___ Unimproved lot
___ Other (Description: _________________________________________)
D. DOES THE PROPERTY PRODUCE INCOME? ___ Yes ___ No
E. IF THE ANSWER TO QUESTION D IS YES, IS THE INCOME FROM:
___ Lease/Rent ___ Contract ___ Mineral rights
___ Other - explain______________________________________________
F. WHAT WAS THE CONDITION OF THE PROPERTY AT THE TIME OF SALE?
___ Good ___ Average ___ Fair ___ Poor
Enter here, or on an attached sheet, any other information that
would assist the Assessor in determining value of the property
such as the physical condition of the property, restrictions, etc.
_________________________________________________________________
_________________________________________________________________
I certify that the foregoing is true, correct and complete to the
best of my knowledge and belief.
Signed__________________________________ Date___________________
(New Owner/Corporate Officer)
Please Print Name of New Owner/Corporate Officer
Phone No. where you are available from 8:00 a.m. - 5:00 p.m.
(____) _______________________
(Note: The Assessor may contact you for further information)
If a document evidencing a change of ownership is presented to the
recorder for recordation without the concurrent filing of a PRELIMINARY
CHANGE OF OWNERSHIP REPORT, the recorder may charge an additional
recording fee of twenty dollars ($20).
Exhibit D
BILL OF SALE, ASSIGNMENT OF CONTRACT
RIGHTS AND INTANGIBLE ASSETS
Reference is made to that certain Offer to Purchase Real
Property and Agreement for the Sale of Real Property Located
in the City of Santa Clara dated April 19, 1996 (as amended,
the "Agreement") between 3Com Corporation, a California
corporation (predecessor in interest to 3Com Corporation, a
Delaware corporation) and the City of Santa Clara, California,
a chartered municipal corporation ("Seller"), pursuant to
which 3Com Corporation named BNP LEASING CORPORATION
("Assignor") as its designee and Seller 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 Seller 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 25, 2997 (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: ______________, _____.
ASSIGNOR:
BNP LEASING CORPORATION
a Delaware corporation
By:______________________________
Its:_____________________________
ASSIGNEE
[3COM, OR THE APPLICABLE PURCHASER], a _________
corporation
By:______________________________
Its:_____________________________
Annex A
Legal Description
All that real property, situate in the City of Santa Clara,
County of Santa Clara, State of California, being a portion of
the lands of the City of Santa Clara Land Fill Corporation and
the City of Santa Clara described as Parcel B in that Deed of
Gift recorded August 30, 1967 in Book 7840 at Page 204,
Official Records of Santa Clara County and being a portion of
the lands of the City of Santa Clara as described in the deed
recorded in Book 9458 at page 115, Official Records of Santa
Clara County, said real property being more particularly
described as follows:
Beginning at the brass pin monument located at the
intersection of the monument line of Great America Parkway
(125 feet wide) and the centerline Old Mountain View - Alviso
Road (60 feet wide) as shown on that Parcel Map filed for
record in Book 602 of Maps at Page 34, Santa Clara County
Records;
Thence along the centerline of Old Mountain View - Alviso
Road, North 89 47'24" West 259.00 feet to the Southerly
prolongation of the Easterly line of the lands of Santa Clara
Valley Water District, described as Parcel 1 in the Grant Deed
recorded in Book D928 at Page 706, Official Records of Santa
Clara County;
Thence along said prolongated line, North 10 57'34" West 30.58
feet to the Southeasterly corner of said lands of Santa Clara
Valley Water District and the True Point of Beginning, said
point being on the Northerly line of said Old Mt. View -
Alviso Road as shown on that Parcel Map filed for record in
Book 413 of Maps at Page 13, Santa Clara County Records;
Thence along the Easterly line of San Tomas Aquino Creek,
conveyed to the Santa Clara Valley Water District as Parcel 1
in that Grant Deed recorded in Book D928 at Page 706, Official
Records of Santa Clara County, and in that Quitclaim recorded
in Book D928 at Page 716, Official Records of Santa Clara
County, North 10 57'34" West 1325.72 feet to the Southerly
corner of that parcel described in the Grant Deed from the
City of Santa Clara to the Santa Clara Valley Water District,
recorded February 14, 1997, Document 13613165, Official Records
of Santa Clara County;
Thence along the Southeasterly line of said parcel, North
19 14'15" East 105.25 feet to the Southeasterly line of that
parcel described as Parcel 1 in that Grant Deed from the City
of Santa Clara to the State of California, recorded
February 10, 1997, Document 13607858, Official Records of
Santa Clara County;
Thence along the general Southerly boundary of the last said
parcel the following six (6) courses:
North 63 34'28" East 51.54 feet;
North 62 02'11" East 153.02 feet;
North 61 29'12" East 230.90 feet;
Easterly and Southeasterly along a tangent curve to the right,
having a radius of 32.00 feet, through a central angle of
100 07'12", an arc length of 55.92 feet to a point of compound
curvature;
Southerly along a tangent curve to the right, having a radius
of 282.00 feet, through a central angle of 18 23'50", an arc
length of 90.55 feet;
South 00 00'14" West 55.36 feet to the Westerly line of said
Great America Parkway, shown as "Proposed Great America
Parkway" on that Record of Survey filed for record in Book 34
of Maps at Pages 1 through 8, Santa Clara County Records;
Thence along said Westerly line, South 01 05'29" West 1395.20
feet;
Thence along a tangent curve to the right, having a radius of
50.00 feet, through a central angle of 89 07'07", for an arc
length of 77.77 feet to a point of tangency on said Northerly
line of Old Mt. View - Alviso Road;
Thence along said Northerly line, North 89 47'24" West 150.14
feet to said True 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 ___________________,
____, 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 ("BNPLC"), 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 BNPLC makes no representations or warranties of any
nature or kind, whether statutory, express or implied, with
respect to environmental matters or the physical condition of
the Subject Property, and Grantee, by acceptance of the
Conveyancing Documents, accepts the Subject Property "AS IS,"
"WHERE IS," "WITH ALL FAULTS" and without any such
representation or warranty by Grantor as to environmental
matters, the physical condition of the Subject Property,
compliance with subdivision or platting requirements or
construction of any improvements. Without limiting the
generality of the foregoing, Grantee hereby further
acknowledges and agrees that warranties of merchantability and
fitness for a particular purpose are excluded from the
transaction contemplated by the Conveyancing Documents, as are
any warranties arising from a course of dealing or usage of
trade. Grantee hereby assumes all risk and liability (and
agrees that BNPLC shall not be liable for any special, direct,
indirect, consequential, or other damages resulting or arising
from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property,
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 BNPLC,
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 BNPLC to act when the duty to act would not have
been imposed but for BNPLC's status as owner of the Subject
Property or as a party to the transactions pursuant to which
BNPLC 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 BNPLC or
participation or facilitation in any manner, directly or
indirectly, of the Applicable Transactions, or (3) the
exercise in a lawful manner by BNPLC (or any party lawfully
claiming through or under BNPLC) 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
BNPLC is entitled to rely and is relying on this Certificate.
EXECUTED as of ________________, ____.
_________________________ , a ____________________
By:_______________________________________________
Name:__________________________________________
Title:_________________________________________
By:
Exhibit F
Documentary Transfer Tax Request
ACCOUNTABLE FORM #____________
DATE: ------------
To: Santa Clara 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 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. 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 ____________,
19____.
______________________________ [signature]
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement
(herein called the "Purchase Agreement") dated as of July 25,
1997, 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.
Exhibit H
BNP LEASING CORPORATION
717 N. HARWOOD
SUITE 2630
DALLAS, TEXAS 75201
____________________ , ______
[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 [3COM or the Applicable Purchaser] (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: BNPLC MUST INCLUDE EITHER ONE, BUT ONLY ONE, OF THE
FOLLOWING REPRESENTATIONS IN THE FIRPTA STATEMENT, BUT IF THE
ONE INCLUDED STATES THAT BNPLC IS DEEMED EXEMPT FROM
CALIFORNIA INCOME AND FRANCHISE TAX, THEN BNPLC MUST ALSO
ATTACH A WITHHOLDING CERTIFICATE FROM THE CALIFORNIA FRANCHISE
TAX BOARD EVIDENCING THE SAME:
4. The Seller is qualified to do business in California.
OR
4. The Seller is deemed to be exempt from the withholding
requirement of California Revenue and Taxation Code Section
26131(e), as evidenced by the withholding certificate from the
California Franchise Tax Board which is attached.]
The Seller understands that this certification may be
disclosed to the Internal Revenue Service and/or to the
California Franchise Tax Board by the Transferee and that any
false statement contained herein could be punished by fine,
imprisonment, or both.
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: ___________, ____.
By:______________________________
Name:_________________________
Title:________________________
EXHIBIT 10.19
The transactions contemplated in this Lease Agreement have been
made possible by the following banks, acting in the capacities
indicated:
Banque Nationale de Paris, ABN Amro Bank N.V.,
as Administrative/Documentation as Syndication Agent and
Agent and Arranger Co-Arranger
$86,000,000
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
AS LANDLORD
AND
3COM CORPORATION,
AS TENANT
EFFECTIVE AS OF JULY 29, 1997
(Marlborough Site)
This Lease Agreement amends, restates and replaces the Lease Agreement
between the Landlord and Tenant dated January 21, 1997, covering the Land
(as described in Exhibit A attached hereto).
TABLE OF CONTENTS
1. Definitions
(a) Active Negligence
(b) Additional Rent
(c) Administrative Fee
(d) Advance Date
(e) Affiliate
(f) Applicable Laws
(g) Applicable Purchaser
(h) Approved Participants
(i) Attorneys' Fees
(j) Base Rent
(k) Base Rent Date
(l) Breakage Costs
(m) Business Day
(n) Capital Adequacy Charges
(o) Carrying Costs
(p) Carrying Costs Accrual Termination Date
(q) Cash Collateral
(r) Certificate of Deposit Collateral Percentage
(s) Closing Costs
(t) Change of Control Event
(u) Code
(v) Collateral
(w) Commitment Fee
(x) Completion Deadline
(y) Completion Notice
(z) Construction Advances
(aa) Construction Allowance
(ab) Construction Documents
(ac) Construction Periods
(ac) Custodial Agreement
(ad) Debt
(ae) Default
(af) Default Rate
(ag) Defaulting Participant
(ah) Designated Improvements
(ai) Designated Sale Date
(aj) Effective Rate
(ak) Environmental Indemnity
(al) Environmental Laws
(am) Environmental Losses
(an) Environmental Report
(ao) ERISA
(ap) ERISA Affiliate
(aq) ERISA Termination Event
(ar) Escrowed Proceeds
(as) Eurocurrency Liabilities
(at) Eurodollar Rate Reserve Percentage
(au) Event of Default
(av) Excluded Taxes
(aw) Fair Market Value
(ax) Fed Funds Rate
(ay) Funding Advances
(az) GAAP
(ba) Hazardous Substance
(bb) Hazardous Substance Activity
(bc) Impositions
(bd) Improvements
(be) Indemnified Party
(bf) Initial Investment
(bg) Landlord's Parent
(bh) Last Advance Date
(bi) LIBOR
(bj) LIBOR Period Election
(bk) Lien
(bl) Losses
(bm) Maximum Construction Allowance
(bn) Notice of Last Advance
(bo) Ordinary Negligence
(bp) Outstanding Construction Allowance
(bq) Participant
(br) Participation Agreement
(bs) Period
(bt) Permitted Encumbrances
(bu) Permitted Hazardous Substance Use
(bv) Permitted Hazardous Substances
(bw) Permitted Transfer
(bx) Person
(by) Plan
(bz) Pledge Agreement
(ca) Prime Rate
(cb) Purchase Agreement
(cc) Purchase Documents
(cd) Purchase Price
(ce) Qualified Payments
(cf) Qualifying Security Interest
(cg) Remaining Proceeds
(ch) Rent
(ci) Responsible Financial Officer
(cj) Scope Change
(ck) Securities Collateral
(cl) Securities Collateral Percentage
(cm) Spread
(cn) Stipulated Loss Value
(co) Subsidiary
(cp) Tenant's Knowledge
(cq) Term
(cr) Unfunded Benefit Liabilities
(cs) Upfront Fee
(ct) Voluntary Minimum Pledge Commitment
(cu) Other Terms and References
2. Term
3. Rental
(a) Base Rent
(b) Upfront Fee
(c) Commitment Fees
(d) Administrative Agency Fees
(e) Additional Rent
(f) Interest and Order of Application
(g) Net Lease
(h) No Demand or Setoff
(i) Overdrawn Allowance
4. Insurance and Condemnation Proceeds
5. No Lease Termination
(a) Status of Lease
(b) Waiver By Tenant
6. Construction Allowance
(a) Advances; Outstanding Construction Allowance
(b) Designated Improvements
(i) Responsibility for Construction.
(ii) Scope Changes.
(iii) Value Added.
(iv) Estoppel Letters Required.
(v) Advances Not a Waiver.
(c) Conditions to Construction Advances
(i) Prior Notice
(ii) Amount of the Advances
(iii) Insurance
a) Title Insurance
b) Builder's Risk Insurance
(iv) Progress of Construction
(v) Evidence of Costs to be Reimbursed
(vi) No Event of Default or Change of Control Event
(vii) No Sale of Landlord's Interest
(viii) Certificate of No Default
(ix) Payments by Approved Participants
(d) Completion Notice
7. Purchase Documents and Environmental Indemnity
8. Use and Condition of Leased Property
(a) Use
(b) Condition
(c) Consideration of and Scope of Waiver
9. Other Representations, Warranties and Covenants of Tenant
(a) Financial Matters
(b) Existing Contract
(c) No Default or Violation
(d) Compliance with Covenants and Laws
(e) Environmental Representations
(f) No Suits
(g) Condition of Property
(h) Organization
(i) Enforceability
(j) Not a Foreign Person
(k) Omissions
(l) Existence
(m) Tenant Taxes
(n) Operation of Property
(o) Debts for Construction
(p) Impositions
(q) Repair, Maintenance, Alterations and Additions
(r) Insurance and Casualty
(s) Condemnation
(t) Protection and Defense of Title
(u) No Liens on the Leased Property
(v) Books and Records
(w) Financial Statements; Required Notices;
Certificates as to Default
(x) Further Assurances
(y) Fees and Expenses; General Indemnification;
Increased Costs; and Capital Adequacy Charges
(z) Liability Insurance
(aa) Permitted Encumbrances
(ab) Environmental
(ac) Affirmative Financial Covenants
(ad) Negative Covenants
(i) Liens
(ii) Transactions with Affiliates
(iii) Mergers; Sales of Assets
(v) Change of Business
(ae) ERISA
10. Representations, Warranties and Covenants of Landlord
(a) Title Claims By, Through or Under Landlord
(b) Actions Required of the Title Holder
(c) No Default or Violation
(d) No Suits
(e) Organization
(f) Enforceability
(g) Existence
(h) Not a Foreign Person
11. Assignment and Subletting
(a) Consent Required
(b) Standard for Landlord's Consent to Assignments
and Certain Other Matters
(c) Consent Not a Waiver
(d) Landlord's Assignment
12. Environmental Indemnification
(a) Indemnity
(b) Assumption of Defense
(c) Notice of Environmental Losses
(d) Rights Cumulative
(e) Survival of the Indemnity
13. Landlord's Right of Access
14. Events of Default
(a) Definition of Event of Default
(b) Remedies
(c) Enforceability
(d) Remedies Cumulative
(e) Waiver by Tenant
(f) No Implied Waiver
15. Default by Landlord
16. Quiet Enjoyment
17. Surrender Upon Termination
18. Holding Over by Tenant
19. Miscellaneous
(a) Notices
(b) Severability
(c) No Merger
(d) NO IMPLIED REPRESENTATIONS BY LANDLORD
(e) Entire Agreement
(f) Binding Effect
(g) Time is of the Essence
(h) Termination of Prior Rights
(i) Governing Law
(j) Waiver of a Jury Trial
(k) Not a Partnership, Etc
(l) Tax Reporting
Exhibits and Schedules
Exhibit A Legal Description
Exhibit B Encumbrance List
Exhibit C Permitted Hazardous Substances
Exhibit D Resolution of Disputed Insurance Claims
Exhibit E Covenant Compliance Certificate
Exhibit F Certificate Setting Forth the Calculation of the Spread
Exhibit G List of Environmental Reports
Exhibit H Information Concerning Designated Improvements
Exhibit I Contractor's Estoppel Letter
Exhibit J Architect's Estoppel Letter
Exhibit K Draw Request Forms
Exhibit L Notice to Accelerate the Carrying Costs Accrual
Termination Date
Exhibit M Notice of Libor Period Election
Schedule 1 List of Approved Participants
LEASE AGREEMENT
This LEASE AGREEMENT (hereinafter called this "Lease"),
made to be effective as of July 29, 1997 (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 Delaware corporation (hereinafter called
"Tenant");
W I T N E S E T H T H A T:
WHEREAS, pursuant to a Sale Agreement dated December 13,
1996 (as amended, hereinafter called the "Existing Contract")
between 3Com Corporation, a California Corporation, the
predecessor in interest to Tenant and Metropolitan Life
Insurance Company, a New York corporation (hereinafter called
"Seller"), concerning the land described in Exhibit A attached
hereto (hereinafter called the "Land") and the improvements on
such Land, if any, Landlord acquired the Land and improvements
(if any) from Seller contemporaneously with the execution of
the Original Lease (hereinafter defined);
WHEREAS, Tenant assigned its rights under the Existing
Contract to Landlord on or about January 21, 1997; Landlord
acquired the Land on or about January 21, 1997; and Landlord
leased the Land and any improvements thereon to Tenant pursuant
to a Lease Agreement between Landlord and Tenant dated as of
January 21, 1997 (as supplemented or amended to the date
hereof, the "Original Lease");
WHEREAS, by this Lease Landlord and Tenant desire to
amend, restate and replace the Original Lease;
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 and Tenant hereby amend and
restate the Original Lease in its entirety, and Landlord does
hereby LEASE, DEMISE and LET unto Tenant for the term
hereinafter set forth the Land, together with:
(i) Landlord's interest in any and all buildings and
improvements now existing 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");
(ii) 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;
(iii) 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 (i) through
(iii) 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 assignable interests or rights in, to or under
the following that have been transferred to Landlord by Seller
under the Existing Contract: (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 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:
1. Definitions. As used herein, the terms "Lease,"
"Landlord," "Tenant," "Existing Contract," "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:
(a) 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 Documents.
(b) Additional Rent. "Additional Rent" shall have the meaning
assigned to it in subparagraph 3.(e) below.
(c) Administrative Fee. "Administrative Fee" shall have the
meaning assigned to it in subparagraph 3.(d) below.
(d) 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, 1997 and continuing regularly thereafter to and
including the Carrying Costs Accrual Termination Date;
provided, that if the Carrying Costs Accrual Termination Date
occurs before the Last Advance Date (as defined below), then
after the Carrying Costs Accrual Termination Date each Base
Rent Date upon which commences a new Base Rent Period (and only
such Base Rent Dates) through and including the Last Advance
Date shall also constitute an "Advance Date" hereunder. In any
event, no Advance Date shall occur after the Last Advance Date.
(e) Affiliate. "Affiliate" of any Person means any other
Person controlling, controlled by or under common control with
such Person. For purposes of this definition, the term
"control" when used with respect to any Person means the power
to direct the management of policies of such Person, directly
or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
(f) Applicable Laws. "Applicable Laws" shall have the meaning
assigned to it in subparagraph 9.(d) below.
(g) 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.
(h) Approved Participants. "Approved Participants" means (1)
the existing Participants and prospective participants listed
on Schedule 1 attached hereto; and (2) any other party which
Tenant shall have approved as a Participant, which approval
shall not be unreasonably withheld for any party that Landlord
proposes as a new Participant to replace, in whole or in part,
an Approved Participant under the Participation Agreement and
the Pledge Agreement; provided, the party proposed by Landlord
as a new Participant is a commercial bank operating in the
United States of America having capital and surplus in excess
of $500,000,000 or an Affiliate of such a bank; and, provided
further, the replacement will not reduce the aggregate
Percentages of Landlord and Landlord's Parent under and as
defined in the Participation Agreement below the minimum
percentage specified in paragraph 14.2 of the Participation
Agreement.
(i) 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.
(j) Base Rent. "Base Rent" means the rent payable by Tenant
pursuant to subparagraph 3.(a) below.
(k) Base Rent Date. "Base Rent Date" means a date upon which
Base Rent must be paid under the Lease, all of which dates
shall be the first Business Day of a calendar month. The first
Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one
month is in effect on the Carrying Costs Accrual
Termination Date, then the first Business Day of the
first calendar month following the Carrying Costs
Accrual Termination Date shall be the first Base Rent
Date.
b) If a LIBOR Period Election of two
months is in effect on the Carrying Costs Accrual
Termination Date, then the first Business Day of the
second calendar month following the Carrying Costs
Accrual Termination Date shall be the first Base Rent
Date.
c) If the LIBOR Period Election in
effect on the Carrying Costs Accrual Termination Date
is three months or six months, then the first
Business Day of the third calendar month following
the Carrying Costs Accrual Termination Date shall be
the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date
shall be the first Business Day of the first, second or third
calendar month following the calendar month which includes the
preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one
month is in effect on a Base Rent Date, then the
first Business Day of the first calendar month
following such Base Rent Date shall be the next
following Base Rent Date.
(2) If a LIBOR Period Election of two
months is in effect on a Base Rent Date, then the
first Business Day of the second calendar month
following such Base Rent Date shall be the next
following Base Rent Date.
(3) If a LIBOR Period Election of
three months or six months is in effect on a Base
Rent Date, then the first Business Day of the third
calendar month following such Base Rent Date shall be
the next following Base Rent Date.
Thus, for example, if the Carrying Costs Accrual Termination
Date falls on the first Business Day of June, 1999 and a LIBOR
Period Election of six months commences on the Carrying Costs
Accrual Termination Date, then the first Base Rent Date shall
be the first Business Day of September, 1999, and the second
Base Rent Date shall be the first Business Day of December,
1999.
"Base Rent Period" means a period for which Base Rent must
be paid under the Lease, each of which periods shall correspond
to the LIBOR Period Election for such period. The first Base
Rent Period shall begin on and include the Carrying Costs
Accrual Termination Date, and each successive Base Rent Period
shall begin on and include the Base Rent Date upon which the
preceding Base Rent Period ends. Each Base Rent Period,
including the first Base Rent Period, shall end on but not
include the first or second Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
(1) If the LIBOR Period Election for
a Base Rent Period is one month, two months or three
months, then such Base Rent Period shall end on the
first Base Rent Date after the Base Rent Date upon
which such period began.
(2) If the LIBOR Period Election for
a Base Rent Period is six months, then such Base Rent
Period shall end on the second Base Rent Date after
the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by
two examples:
1) If Tenant makes a LIBOR Period
Election of three months for a hypothetical Base Rent
Period beginning on the first Business Day in
January, 2000, then such Base Rent Period will end on
but not include the first Base Rent Date after it
begins; that is, such Base Rent Period will end on
the first Business Day in April, 2000, the third
calendar month after January, 2000.
2) If, however, Tenant makes a LIBOR
Period Election of six months for the hypothetical
Base Rent Period beginning the first Business Day in
January, 2000, then such Base Rent Period will end on
but not include the second Base Rent Date after it
begins; that is, the first Business Day in July,
2000.
(l) Breakage Costs. "Breakage Costs" means any and all costs,
losses or expenses incurred or sustained by Landlord's Parent
or any other Participant, for which Landlord's Parent or the
other 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 2 or
any sale of the Leased Property pursuant to the Purchase
Agreement, if such termination or sale is effective as of any
day other than a Base Rent Date. Breakage Costs will include
losses attributable to any decline in LIBOR as of the effective
date of termination or sale as compared to LIBOR used to
determine the Effective Rate then in effect. (However, if
Landlord's Parent or another 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 for the account of Landlord's Parent or the applicable
Participant under this Lease.) Each determination by
Landlord's Parent of Breakage Costs shall, in the absence of
clear and demonstrable error, be conclusive and binding upon
Landlord and Tenant.
(m) 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).
(n) Capital Adequacy Charges. "Capital Adequacy Charges"
means any additional amounts Landlord's Parent or any other
Participant requires Landlord to pay as compensation for an
increase in required capital as provided in subparagraph
9.(y)(iv).
(o) Carrying Costs. "Carrying Costs" means the charges added
to and made a part of the Outstanding Construction Allowance
from time to time on and before the Carrying Costs Accrual
Termination Date pursuant to and as more particularly described
in subparagraph 6.(a)(ii) below.
(p) Carrying Costs Accrual Termination Date. "Carrying Costs
Accrual Termination Date" means the earlier of (1) the Last
Advance Date or (2) the first Advance Date that occurs at least
ten (10) days after Landlord has received a notice from Tenant,
in the form of Exhibit L attached hereto, stating that Tenant
irrevocably elects to accelerate the Carrying Costs Accrual
Termination Date and thereby accelerate the commencement of
Base Rent accruals and the termination of accruals of Carrying
Costs. It is understood that Tenant may, but shall not be
required, to give such a notice at any time.
(q) Cash Collateral. "Cash Collateral" shall have the meaning
assigned to it in the Pledge Agreement.
(r) Certificate of Deposit Collateral Percentage.
"Certificate of Deposit Collateral Percentage" for each Period
means the Certificate of Deposit Collateral Percentage for such
Period (as defined in and determined in accordance with the
Pledge Agreement); provided, however, for purposes of this
Lease, the Certificate of Deposit Collateral Percentage for any
Period shall not exceed a fraction, the numerator of which
fraction shall equal the Value (as defined in and determined in
accordance with the Pledge Agreement) of all Cash Collateral
that is, on the first day of such Period, held by the Deposit
Takers under (and as defined in) the Pledge Agreement, subject
to a Qualifying Security Interest and free from claims or
security interests held or asserted by any third party, and the
denominator of which fraction shall equal the Stipulated Loss
Value on the first day of such 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).
(s) Closing Costs. "Closing Costs" means an amount requested
by Tenant, not to exceed $200,000, advanced by or on behalf of
Landlord on the effective date of this Lease to pay on behalf
of Tenant (i) the Upfront Fee, (ii) "Base Rent" and "Breakage
Costs" which have accrued and are due under (and as are defined
in) the Original Lease, and (iii) expenses incurred in
connection with the preparation and negotiation of this Lease,
the Purchase Documents, the Environmental Indemnity, the
Participation Agreement and related documents. To the extent
that Landlord does not itself apply funds advanced as provided
in this definition, the remainder thereof will be advanced to
Tenant, with the expectation that Tenant shall use any such
amount advanced for one or more of the following purposes: (1)
the payment of the Upfront Fee and expenses incurred in
connection with the preparation and negotiation of this Lease,
the Purchase Documents, the Environmental Indemnity, the
Participation Agreement and related documents; (2) the payment
or reimbursement of other expenses incurred by Tenant in
connection with any improvements Tenant may elect to make to
the Leased Property in accordance with the requirements and
limitations imposed by this Lease, including the planning,
design, engineering and permitting of thereof; (3) the
maintenance of the Leased Property; or (4) the payment of Rents
next due. The advance described in this definition shall
constitute part of the Initial Investment, and the amount
thereof may be confirmed by Landlord and Tenant in a separate
closing certificate.
(t) 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 subparagraph
9.(ad)(iii).
(u) Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(v) Collateral. "Collateral" shall have the meaning assigned
to it in the Pledge Agreement.
(w) Commitment Fee. "Commitment Fee" shall have the meaning
assigned to it in subparagraph 3.(c) below.
(x) Completion Deadline. "Completion Deadline" means the
first Business Day in August, 1999.
(y) Completion Notice. "Completion Notice" shall have the
meaning assigned to it in subparagraph 6.(d) below.
(z) Construction Advances. "Construction Advances" means
actual advances of funds made by or on behalf of Landlord
pursuant to Paragraph 6.(a)(i) below for costs incurred to
construct the Designated Improvements or for property taxes and
assessments assessed against the Leased Property paid prior to
the Last Advance Date.
(aa) 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 Designated Improvements as more
particularly described in Paragraph 6 below.
(ab) 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 Designated
Improvements.
(ac) Construction Periods. The first "Construction
Period" shall be the 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 Carrying Costs Accrual Termination Date, which
shall be coterminous with Base Rent Periods) 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.
(ac) 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.
(ad) 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 of such Person, contingent
or otherwise, under any lease of real property or related
documents (including a separate purchase agreement) which
provide that such Person must purchase or cause another to
purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to
the lessor; (vi) 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 (v) above, (vii) 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 (viii) Unfunded Benefit Liabilities.
(ae) 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.
(af) 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.
(ag) Defaulting Participant. "Defaulting Participant" means
any Approved Participant that shall have breached the
Participation Agreement 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 the Participation Agreement, 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.)
(ah) Designated Improvements. "Designated 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 as described in
Paragraph 6 below.
(ai) Designated Sale Date. "Designated Sale Date" shall have
the meaning assigned to it in the Purchase Agreement.
(aj) Effective Rate. "Effective Rate" means, for each Period,
the per annum rate determined by dividing (A) LIBOR for such
Period, by (B) 100% minus the Eurodollar Rate Reserve
Percentage for such Period; provided, however, for each day
during the short first Construction Period ending on August 1,
1997, the Effective Rate will equal the per annum rate which is
fifty basis points (50/100 of 1%) above the Fed Funds Rate on
that day.
If LIBOR or the Eurodollar Rate Reserve Percentage changes from
Period to Period, then the Effective Rate shall be
automatically increased or decreased, as the case may be, as of
the date of the change from Period to Period. If for any
reason Landlord's Parent determines that it is impossible or
unreasonably difficult to determine the Effective Rate with
respect to a given Period in accordance with the preceding
sentences, then the "Effective Rate" for that Period shall
equal any published index or per annum interest rate determined
reasonably and in good faith by Landlord's Parent to be a
comparable rate 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 Parent's comparison of
past eurodollar market rates to past yields on such Treasury
obligations. Any determination by Landlord's Parent of the
Effective Rate hereunder shall, in the absence of clear and
demonstrable error, be conclusive and binding.
(ak) 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.
(al) 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").
(am) 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 1.(am), 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.
(an) Environmental Report. "Environmental Report" means,
collectively, the reports listed on Exhibit G attached hereto.
(ao) 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.
(ap) 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.
(aq) ERISA Termination Event. "ERISA Termination Event" means
(i) the occurrence with respect to any Plan of a) a reportable
event described in Sections 4043(b)(5) or (6) of ERISA or b)
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 (ii) 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 (iii) 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 (iv) the
institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or
(v) 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.
(ar) 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 4 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 Rent 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 4 below or applied as a Qualified Payment
or as reimbursement for costs incurred in connection with a
Qualified Payment, Landlord shall keep the same deposited in an
interest bearing account, and all interest earned on such
account shall be added to and made a part of Escrowed Proceeds.
(as) 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.
(at) Eurodollar Rate Reserve Percentage. "Eurodollar Rate
Reserve Percentage" means, for purposes of determining the
Effective Rate for any Period, the reserve percentage
applicable two Business Days before the first day of such
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 period.
(au) Event of Default. "Event of Default" shall have the
meaning assigned to it in subparagraph 14.(a) below.
(av) Excluded Taxes. "Excluded Taxes" shall mean (1) all
federal, state and local income taxes upon the Base Rent, the
Upfront Fee, the Commitment Fee, Administrative Fees and any
interest paid to Landlord pursuant to subparagraph 3.(f), (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 this Lease, the
Purchase Documents, or the Leased Property, but excluding any
such taxes assessed because of any Permitted Transfer.
(aw) Fair Market Value. "Fair Market Value" shall have the
meaning assigned to it in the Purchase Agreement.
(ax) 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 Parent from three Federal funds brokers of
recognized standing selected by Landlord's Parent. All
determinations of the Fed Funds Rate by Landlord's Parent
shall, in the absence of clear and demonstrable error, be
binding and conclusive upon Landlord and Tenant.
(ay) Funding Advances. "Funding Advances" means (1) advances
(equal in the aggregate to the Initial Investment) made on or
prior to the date hereof by Landlord's Parent and other
Participants to or on behalf of Landlord to permit Landlord to
acquire or maintain its investment in the Leased Property and
to allow Landlord to provide the advance described in the
definition of Closing Costs in subparagraph 1.(s), (2) future
advances (which, together with the Funding Advances described
in the preceding clauses (1), are expected to total
$86,000,000) made by Landlord's Parent or any Participant to or
on behalf of Landlord to allow Landlord to provide Construction
Advances hereunder and to cover Carrying Costs, and (3) future
advances made by Landlord's Parent or any Participant to or on
behalf of Landlord in replacement of or renewal and extension
of other Funding Advances. For example, if after the date
hereof a new Participant advances funds on behalf of Landlord
to Landlord's Parent or another then existing Participant in
repayment of all or part of Funding Advances previously made by
Landlord's Parent or the other Participant, such advance of
funds by the new Participant shall constitute a Funding Advance
hereunder, and the prior Funding Advances so repaid to
Landlord's Parent or the other Participant shall thereupon
cease to constitute Funding Advances for purposes of this
Lease.
(az) 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 9.(w) (except for changes concurred in by Tenant's
independent public accountants).
(ba) 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; and (iv) 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.
(bb) 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.
(bc) Impositions. "Impositions" shall have the meaning
assigned to it in subparagraph 9.(p) below.
(bd) 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.
(be) 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 through or under
an assignment from Landlord that does not constitute a
Permitted Transfer), (2) the Participants, and (3) any
Affiliate, officer, agent, director, employee or servant of any
of the parties described in clause (1) or (2) preceding.
(bf) Initial Investment. "Initial Investment" means
$10,400,000, being equal to the $10,200,000 "Stipulated Loss
Value" under and as defined in the Original Lease, plus the
advance described in the definition of Closing Costs in
subparagraph 1.(s) above.
(bg) Landlord's Parent. "Landlord's Parent" 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 Funding Advances, and
any successors of such bank and such Affiliates.
(bh) Last Advance Date. "Last Advance Date" means the earlier
of (1) the Completion Deadline (or - if the Completion Deadline
is not an Advance Date, which could occur if Tenant exercises
its rights hereunder to accelerate the Carrying Costs Accrual
Termination Date and to thereafter designate a LIBOR Period
Election of more than one month - then the latest Advance Date
prior to the Completion Deadline), (2) the first Advance Date
that occurs at least ten (10) days after Landlord has received
a Completion Notice or a Notice of Last Advance, or (3) the
Designated Sale Date.
(bi) LIBOR. "LIBOR" means, for purposes of determining the
Effective Rate for each Period, the rate determined by
Landlord's Parent 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 Parent in the London interbank market at
approximately 11:00 a.m. (London time) on the second Business
Day preceding the first day of such period. Landlord shall
instruct Landlord's Parent 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 Period, (ii) in an amount equal or comparable to the
total (projected on the applicable date of determination by
Landlord's Parent) Stipulated Loss Value on the first day of
such Period, and (iii) for a period of time equal or comparable
to the appropriate Period. If Landlord's Parent 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 Parent determines that it is impossible or
unreasonably difficult to determine LIBOR with respect to a
given Period in accordance with the preceding sentences, or if
Landlord's Parent shall determine that it is unlawful (or any
central bank or governmental authority shall assert that it is
unlawful) for Landlord, Landlord's Parent or any other
Participant to provide or maintain any Funding Advances
hereunder during any Period for which Base Rent is computed by
reference to LIBOR, then "LIBOR" for that 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 Parent shall, in the absence of clear and
demonstrable error, be binding and conclusive upon Landlord and
Tenant.
(bj) LIBOR Period Election. "LIBOR Period Election" for any
Base Rent Period means a period of one month, two months, three
months or six months as designated by Tenant at least ten
Business Days prior to the commencement of such Base Rent
Period by a notice given to Landlord in the form of Exhibit M
attached to this Lease. (For purposes of this Lease a LIBOR
Period Election for any Base Rent Period shall also be
considered the LIBOR Period Election in effect on (1) the date
[whether the Carrying Costs Accrual Termination Date or a Base
Rent Date] upon which such Base Rent Period begins and (2)
subsequent Base Rent Dates, if any, which occur before the date
upon which such Base Rent Period ends.) Any LIBOR Period
Election shall remain in effect not only for the entire first
Base Rent Period for which it is designated or becomes
effective, but also for subsequent Base Rent Periods until a
new designation by Tenant becomes effective in accordance with
the provisions set forth in this definition. Notwithstanding
the foregoing, however: (1) any LIBOR Period Election that
would cause a Base Rent Period to extend beyond the end of the
scheduled Term will be shortened as necessary to cause such
Base Rent Period to end when the scheduled Term ends; (2)
changes in the LIBOR Period Election shall become effective
only upon the commencement of a new Base Rent Period; (3) until
such time as Tenant designates another LIBOR Period Election
consistent with the foregoing requirements, Tenant will be
considered to have designated a LIBOR Period Election of one
month; and (4) if an Event of Default shall have occurred and
be continuing on the third Business Day preceding the
commencement of any Base Rent Period, the LIBOR Period Election
for such Base Rent Period shall be one month.
(bk) 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.
(bl) 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.
(bm) Maximum Construction Allowance. "Maximum Construction
Allowance" means $86,000,000, minus the Initial Investment.
(bn) 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.
(bo) 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.
(bp) Outstanding Construction Allowance. "Outstanding
Construction Allowance" means at any time the amount equal to
(1) the total Construction Advances made by Landlord, PLUS (2)
all Carrying Costs added to the Outstanding Construction
Allowance under subparagraph 6.(a)(ii) on or prior to the date
in question, LESS (3) the amount (if any) of Qualified Payments
paid to Landlord and applied to the Outstanding Construction
Allowance on or prior to such date, and LESS (4) any payments
previously made by Tenant to Landlord pursuant to
subparagraph 3.(i).
(bq) Participant. "Participant" means any Person, including
Landlord's Parent, 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 Documents.
As of the effective date hereof, the only Participants are
those which have executed the Participation Agreement, but such
Participants and Landlord may agree to share in risks and
rewards of this Lease and the Purchase Documents with other
Participants in the future. However, no Person other than
Landlord's Parent and the Approved Participants shall qualify
as a Participant for purposes of this Lease, the Purchase
Documents or any other agreement to which Tenant is a party
unless, with Tenant's prior written approval or when an Event
of Default had occurred and was continuing, such Person became
a party to the Pledge Agreement and to the Participation
Agreement by executing supplements to those agreements as
contemplated therein.
(br) Participation Agreement. "Participation Agreement" means
the Participation Agreement dated the date hereof among
Landlord, Landlord's Parent, and the Participants named
therein, pursuant to which Landlord's Parent and such
Participants have agreed to participate in certain risks and
rewards to Landlord of this Lease and the Purchase Agreement,
as such Participation Agreement may be extended, supplemented,
amended, restated or otherwise modified from time to time in
accordance with its terms.
(bs) Period. "Period" means a Construction Period or a Base
Rent Period, as the context requires.
(bt) 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 (but not any deed of trust, mortgage or
other agreement given to secure the repayment of borrowed
funds), 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.
(bu) 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 Improvements permitted by this Lease and
for the operation of the Leased Property for the purposes
expressly permitted under subparagraph 8.(a); 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 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.
(bv) Permitted Hazardous Substances. "Permitted Hazardous
Substances" means Hazardous Substances used and reasonably
required for Tenant's operation of the Leased Property for the
purposes expressly permitted by subparagraph 8.(a) 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 C attached hereto.
(bw) Permitted Transfer. "Permitted Transfer" means any one or
more of the following: (1) the creation or conveyance of
rights and interests under the Participation Agreement in favor
of Landlord's Parent or Participants; (2) subject to the last
sentence of subparagraph 11.(d), any 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 Documents 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 Sale Date.
(bx) 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.
(by) 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.
(bz) Pledge Agreement. "Pledge Agreement" means the Pledge
Agreement dated as of the date hereof between Landlord and
Tenant, pursuant to which Tenant may pledge certificates of
deposit and/or securities as security for Tenant's obligations
under the Purchase Agreement (and for the corresponding
obligations of Landlord to the Participants under the
Participation Agreement), as such Pledge Agreement may be
extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
(ca) Prime Rate. "Prime Rate" means the prime interest
rate or equivalent charged by Landlord's Parent in the United
States as announced or published by Landlord's Parent from time
to time, which need not be the lowest interest rate charged by
Landlord's Parent. If for any reason Landlord's Parent does
not announce or publish a prime rate or equivalent, the prime
rate or equivalent announced or published by ABN AMRO Bank N.V.
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.
(cb) 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 in accordance with its terms.
(cc) Purchase Documents. "Purchase Documents" means
collectively the Purchase Agreement, the Pledge Agreement, and
the Custodial Agreement.
(cd) Purchase Price. "Purchase Price" shall have the
meaning assigned to it in the Purchase Agreement.
(ce) 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 Rent 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 Rent 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 Rent Date
in accordance with Paragraph 4 below. (Landlord shall have no
obligation to readvance any portion of the Outstanding
Construction Allowance reduced by Qualified Payments.)
(cf) Qualifying Security Interest. "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 risk weighting of no more
than twenty percent to a portion of their collective investment
in the Leased Property equal to the Value (as defined in and
determined in accordance with the Pledge Agreement) of the
Collateral encumbered by such an interest.
(cg) Remaining Proceeds. "Remaining Proceeds" shall have
the meaning assigned to it in subparagraph 4.(a)(ii).
(ch) Rent. "Rent" means the Base Rent and all Additional Rent.
(ci) Responsible Financial Officer. "Responsible
Financial Officer" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of Tenant.
(cj) Scope Change. A "Scope Change" means a material
addition to, deletion from or other modification to the
quality, function or capacity of the Designated Improvements as
delineated in Exhibit H 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 shall mean any change that (a)
is reasonably likely to substantially reduce the fair market
value of the Leased Property (after completion of the
Designated Improvements), or (b) will change the general
character of the Designated Improvements from that described in
Exhibit H.
(ck) Securities Collateral. "Securities Collateral" shall
have the meaning assigned to it in the Pledge Agreement.
(cl) Securities Collateral Percentage. "Securities
Collateral Percentage" for each Period means the Securities
Collateral Percentage for such Period (as defined in and
determined in accordance with the Pledge Agreement); provided,
however, for purposes of this Lease, the Securities Collateral
Percentage:
(i) for any Period ending on or prior to the Last Advance
Date shall be zero; and
(ii) for any Period ending after the Last Advance Date
shall not exceed the lesser of
(A) one minus the Certificate of
Deposit Collateral Percentage for such Period, or
(B) a fraction, the numerator of which
fraction shall equal the Value (as defined below) of
all Securities Collateral that is, on the first day
of such Period, held by the Custodian under the
Custodial Agreement, subject to a Qualifying Security
Interest and free from claims or security interests
held or asserted by any third party, and the
denominator of which fraction shall equal the
Stipulated Loss Value on the first day of such Period
(computed after the subtraction of any Qualified
Payments applied on such first day). "Value" means,
for purposes of determining the Securities Collateral
Percentage under this definition for each Period, the
Value (as defined in and determined in accordance
with the Pledge Agreement) on the Valuation Date (as
defined in the Custodial Agreement) upon which such
Period commences or, if such Period does not commence
upon a Valuation Date, on the most recent Valuation
Date prior to the commencement of such Period.
(cm) Spread. The "Spread" on any date will depend upon a
computation involving (a) the rating by Standard and Poor's
Corporation (the "S&P Rating") or the rating by Moody's
Investor Service, Inc. (the "Moody's Ratings"), whichever
rating is higher, of Tenant's senior, unsecured debt on that
date (whether such ratings are express or published, implied
ratings), and (b) the Debt to Capital Ratio (as defined below)
on that date, such computation to be as follows:
(i) If (1) there is no S&P Rating for the senior,
unsecured debt of Tenant (express or published, implied)
or the S&P Rating is below BBB-, AND (2) there is no
Moody's Rating for senior, unsecured debt of Tenant
(express or published, implied) or the Moody's Rating is
below Baa3, AND (3) the Debt to Capital Ratio is greater
than 0.30, then the Spread will be sixty basis points
(.600%).
(ii) If (1) the S&P Rating is BBB-, OR (2) the Moody's
Rating is Baa3, OR (3) the Debt to Capital Ratio is equal
to or less than 0.30 and more than 0.15, and if Tenant
does not qualify for a lower Spread pursuant to clause
(iii), (iv) or (v) below, then the Spread will be forty-
five basis points (.450%).
(iii) If (1) the S&P Rating is BBB, OR (2) the Moody's
Rating is Baa2, OR (3) the Debt to Capital Ratio is equal
to or less than 0.15, and if Tenant does not qualify for a
lower Spread pursuant to clause (iv) or (v) below, then
the Spread will be thirty-seven and one-half basis points
(.375%).
(iv) If (1) the S&P Rating is BBB+, OR (2) the Moody's
Rating is Baa1, and if Tenant does not qualify for a lower
Spread pursuant to clause (v) below, then the Spread will
be thirty basis points (.300%).
(v) If (1) the S&P Rating is above BBB+, OR (2) the
Moody's Rating is above Baa1, then the Spread will be
twenty-seven and one-half basis points (.275%).
For purposes of calculating the Spread, "Debt to Capital Ratio"
means the quotient determined by dividing (A) funded Senior
Debt (as defined in subparagraph 9.(ac)(ii)), by (B) the total
Capitalization (as defined in subparagraph 9.(ac)(ii)),
including Subordinated Debt (as defined in
subparagraph 9.(ac)(ii)). The parties believe it improbable
that the ratings systems used by Standard and Poor's
Corporation and by Moody's Investor Service, Inc. will be
discontinued or changed, but if such ratings systems are
discontinued or changed, Landlord shall be entitled to select
and use a comparable ratings systems as a substitute for the
S&P Rating or the Moody Rating, as the case may be, for
purposes of determining the Spread. All determinations of the
Spread by Landlord shall, in the absence of clear and
demonstrable error, be binding and conclusive for purposes of
this Lease. Further Landlord may, but shall not be required,
to rely on the determination of the Spread set forth in any
certificate delivered by Tenant pursuant to
subparagraph 9.(w)(iv) below, and no reduction in the Spread
will be effective because of an improvement in the S&P Rating,
the Moody's Rating or the Debt to Capital Ratio before Tenant
has notified Landlord thereof by delivery of such a
certificate.
(cn) Stipulated Loss Value. "Stipulated Loss Value" means
at any time the amount equal to (1) the Initial Investment PLUS
(2) the Outstanding Construction Allowance at such time, LESS
(3) the aggregate amount (if any) of Qualified Payments paid to
Landlord in excess of any Qualified Payments deducted in the
computation of such Outstanding Construction Allowance. Under
no circumstances will any payment of Base Rent, the Upfront
Fee, Commitment Fees or Administrative Fees reduce Stipulated
Loss Value.
(co) 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.
(cp) 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: Alan Groves, Vice President and Corporate
Controller; Christopher B. Paisley, Chief Financial Officer;
Abe Darwish, Vice President of Worldwide Real Estate and Site
Services; and Paul Murray, Director of Worldwide Safety and
Environmental Health. 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.
(cq) Term. "Term" shall have the meaning assigned to it
in Paragraph 2 below.
(cr) 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.
(cs) Upfront Fee. "Upfront Fee" shall have the meaning
assigned to it in subparagraph 3.(b).
(ct) Voluntary Minimum Pledge Commitment. "Voluntary
Minimum Pledge Commitment" means an agreement in form and
substance reasonably satisfactory to Landlord and the other
parties to the Pledge Agreement which Tenant may elect to
execute in connection with a casualty, condemnation or sale in
lieu of condemnation affecting the Leased Property and which
modifies the Pledge Agreement by establishing a Minimum
Collateral Percentage (as defined therein) sufficient to
require Tenant to maintain Collateral under the Pledge
Agreement with a value of no less than the insurance,
condemnation or sale proceeds paid or to be paid because of the
casualty, condemnation or sale in lieu of condemnation until
Tenant has completed any related repairs or restoration
required by this Lease.
(cu) 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. Unless required by the
context in which it is used, the word "or" is not exclusive.
Other capitalized terms are defined in the provisions that
follow.
2. Term. The term of this Lease (herein called the "Term")
shall commence on and include the effective date hereof, and
end at 8:00 A.M. on the first Business Day of August, 2002,
unless extended or sooner terminated as herein provided.
Notwithstanding any other provision of this Lease which may
expressly restrict the early termination hereof, and 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 Sale Date, Tenant may notify Landlord of
Tenant's election to terminate this Lease before the first
Business Day of August, 2002, 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.
The Term may be extended at the option of Tenant for two
successive periods of five (5) years each; provided, however,
that prior to any such extension the following conditions must
have been satisfied: (A) at least one hundred eighty (180) days
prior to the commencement of any such extension, Landlord and
Tenant must have agreed in writing upon, and received the
written consent and approval of Landlord's Parent and all other
Participants to (1) a corresponding extension of the date
specified in clause (iii) of the definition of Designated Sale
Date in the Purchase Agreement, and (2) an adjustment to the
Rent that Tenant will be required to pay for the extension, it
being expected that the Rent for the extension may be different
than the Rent required for the original Term, and it being
understood that the Rent for any extension must in all events
be satisfactory to both Landlord and Tenant, each in its sole
and absolute discretion; (B) there must be no Event of Default
continuing hereunder at the time of Tenant's exercise of its
option to extend; and (C) immediately prior to any such
extension, this Lease must remain in effect. With respect to
the condition that Landlord and Tenant must have agreed upon
the Rent required for any extension of the Term, neither Tenant
nor Landlord is willing to submit itself to a risk of liability
or loss of rights hereunder for being judged unreasonable.
Accordingly, both Tenant and Landlord hereby disclaim any
obligation express or implied to be reasonable in negotiating
the Rent for any such extension. Subject to the changes to the
Rent payable during any extension of the Term as provided in
this Paragraph, if Tenant exercises its option to extend the
Term as provided in this Paragraph, this Lease shall continue
in full force and effect, and the leasehold estate hereby
granted to Tenant shall continue without interruption and
without any loss of priority over other interests in or claims
against the Leased Property that may be created or arise after
the date hereof and before the extension.
3. Rental.
(a) Base Rent. Tenant shall pay Landlord rent (herein called
"Base Rent") in arrears, in currency that at the time of
payment is legal tender for public and private debts in the
United States of America, in installments on each Base Rent
Date through the end of the Term. Each payment of Base Rent
must be received by Landlord no later than 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 Rent
Period (or portion thereof) ending on the date on which the
installment is due. Landlord shall notify Tenant in writing of
the Base Rent due for each Base Rent Period at least fifteen
(15) days prior to the Base Rent 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.
For all Base Rent Periods subject to a LIBOR Period
Election of one month, two months or three months, Base Rent
shall be due in one installment on the Base Rent Date upon
which the Base Rent Period ends. For Base Rent Periods subject
to a LIBOR Period Election of six months, Base Rent shall be
payable in two installments, with the first installment
becoming due on the Base Rent Date that occurs on the first
Business Day of the third calendar month following the
commencement of such Base Rent Period, and with the second
installment becoming due on the Base Rent Date upon which the
Base Rent Period ends. Notwithstanding the foregoing, if
Tenant or any Applicable Purchaser purchases Landlord's
interest in the Property pursuant to the Purchase Agreement,
any accrued unpaid Base Rent and all outstanding Additional
Rent shall be due on the date of purchase in addition to the
purchase price and other sums due Landlord under the Purchase
Agreement.
The Base Rent for each Base Rent Period shall equal the
sum of:
(1) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) one minus the sum of the
Certificate of Deposit Collateral Percentage for such Base
Rent Period and the Securities Collateral Percentage for
such Base Rent Period, times (C) the sum of (i) the
Effective Rate for such Base Rent Period and (ii) the
Spread calculated on the tenth (10th) Business Day prior
to the day upon which such Base Rent Period commences,
times (D) the number of days in such Base Rent Period,
divided by (E) three hundred sixty (360); PLUS
(2) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) the Certificate of
Deposit Collateral Percentage for such Base Rent Period,
times (C) twenty-two and one-half basis points (22.5/100
of 1%), times (D) the number of days in such Base Rent
Period, divided by (E) three hundred sixty (360); PLUS
(3) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) the Securities Collateral
Percentage for such Base Rent Period, times (C) the sum of
(i) the Effective Rate for such Base Rent Period and (ii)
twenty-two and one-half basis points (22.5/100 of 1%),
times (D) the number of days in such Base Rent Period,
divided by (E) three hundred sixty (360).
To ease the administrative burden of this Lease and the
Pledge Agreement, clause (2) in the formula above for
calculating Base Rent reflects a reduction in the Base Rent
equal to the interest that would accrue on any Cash Collateral
required by the Pledge Agreement from time to time if the
Accounts (as defined in the Pledge Agreement) bore interest at
the Effective Rate. Landlord has agreed to such reduction in
the Base Rent to provide Tenant with the economic equivalent of
interest on such Cash Collateral, and in return Tenant has
agreed to the provisions of the Pledge Agreement that excuse
the actual payment of interest on the Accounts. By
incorporating such reduction of Base Rent into the formula
above, and by providing for noninterest bearing Accounts in the
Pledge Agreement, the parties will avoid an unnecessary and
cumbersome periodic exchange of equal payments. It is not,
however, the intent of Landlord or Tenant to understate Base
Rent or interest for financial reporting purposes.
Accordingly, for purposes of determining Tenant's compliance
with the affirmative financial covenants set forth in
subparagraph 9.(ac), and for purposes of any financial reports
that this Lease requires of Tenant from time to time, Tenant
may report Base Rent as if there had been no such reduction and
as if the Cash Collateral from time to time required by the
Pledge Agreement had been maintained in Accounts bearing
interest at the Effective Rate.
Assume, only for the purpose of illustration of the
calculation of Base Rent: that after the Carrying Costs Accrual
Termination Date, a hypothetical Base Rent Period contains
exactly ninety (90) days; that, after taking into account all
Qualified Payments, the Stipulated Loss Value on the first day
of such Base Rent Period is $50,000,000; that the Certificate
of Deposit Collateral Percentage for such Base Rent Period is
twenty percent (20%); that the Securities Collateral Percentage
for such Base Rent Period is thirty percent (30%); that the
Effective Rate for the applicable Base Rent Period is 5.5%; and
that the Spread for the applicable Base Rent Period is 0.5%.
Under such assumptions, the Base Rent for the hypothetical Base
Rent Period will equal:
$50,000,000 x 50% x (5.5% + 0.5%) x 90/360,
or $375,000, PLUS
$50,000,000 x 20% x .225% x 90/360, or
$5,625, PLUS
$50,000,000 x 30% x (5.5% + .225%) x
90/360, or $214,687.5, = $595,312.5
(b) Upfront Fee. Upon execution and delivery of this Lease by
Landlord, Tenant shall pay Landlord an upfront fee (the
"Upfront Fee") as provided in the letter dated July 10, 1997
from Landlord to Tenant, which Tenant executed and returned to
Landlord to indicate (among other things) Tenant's willingness
to proceed with negotiations for this Lease (the "Nonbinding
Term Sheet"). (Tenant shall, however, be entitled to an
appropriate credit against the Upfront Fee for the deposit
already paid by Tenant as provided in the Nonbinding Term
Sheet.) The Upfront Fee shall represent Additional Rent for
the first Base Rent Period.
(c) Commitment Fees. For each Construction Period, Tenant
shall pay Landlord a fee (herein called a "Commitment Fee")
equal to (1) twelve and one-half basis points (12.5/100 of 1%),
times (2) the difference at the end of the first day of such
Construction Period between (A) the 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 under this Lease and all Carrying Costs that
have been added to and made a part of the Outstanding
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 the first
Business Day of February, May, August and November of each
calendar year, beginning with the first Business Day in
November, 1997 and continuing regularly thereafter to and
including the first of such Business Days 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 Sale
Date, such accrued unpaid Commitment Fees shall be due on the
Designated Sale Date.
(d) Administrative Agency Fees. Upon execution and delivery
of this Lease by Landlord, and again on each anniversary of the
date hereof, Tenant shall pay to Landlord an administrative
agency fee (an "Administrative Fee") in the amount equal to one
third of the total per annum administrative agency fees
specified in the Nonbinding Term Sheet. Each Administrative
Fee shall represent Additional Rent for the Construction Period
or Base Rent Period during which it is paid.
(e) 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").
(f) 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.
(g) 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 3.(g), 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.
(h) 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.
(i) Overdrawn Allowance. On any Advance Date on which (1) the
Outstanding Construction Allowance (including any Carrying
Costs added thereto on such Advance Date), plus any Qualified
Payments that have been applied to reduce the Outstanding
Construction Allowance on or prior to such Advance Date, exceed
(2) the Maximum Construction Allowance, Tenant shall pay to
Landlord the amount of such excess. Each payment required by
this subparagraph must be received by Landlord no later than
12:00 noon (San Francisco time) on the Advance 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. Landlord shall notify Tenant in writing of any
payment due pursuant to this subparagraph at least fifteen (15)
days prior to the Advance Date upon which it becomes due. 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. Nothing in this subparagraph shall be construed
to require Landlord to make Construction Advances which could
result in payments required by this subparagraph.
4. Insurance and Condemnation Proceeds.
(a) Subject to Landlord's rights under this Paragraph 4, and
so long as no Event of Default shall have occurred and be
continuing, Tenant shall be entitled to use all casualty
insurance and condemnation proceeds payable with respect to the
Leased Property during the Term for the restoration and repair
of the Leased Property or any remaining portion thereof.
Except as provided in the last sentence of subparagraph 9.(r)
and the last sentence of subparagraph 9.(s), 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 applied as follows:
(i) First, such proceeds shall be used to reimburse
Landlord for any costs and expenses, including Attorneys'
Fees, incurred in connection with the collection of such
proceeds.
(ii) Second, the remainder of such proceeds (the
"Remaining Proceeds"), shall be held by Landlord as
Escrowed Proceeds and applied to reimburse Tenant for the
actual cost of the repair, restoration or replacement of
the Leased Property. However, any Remaining Proceeds not
needed for such purpose shall be applied by Landlord as
Qualified Payments after Tenant notifies Landlord that
they are not needed for repairs, restoration or
replacement.
Notwithstanding the foregoing, 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) apply such proceeds
(net of the deductions described in clause (i) above) as
Qualified Payments.
(b) Any Remaining Proceeds held by Landlord as Escrowed
Proceeds shall be deposited by Landlord in an interest bearing
account as provided in the definition of Escrowed Proceeds and
shall be paid to Tenant upon completion of the applicable
repair, restoration or replacement and upon compliance by
Tenant with such terms, conditions and requirements as may be
reasonably imposed by Landlord, but in no event shall Landlord
be required to pay any Escrowed Proceeds to Tenant in excess of
the actual cost to Tenant of the applicable repair, restoration
or replacement, it being understood that Landlord may retain
any such excess as a Qualified Payment. In any event, Tenant
will not be entitled to any abatement or reduction of the Base
Rent or any other amount due hereunder except to the extent
that such excess Remaining Proceeds result in Qualified
Payments which reduce Stipulated Loss Value (and thus payments
computed on the basis of Stipulated Loss Value) as provided in
the definitions set out above. Further, notwithstanding 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 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 4.
(c) In the event of any taking of all or substantially all of
the Leased Property, Landlord shall be entitled to apply all
Remaining Proceeds as a Qualified Payment, notwithstanding the
foregoing. In addition, if Stipulated Loss Value immediately
prior to any taking of all or substantially all of the Leased
Property by condemnation exceeds the sum of the Remaining
Proceeds resulting from such condemnation, then Landlord shall
be entitled to recover the excess from Tenant upon demand as an
additional Qualified Payment, whereupon this Lease shall
terminate.
(d) Nothing herein contained shall be construed to prevent
Tenant from obtaining 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 2 and purchasing such excess
(which will then be held by Landlord as Escrowed Proceeds),
together with any remaining interest of Landlord in the Leased
Property, pursuant to the Purchase Agreement.
(e) Landlord and Tenant each waive any right of recovery
against the other, and the other's agents, officers or
employees, for any damage to the Leased Property or to the
personal property situated from time to time in or on the
Leased Property resulting from fire or other casualty covered
by a valid and collectible insurance policy; provided, however,
that the waiver set forth in this subparagraph 4.(e) shall be
effective insofar, but only insofar, as compensation for such
damage or loss is actually recovered by the waiving party (net
of costs of collection) under the policy notwithstanding the
waivers set out in this paragraph. Tenant shall cause the
insurance policies required of Tenant by this Lease to be
properly endorsed, if necessary, to prevent any loss of
coverage because of the waivers set forth in this paragraph.
If such endorsements are not available, the waivers set forth
in this paragraph shall be ineffective to the extent that such
waivers would cause required insurance with respect to the
Leased Property to be impaired.
5. No Lease Termination.
(a) Status of Lease. Except as expressly provided herein,
this Lease shall not terminate, nor shall Tenant have any right
to terminate this Lease, nor shall Tenant be entitled to any
abatement of the Rent, nor shall the obligations of Tenant
under this Lease be excused, for any reason whatsoever,
including without limitation any of the following: (i) any
damage to or the destruction of all or any part of the Leased
Property from whatever cause, (ii) the taking of the Leased
Property or any portion thereof by eminent domain or otherwise
for any reason, (iii) the prohibition, limitation or
restriction of Tenant's use of all or any portion of the Leased
Property or any interference with such use by governmental
action or otherwise, (iv) any eviction of Tenant or 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 15 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 15, (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.
(b) 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.
6. Construction Allowance.
(a) Advances; Outstanding Construction Allowance.
(i) 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 Designated
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
Construction Advances which may be required of Landlord, when
added to Carrying Costs accrued or projected by Landlord to
accrue prior to the Carrying Costs Accrual Termination Date
as described below, exceed the Maximum Construction
Allowance. 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.
(ii) Charges (herein collectively called "Carrying Costs")
shall accrue as described below for each Construction Period
ending on or prior to the Carrying Costs Accrual Termination
Date, and 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).
(iii) For the first short Construction Period ending
August 1, 1997, Carrying Costs shall equal the sum of
Carrying Costs for all days during such period, and the
Carrying Costs accruing for each day during such period shall
equal (A) the Initial Investment, times (B) the sum of (i)
the Effective Rate for such day and (ii) the Spread
calculated on the date of this Lease, divided by (C) three
hundred sixty (360).
For each Construction Period after the first short
Construction Period and prior to or ending on the Carrying
Costs Accrual Termination Date, Carrying Costs shall equal:
(1)(A) Stipulated Loss Value as of the first day
of such Construction Period, times (B) one minus the
Certificate of Deposit Collateral Percentage in effect
during such Construction Period, times (C) the sum of
(i) the Effective Rate in effect during such
Construction Period and (ii) the Spread calculated on
the tenth (10th) Business Day prior to the day upon
which such Construction Period commences, times (D) the
number of days in such Construction Period, divided by
(E) three hundred sixty (360); PLUS
(2)(A) Stipulated Loss Value as of the first day
of such Construction Period, times (B) the Certificate
of Deposit Collateral Percentage in effect during such
Construction Period, times (C) twenty-two and one-half
basis points (22.5/100 of 1%), times (D) the number of
days in such Construction Period, divided by (E) three
hundred sixty (360).
(iv) To ease the administrative burden of this Lease and
the Pledge Agreement, clause (2)(A) in the formula set forth
in the preceding clause 6.(a)(iii) for calculating Carrying
Costs reflects a reduction in the Carrying Costs equal to the
interest that would accrue on any Cash Collateral required by
the Pledge Agreement from time to time if the Accounts (as
defined in the Pledge Agreement) bore interest at the
Effective Rate. Landlord has agreed to such reduction in the
Carrying Costs to provide Tenant with the economic equivalent
of interest on such Cash Collateral, and in return Tenant has
agreed to the provisions of the Pledge Agreement that excuse
the actual payment of interest on the Accounts. By
incorporating such reduction of Carrying Costs into the
formula above, and by providing for noninterest bearing
Accounts in the Pledge Agreement, the parties will avoid an
unnecessary and cumbersome periodic exchange of equal
payments. It is not, however, the intent of Landlord or
Tenant to understate Carrying Costs or interest for financial
reporting purposes. Accordingly, for purposes of determining
Tenant's compliance with the affirmative financial covenants
set forth in subparagraph 9.(ac), and for purposes of any
financial reports that this Lease requires of Tenant from
time to time, Tenant may report its financial statements as
if there had been no such reduction and as if the Cash
Collateral from time to time required by the Pledge Agreement
had been maintained in Accounts bearing interest at the
Effective Rate.
(b) Designated Improvements.
(i) Responsibility for Construction. Tenant shall construct
all Designated Improvements in a good and workmanlike manner,
in accordance with (1) the descriptions and renderings
attached as Exhibit H, (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 10.(b) (though this clause (2)
shall not be construed to require Tenant to 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 Designated
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 Designated Improvements, it
being understood that Landlord's obligation with respect to
the Designated Improvements shall be limited to the making of
advances under and subject to the conditions set forth in
this Paragraph 6. 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
Designated Improvements, Tenant warrants that it shall cause
all Designated Improvements with respect to which it receives
any Construction Advances to be completed on or prior to the
Completion Deadline.
(ii) Scope Changes. Before making any Scope Change to the
Designated Improvements contemplated in Exhibit H, 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.
(iii) Value Added. The Designated 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 Designated
Improvements which will in the aggregate satisfy this
requirement. For purposes hereof, the Designated
Improvements will be deemed to have added value
"commensurate" with the Construction Allowance used by Tenant
if, when the Designated Improvements are substantially
complete, the Leased Property has a fair market value with
the Designated Improvements that exceeds the fair market
value which the Leased Property would have without the
Designated Improvements by an amount equal to no less than
fifty percent (50%) of the Carrying Costs and Construction
Advances added to the Outstanding Construction Allowance.
(iv) Estoppel Letters Required. If requested by Landlord
prior to the substantial completion of the Designated
Improvements, Tenant shall cause the contractor under each
significant general construction contract for the Designated
Improvements to execute and deliver to Landlord an estoppel
letter in the form of Exhibit I attached hereto. Similarly,
if requested by Landlord prior to the substantial completion
of the Designated Improvements, Tenant shall also cause the
architect and engineer under any material architectural or
engineering contract for the Designated Improvements to
execute and deliver to Landlord an estoppel letter in the
form of Exhibit J 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 Designated 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.
(v) Advances Not a Waiver. No funding of Construction
Advances and no failure of Landlord to object to Designated
Improvements proposed or constructed by Tenant shall
constitute a waiver by Landlord of the requirements contained
in this subparagraph 6.(b).
(c) Conditions to Construction Advances. Landlord's
obligation to make Construction Advances from time to time
under this Paragraph 6 shall be subject to the following terms
and conditions, all of which are intended for the sole benefit
of Landlord:
(i) Prior Notice. Tenant must make a request in
substantially the form attached to this Lease as Exhibit K
for any Construction Advance at least ten (10) Business Days
prior to the Advance 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 Designated
Improvements.
(ii) Amount of the Advances. No Construction Advance
shall exceed the lesser of:
a) the Maximum Construction Allowance, less the sum of
(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
b) (1) the actual costs and expenses previously
incurred and paid by Tenant for the Designated
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 6 to
Tenant as reimbursement for such costs and expenses.
Further, no Construction Advance shall be required that
would cause the cost of completing all Designated
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
Outstanding 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.
(iii) 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 9.(z) below):
a) 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 one or more 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
b) Builder's Risk Insurance. Builder's 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 $1,000,000 (or such other amount as Landlord and
Tenant may agree upon in writing from time to time),
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 Designated Improvements.
(iv) Progress of Construction. Construction of the
Designated 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 and
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.
(v) Evidence of Costs to be Reimbursed. To the extent
contemplated by the Construction Advance request forms
attached as Exhibit K and described in subparagraph 6.(c)(i),
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
Designated 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 the right to assert a mechanic's or materialman's
lien against the Leased Property for labor performed in
connection with the Leased Property or materials delivered to
the Leased Property (collectively, "Potential Lien
Claimants") have been paid all sums for which prior
Construction Advances have been advanced under this Lease or
the Original Lease. Without limiting the foregoing, Landlord
may decline to advance any amount that would result in an
excess of $5,000,000 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.
(vi) No Event of Default or Change of Control Event. No
Event of Default shall have occurred and be continuing under
this Lease and no Change of Control Event shall have
occurred.
(vii) No Sale of Landlord's Interest. No sale of
Landlord's interest in the Leased Property shall have
occurred pursuant to the Purchase Agreement.
(viii) Certificate of No Default. Landlord shall have
received, together with the notice requesting the
Construction Advance described in clause (i) above, a current
certificate of a Responsible Financial Officer of Tenant in
the form attached as Exhibit F.
(ix) Payments by Approved Participants. None of the
Approved Participants (other than Landlord's Parent) shall
have failed to advance to Landlord their respective
percentage shares of the Construction Advance being requested
as required by Section 3.2 of the Participation Agreement.
However, any such failure shall excuse Landlord's obligation
to provide the Construction Advance requested only to the
extent of the funds that the applicable Defaulting
Participant or Participants should have advanced (but did not
advance) to Landlord. Moreover, in the event of any such
failure:
a) Landlord will, to the extent possible, postpone
reductions of Construction Advances because of the
failure by any one or more Defaulting Participants to
make required advances under Section 3.2 of the
Participation Agreement by adjusting (and readjusting
from time to time, as required) the funding
"Percentages" of other Participants, and by requesting
the other Participants to make advances to Landlord on
the basis of such adjusted Percentages, in each case as
provided in Section 4 of the Participation Agreement;
however, so long as a Defaulting Participant's failure
to make required advances continues, no Construction
Advance shall be required that would cause the
Outstanding Construction Allowance (plus Carrying Costs
to accrue thereafter as projected by BNPLC) to exceed
(a) the Maximum Construction Allowance available under
this Lease, less (b) all amounts that should have been,
but have not been, advanced by a Defaulting Participant
as required by Section 3.2 of the Participation
Agreement.
b) Tenant may exercise its rights under Section 3.1.3
of the Pledge Agreement to require Landlord to attempt
in good faith, on and subject to the terms and
conditions set forth in that Section, to assist Tenant
in identifying one or more new Participants to replace
the Defaulting Participants.
(d) Completion Notice. Tenant shall provide a notice to
Landlord (the "Completion Notice") promptly after construction
of the Designated Improvements is substantially complete and
more than fifty percent (50%) of the Designated Improvements
are being occupied by Tenant or any subtenant permitted by
Paragraph 11.(a).
7. Purchase Documents 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 Documents 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
Documents or Environmental Indemnity and the terms and
provisions of this Lease, the terms and provisions of the
Purchase Documents or Environmental Indemnity (as the case may
be) shall control.
8. Use and Condition of Leased Property.
(a) Use. Subject to the Permitted Encumbrances and the terms
hereof, Tenant may use and occupy the Leased Property so long
as no Event of Default occurs hereunder, but only for the
following purposes and other lawful purposes (including
parking) incidental thereto:
(i) research and development of computer-related and other
electronic products; and
(ii) administrative and office space; and
(iii) distribution and warehouse storage of computer-related
and other electronic products; and
(iv) assembly of computer-related and other electronic
products using components manufactured elsewhere, and light
manufacturing of computer-related and other electronic
products, but not including the manufacture of computer chips
on-site; and
(v) 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.
(b) Condition. Tenant accepts the Leased Property (and will
accept the same upon any purchase of the Landlord's interest
therein) in its present state, AS IS, and without any
representation or warranty, express or implied, as to the
condition of such property or as to the use which may be made
thereof. Tenant also accepts the Leased Property without any
representation or warranty, express or implied, by Landlord
regarding the title thereto or the rights of any parties in
possession of any part thereof, except as set forth in
subparagraph 10.(a). Landlord shall not be responsible for any
latent or other defect or change of condition in the Land,
Improvements, fixtures and personal property forming a part of
the Leased Property, and the Rent hereunder shall in no case be
withheld or diminished 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.
(c) Consideration of and Scope of Waiver. The provisions of
subparagraph 8.(b) above have been negotiated by the Landlord
and Tenant after due consideration for the Rent payable
hereunder and are intended to be a complete exclusion and
negation of any representations or warranties of the Landlord,
express or implied, with respect to the Leased Property that
may arise pursuant to any law now or hereafter in effect, or
otherwise. However, such exclusion of representations and
warranties by Landlord is not intended to impair any
representations or warranties made by other parties, including
Seller, the benefit of which is to pass to Tenant during the
Term because of the definition of Personal Property and Leased
Property above.
9. Other Representations, Warranties and Covenants of Tenant.
Tenant represents, warrants and covenants as follows:
(a) Financial Matters. Tenant is solvent 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 May 31, 1997.
(b) Existing Contract. Except to the extent required of
Landlord under subparagraph 10.(b), Tenant shall satisfy all
surviving obligations of Tenant 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 Tenant 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 10.(b)) shall, for the purposes of this
indemnity, be deemed to be caused by the Active Negligence,
gross negligence or willful misconduct of Landlord. The
foregoing indemnity is in addition to the other indemnities set
out herein and shall not terminate upon the closing of any sale
of Landlord's interest in the Leased Property pursuant to the
provisions of the Purchase Agreement or the termination of this
Lease.
(c) No Default or Violation. The execution, delivery and
performance by Tenant of this Lease, the Purchase Documents 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.
(d) 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.
(e) 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.
(f) 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.
(g) Condition of Property. The Land as described in Exhibit A
is shown on the plat included as part of the A.L.T.A. Survey
prepared by Guerriere & Halnon, Inc., last revised January 7,
1997, certification dated January 8, 1997, which was delivered
to Landlord at the request of Tenant. All material
improvements on the Land as of the date hereof are as shown on
that survey, and except as shown on that survey there are no
easements or encroachments visible or apparent from an
inspection of the Real Property. Adequate provision has been
made (or can be made at a cost that is reasonable in connection
with development of the Land) 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 can be completed at a cost that is reasonable
in connection with development of the Land). The Leased
Property is 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.
(h) Organization. Tenant is duly incorporated and legally
existing under the laws of the State of Delaware. 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 (or has properly applied with
all appropriate authorities to become) 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 States of California and Massachusetts) or, if
it is not so qualified in a state other than California and
Massachusetts, 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.
(i) Enforceability. The execution, delivery and performance
of this Lease, the Purchase Documents, 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 Documents, 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.
(j) 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).
(k) 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.
(l) Existence. Tenant shall continuously maintain its
corporate existence, and Tenant shall continuously maintain its
qualification to do business in the States of California and
Massachusetts.
(m) 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.
(n) 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.
(o) Debts for Construction. Tenant shall cause all debts and
liabilities incurred in the construction, maintenance,
operation and development of the Leased Property, including
without limitation all debts and liabilities for labor,
material and equipment and all debts and charges for utilities
servicing the Leased Property, to be promptly paid.
Notwithstanding the foregoing, Tenant may in good faith by
appropriate proceedings contest the validity, applicability or
amount of any asserted mechanic's or materialmen's lien and
pending such contest Tenant shall not be deemed in default
under this subparagraph (or subparagraphs 9.(t) or 9.(u))
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 $3,000,000 (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.
(p) Impositions. Tenant shall reimburse Landlord for (or, if
requested by Landlord, will pay or cause to be paid prior to
delinquency) all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes,
levies, fees, charges, surcharges, assessments or penalties
which arise out of or are attributable to this Lease or which
are imposed upon Landlord or the Leased Property because of the
ownership, leasing, occupancy, sale or operation of the Leased
Property, or any part thereof, or relating to or required to be
paid by the terms of any of the Permitted Encumbrances
(collectively, herein called the "Impositions"), excluding only
Excluded Taxes. If Landlord requires Tenant to pay any
Impositions directly to the applicable taxing authority or
other party entitled to collect the same, Tenant shall furnish
Landlord with receipts showing payment of such Impositions and
other amounts 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 9.(t) or 9.(u)) 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
$1,000,000 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.
(q) 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, 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 $500,000 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 $1,000,000 or more) or (ii)
make any alteration to any Improvements 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 Leased Property 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.
(r) 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 $1,000,000 (or such other amount as Landlord and Tenant
may agree upon in writing from time to time). 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 4, 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 D, 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
$3,000,000, Tenant shall give immediate notice thereof to
Landlord and Paragraph 4 shall apply.
Notwithstanding the foregoing provisions of this
subparagraph 9.(r), following any fire or other casualty
involving the Leased Property, if insurance proceeds totaling
not more than $2,000,000 are to be recovered as a result
thereof, or if in connection therewith Tenant shall have
executed a Voluntary Minimum Pledge Commitment and delivered
any additional Collateral required to satisfy such Voluntary
Minimum Pledge Commitment, Tenant shall be entitled to receive
directly and hold such insurance 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
subparagraph 4.(b).
(s) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the
Leased Property or any portion thereof, or any other similar
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 4 above. Landlord is hereby
authorized, in the name of Tenant, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree
or award concerning condemnation of any of the Leased Property.
Landlord shall not be, in any event or circumstances, liable
or responsible for failure to collect, or to exercise diligence
in the collection of, any such proceeds, judgments, decrees or
awards.
Notwithstanding the foregoing provisions of this
subparagraph 9.(s), following any condemnation or sale in lieu
of condemnation involving the Leased Property, if condemnation
or sale proceeds totaling not more than $2,000,000 are to be
recovered as a result thereof, or if in connection therewith
Tenant shall have executed a Voluntary Minimum Pledge
Commitment and delivered any additional Collateral required to
satisfy such Voluntary Minimum Pledge Commitment, Tenant shall
be entitled to receive directly and hold such condemnation or
sale 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
subparagraph 4.(b).
(t) Protection and Defense of Title. If any encumbrance or
title defect whatsoever affecting Landlord's fee interest in
the Leased Property is claimed or discovered (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 9.(o) or subparagraph 9.(p)), 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.
For purposes of this subparagraph 9.(t), Tenant shall be
deemed to be acting promptly to remove any encumbrance or to
cure any title defect, other than a Lien which Tenant has
itself granted or authorized, so long as Tenant (or a title
insurance company obligated to do so) is in good faith by
appropriate proceedings contesting the validity and
applicability of the encumbrance or defect, and pending such
contest Tenant shall not be deemed in default under this
subparagraph because of the encumbrance or defect; provided,
with respect to a contest of any encumbrance or title defect
which is the subject of subparagraphs 9.(o) or 9.(p), Tenant
(or the applicable title insurance company) must satisfy the
conditions and requirements for a permitted contest set forth
in those subparagraphs, and with respect to a contest of any
other encumbrance or title defect, Tenant (or the applicable
title insurance company) must:
(1) diligently prosecute the contest to completion in
a manner reasonably satisfactory to Landlord;
(2) immediately remove the encumbrance or cure the
defect, as and to the extent reasonably required to preserve
Landlord's indefeasible fee estate in the Leased Property and
to prevent any significant adverse impact the encumbrance or
defect may have on the value of the Leased Property, upon a
final determination by a court of competent jurisdiction that
the encumbrance or defect is valid and applicable to the
Leased Property; and
(3) in any event conclude the contest and remove the
encumbrance or cure the defect and pay any claims asserted
against Landlord or the Leased Property because of such
encumbrance or defect, all prior to (i) any Designated Sale
Date on which neither Tenant nor any Applicable Purchaser
purchases the Leased Property pursuant to the Purchase
Agreement for a price to Landlord (when taken together with
any additional payments made by Tenant pursuant to
Paragraph 2(a)(ii) of the Purchase Agreement, in the case of
a purchase by an Applicable Purchaser) of not less than the
Purchase Price, (ii) the date any criminal charges may be
brought against Landlord or any of its directors, officers or
employees because of such encumbrance or defect or (iii) the
date any action may be taken against Landlord or any property
owned by Landlord (including the Leased Property) by any
governmental authority or any other Person who has or claims
rights superior to Landlord because of the encumbrance or
defect.
(u) 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 Permitted Encumbrances, 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
9.(o) or subparagraph 9.(p)), 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.
(v) 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; provided that so long as
Tenant remains in possession of the Leased Property, Landlord
or Landlord's representative will, before making any such
inspection or copying any such documents, 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 copying by Landlord authorized by this
subparagraph.. 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.
(w) Financial Statements; Required Notices; Certificates as to
Default. Tenant shall deliver to Landlord and to each
Participant of which Tenant has been notified:
(i) 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;
(ii) 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;
(iii) together with the financial statements furnished in
accordance with subparagraph 9.(w)(ii) and 9.(w)(i), a
certificate of a Responsible Financial Officer of Tenant in
substantially the form attached hereto as Exhibit E: (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 9 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 9.(ac);
(iv) promptly after any change in the rating of Tenant's
senior, unsecured debt by Standard and Poor's Corporation or
Moody's Investor Service, Inc. or in Tenant's Debt to Capital
Ratio (as defined in subparagraph 1.(cm)), which will result
in a change in the Spread (as defined in
subparagraph 1.(cm)), a certificate of a Responsible
Financial Officer of Tenant in substantially the form
attached hereto as Exhibit F with computations evidencing
Tenant's calculation of the Spread after giving effect to
such changes;
(v) 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;
(vi) 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;
(vii) 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
(viii) 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 9.(w) to any Participant and to any regulatory
body having jurisdiction over Landlord that requires or
requests it.
(x) Further Assurances. Tenant shall, on request of Landlord,
(i) promptly correct any defect, error or omission which may be
discovered in the contents of this Lease or in any other
instrument executed in connection herewith or in the execution
or acknowledgment thereof; (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 Parent and other Participants to
comply with the requirements or requests of any agency or
authority having jurisdiction over them.
(y) Fees and Expenses; General Indemnification; Increased
Costs; and Capital Adequacy Charges.
(i) Except for any costs paid by Landlord with the proceeds
of the advance described in subparagraph 1.(s) as part of the
Closing Costs, Tenant shall pay (and shall indemnify and hold
harmless Landlord, Landlord's Parent and any Person claiming
through Landlord by reason of a Permitted Transfer from and
against) all Losses incurred by Landlord or Landlord's Parent
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
Documents, the Environmental Indemnity or the Participation
Agreement, (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, (D) the construction of
the Designated Improvements, whether such Losses are incurred
at the time of execution of this Lease or at any time during
the Term, or (E) Tenant's request for assistance in
identifying any new Participant pursuant to Paragraph 18 of
the Purchase Agreement, 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
Parent for any such Losses, Tenant shall reimburse Landlord
for the same notwithstanding that Landlord may have already
received any payment from any other Participant on account of
such Losses, it being understood that the other Participant
may expect repayment from Landlord when Landlord does collect
the required reimbursement from Tenant.
(ii) Tenant shall also pay (and indemnify and hold harmless
Landlord, Landlord's Parent 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 Parent 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.
(iii) 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
Parent or any other 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 Parent or such other Participant, as
the case may be, additional amounts sufficient to compensate
Landlord's Parent or the Participant for such increased cost.
An increase in costs resulting from any imposition or
increase of reserve requirements applicable to Collateral
held from time to time by Landlord's Parent or other
Participants pursuant to the Pledge Agreement would be an
increase covered by the preceding sentence. A certificate as
to the amount of any increased cost covered by this
subparagraph, submitted to Landlord and Tenant by Landlord's
Parent or the other Participant, shall be conclusive and
binding for purposes of determining Tenant's obligations
hereunder, absent clear and demonstrable error.
(iv) Landlord's Parent or any other Participant may demand
additional payments (herein called "Capital Adequacy
Charges") if Landlord's Parent or the other 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
Funding 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 Parent or the other 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 Landlord's
Parent or the other Participant, as the case may be, the
amount so demanded.
(v) Any amount to be paid to Landlord, Landlord's Parent or
any other Indemnified Party under this subparagraph 9.(y)
shall be a demand obligation owing by Tenant. Tenant's
indemnities and obligations under this subparagraph 9.(y)
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.
(z) 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 $1,000,000 (or such other amount as Landlord
and Tenant may agree upon in writing from time to time)
self-insured retention. Such commercial general liability
insurance shall include blanket contractual liability coverage
which insures contractual liability under the indemnifications
set forth in this Lease (other than the indemnifications set
forth in Paragraph 12 concerning environmental matters), but
such coverage or the amount thereof shall in no way limit such
indemnifications. The policy evidencing such insurance shall
name as additional insureds Landlord and all Participants of
which Tenant has been notified (including Landlord's Parent and
the Participants). 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.
(aa) Permitted Encumbrances. Except to the extent expressly
required of Landlord by subparagraph 10.(b), Tenant shall
comply with and will cause to be performed all of the
covenants, agreements and obligations imposed upon the owner of
the Leased Property in the Permitted Encumbrances in accordance
with their respective terms and provisions. Tenant shall not,
without the prior written consent of Landlord, modify or permit
any modification of any Permitted Encumbrance in any manner
that could impose significant monetary obligations upon
Landlord or any subsequent owner of the Leased Property, could
significantly and adversely affect the value of the Leased
Property, could impose any lien to secure payment or
performance obligations against any part of the Leased Property
or would otherwise be material and adverse to Landlord.
(ab) Environmental.
(i) Environmental Covenants. Tenant covenants:
a) 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;
b) not to conduct or authorize others to conduct
Hazardous Substance Activities on the Leased Property,
except Permitted Hazardous Substance Use;
c) 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
d) 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
12.(c) 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 of
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.
(ii) 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.
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).
(iii) 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 9.(e) inaccurate in any material
respect if made at the time of such discovery, (ii) any
remedial action taken by Tenant in response to any (A)
discovery of any Hazardous Substances other than Permitted
Hazardous Substances on, under or about the Leased Property
or (B) any claim for damages resulting from Hazardous
Substance Activities, (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.
(ac) Affirmative Financial Covenants.
(i) 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. As used in this
subparagraph 9.(ac), "Quick Assets" means the sum (without
duplication of any item) of the Collateral held 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. For purposes
of determining Quick Assets, assets will be deemed to be
"unencumbered" if they are actually unencumbered or if they
are encumbered only by Liens, from which, at the time of the
applicable determination of Quick Assets, Tenant is entitled
to a release of such assets upon no more than ninety days'
notice, without any payment (other than the payment of
ministerial fees and costs), without subjecting other assets
to any Lien and without otherwise satisfying any condition
that is beyond Tenant's control. As used herein "Long-Term
Investments" means those investments described below (to the
extent that they are not classified as short term investments
in accordance with GAAP), provided that such investments
shall have maturities of not longer than two years, and shall
be rated not less than A- by Standard & Poor's Corporation or
less than A 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 issued by
either one of the 50 largest (in assets) banks in the
United States or by one of the 100 largest (in assets)
banks in the world; and
(3) Notes and municipal bonds.
As used in this subparagraph 9.(ac), "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.
(ii) Maximum Senior Debt to Capitalization. Throughout the
Term Tenant shall maintain a ratio of Senior Debt to
Capitalization of not more than 0.35 to 1.00. As used in
this subparagraph 9.(ac):
"Senior Debt" means the outstanding Debt of
Tenant and its Subsidiaries (determined on a
consolidated basis), minus the aggregate principal
amount of the Subordinated Debt.
"Capitalization" means the sum of the Debt of
Tenant and its Subsidiaries (determined on a
consolidated basis), including the aggregate principal
amount of the Subordinated Debt, plus Consolidated
Tangible Net Worth of Tenant and its Subsidiaries
(determined on a consolidated basis).
"Subordinated Debt" means the following
unsecured Debt of Tenant: (i) unsecured Debt in respect
of the $110,000,000 aggregate principal amount at
maturity of 10 1/14% Convertible Subordinated Notes due
2001 issued pursuant to the Indenture (in this
definition called the "Existing Subordinated Notes")
but only so long as such unsecured Debt remains
expressly and unconditionally subordinated to the
payment and performance obligations of Tenant in
transactions of the type and structure contemplated by
this Lease and the Purchase Agreement; (ii) other
unsecured Debt of Tenant which is expressly and
unconditionally subordinated to the obligations of
Tenant under this Lease and the Purchase Agreement on
the same terms as the Existing Subordinated Notes or on
other terms approved by the Majority, as defined in the
Participation Agreement (such approval not to be
unreasonably withheld), which together with the
Existing Subordinated Notes, does not exceed at any
time an aggregate amount equal to fifteen percent (15%)
of Tenant's Consolidated Tangible Net Worth at such
time; and (iii) other unsecured Debt of Tenant in an
amount approved in writing by the Majority and which is
expressly and unconditionally subordinated to the
obligations of Tenant under this Lease and the Purchase
Agreement on terms approved in writing by the Majority,
in each case in its sole discretion.
"Consolidated Tangible Net Worth" means, at any
date of determination thereof, the excess determined in
accordance with GAAP 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.
"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.
"Indenture" means the Indenture dated as of
November 1, 1994 by and between Tenant and the First
National Bank of Boston, as trustee.
(iii) Minimum Tangible Net Worth. Tenant shall not permit
its Consolidated Tangible Net Worth, on a consolidated basis,
at the end of any fiscal quarter to be less than the sum of:
(A) eighty percent (80%) of Consolidated Tangible Net Worth
of Tenant as of May 31, 1997 (restated to give effect to
Tenant's subsequent merger with U.S. Robotics, such that
"Consolidated Tangible Net Worth" as used in this clause (A)
reflects not only Tenant's May 31, 1997 Consolidated Tangible
Net Worth as reported prior to the merger, but also the
March 30, 1997 Consolidated Tangible Net Worth of U.S.
Robotics reported prior to the merger); plus (B) fifty
percent (50%) of Tenant's net income (but without deducting
any net losses for any period) earned in each fiscal quarter,
starting with the quarter ended August 31, 1997, and ending
with the quarter which, at such time, is the most recently
ended fiscal quarter; less (C) the amount of write-offs
resulting from acquisitions after May 31, 1997, such amount
not to exceed an aggregate, cumulative amount of
$550,000,000.
(iv) 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 acquisitions, 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.
(ad) Negative Covenants. Without the prior written consent of
Landlord in each case, neither Tenant nor any of its
Subsidiaries shall:
(i) 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:
a) 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;
b) Liens that secure obligations incurred in the
ordinary course of business, that are not past due for
more than thirty (30) days (or that are being contested
in good faith by appropriate proceedings and for which
appropriate reserves have been established) and that:
(1) are imposed by law, such as mechanic's,
materialmen's, landlord's, warehousemen's and
carrier's Liens, and other similar Liens; or
(2) encumber only equipment or other tangible
personal property and any proceeds thereof
(including Liens created by equipment leases) and
are imposed to secure the payment of the purchase
price or other direct costs of acquiring the
equipment or other tangible personal property they
encumber;
c) Liens under workmen's compensation, unemployment
insurance, social security or similar legislation
(other than ERISA);
d) 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;
e) 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;
f) 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;
g) Liens securing obligations of such a Subsidiary to
Tenant or to another such Subsidiary;
h) Liens incurred after the date of this Lease given to
secure the payment of the purchase price 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 such Liens are imposed, 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;
i) existing mortgages and deeds of trust as of the date
of this Lease;
j) Liens created by any real property lease (including
this Lease), or related documents (including the
Purchase Agreement and other separate purchase
agreements), that require Tenant or its Subsidiaries to
purchase or cause another to purchase any interest in
the property covered thereby and thus guarantee a
minimum residual value of the property to the landlord;
provided, that the value of all such leases (including
this Lease) shall not exceed an aggregate, cumulative
amount of $700,000,000 (for purposes of this Section
(ad)(i), the "value" of a lease means the amount,
determined as of the date the lease became effective,
equal to the greater of (1) the present value of
rentals and other minimum lease payments required in
connection with such lease [calculated in accordance
with FASB Statement 13 and other GAAP relevant to the
determination of the whether such lease must be
accounted for as capital leases, and calculated under
the assumption that any allowance for construction to
be provided by the landlord will be fully funded] or
(2) the fair value of the property covered thereby);
k) Liens imposed to secure Debt incurred to finance the
acquisition of property which has been leased or sold
by Tenant or one of its Subsidiaries to another Person
(other than Tenant or a Subsidiary of Tenant) pursuant
to a lease or sales agreement providing for payments
sufficient to pay such Debt in full, provided such Debt
is not a general obligation of Tenant or its
Subsidiaries, but rather is payable only from the
rentals or other sums payable under the lease or sales
agreement or from the property sold or leased
thereunder;
l) Liens not otherwise permitted by this
subparagraph 9.(ad)(i) (and not encumbering the Leased
Property or any Collateral) which secure the payment of
Debt, provided that (i) at no time does the sum of the
aggregate amount of all outstanding Debt secured by
such Liens exceed $50,000,000, and (i) such Liens do
not constitute Liens against Tenant's interest in any
material Subsidiary or blanket Liens against all or
substantially all of the inventory, receivables,
general intangibles or equipment of Tenant or of any
material Subsidiary of Tenant (for purposes of this
clause, a "material Subsidiary" means any subsidiary
whose assets represent a substantial part of the total
assets of Tenant and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP); and
m) Liens incurred in connection with any renewals,
extensions or refundings of any Debt secured by Liens
described in the other clauses of this subparagraph
9.(ad)(i), 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.
(ii) 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.
(iii) Mergers; Sales of Assets.
a) Except to the extent permitted by the last sentence
of this subparagraph 9.(ad), 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 9.(ad), acquire the
assets or business of any Person, other than in the
ordinary course of Tenant's business as presently
conducted.
(iv) 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: a) a sale of
receivables for cash at a discount which is less than fifteen
percent (15%) of the face value of all receivables then
outstanding on the books of Tenant and its consolidated
Subsidiaries, if such sale and all other discounted sales of
receivables permitted by this clause a) during the same
fiscal year of Tenant do not affect more than fifteen percent
(15%) of the individual accounts (excluding intercompany
accounts) comprising the receivables of Tenant and its
Subsidiaries; b) 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 c) 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.
(v) 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
9.(ad)(iii), 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.
(ae) ERISA.
(i) 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
9.(ae)(ii).
(ii) 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.
10. Representations, Warranties and Covenants of Landlord.
Landlord represents, warrants and covenants as follows:
(a) Title Claims By, Through or Under Landlord. Except by a
Permitted Transfer, Landlord shall not assign, transfer,
mortgage, pledge, encumber or hypothecate this Lease or any
interest of Landlord in and to the Leased Property 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, an Approved
Participant, or any other Participant (other than Landlord's
Parent) which Tenant shall have approved, or (iii) any
encumbrance or title defect arising because of Landlord's
compliance with subparagraph 10.(b) or any request made by
Tenant.
(b) Actions Required of the Title Holder. So long as no Event
of Default shall have occurred and be continuing, Landlord
shall take any and all action required 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 Documents, 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
9.(y). Further, for purposes of such indemnification, any
action taken by Landlord will be deemed to have been made at
the request of Tenant if made pursuant to any request of
Tenant's counsel or of any officer of Tenant (or with their
knowledge, and without their objection) in connection with the
closing under the Existing Contract or the execution,
administration or enforcement of any Construction Document.
(c) No Default or Violation. The execution, delivery and
performance of this Lease do not contravene, result in a breach
of or constitute a default under any material contract or
agreement to which Landlord is a party or by which Landlord is
bound and do not, to the knowledge of Landlord, violate or
contravene any law, order, decree, rule or regulation to which
Landlord is subject.
(d) No Suits. To Landlord's knowledge there are no judicial
or administrative actions, suits or proceedings involving the
validity, enforceability or priority of this Lease, and to
Landlord's knowledge no such suits or proceedings are
threatened.
(e) Organization. Landlord is duly incorporated and legally
existing under the laws of Delaware and is or, if necessary,
will become duly qualified to do business in the States of
California and Massachusetts. Landlord has or will obtain, at
Tenant's expense pursuant to the other provisions of this
Lease, all requisite power and all material governmental
certificates of authority, licenses, permits, qualifications
and other documentation necessary to own and lease the Leased
Property and to perform its obligations under this Lease.
(f) Enforceability. The execution, delivery and performance
of this Lease and the Purchase Documents 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 and the Purchase
Documents 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.
(g) Existence. Landlord will continuously maintain its
existence and, after qualifying to do business in the States of
California and Massachusetts if Landlord has not already done
so, Landlord will continuously maintain its right to do
business in those states to the extent necessary for the
performance of Landlord's obligations hereunder.
(h) Not a Foreign Person. Landlord is not a "foreign person"
within the meaning of the 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).
11. Assignment and Subletting.
(a) Consent Required. During the term of this Lease, without
the prior written consent of Landlord first had and received,
Tenant shall not assign, transfer, mortgage, pledge or
hypothecate this Lease or any interest of Tenant hereunder and
shall not sublet all or any part of the Leased Property, by
operation of law or otherwise; provided, that, so long as no
Event of Default has occurred and is continuing, Tenant shall
be entitled without the consent of Landlord to sublet all or
any portion of the space in any then completed Improvements if:
(i) any sublease by Tenant is made expressly
subject and subordinate to the terms hereof;
(ii) no sublease has a term longer than the
remainder of the then effective term of this Lease;
(iii) the use permitted by such sublease is
expressly limited to general office use or other uses
approved in advance by Landlord as uses that will not present
extraordinary risks of uninsured environmental or other
liability; and
(iv) no more than forty-five percent (45%) of
the total space of completed Improvements shall be subleased
without Landlord's prior consent to any Person that is
neither (A) an Affiliate of Tenant nor (B) the operator of a
business in the subleased space that is related to the
operation of Tenant's own business (such as another venturer
in a joint venture with Tenant).
(b) Standard for Landlord's Consent to Assignments and Certain
Other Matters. Consents and approvals of Landlord which are
required by this Paragraph 11 will not be unreasonably
withheld, but Tenant acknowledges that Landlord's withholding
of such consent or approval shall be reasonable if Landlord
determines in good faith that (1) giving the approval may
increase Landlord's risk of liability for any existing or
future environmental problem, (2) giving the approval is likely
to substantially increase Landlord's administrative burden of
complying with or monitoring Tenant's compliance with the
requirements of this Lease, or (3) any transaction for which
Tenant has requested the consent or approval would negate
Tenant's representations in this Lease regarding ERISA or cause
this Lease or the other documents referenced herein to
constitute a violation of any provision of ERISA.
(c) 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.
(d) Landlord's Assignment. Landlord shall have the right to
transfer, assign and convey, in whole or in part, the Leased
Property and any and all of its rights under this Lease 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.) If
Landlord sells or otherwise transfers the Leased Property and
assigns its rights under this Lease and the Purchase Documents
pursuant to a Permitted Transfer, then to the extent Landlord's
successor in interest confirms its liability for the
obligations imposed upon Landlord by this Lease and the
Purchase Documents on and subject to the express terms and
conditions set out herein and therein, the original Landlord
shall thereby be released from any obligations thereafter
arising under this Lease and the Purchase Documents, and Tenant
will 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 aggregate of its and Landlord's Parent's
Percentages under and as defined in the Participation Agreement
below the minimum percentage require by paragraph 14.2 of the
Participation Agreement.
12. Environmental Indemnification.
(a) Indemnity. Tenant hereby agrees to assume liability for
and to pay, indemnify, defend, and hold harmless each and every
Indemnified Party from and against any and all Environmental
Losses, subject only to the provisions of subparagraph 12.(c)
below.
(b) Assumption of Defense.
(i) If an Indemnified Party notifies Tenant of any claim,
demand, action, administrative or legal proceeding,
investigation or allegation as to which the indemnity
provided for in this Paragraph 12 applies, Tenant shall
assume on behalf of the Indemnified Party and conduct with
due diligence and in good faith the investigation and defense
thereof and the response thereto with counsel 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.
(ii) If any claim, demand, action, proceeding,
investigation or allegation arises as to which the indemnity
provided for in this Paragraph 12 applies, and Tenant fails
to assume promptly (and in any event within 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 12 so long as, in the written
opinion of reputable counsel to the Indemnified Party, the
settlement or payment in full is clearly advisable.
(c) Notice of Environmental Losses. If an Indemnified Party
receives a written notice of Environmental Losses that such
Indemnified Party believes are covered by this Paragraph 12,
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 12; provided, that if
Tenant is unaware of the matters described in the notice and
such failure renders unavailable defenses that Tenant might
otherwise assert, or precludes actions that Tenant might
otherwise take, to minimize its obligations hereunder, then
Tenant shall be excused from its obligation to indemnify 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 12.(a) 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.
(d) Rights Cumulative. The rights of each Indemnified Party
under this Paragraph 12 shall be in addition to any other
rights and remedies of such Indemnified Party against Tenant
under the other provisions of this Lease or under any other
document or instrument now or hereafter executed by Tenant, or
at law or in equity (including, without limitation, any right
of reimbursement or contribution pursuant to CERCLA).
(e) Survival of the Indemnity. Tenant's obligations under
this Paragraph 12 shall survive the termination or expiration
of this Lease. All obligations of Tenant under this Paragraph
12 shall be payable upon demand, and any amount due upon demand
to any Indemnified Party by Tenant which is not paid shall bear
interest from the date of such demand at a floating interest
rate equal to the Default Rate, but in no event in excess of
the maximum rate permitted by law.
13. Landlord's Right of Access.
(a) 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.
(b) 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.
14. Events of Default.
(a) Definition of Event of Default. Each of the following
events shall be deemed to be an "Event of Default" by Tenant
under this Lease:
(i) Tenant shall fail to pay when due any installment of Rent
due hereunder and such failure shall continue for three (3)
Business Days after Tenant is notified thereof.
(ii) 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 14.(a)), 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 14.(a)), 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.
(iii) Tenant shall fail to comply with any term, provision or
condition of the Purchase Documents and, if any Purchase
Document expressly provides a time within which Tenant may
cure such failure, Tenant shall not cure the failure within
such time.
(iv) Tenant shall abandon the Leased Property.
(v) 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 14.(a)(v), "Debt" shall mean only a Debt of
Tenant now existing or arising in the future, (A) payable to
Landlord or any Participant or any Affiliate of Landlord or
any Participant, the outstanding balance of which has become
due by reason of acceleration or maturity, or (B) payable to
any Person, with respect to which $20,000,000 or more is
actually due and payable because of acceleration or
otherwise.
(vi) Tenant or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against Tenant or
any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief,
or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period of thirty
(30) consecutive days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an
order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for
any substantial part of its property) shall occur; or Tenant
or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this
clause (vi).
(vii) Any order, judgment or decree is entered in any
proceedings against Tenant or any Subsidiary decreeing the
dissolution of Tenant or such Subsidiary and such order,
judgment or decree remains unstayed and in effect for more
than sixty (60) days.
(viii) Any order, judgment or decree is entered in any
proceedings against Tenant or any Subsidiary decreeing a
split-up of Tenant or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the consolidated assets of
Tenant and its Subsidiaries (determined in accordance with
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.
(ix) One or more non-interlocutory judgments, non-
interlocutory orders, decrees, or arbitration awards is
entered against Tenant or any of its Subsidiaries involving
in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer
does not dispute coverage) as to any single or related series
of transactions, incidents, or conditions, of $20,000,000 or
more, and the same shall remain unvacated and unstayed
pending appeal for a period of ten days after the entry
thereof;
(x) 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.
(xi) A Change of Control Event not approved in advance by
Landlord shall occur.
(xii) The subordination provisions of the Indenture (as
defined in subparagraph 9.(ac)(ii) of this Lease) or any
other agreement or instrument governing the Subordinated Debt
(as defined in subparagraph 9.(ac)(ii) of this Lease) shall
be for any reason revoked or invalidated, or otherwise cease
to be in full force and effect; or the Tenant or any of its
Subsidiaries shall contest in any manner the validity or
enforceability of such subordination provisions or shall deny
that it has any further liability or obligation thereunder;
or the obligations of Tenant hereunder or under the Purchase
Documents shall be for any reason subordinated to such
Subordinated Debt or shall not have the priority over such
Subordinated Debt as contemplated by this Lease or by the
Indenture or by such subordination provisions.
Notwithstanding the foregoing, any Default that could become an
Event of Default under clause 14.(a)(ii) 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 Sale Date the next
following date which is an Advance Date or Base Rent 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 Sale 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 9.(y) and the environmental
indemnity set forth in Paragraph 12 shall survive the payment
of such amounts by Tenant to Landlord and the conveyance of
Landlord's interest in the Leased Property to Tenant.
(b) Remedies. Upon the occurrence of an Event of Default
which is not cured within any applicable period expressly
permitted by subparagraph 14.(a), at Landlord's option and
without limiting Landlord in the exercise of any other right or
remedy Landlord may have on account of such default, and
without any further demand or notice except as expressly
described in this subparagraph 14.(b):
(i) By notice to Tenant, Landlord may terminate Tenant's
right to possession of the Leased Property. A notice given
in connection with unlawful detainer proceedings specifying a
time within which to cure a default shall terminate Tenant's
right to possession if Tenant fails to cure the default
within the time specified in the notice.
(ii) Upon termination of Tenant's right to possession and
without further demand or notice, Landlord may re-enter the
Leased Property and take possession of all improvements,
additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property in
the Leased Property may be removed and stored in a warehouse
or elsewhere at the expense and risk of and for the account
of Tenant.
(iii) Upon termination of Tenant's right to possession, this
Lease shall terminate and Landlord may recover from Tenant:
a) The worth at the time of award of the unpaid Rent
which had been earned at the time of termination;
b) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount
of such rental loss that Tenant proves could have been
reasonably avoided;
c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the scheduled Term
after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably
avoided; and
d) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's
failure to perform Tenant's obligations under this
Lease or which in the ordinary course of things would
be likely to result therefrom, including, but not
limited to, the costs and expenses (including
Attorneys' Fees, advertising costs and brokers'
commissions) of recovering possession of the Leased
Property, removing persons or property therefrom,
placing the Leased Property in good order, condition,
and repair, preparing and altering the Leased Property
for reletting, all other costs and expenses of
reletting, and any loss incurred by Landlord as a
result of Tenant's failure to perform Tenant's
obligations under the Purchase Agreement.
The "worth at the time of award" of the amounts
referred to in subparagraph 14.(b)(iii)a) and
subparagraph 14.(b)(iii)b) 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 Massachusetts law at
the time of computation. The "worth at the time of
award" of the amount referred to in subparagraph
14.(b)(iii)c) 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%).
e) Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by
applicable Massachusetts law.
(iv) Even if Tenant breaches this Lease and abandons the
Leased Property, this Lease shall continue in effect for so
long as Landlord does not terminate Tenant's right to
possession, and Landlord may enforce all of Landlord's rights
and remedies under this Lease, including the right to recover
the Rent as it becomes due under this Lease. Tenant's right
to possession shall not be deemed to have been terminated by
Landlord except pursuant to subparagraph 14.(b)(i) hereof.
The following shall not constitute a termination of Tenant's
right to possession:
a) Acts of maintenance or preservation or efforts to
relet the Leased Property;
b) The appointment of a receiver upon the initiative of
Landlord to protect Landlord's interest under this
Lease; or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment
by Tenant.
(v) No re-entry or reletting of the Leased Property or
any filing or service of an unlawful detainer action or
similar action will be construed as an election by Landlord
to terminate or accept a forfeiture of this Lease or to
accept a surrender of the Leased Property after an Event of
Default by Tenant, unless a written notice of such intention
is given by Landlord to Tenant; but notwithstanding any such
action without such notice, Landlord may at any time
thereafter elect to terminate this Lease by notifying Tenant.
(c) 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.
(d) 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
Documents or the Environmental Indemnity.
(e) Waiver by Tenant. To the extent permitted by law, Tenant
hereby waives and surrenders for itself and all claiming by,
through and under it, including creditors of all kinds, (i) any
right and privilege which it or any of them may have under any
present or future constitution, statute or rule of law to have
a continuance of this Lease for the term hereby demised after
termination of Tenant's right of occupancy by order or judgment
of any court or by any legal process or writ, or under the
terms of this Lease, or after the termination of this Lease as
herein provided, and (ii) the benefits of any present or future
constitution, or statute or rule of law which exempts property
from liability for debt or for distress for rent, and (iii) the
provisions of law relating to notice and/or delay in levy of
execution in case of eviction of a lessee for nonpayment of
rent.
(f) 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.
15. 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.
16. Quiet Enjoyment. Provided no Event of Default has
occurred and is continuing, 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 5 above, no such breach shall entitle
Tenant to terminate this Lease or excuse Tenant from its
obligation to pay Base Rent and other amounts hereunder.
17. 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 Leased Property, 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 Improvements in
the same condition as of the date hereof, 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.
18. 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) the unpaid Purchase Price on
the day in question, times (ii) the Holdover Rate (as defined
below) for such day, 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; provided, however, following any
breach by Landlord of its obligations to tender a deed and
other documents on the Designated Sale Date as provided in the
Purchase Agreement, Tenant may at its option continue its
possession and use of the Leased Property pursuant to this
Lease, as if the Term had been extended, for a period not to
exceed 180 days after the Designated Sale Date or such longer
time as may be proscribed by Applicable Law.
As used herein, the "Holdover Rate" means:
(1) for any day prior to the date on which Landlord
tenders a deed and other documents as required by the
Purchase Agreement (or is excused from its obligation to
tender by Tenant's breach or anticipatory repudiation of the
Purchase Agreement), a rate equal to the Fed Funds Rate on
that day plus one hundred basis points;
(2) for any day on which or within ninety days after
Landlord tenders a deed and other documents as required by
the Purchase Agreement (or is excused from its obligation to
tender by Tenant's breach or anticipatory repudiation of the
Purchase Agreement), the per annum Prime Rate in effect for
such day; and
(3) for any day after the ninety days described in
the preceding clause, a rate which is three percent (3%)
above the per annum Prime Rate.
19. Miscellaneous.
(a) 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:
(i) All Rent required to be paid by Tenant to Landlord
hereunder shall be paid to Landlord in immediately available
funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris
ABA #: 121027234
Reference: 3COM - Marlborough Site
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.
(ii) 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: ___________________
ABA #: 121000358
Reference: Construction Advance/3COM -
Marlborough Site
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.
(iii) 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 Participants, at the addresses for notice
established by the Participation Agreement) 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 or Will
La Herran
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of Tenant:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Legal Dept. MS - 1308
Telecopy: (408) 764-6434
With copies to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Real Estate Dept. MS - 1220
Telecopy: (408) 764-5718; and
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Treasury Dept. MS - 1307
Telecopy: (408) 764-8403; and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Jonathan E. Rattner, Esq.
Telecopy: (415) 328-3029
(b) 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.
(c) 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.
(d) 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, AND THE PURCHASE
DOCUMENTS.
(e) 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.
(f) 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.
(g) 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
14.(a).
(h) 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.
(i) Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the State of
Massachusetts.
(j) 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.
(k) Not a Partnership, Etc. NOTHING IN THIS LEASE IS
INTENDED TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR
OTHER JOINT ENTERPRISE BETWEEN LANDLORD AND TENANT. NEITHER
THE EXECUTION OF THIS LEASE NOR THE ADMINISTRATION OF THIS
LEASE OR OTHER DOCUMENTS REFERENCED HEREIN BY LANDLORD, NOR ANY
OTHER RIGHT, DUTY OR OBLIGATION OF LANDLORD UNDER OR PURSUANT
TO THIS LEASE OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE
ANY FIDUCIARY OBLIGATIONS OF LANDLORD TO TENANT.
(l) 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 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.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, this Lease is hereby executed in
multiple originals as of July 29, 1997.
"Landlord"
BNP LEASING CORPORATION, a Delaware corporation
By: /s/ Lloyd G. Cox
----------------------------
Lloyd G. Cox, Vice President
[Continuation of signature pages to Lease Agreement dated to be
effective July 29, 1997]
"Tenant"
3COM CORPORATION, a Delaware corporation
By: /s/ Mark D. Michael
----------------------------------
SVP, General Counsel and Secretary
Exhibit A
Legal Description
The land with the buildings thereon situated on Forest Street
in Marlborough, Middlesex County, Massachusetts and being shown
as Lots 1 and 2 on a plan of land entitled "Plan of Land in
Marlborough, Mass." drawn by Guerriere & Halnon, Inc.
Engineering and Land Surveying, owned by Metropolitan Life
Insurance Company, Sale 200 feet to an inch, dated August 17,
1989 and recorded in Middlesex County Registry of Deeds in Book
25878, Page 342, to which plan reference is made for a more
particular description of Lots 1 and 2.
Exhibit B
Permitted Encumbrances
1. Easement to New England Power Engineering & Service
Corporation dated February 17, 1931 and recorded in Book
5544, Page 152.
2. Easement to New England Power Engineering & Service
Corporation dated February 17, 1931 and recorded in Book
5546, Page 341.
3. Easement to Worcester County Electric Company dated
May 27, 1959 and recorded in Book 9395, Page 43.
4. Order of Taking by the City of Marlborough for laying
out of Forest Street dated December 9, 1968 and recorded
in Book 11624, Page 1; as affected by Order for the
Relocation of Forest Street by the County Commissioners
for the County of Middlesex dated March 24, 1961 and
recorded in Book 9789, Page 242.
5. Matters as shown or disclosed on a plan entitled,
"Title Insurance Plan of Land in Marlborough, Mass."
Prepared for: 3COM Corporation Scale: 1" = 100' Date:
November 8, 1996 Prepared by: Guerriere & Halnon, Inc.
Engineering & Land Surveying 333 West Street Milford,
Massachusetts as follows:
a) encroachment of stone wall;
b) encroachment of fence;
c) encroachment of guard rail; and
d) encroachment of utility poles.
6. Order of Conditions by the Marlborough Conservation
Commission, DEP File No. 212-408 dated April 19, 1990 and
recorded in Book 20539, Page 467.
7. Order of Conditions by the Marlborough Conservation
Commission, DEP File No. 212-408 dated November 29, 1989
and recorded in Book 20539, Page 515, as affected by
Amendment dated April 19, 1990 and recorded in Book 20598,
Page 521.
8. PROPERTY TAXES, including any assessments collected
with taxes, for the fiscal year 1997, a lien not yet due
or payable.
Exhibit C
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 D
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 9.(r), then either party may require that the
amount be determined as follows:
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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.
Exhibit E
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 or Will La Herran
Re: 3Com Lease Agreement (Marlborough Site)
Gentlemen:
I, the undersigned, the [chief financial officer,
controller, treasurer or the assistant treasurer] of 3Com
Corporation, do hereby certify, represent and warrant that:
1. This Certificate is furnished pursuant to
subparagraph 9.(w)(iii) of that certain Lease Agreement dated
as of July 29, 1997 (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 ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Annex 1 To Compliance Certificate
For the _________________ Ended ________________, ____
I. PARAGRAPH 9.(ac)(i): Quick Ratio
A. Unencumbered Cash and Cash Equivalents
and other "Quick Assets" as defined in
Paragraph 9.(ac)(i) of the Lease: $_____________
B. "Current Liabilities" as defined in
Paragraph 9.(ac)(i) of the Lease: $_____________
C. Ratio of A to B: _____ to 1.00
F. Minimum ratio computed as provided in
Paragraph 9.(ac)(i) of the Lease: 1.00 to 1.00
II. PARAGRAPH 9.(ac)(ii): Maximum Senior Debt to Capitalization
A. Total "Debt" as defined
in Paragraph 1.(ad) of
Tenant and its consolidated
Subsidiaries: $_____________
B. "Subordinated
Debt" as defined in
Paragraph 9.(ac)(ii) of the Lease $_____________
C. "Senior Debt" as
defined in Paragraph 9.(ac)(ii)
of the Lease
(A - B): $_____________
D. Consolidated Tangible Net Worth
(from calculation below): $_____________
E. Capitalization as defined in
Paragraph 9.(ac)(ii) of the Lease
(A + D): $_____________
F. Ratio of B to E: _____ to 1.00
D. Maximum ratio: 0.35 to 1.00
III. PARAGRAPH 9.(ac)(iii): Minimum Tangible Net Worth
A. Reported stockholders equity: $_____________
B. "Intangible Assets" as
defined in Paragraph 9.(ac)(iii)
of the Lease: $_____________
D. Consolidated Tangible Net Worth
(A - B): $_____________
E. Minimum computed as
provided in Paragraph 9.(ac)(iii)
of the Lease: $_____________
IV. PARAGRAPH 9.(ac)(iv): Fixed Charge Ratio
A. "Adjusted EBIT" as
defined in Paragraph 9.(ac)(iv)
of the Lease: $_____________
B. "Fixed Charges" as
defined in Paragraph 9.(ac)(iv)
of the Lease: $_____________
C. Ratio of A to B: _____ to 1.00
D. Minimum ratio: 2.00 to 1.00
Exhibit F
CERTIFICATE OF TENANT'S CALCULATION OF THE SPREAD
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: 3Com Lease Agreement (Marlborough Site)
Gentlemen:
I, the undersigned, the [chief financial officer,
controller, treasurer or the assistant treasurer] of 3Com
Corporation, do hereby certify, represent and warrant that:
1. This Certificate is furnished pursuant to
subparagraph 9.(w)(iv) of that certain Lease Agreement dated as
of July 29, 1997 (the "Lease Agreement," the terms defined
therein being used herein as therein defined) between 3Com
Corporation, and you.
2. Annex 1 attached hereto sets forth financial data and
computations evidencing the Tenant's computation of the Spread,
all of which data and computations are complete, true and
correct.
Executed this _____ day of ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Annex 1 To Certificate of Tenant's Calculation of the Spread
As of the ________________, ____
I. S&P'S RATING OF TENANT'S SENIOR UNSECURED DEBT: _____________
II. MOODY'S RATING OF TENANT'S SENIOR UNSECURED DEBT: _____________
III. CALCULATION OF TENANT'S DEBT TO CAPITAL RATIO: _____________
A. Funded "Senior Debt" as defined in
Paragraph 9.(ac)(ii) of the Lease: $_____________
B. Other outstanding Debt as defined in
Paragraph 1.(ad) of the Lease: $_____________
C. Outstanding "Subordinated Debt" as
defined in Paragraph 9.(ac)(ii) of
the Lease: $_____________
D. Debt for purposes of this ratio
(A + B - C): $_____________
E. Reported stockholders equity: $_____________
F. "Intangible Assets" as
defined in Paragraph 9.(ac)(iii)
of the Lease: $_____________
G. Consolidated Tangible Net Worth
(E - F): $_____________
H. Capital for purposes of this test
(A + B + G): $_____________
I. D divided by H: _____________
III. SPREAD AS DEFINED IN PARAGRAPH 1.(cm) OF THE LEASE:_____________
Exhibit G
LIST OF ENVIRONMENTAL REPORTS
As used in this Lease, "Environmental Report" means,
collectively, the following reports provided to Landlord by
3COM or acquired by Landlord from its own consultants:
Letter dated October 31, 1996, from Vanesse Hangen
Brustlin, Inc., to the Executive Office of Environmental
Affairs, regarding Metropolitan Corporate Center/Forest
Street Parcels - EOEA # 7515, Marlborough, Massachusetts,
Notice of Project Change
Exhibit H
DESCRIPTION OF RENDERINGS OF THE DESIGNATED IMPROVEMENTS
Designated Improvements to the Leased Property will consist of
the following improvements:
[to be added]
For a better description of the Designated Improvements,
reference is made to [BY PAGE SUBSTITUTION, THIS REFERENCE WILL
BE COMPLETED TO REFER TO THE ARCHITECT'S REPORT CONTAINING
RENDERINGS AND A CONCEPTUAL PROJECT DESCRIPTION AS DISCUSSED BY
BNPLC'S COUNSEL AND 3COM'S COUNSEL WHEN THE REPORT IS RECEIVED
BY BNPLC'S COUNSEL.] If requested by Landlord from time to
time, Tenant will provide current renderings and conceptual
plans and specifications for any Designated Improvements then
contemplated or under construction.
Exhibit I
Estoppel From Contractors
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents
to BNP Leasing Corporation, a Delaware corporation ("BNP"), and
covenants with BNP as follows:
1. The undersigned has entered into that certain
[Construction Contract] (the "Construction Contract") by and
between the undersigned and 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").
2. The undersigned has been advised that BNP owns the Land.
3. The undersigned has also received a copy of the Lease
Agreement dated as of July 29, 1997 (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.
4. A complete and correct copy of the Construction Contract
is attached to this letter. The Construction Contract is in
full force and effect and has not been modified or amended.
5. The undersigned has not sent 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 -
MARLBOROUGH, MASSACHUSETTS" 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 J
Estoppel From Architects/Engineers
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents
to BNP Leasing Corporation, a Delaware corporation ("BNP"), and
covenants with BNP as follows:
1. The undersigned has entered into that certain
[Architect's/Engineer's 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").
2. The undersigned has been advised that BNP owns the Land.
3. The undersigned has also received a copy of the Lease
Agreement dated as of July 29, 1997 (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.
4. A complete and correct copy of the Agreement is attached
to this letter. The Agreement is in full force and effect and
has not been modified or amended.
5. The undersigned has not sent 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, HEADER FOLLOWS THIS COMMENT BOX --
MOVE TO FIT PAGE NUMBERINGbut 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 - MARLBOROUGH, MASSACHUSETTS"
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 K
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 29, 1997 (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 6.(c)(viii) 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 6.(c)(viii) of the Lease dated as of
July 29, 1997 (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 Designated 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
Designated 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 L
Notice to Accelerate the Carrying Costs Accrual Termination Date
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: Lease Agreement/3COM (Marlborough Site)
Gentlemen:
This notice is furnished pursuant to subparagraph 1.(p) of
that certain Lease Agreement dated as of July 29, 1997 (the
"Lease Agreement," the terms defined therein being used herein
as therein defined) between 3Com Corporation and you. I, the
undersigned, the [chief financial officer, controller,
treasurer or the assistant treasurer] of 3Com Corporation, do
hereby notify you that 3COM Corporation irrevocably elects to
accelerate the Carrying Costs Accrual Termination Date and
thereby accelerate the commencement of Base Rent accruals and
the termination of accruals of Carrying Costs. Because of this
notice, the Carrying Costs Accrual Termination Date will occur
on the next following Advance Date that is at least ten (10)
days after the date you receive this notice.
Executed this _____ day of ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Exhibit M
Notice of LIBOR Period Election
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: Lease Agreement dated as of July 29, 1997, between
3COM Corporation, as tenant, and BNP Leasing Corporation, as
landlord
Gentlemen:
Capitalized terms used in this letter are intended to have
the meanings assigned to them in the Lease referenced above.
This letter constitutes notice to you that the LIBOR Period
Election under the Lease shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
______________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE
NUMBER OF MONTHS SPECIFIED ABOVE IS NOT A PERMITTED NUMBER
UNDER THE DEFINITION OF "LIBOR PERIOD ELECTION" IN THE LIST OF
DEFINED TERMS ATTACHED TO THE LEASE, OR IF THE DATE SPECIFIED
ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION
IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS
NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR
ANY REASON YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 19___.
3COM CORPORATION
Name:_________________________
Title:________________________
[cc all Participants]
Schedule 1
LIST OF APPROVED PARTICIPANTS
"Approved Participants" as used in this Lease will include the
existing Participants, Banque Nationale de Paris and ABN Amro
Bank N.V., and the following prospective participants, to the
extent that any one or more of the following may at the request
of Landlord become parties to the Participation Agreement and
the Pledge Agreement by executing supplements to those
agreements as therein provided:
Credit Suisse First Boston
Industrial Bank of Japan, Limited
Mellon Bank, N.A.
Societe Generale
The Toronto-Dominion Bank
The Bank of Nova Scotia
Union Bank of California
EXHIBIT 10.20
The transactions contemplated in this Purchase Agreement have been
made possible by the following banks, acting in the capacities
indicated:
Banque Nationale de Paris, ABN Amro Bank N.V.,
as Administrative/Documentation as Syndication Agent and
Agent and Arranger Co-Arranger
$86,000,000
PURCHASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
AS SELLER
AND
3COM CORPORATION,
AS PURCHASER
EFFECTIVE AS OF JULY 29, 1997
(Marlborough Site)
This Purchase Agreement amends, restates and replaces the Purchase
Agreement between the Seller and Purchaser dated January 21, 1997,
covering the Land (as described in Exhibit A attached hereto).
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is made as of
July 29, 1997, by 3COM CORPORATION, a Delaware corporation
("3COM") and BNP LEASING CORPORATION, a Delaware corporation
("BNPLC").
R E C I T A L S
---------------
A. BNPLC acquired the land described in Exhibit A
attached hereto and the improvements and fixtures located
thereon, if any, and has leased the same to 3COM pursuant to
that certain Lease Agreement (as from time to time
supplemented, amended or restated, the "Original Lease")
between 3COM Corporation, a California corporation, the
predecessor in interest to 3Com, and BNPLC dated as January
21, 1997.
B. By a Lease Agreement dated of even date herewith (as
from time to time supplemented, amended or restated, the
"Lease"), BNPLC and 3Com have amended, restated and replaced
the Original Lease. (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".)
C. BNPLC 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 BNPLC dated as of the date
hereof.
D. 3COM has requested an option to purchase the
Property, which BNPLC 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:
1. Definitions. As used herein, the terms "3COM",
"BNPLC", "Original Lease", "Lease", "Leased Property",
"Property", 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" means any third party designated
by 3COM to purchase the interest of BNPLC in the Property as
provided in Paragraph 2(a)(ii) below.
"Deposit Taker" shall have the meaning assigned to it in
the Pledge Agreement.
"Deposit Taker Losses" shall have the meaning assigned to
it in the Pledge Agreement.
"Designated Sale Date" means the earlier of:
(1) the effective date of any termination of
the Lease by 3COM pursuant to Paragraph 2 thereof;
(2) any date designated by BNPLC in a written
notice given by BNPLC to 3COM when an Event of Default by
3COM is continuing, provided the notice of the date so
designated is given by BNPLC at least thirty (30) days
before the date so designated; or
(3) the first Business Day in August, 2002.
"Direct Payments to Participants" means the amounts paid
or required to be paid directly to Participants on the
Designated Sale Date as provided in Section 6.2 of the Pledge
Agreement at the direction of and for 3COM by the collateral
agent appointed pursuant to the Pledge Agreement from all or
any part of the Collateral described therein.
"Fair Market Value" means the fair market value of the
Property on or about the Designated Sale 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
the construction of any Improvements which was commenced prior
to the Designated Sale Date; that all such Improvements are
self-sufficient in the sense that any easements or offsite
facilities needed for their use will be available at no
additional cost to the owner of the Improvements; 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 no conditions or
circumstances on or about the Property [such as the presence
of an endangered species] is discovered that will impede the
use or any development of the Property permitted by the Lease;
that any use or development of the Property as permitted by
the Lease will not be hindered or delayed because of the
limited availability of utilities or water; that without undue
cost or delay any purchaser paying fair market value for the
Property can obtain any necessary permits or licenses needed
to use the Property for the purposes permitted by the Lease;
and that 3COM has 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) as determined by an
independent MAI appraiser selected by BNPLC, which appraiser
must have five (5) years or more experience appraising similar
properties in Massachusetts.
"Qualified Deposit Taker" means one of the fifty largest
(measured by total assets) U.S. banks, or one of the one
hundred largest (measured by total assets) banks in the world,
with debt ratings of at least (i) A- (in the case of long term
debt) and A-1 (in the case of short term debt) or the
equivalent thereof by Standard and Poor's Corporation, and
(ii) A (in the case of long term debt) and P-1 (in the case of
short term debt) or the equivalent thereof by Moody's Investor
Service, Inc. The parties believe it improbable that the
ratings systems used by Standard and Poor's Corporation and by
Moody's Investor Service, Inc. will be discontinued or
changed, but if such ratings systems are discontinued or
changed, 3COM shall be entitled to select and use a comparable
ratings systems as a substitute for the S&P Rating or the
Moody Rating, as the case may be, for purposes of determining
the status of any bank as a Qualified Deposit Taker.
"Purchase Price" means an amount equal to Stipulated Loss
Value outstanding on the Designated Sale Date, plus all costs
and expenses (including appraisal costs, withholding taxes (if
any) and reasonable Attorneys' Fees, as defined in the Lease)
incurred in connection with any sale of the Property by BNPLC
hereunder or in connection with collecting sales proceeds due
hereunder, less the aggregate amounts (if any) of Direct
Payments to Participants and Deposit Taker Losses.
"Prohibited Encumbrance" means any lien or other title
defect encumbering the Property that is claimed by BNPLC
itself or lawfully claimed by a third party through or under
BNPLC, including any judgment lien lawfully filed against
BNPLC and including any tax lien assessed because of BNPLC'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 BNPLC, (ii) is claimed by, through or under
3COM or any of the Participants approved by 3COM (other than
Landlord's Parent), or (iii) exists because of any breach by
3COM of the Lease, because of anything done or not done by
BNPLC in an effort to satisfy subparagraph 9(b) of the Lease,
or because of anything done or not done by BNPLC at the
request of 3COM.
"Remarketing Notice" shall have the meaning assigned to
it in Paragraph 2(b)(1) below.
"Required Documents" means the quitclaim deed and other
documents that BNPLC must tender pursuant to Paragraph 3
below.
"Shortage Amount" means any amount payable to BNPLC by
3COM, rather than by the Applicable Purchaser, pursuant to
clause 2(a)(ii) below.
2. 3COM's Options and Obligations on the Designated
Sale Date.
(a) Choices. On the Designated Sale Date 3COM shall
have the right and the obligation to either:
(i) purchase BNPLC'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
BNPLC's interest in the Property and in Escrowed
Proceeds, if any, for a net cash price not less than
the lesser of (a) the Fair Market Value of the
Property, (b) fifteen percent (15%) of Stipulated
Loss Value outstanding immediately prior to the
purchase or (c) the Purchase Price. If, however,
the Fair Market Value is less than fifteen percent
(15%) of Stipulated Loss Value and less than the
Purchase Price, BNPLC may elect to keep the Property
and any Escrowed Proceeds rather than sell to the
Applicable Purchaser, in which case 3COM shall pay
BNPLC an amount equal to (A) eighty-five percent
(85%) of Stipulated Loss Value, less (B) the sum of
(x) any Escrowed Proceeds then held and to be
retained by BNPLC, (y) any Direct Payments to
Participants and (z) any Deposit Taker Losses.
Unless BNPLC elects to keep the Property pursuant to
the preceding sentence, 3COM must make a
supplemental payment to BNPLC on the Designated Sale
Date equal to the excess (if any) of the Purchase
Price over the net cash price actually paid to BNPLC
on the Designated Sale Date by the Applicable
Purchaser for BNPLC'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 (1) eighty-five percent
(85%) of Stipulated Loss Value on the Designated
Sale Date, less (2) any Direct Payments to
Participants and any Deposit Taker Losses. Any
supplemental payment payable to BNPLC 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 BNPLC exceeds
the Purchase Price and all other sums that are then
due from 3COM to BNPLC, 3COM shall be entitled to
such excess.
If any amount payable to BNPLC pursuant to this subparagraph
2(a) is not actually paid to BNPLC on the Designated Sale
Date, 3COM shall pay interest on the past due amount computed
at the Default Rate from the Designated Sale Date. However,
3Com shall be entitled to a reduction of the interest required
by the preceding sentence equal to the Base Rent, if any, paid
by 3Com as provided in Paragraph 17 of the Lease for any
holdover period after the Designated Sale Date.
(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 BNPLC the opportunity to have the
Fair Market Value determined by an appraiser as provided
in the definition of Fair Market Value above before the
Designated Sale Date, 3COM must, unless 3COM concedes
that Fair Market Value will not be less than fifteen
percent (15%) of Stipulated Loss Value on the Designated
Sale Date, provide BNPLC with a Remarketing Notice.
"Remarketing Notice" means a notice given by 3COM to
BNPLC (and to each of the Participants) no earlier than
one hundred eighty (180) days before the Designated Sale
Date and no later than ninety (90) days before the
Designated Sale Date, specifying that 3COM does not
concede that the Fair Market Value is equal to or greater
than fifteen percent (15%) of the Stipulated Loss Value.
A Remarketing Notice will be required only if 3COM does
not concede that Fair Market Value will equal or exceed
fifteen percent (15%) of Stipulated Loss Value on the
Designated Sale Date. But if for any reason (including
but not limited to any acceleration of the Designated
Sale Date pursuant to clause (2) of the definition of
Designated Sale 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 fifteen percent (15%) of Stipulated Loss
Value on the Designated Sale Date.
(2) To give BNPLC the opportunity to prepare
the Required Documents before the Designated Sale 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 BNPLC given
at least seven (7) days prior to the Designated Sale
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 BNPLC'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 Sale Date and BNPLC shall have elected to keep the
Property on such Designated Sale Date in accordance with
clause (ii) of Paragraph 2(a); or
(2) 3COM shall have failed on a Designated
Sale Date to make or cause to be made all payments to BNPLC
required by this Agreement or by the Lease and such failure
shall have continued beyond the thirty (30) day period for
tender specified in the next sentence.
If BNPLC does not receive all payments due under the Lease and
all payments required hereunder on a Designated Sale Date,
3COM may nonetheless tender to BNPLC 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 Sale Date to the date of tender, and
if presented with such a tender within thirty (30) days after
the applicable Designated Sale Date, BNPLC 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 BNPLC. 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 BNPLC,
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
Sale Date 3COM must pay all amounts then due to BNPLC under
the Lease. BNPLC will remit any excess amounts due 3COM
pursuant to the last sentence of clause (ii) of Paragraph 2(a)
promptly after BNPLC's receipt of the same and in no event
later than thirty (30) days thereafter.
(e) Effect of Options on Subsequent Title Encumbrances.
It is the intent of BNPLC 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 BNPLC, including the
Participants (but not any unsatisfied obligations to BNPLC
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
BNPLC in the ordinary course of BNPLC's business. Anyone
accepting or taking any interest in the Property by or through
BNPLC 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 BNPLC notwithstanding any
prior conveyance or assignment by BNPLC, 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 BNPLC.
3. Terms of Conveyance Upon Purchase. Immediately
after receipt of all payments to BNPLC required pursuant to
the preceding Paragraph 2, BNPLC must, unless it is to keep
the Property as permitted by Paragraph 2(a)(ii), deliver all
Escrowed Proceeds, if any, and convey all of its right, title
and interest in the Property by quitclaim 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 BNPLC or that may
become due thereafter because of any expense or liability
incurred by BNPLC resulting in whole or in part from events or
circumstances occurring before such conveyance. All costs of
such purchase and conveyance of every kind whatsoever, both
foreseen and unforeseen, shall be the responsibility of the
purchaser, and the form of quitclaim deed used to accomplish
such conveyance shall be substantially in the form attached as
Exhibit B. With such quitclaim deed, BNPLC shall also tender
to 3COM or the Applicable Purchaser, as the case may be, the
following, each fully executed and, where appropriate,
acknowledged on BNPLC's behalf by an officer of BNPLC: (1) a
Bill of Sale and Assignment of Contract Rights and Intangible
Assets in the form attached as Exhibit D, (2) 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 BNPLC, (3)
a Secretary's Certificate in the form attached as Exhibit G,
(4) a letter to the title insurance company insuring title to
the Property in the form attached as Exhibit H, and (5) 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 BNPLC 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 BNPLC under this
Agreement, the Lease or any other agreement to which BNPLC is
a party, or (vii) any other cause, whether similar or
dissimilar to the foregoing, any existing or future law to the
contrary notwithstanding. It is the intention of the parties
hereto that the obligations of 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 BNPLC. 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 BNPLC. 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 BNPLC to tender a quitclaim 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 BNPLC at the closing of the sale
hereunder, to (i) recover monetary damages proximately caused
by such failure of BNPLC if BNPLC does not cure the failure
within thirty (30) days after 3COM demands a cure by written
notice to BNPLC, or (ii) a decree compelling performance of
BNPLC's obligation to so tender a quitclaim 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 BNPLC is intended to be
exclusive of any other right or remedy BNPLC has with respect
to the Property, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given
hereunder or now or hereafter existing at law or in equity or
by statute. In addition to other remedies available under
this Agreement, 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 BNPLC of any payment hereunder with knowledge of the breach
of this Agreement shall not be deemed a waiver of such breach,
and no waiver by 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 BNPLC 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 BNPLC with respect to the Property.
Neither 3COM nor BNPLC 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 BNPLC, 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 BNPLC hereunder shall be paid to BNPLC
in immediately available funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris
ABA #: 121027234
Reference: 3COM (Marlborough Site)
or at such other place and in such other manner as
BNPLC may designate in a notice to 3COM (provided BNPLC
will not unreasonably designate a method of payment other
than wire transfer). Time is of the essence as to all
payments to BNPLC under this Agreement. Any payments
required to be made by BNPLC 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 BNPLC:
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 or William J.
La Herran
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of 3COM:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Legal Dept. Mail Stop 1308
Telecopy: (408) 764-6434
With copies to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Real Estate Dept. Mail Stop 1220
Telecopy: (408) 764-5718; and
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Treasury Dept. Mail Stop 1307
Telecopy: (408) 764-8403; and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Jonathan E. Rattner, Esq.
Telecopy: (415) 328-3029
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 MASSACHUSETTS.
15. Successors and Assigns. The terms, provisions,
covenants and conditions hereof shall be binding upon 3COM and
BNPLC and their respective permitted successors and assigns
and shall inure to the benefit of 3COM and BNPLC and all
permitted transferees, mortgagees, successors and assignees of
3COM and BNPLC with respect to the Property; provided, that
the rights of BNPLC hereunder shall not pass to 3COM or any
Applicable Purchaser or any subsequent owner claiming through
them. Prior to the Designated Sale Date BNPLC 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 BNPLC sells or
otherwise transfers the Property and assigns its rights under
this Agreement and the Lease pursuant to a Permitted Transfer,
then to the extent BNPLC's successor in interest confirms its
liability for the obligations imposed upon BNPLC by this
Agreement and the Lease on and subject to the express terms
set out herein and therein, BNPLC shall thereby be released
from any further obligations thereafter arising under this
Agreement and the Lease, and 3COM will look solely to each
successor in interest of BNPLC for performance of such
obligations.
16. WAIVER OF JURY TRIAL. BNPLC 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 BNPLC each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each
has already relied on the waiver in entering into this
Agreement and the other documents referred to herein, and that
each will continue to rely on the waiver in their related
future dealings. 3COM and BNPLC each further warrant and
represent that it has reviewed this waiver with its legal
counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LEASE, THIS AGREEMENT OR THE ENVIRONMENTAL
INDEMNITY. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
17. Security for 3COM's Obligations. 3COM's
obligations under this Agreement are secured by the Pledge
Agreement, reference to which is hereby made for a description
of the Collateral covered thereby and the rights and remedies
provided to BNPLC thereby. Although the collateral agent
appointed for BNPLC as provided in the Pledge Agreement 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
Shortage Amount or a measure of BNPLC'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, BNPLC may, from time to time, without prejudice to
any other remedy and without notice to 3COM, require the
collateral agent to 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 BNPLC
assigns its interest in the Property before the Designated
Sale Date, BNPLC may also assign BNPLC's interest in the
Collateral to the assignee.
18. Replacement of Participants Proposed by 3COM. So
long as no Event of Default has occurred and is continuing,
BNPLC shall not unreasonably withhold its approval for a
substitution under the Participation Agreement of a new
Participant proposed by 3COM for any Participant, the Deposit
Taker for whom has ceased to be a Qualified Deposit Taker;
provided, however, that (A) the proposed substitution can be
accomplished without a release or breach by BNPLC of its
rights and obligations under the Participation Agreement or
the "Underlying Documents" described therein (including this
Purchase Agreement); (B) the new Participant will agree (by
executing Supplements to the Participation Agreement and
Pledge Agreement as therein contemplated and by other
agreements as may be reasonably required by BNPLC and 3COM) to
become a party to the Participation Agreement and to the
Pledge Agreement, to designate a Qualified Deposit Taker as
the Deposit Taker for it under the Pledge Agreement and to
accept a Percentage under the Participation Agreement equal to
the Percentage of the Participant to be replaced; (C) the new
Participant (or 3COM) will provide the funds required to pay
the termination fee by Section 6.4 of the Participation
Agreement to accomplish the substitution; (D) 3COM (or the new
Participant) agrees in writing to indemnify and defend BNPLC
for any and all Losses incurred by BNPLC in connection with or
because of the substitution, including the cost of preparing
supplements to the Participation Agreement and the Pledge
Agreement and including any cost of defending and paying any
claim asserted by the Participant to be replaced because of
the substitution (but not including any liability of BNPLC to
such Participant for damages caused by BNPLC's bad faith or
gross negligence in the performance of BNPLC's obligations
under the Participation Agreement prior to the substitution);
and (E) the new Participant shall be a reputable financial
institution having a net worth of no less than seven and one
half percent (7.5%) of total assets and total assets of no
less than $10,000,000,000.00 (all according to then recent
audited financial statements). BNPLC shall attempt in good
faith to assist (and cause its Affiliate, Banque Nationale de
Paris, to attempt in good faith to assist) 3COM in identifying
a new Participant that 3COM may propose to substitute for an
existing Participant pursuant to this Paragraph, as 3COM may
reasonably request from time to time. However, in no event
shall BNPLC itself, or any of its Affiliates, be required to
take the Percentage of any Participant to be replaced.
19. Security for BNPLC's Obligations. To secure 3COM's
right to recover any damages caused by a breach of Paragraph 3
by BNPLC, including any such breach caused by a rejection or
termination of this Agreement in any bankruptcy or insolvency
proceeding instituted by or against BNPLC, as debtor, BNPLC
does hereby grant to 3COM a lien and security interest against
all rights, title and interests of BNPLC from time to time in
and to the Property. 3COM may enforce such lien and security
interest judicially after any such breach by BNPLC, but not
otherwise. Contemporaneously with the execution of this
Agreement, 3COM and BNPLC will execute a memorandum of this
Agreement which is in recordable form and which specifically
references the lien granted in this Paragraph, and 3COM shall
be entitled to record such memorandum at any time prior to the
Designated Sale Date.
20. Not a Partnership, Etc. NOTHING IN THIS PURCHASE
AGREEMENT IS INTENDED TO BE OR TO CREATE ANY PARTNERSHIP,
JOINT VENTURE, OR OTHER JOINT ENTERPRISE BETWEEN BNPLC AND
3COM. NEITHER THE EXECUTION OF THIS PURCHASE AGREEMENT NOR
THE ADMINISTRATION OF THIS PURCHASE AGREEMENT OR OTHER
DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY OTHER RIGHT,
DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS PURCHASE
AGREEMENT OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE ANY
FIDUCIARY OBLIGATIONS OF BNPLC TO 3COM.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT
BLANK]
IN WITNESS WHEREOF, the parties have executed this
Purchase Agreement as of July 29, 1997.
"BNPLC"
BNP LEASING CORPORATION, a Delaware corporation
By: /s/ Lloyd G. Cox
----------------------------
Lloyd G. Cox, Vice President
[Continuation of signature pages to Purchase Agreement dated
to be effective July 29, 1997]
"3COM"
3COM CORPORATION, a Delaware corporation
By: /s/ Mark D. Michael
Name:Mark D. Michael
Title:SVP, Gen Counsel & Secretary
Exhibit A
Legal Description
The land with the buildings thereon situated on Forest Street
in Marlborough, Middlesex County, Massachusetts and being
shown as Lots 1 and 2 on a plan of land entitled "Plan of Land
in Marlborough, Mass." drawn by Guerriere & Halnon, Inc.
Engineering and Land Surveying, owned by Metropolitan Life
Insurance Company, Sale 200 feet to an inch, dated August 17,
1989 and recorded in Middlesex County Registry of Deeds in
Book 25878, Page 342, to which plan reference is made for a
more particular description of Lots 1 and 2.
Exhibit B
QUITCLAIM DEED
THE STATE OF MASSACHUSETTS )
) KNOW ALL MEN BY THESE PRESENTS
THAT:
COUNTY OF ______________ )
BNP LEASING CORPORATION, a Delaware corporation
("Grantor"), for and in consideration of the sum of [INSERT
AMOUNT] paid to Grantor by [3COM OR THE APPLICABLE PURCHASER,
AS THE CASE MAY BE] ("Grantee"), the receipt and sufficiency
of which are hereby acknowledged, does hereby GRANT, SELL,
CONVEY, ASSIGN and DELIVER to Grantee, with quitclaim
covenants, the real property described in Exhibit A attached
hereto and made a part hereof (the "Property"), together with
any buildings and other improvements situated thereon, any
fixtures and other property affixed thereto and all right,
title, and interest of Grantor in and to adjacent streets,
alleys, and rights-of-way; provided, however, this conveyance
is made by Grantor and accepted by Grantee subject to the
following, as well as the Permitted Encumbrances described on
Annex B (collectively, the "Permitted Encumbrances"):
1. Real Estate Taxes not yet due and payable;
2. General or Special Assessments due and
payable after the date hereof; and
3. Encroachments, variations in area or in
measurements, boundary line disputes, roadways and
other matters not of record which would be disclosed
by a survey and inspection of the property conveyed
hereby.
IN WITNESS WHEREOF, this Deed is executed by Grantor on
this ________ day of __________, 199__.
BNP LEASING CORPORATION
a Delaware corporation
By:______________________________
Its:_____________________________
THE STATE OF )
)
COUNTY OF )
In witness whereof, the said BNP Leasing Corporation, a
Delaware corporation, has caused its corporate seal to be
hereto affixed and these presents to be signed, acknowledged,
and delivered in its name and behalf by
______________________, its ___________________ hereto duly
authorized this ___ day of ____________, 199__.
Signed and sealed in the presence of
__________________________________
__________________________________
__________________________________
__________________________________
The Commonwealth of Massachusetts
ss. 19__
Then personally appeared the above named ________________
and acknowledged the foregoing instrument to be the free act and deed
of the ____________________ before me.
Notary Public
My commission expires__________________.
Annex A
LEGAL DESCRIPTION
The land with the buildings thereon situated on Forest Street
in Marlborough, Middlesex County, Massachusetts and being
shown as Lots 1 and 2 on a plan of land entitled "Plan of Land
in Marlborough, Mass." drawn by Guerriere & Halnon, Inc.
Engineering and Land Surveying, owned by Metropolitan Life
Insurance Company, Sale 200 feet to an inch, dated August 17,
1989 and recorded in Middlesex County Registry of Deeds in
Book 25878, Page 342, to which plan reference is made for a
more particular description of Lots 1 and 2.
Annex B
Permitted Encumbrances
[NOTE: TO THE EXTENT THAT SPECIFIC ENCUMBRANCES (OTHER THAN
"PROHIBITED LIENS") ARE IDENTIFIED IN ADDITION TO THOSE
DESCRIBED BELOW, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO
THE LIST BELOW AND THIS "NOTE" WILL BE DELETED BEFORE THIS
DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES
APPROVED BY BNPLC AS "PERMITTED ENCUMBRANCES" FROM TIME TO
TIME BECAUSE OF 3COM'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL
TO AN ADJUSTMENT AS PROVIDED IN THE LEASE.]
This conveyance is subject to any encumbrances that do
not constitute "Prohibited Encumbrances" (as defined in the
Purchase Agreement pursuant to which this Deed is being
delivered), including county and city taxes for the Fiscal
Year 1997, a lien not yet due or payable, and including the
following matters to the extent the same are still valid and
in force:
1. Easement to New England Power Engineering & Service
Corporation dated February 17, 1931 and recorded in Book
5544, Page 152.
2. Easement to New England Power Engineering & Service
Corporation dated February 17, 1931 and recorded in Book
5546, Page 341.
3. Easement to Worcester County Electric Company dated
May 27, 1959 and recorded in Book 9395, Page 43.
4. Order of Taking by the City of Marlborough for
laying out of Forest Street dated December 9, 1968 and
recorded in Book 11624, Page 1; as affected by Order for
the Relocation of Forest Street by the County
Commissioners for the County of Middlesex dated March 24,
1961 and recorded in Book 9789, Page 242.
5. Matters as shown or disclosed on a plan entitled,
"Title Insurance Plan of Land in Marlborough, Mass."
Prepared for: 3COM Corporation Scale: 1" = 100' Date:
November 8, 1996 Prepared by: Guerriere & Halnon, Inc.
Engineering & Land Surveying 333 West Street Milford,
Massachusetts as follows:
a. encroachment of stone wall;
b. encroachment of fence;
c. encroachment of guard rail; and
d. encroachment of utility poles.
6. Order of Conditions by the Marlborough Conservation
Commission, DEP File No. 212-408 dated April 19, 1990 and
recorded in Book 20539, Page 467.
7. Order of Conditions by the Marlborough Conservation
Commission, DEP File No. 212-408 dated November 29, 1989
and recorded in Book 20539, Page 515, as affected by
Amendment dated April 19, 1990 and recorded in Book
20598, Page 521.
EXHIBIT C
[Intentionally deleted.]
Exhibit D
BILL OF SALE, ASSIGNMENT OF CONTRACT
RIGHTS AND INTANGIBLE ASSETS
Reference is made to that certain Sale Agreement dated
December 13, 1996 (the "Agreement") between 3Com Corporation,
a California Corporation, the predecessor in interest to 3Com
Corporation, a Delaware corporation, and Metropolitan Life
Insurance Company, a New York corporation ("Seller"), pursuant
to which 3Com Corporation named BNP LEASING CORPORATION
("Assignor") as its designee and Seller 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 Seller 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 29, 2997 (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: ____________________, _____.
ASSIGNOR:
BNP LEASING CORPORATION
a Delaware corporation
By:______________________________
Its:_____________________________
ASSIGNEE:
[3COM, OR THE APPLICABLE PURCHASER],
a _________ corporation
By:______________________________
Its:_____________________________
Annex A
Legal Description
The land with the buildings thereon situated on Forest Street
in Marlborough, Middlesex County, Massachusetts and being
shown as Lots 1 and 2 on a plan of land entitled "Plan of Land
in Marlborough, Mass." drawn by Guerriere & Halnon, Inc.
Engineering and Land Surveying, owned by Metropolitan Life
Insurance Company, Sale 200 feet to an inch, dated August 17,
1989 and recorded in Middlesex County Registry of Deeds in
Book 25878, Page 342, to which plan reference is made for a
more particular description of Lots 1 and 2.
Exhibit E
Acknowledgment of Disclaimer of Representations and Warranties
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND
WARRANTIES (this "Certificate") is made as of ___________________,
____, 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 ("BNPLC"), 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 BNPLC makes no representations or warranties of any
nature or kind, whether statutory, express or implied, with
respect to environmental matters or the physical condition of
the Subject Property, and Grantee, by acceptance of the
Conveyancing Documents, accepts the Subject Property "AS IS,"
"WHERE IS," "WITH ALL FAULTS" and without any such
representation or warranty by Grantor as to environmental
matters, the physical condition of the Subject Property,
compliance with subdivision or platting requirements or
construction of any improvements. Without limiting the
generality of the foregoing, Grantee hereby further
acknowledges and agrees that warranties of merchantability and
fitness for a particular purpose are excluded from the
transaction contemplated by the Conveyancing Documents, as are
any warranties arising from a course of dealing or usage of
trade. Grantee hereby assumes all risk and liability (and
agrees that BNPLC shall not be liable for any special, direct,
indirect, consequential, or other damages resulting or arising
from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property,
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 BNPLC,
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 BNPLC to act when the duty to act would not have
been imposed but for BNPLC's status as owner of the Subject
Property or as a party to the transactions pursuant to which
BNPLC 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 BNPLC or
participation or facilitation in any manner, directly or
indirectly, of the Applicable Transactions, or (3) the
exercise in a lawful manner by BNPLC (or any party lawfully
claiming through or under BNPLC) 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
BNPLC is entitled to rely and is relying on this Certificate.
EXECUTED as of ________________, ____.
_________________________________
By:______________________________
Name:_________________________
Title:________________________
Exhibit F
[Intentionally deleted.]
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. 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 ________________,
____.
______________________________ [signature]
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement
(herein called the "Purchase Agreement") dated as of July 29,
1997, 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 Middlesex County, Massachusetts, 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.
Exhibit H
BNP LEASING CORPORATION
717 N. HARWOOD
SUITE 2630
DALLAS, TEXAS 75201
____________________ , ____
[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.
To inform [3COM or the Applicable Purchaser] (the
"Transferee") that withholding of tax is not required upon the
disposition of a 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 ______________
__________________________________________.
The Seller understands that this certification may be
disclosed to the Internal Revenue Service 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: ___________, ____.
By:______________________________
Name:_________________________
Title:________________________
EXHIBIT 10.21
The transactions contemplated in this Lease Agreement have been
made possible by the following banks, acting in the capacities
indicated:
Banque Nationale de Paris, ABN Amro Bank N.V.,
as Administrative/Documentation as Syndication Agent and
Agent and Arranger Co-Arranger
$95,000,000
LEASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
AS LANDLORD
AND
3COM CORPORATION,
AS TENANT
EFFECTIVE AS OF AUGUST 11, 1997
(Rolling Meadows Site)
TABLE OF CONTENTS
1. 1. Definitions
(a) Active Negligence
(b) Additional Rent
(c) Administrative Fee
(d) Advance Date
(e) Affiliate
(f) Applicable Laws
(g) Applicable Purchaser
(h) Approved Participants
(i) As-built Appraisal
(j) Attorneys' Fees
(k) Base Rent
(l) Base Rent Date
(m) Breakage Costs
(n) Business Day
(o) Capital Adequacy Charges
(p) Carrying Costs
(q) Carrying Costs Accrual Termination Date
(r) Cash Collateral
(s) Certificate of Deposit Collateral Percentage
(t) Closing Costs
(u) Change of Control Event
(v) Code
(w) Collateral
(x) Commitment Fee
(y) Completion Deadline
(z) Completion Notice
(aa) Construction Advances
(ab) Construction Allowance
(ac) Construction Documents
(ac) Construction Periods
(ad) Custodial Agreement
(ae) Debt
(af) Default
(ag) Default Rate
(ah) Defaulting Participant
(ai) Designated Improvements
(aj) Designated Sale Date
(ak) Effective Rate
(al) Environmental Indemnity
(am) Environmental Laws
(an) Environmental Losses
(ao) Environmental Report
(ap) ERISA
(aq) ERISA Affiliate
(ar) ERISA Termination Event
(as) Escrowed Proceeds
(at) Eurocurrency Liabilities
(au) Eurodollar Rate Reserve Percentage
(av) Event of Default
(aw) Excluded Taxes
(ax) Fair Market Value
(ay) Fed Funds Rate
(az) Funding Advances
(ba) GAAP
(bb) Hazardous Substance
(bc) Hazardous Substance Activity
(bd) Impositions
(be) Improvements
(bf) Indemnified Party
(bg) Initial Investment
(bh) Landlord's Parent
(bi) Last Advance Date
(bj) LIBOR
(bk) LIBOR Period Election
(bl) Lien
(bm) Losses
(bn) Maximum Construction Allowance
(bo) Notice of Last Advance
(bp) Ordinary Negligence
(bq) Outstanding Construction Allowance
(br) Participant
(bs) Participation Agreement
(bt) Period
(bu) Permitted Encumbrances
(bv) Permitted Hazardous Substance Use
(bw) Permitted Hazardous Substances
(bx) Permitted Transfer
(by) Person
(bz) Plan
(ca) Pledge Agreement
(cb) Prime Rate
(cc) Purchase Agreement
(cd) Purchase Documents
(ce) Purchase Price
(cf) Qualified Payments
(cg) Qualifying Security Interest
(ch) Remaining Proceeds
(ci) Rent
(cj) Responsible Financial Officer
(ck) Scope Change
(cl) Securities Collateral
(cm) Securities Collateral Percentage
(cn) Spread
(co) Stipulated Loss Value
(cp) Subsidiary
(cq) Tenant's Knowledge
(cr) Term
(cs) Unfunded Benefit Liabilities
(ct) Upfront Fee
(cu) Voluntary Minimum Pledge Commitment
(cv) Other Terms and References
2. 2. Term
3. 3. Rental
(a) Base Rent
(b) Upfront Fee
(c) Commitment Fees
(d) Administrative Agency Fees
(e) Additional Rent
(f) Interest and Order of Application
(g) Net Lease
(h) No Demand or Setoff
(i) Overdrawn Allowance
4. 4. Insurance and Condemnation Proceeds
5. 5. No Lease Termination
(a) Status of Lease
(b) Waiver By Tenant
6. 6. Construction Allowance
(a) Advances; Outstanding Construction Allowance
(b) Designated Improvements
(i) Responsibility for Construction.
(ii) Approval of Descriptions and Renderings
of the Designated Improvements.
(iii) Scope Changes Subsequent to Initial Approval.
(iv) Value Added.
(v) Estoppel Letters Required.
(vi) Advances Not a Waiver.
(c) Conditions to Construction Advances
(i) Prior Notice
(ii) Amount of the Advances
(iii) Insurance
a) Title Insurance
b) Builder's Risk Insurance
(iv) Progress of Construction
(v) Evidence of Costs to be Reimbursed
(vi) No Event of Default or Change of Control Event
(vii) No Sale of Landlord's Interest
(viii) Certificate of No Default
(ix) Payments by Approved Participants
(x) Approval of Designated Improvements and
As-built Appraisal
(d) Completion Notice
7. 7. Purchase Documents and Environmental Indemnity
8. 8. Use and Condition of Leased Property
(a) Use
(b) Condition
(c) Consideration of and Scope of Waiver
9. 9. Other Representations, Warranties and Covenants of Tenant
(a) Financial Matters
(b) Existing Contract
(c) No Default or Violation
(d) Compliance with Covenants and Laws
(e) Environmental Representations
(f) No Suits
(g) Condition of Property
(h) Organization
(i) Enforceability
(j) Not a Foreign Person
(k) Omissions
(l) Existence
(m) Tenant Taxes
(n) Operation of Property
(o) Debts for Construction
(p) Impositions
(q) Repair, Maintenance, Alterations and Additions
(r) Insurance and Casualty
(s) Condemnation
(t) Protection and Defense of Title
(u) No Liens on the Leased Property
(v) Books and Records
(w) Financial Statements; Required Notices; Certificates
as to Default
(x) Further Assurances
(y) Fees and Expenses; General Indemnification; Increased
Costs; and Capital Adequacy Charges
(z) Liability Insurance
(aa) Permitted Encumbrances
(ab) Environmental
(ac) Affirmative Financial Covenants
(ad) Negative Covenants
(i) Liens
(ii) Transactions with Affiliates
(iii) Mergers; Sales of Assets
(v) Change of Business
(ae) ERISA
10. 10. Representations, Warranties and Covenants of Landlord
(a) Title Claims By, Through or Under Landlord
(b) Actions Required of the Title Holder
(c) No Default or Violation
(d) No Suits
(e) Organization
(f) Enforceability
(g) Existence
(h) Not a Foreign Person
11. 11. Assignment and Subletting
(a) Consent Required
(b) Standard for Landlord's Consent to Assignments
and Certain Other Matters
(c) Consent Not a Waiver
(d) Landlord's Assignment
12. 12. Environmental Indemnification
(a) Indemnity
(b) Assumption of Defense
(c) Notice of Environmental Losses
(d) Rights Cumulative
(e) Survival of the Indemnity
13. 13. Landlord's Right of Access
14. 14. Events of Default
(a) Definition of Event of Default
(b) Remedies
(c) Enforceability
(d) Remedies Cumulative
(e) Waiver by Tenant
(f) No Implied Waiver
15. 15. Default by Landlord
16. 16. Quiet Enjoyment
17. 17. Surrender Upon Termination
18. 18. Holding Over by Tenant
19. 19. Miscellaneous
(a) Notices
(b) Severability
(c) No Merger
(d) NO IMPLIED REPRESENTATIONS BY LANDLORD
(e) Entire Agreement
(f) Binding Effect
(g) Time is of the Essence
(h) Termination of Prior Rigts
(i) Governing Law
(j) Waiver of a Jury Trial
(k) Not a Partnership, Etc
(l) Tax Reporting
Exhibits and Schedules
Exhibit A Legal Description
Exhibit B Encumbrance List
Exhibit C Permitted Hazardous Substances
Exhibit D Resolution of Disputed Insurance Claims
Exhibit E Covenant Compliance Certificate
Exhibit F Certificate Setting Forth the Calculation of the Spread
Exhibit G List of Environmental Reports
Exhibit H Contractor's Estoppel Letter
Exhibit I Architect's Estoppel Letter
Exhibit J Draw Request Forms
Exhibit K Notice to Accelerate the Carrying Costs Accrual
Termination Date
Exhibit L Notice of Libor Period Election
Schedule 1 List of Approved Participants
LEASE AGREEMENT
This LEASE AGREEMENT (hereinafter called this "Lease"),
made to be effective as of August 11, 1997 (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 Delaware corporation (hereinafter called
"Tenant");
W I T N E S E T H T H A T:
WHEREAS, pursuant to an Agreement for Purchase and Sale of
Real Estate dated June 20, 1997 and with an "effective date"
of June 24, 1997 (as amended, hereinafter called the "Existing
Contract") between Tenant and 3800 Golf Company, L.L.C.
(hereinafter called "Seller"), concerning the land described in
Exhibit A attached hereto (hereinafter called the "Land") and
the improvements on such Land, if any, Landlord (as the
assignee of Tenant thereunder) is acquiring the Land and
improvements (if any) from Seller contemporaneously with the
execution of this Lease;
WHEREAS, In anticipation of Landlord's acquisition of the
Land and the improvements on the Land, Landlord and Tenant
have reached agreement as to the terms and conditions upon
which Landlord will 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:
(i) Landlord's interest in any and all buildings and
improvements now existing 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");
(ii) 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;
(iii) 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 (i) through
(iii) 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 assignable interests or rights in, to or under
the following that have been transferred to Landlord by Seller
under the Existing Contract: (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 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:
1. Definitions. As used herein, the terms "Lease,"
"Landlord," "Tenant," "Existing Contract," "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:
(a) 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 Documents.
(b) Additional Rent. "Additional Rent" shall have the meaning
assigned to it in subparagraph 3.(e) below.
(c) Administrative Fee. "Administrative Fee" shall have the
meaning assigned to it in subparagraph 3.(d) below.
(d) 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
September 2, 1997 and continuing regularly thereafter to and
including the Carrying Costs Accrual Termination Date;
provided, that if the Carrying Costs Accrual Termination Date
occurs before the Last Advance Date (as defined below), then
after the Carrying Costs Accrual Termination Date each Base
Rent Date upon which commences a new Base Rent Period (and only
such Base Rent Dates) through and including the Last Advance
Date shall also constitute an "Advance Date" hereunder. In any
event, no Advance Date shall occur after the Last Advance Date.
(e) Affiliate. "Affiliate" of any Person means any other
Person controlling, controlled by or under common control with
such Person. For purposes of this definition, the term
"control" when used with respect to any Person means the power
to direct the management of policies of such Person, directly
or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
(f) Applicable Laws. "Applicable Laws" shall have the meaning
assigned to it in subparagraph 9.(d) below.
(g) 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.
(h) Approved Participants. "Approved Participants" means (1)
the existing Participants and prospective participants listed
on Schedule 1 attached hereto; and (2) any other party which
Tenant shall have approved as a Participant, which approval
shall not be unreasonably withheld for any party that Landlord
proposes as a new Participant to replace, in whole or in part,
an Approved Participant under the Participation Agreement and
the Pledge Agreement; provided, the party proposed by Landlord
as a new Participant is a commercial bank operating in the
United States of America having capital and surplus in excess
of $500,000,000 or an Affiliate of such a bank; and, provided
further, the replacement will not reduce the aggregate
Percentages of Landlord and Landlord's Parent under and as
defined in the Participation Agreement below the minimum
percentage specified in paragraph 14.2 of the Participation
Agreement.
(i) As-built Appraisal. "As-built Appraisal" means an
appraisal of the Leased Property, prepared by an independent
appraiser reasonably satisfactory to Landlord, in form and
scope reasonably satisfactory to Landlord, reflecting
assumptions that the Designated Improvements have been
completed in accordance with descriptions and renderings
approved by Landlord as provided in subparagraph 6.(b)(ii) and
that the Designated Improvements are vacant and ready for use
and occupancy, and in any event satisfying the regulatory
requirements for such appraisals issued under 12 U.S.C. 93a and
title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA), 12 U.S.C. 3331 et. seq.
(j) 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.
(k) Base Rent. "Base Rent" means the rent payable by Tenant
pursuant to subparagraph 3.(a) below.
(l) Base Rent Date. "Base Rent Date" means a date upon which
Base Rent must be paid under the Lease, all of which dates
shall be the first Business Day of a calendar month. The first
Base Rent Date shall be determined as follows:
a) If a LIBOR Period Election of one
month is in effect on the Carrying Costs Accrual
Termination Date, then the first Business Day of the
first calendar month following the Carrying Costs
Accrual Termination Date shall be the first Base Rent
Date.
b) If a LIBOR Period Election of two
months is in effect on the Carrying Costs Accrual
Termination Date, then the first Business Day of the
second calendar month following the Carrying Costs
Accrual Termination Date shall be the first Base Rent
Date.
c) If the LIBOR Period Election in
effect on the Carrying Costs Accrual Termination Date
is three months or six months, then the first
Business Day of the third calendar month following
the Carrying Costs Accrual Termination Date shall be
the first Base Rent Date.
Each successive Base Rent Date after the first Base Rent Date
shall be the first Business Day of the first, second or third
calendar month following the calendar month which includes the
preceding Base Rent Date, determined as follows:
(1) If a LIBOR Period Election of one
month is in effect on a Base Rent Date, then the
first Business Day of the first calendar month
following such Base Rent Date shall be the next
following Base Rent Date.
(2) If a LIBOR Period Election of two
months is in effect on a Base Rent Date, then the
first Business Day of the second calendar month
following such Base Rent Date shall be the next
following Base Rent Date.
(3) If a LIBOR Period Election of
three months or six months is in effect on a Base
Rent Date, then the first Business Day of the third
calendar month following such Base Rent Date shall be
the next following Base Rent Date.
Thus, for example, if the Carrying Costs Accrual Termination
Date falls on the first Business Day of June, 1999 and a LIBOR
Period Election of six months commences on the Carrying Costs
Accrual Termination Date, then the first Base Rent Date shall
be the first Business Day of September, 1999, and the second
Base Rent Date shall be the first Business Day of December,
1999.
"Base Rent Period" means a period for which Base Rent must
be paid under the Lease, each of which periods shall correspond
to the LIBOR Period Election for such period. The first Base
Rent Period shall begin on and include the Carrying Costs
Accrual Termination Date, and each successive Base Rent Period
shall begin on and include the Base Rent Date upon which the
preceding Base Rent Period ends. Each Base Rent Period,
including the first Base Rent Period, shall end on but not
include the first or second Base Rent Date after the Base Rent
Date upon which such period began, determined as follows:
(1) If the LIBOR Period Election for
a Base Rent Period is one month, two months or three
months, then such Base Rent Period shall end on the
first Base Rent Date after the Base Rent Date upon
which such period began.
(2) If the LIBOR Period Election for
a Base Rent Period is six months, then such Base Rent
Period shall end on the second Base Rent Date after
the Base Rent Date upon which such period began.
The determination of Base Rent Periods can be illustrated by
two examples:
1) If Tenant makes a LIBOR Period
Election of three months for a hypothetical Base Rent
Period beginning on the first Business Day in
January, 2000, then such Base Rent Period will end on
but not include the first Base Rent Date after it
begins; that is, such Base Rent Period will end on
the first Business Day in April, 2000, the third
calendar month after January, 2000.
2) If, however, Tenant makes a LIBOR
Period Election of six months for the hypothetical
Base Rent Period beginning the first Business Day in
January, 2000, then such Base Rent Period will end on
but not include the second Base Rent Date after it
begins; that is, the first Business Day in July,
2000.
(m) Breakage Costs. "Breakage Costs" means any and all costs,
losses or expenses incurred or sustained by Landlord's Parent
or any other Participant, for which Landlord's Parent or the
other 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 2 or
any sale of the Leased Property pursuant to the Purchase
Agreement, if such termination or sale is effective as of any
day other than a Base Rent Date. Breakage Costs will include
losses attributable to any decline in LIBOR as of the effective
date of termination or sale as compared to LIBOR used to
determine the Effective Rate then in effect. (However, if
Landlord's Parent or another 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 for the account of Landlord's Parent or the applicable
Participant under this Lease.) Each determination by
Landlord's Parent of Breakage Costs shall, in the absence of
clear and demonstrable error, be conclusive and binding upon
Landlord and Tenant.
(n) 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).
(o) Capital Adequacy Charges. "Capital Adequacy Charges"
means any additional amounts Landlord's Parent or any other
Participant requires Landlord to pay as compensation for an
increase in required capital as provided in subparagraph
9.(y)(iv).
(p) Carrying Costs. "Carrying Costs" means the charges added
to and made a part of the Outstanding Construction Allowance
from time to time on and before the Carrying Costs Accrual
Termination Date pursuant to and as more particularly described
in subparagraph 6.(a)(ii) below.
(q) Carrying Costs Accrual Termination Date. "Carrying Costs
Accrual Termination Date" means the earlier of (1) the Last
Advance Date or (2) the first Advance Date that occurs at least
ten (10) days after Landlord has received a notice from Tenant,
in the form of Exhibit K attached hereto, stating that Tenant
irrevocably elects to accelerate the Carrying Costs Accrual
Termination Date and thereby accelerate the commencement of
Base Rent accruals and the termination of accruals of Carrying
Costs. It is understood that Tenant may, but shall not be
required, to give such a notice at any time.
(r) Cash Collateral. "Cash Collateral" shall have the meaning
assigned to it in the Pledge Agreement.
(s) Certificate of Deposit Collateral Percentage.
"Certificate of Deposit Collateral Percentage" for each Period
means the Certificate of Deposit Collateral Percentage for such
Period (as defined in and determined in accordance with the
Pledge Agreement); provided, however, for purposes of this
Lease, the Certificate of Deposit Collateral Percentage for any
Period shall not exceed a fraction, the numerator of which
fraction shall equal the Value (as defined in and determined in
accordance with the Pledge Agreement) of all Cash Collateral
that is, on the first day of such Period, held by the Deposit
Takers under (and as defined in) the Pledge Agreement, subject
to a Qualifying Security Interest and free from claims or
security interests held or asserted by any third party, and the
denominator of which fraction shall equal the Stipulated Loss
Value on the first day of such 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).
(t) Closing Costs. "Closing Costs" means an amount requested
by Tenant advanced by or on behalf of Landlord on the effective
date of this Lease to pay on behalf of Tenant (i) the Upfront
Fee, and (ii) expenses incurred in connection with the
preparation and negotiation of this Lease, the Purchase
Documents, the Environmental Indemnity, the Participation
Agreement and related documents. To the extent that Landlord
does not itself apply funds advanced as provided in this
definition, the remainder thereof will be advanced to Tenant,
with the expectation that Tenant shall use any such amount
advanced for one or more of the following purposes: (1) the
payment of the Upfront Fee and expenses incurred in connection
with the preparation and negotiation of this Lease, the
Purchase Documents, the Environmental Indemnity, the
Participation Agreement and related documents; (2) the payment
or reimbursement of other expenses incurred by Tenant in
connection with any improvements Tenant may elect to make to
the Leased Property in accordance with the requirements and
limitations imposed by this Lease, including the planning,
design, engineering and permitting of thereof; (3) the
maintenance of the Leased Property; or (4) the payment of Rents
next due. The advance described in this definition shall
constitute part of the Initial Investment, and the amount
thereof may be confirmed by Landlord and Tenant in a separate
closing certificate.
(u) 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 subparagraph 9.(ad)(iii).
(v) Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(w) Collateral. "Collateral" shall have the meaning assigned
to it in the Pledge Agreement.
(x) Commitment Fee. "Commitment Fee" shall have the meaning
assigned to it in subparagraph 3.(c) below.
(y) Completion Deadline. "Completion Deadline" means the
first Business Day in August, 1999.
(z) Completion Notice. "Completion Notice" shall have the
meaning assigned to it in subparagraph 6.(d) below.
(aa) Construction Advances. "Construction Advances" means
actual advances of funds made by or on behalf of Landlord
pursuant to Paragraph 6.(a)(i) below for costs incurred to
construct the Designated Improvements or for property taxes and
assessments assessed against the Leased Property paid prior to
the Last Advance Date.
(ab) 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 Designated Improvements as more
particularly described in Paragraph 6 below.
(ac) 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 Designated
Improvements.
(ac) Construction Periods. The first "Construction
Period" shall be the 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 Carrying Costs Accrual Termination Date, which
shall be coterminous with Base Rent Periods) 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.
(ad) 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.
(ae) 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 of such Person, contingent
or otherwise, under any lease of real property or related
documents (including a separate purchase agreement) which
provide that such Person must purchase or cause another to
purchase any interest in the leased property and thereby
guarantee a minimum residual value of the leased property to
the lessor; (vi) 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 (v) above, (vii) 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 (viii) Unfunded Benefit Liabilities.
(af) 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.
(ag) 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.
(ah) Defaulting Participant. "Defaulting Participant" means
any Approved Participant that shall have breached the
Participation Agreement 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 the Participation Agreement, 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.)
(ai) Designated Improvements. "Designated 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 as described in
Paragraph 6 below.
(aj) Designated Sale Date. "Designated Sale Date" shall have
the meaning assigned to it in the Purchase Agreement.
(ak) Effective Rate. "Effective Rate" means, for each Period,
the per annum rate determined by dividing (A) LIBOR for such
Period, by (B) 100% minus the Eurodollar Rate Reserve
Percentage for such Period; provided, however, for the short
first Construction Period ending on September 2, 1997, the
Effective Rate will equal the per annum rate (which may be
confirmed by a separate document executed by BNPLC and 3COM
contemporaneously with this Lease) equal to the higher of rates
set by each Participant as its "cost of funds" for such period.
If LIBOR or the Eurodollar Rate Reserve Percentage changes from
Period to Period, then the Effective Rate shall be
automatically increased or decreased, as the case may be, as of
the date of the change from Period to Period. If for any
reason Landlord's Parent determines that it is impossible or
unreasonably difficult to determine the Effective Rate with
respect to a given Period in accordance with the preceding
sentences, then the "Effective Rate" for that Period shall
equal any published index or per annum interest rate determined
reasonably and in good faith by Landlord's Parent to be a
comparable rate 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 Parent's comparison of
past eurodollar market rates to past yields on such Treasury
obligations. Any determination by Landlord's Parent of the
Effective Rate hereunder shall, in the absence of clear and
demonstrable error, be conclusive and binding.
(al) 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.
(am) 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").
(an) 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 1.(an), 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.
(ao) Environmental Report. "Environmental Report" means,
collectively, the reports listed on Exhibit G attached hereto.
(ap) 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.
(aq) 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.
(ar) ERISA Termination Event. "ERISA Termination Event" means
(i) the occurrence with respect to any Plan of a) a reportable
event described in Sections 4043(b)(5) or (6) of ERISA or b)
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 (ii) 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 (iii) 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 (iv) the
institution of proceedings to terminate any Plan by the Pension
Benefit Guaranty Corporation under Section 4042 of ERISA, or
(v) 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.
(as) 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 4 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 Rent 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 4 below or applied as a Qualified Payment
or as reimbursement for costs incurred in connection with a
Qualified Payment, Landlord shall keep the same deposited in an
interest bearing account, and all interest earned on such
account shall be added to and made a part of Escrowed Proceeds.
(at) 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.
(au) Eurodollar Rate Reserve Percentage. "Eurodollar Rate
Reserve Percentage" means, for purposes of determining the
Effective Rate for any Period, the reserve percentage
applicable two Business Days before the first day of such
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 period.
(av) Event of Default. "Event of Default" shall have the
meaning assigned to it in subparagraph 14.(a) below.
(aw) Excluded Taxes. "Excluded Taxes" shall mean (1) all
federal, state and local income taxes upon the Base Rent, the
Upfront Fee, the Commitment Fee, Administrative Fees and any
interest paid to Landlord pursuant to subparagraph 3.(f), (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 this Lease, the
Purchase Documents, or the Leased Property, but excluding any
such taxes assessed because of any Permitted Transfer.
(ax) Fair Market Value. "Fair Market Value" shall have the
meaning assigned to it in the Purchase Agreement.
(ay) 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 Parent from three Federal funds brokers of
recognized standing selected by Landlord's Parent. All
determinations of the Fed Funds Rate by Landlord's Parent
shall, in the absence of clear and demonstrable error, be
binding and conclusive upon Landlord and Tenant.
(az) Funding Advances. "Funding Advances" means (1) advances
(equal in the aggregate to the Initial Investment) made on or
prior to the date hereof by Landlord's Parent and other
Participants to or on behalf of Landlord to permit Landlord to
acquire or maintain its investment in the Leased Property and
to allow Landlord to provide the advance described in the
definition of Closing Costs in subparagraph 1.(t), (2) future
advances (which, together with the Funding Advances described
in the preceding clauses (1), are expected to total
$95,000,000) made by Landlord's Parent or any Participant to or
on behalf of Landlord to allow Landlord to provide Construction
Advances hereunder and to cover Carrying Costs, and (3) future
advances made by Landlord's Parent or any Participant to or on
behalf of Landlord in replacement of or renewal and extension
of other Funding Advances. For example, if after the date
hereof a new Participant advances funds on behalf of Landlord
to Landlord's Parent or another then existing Participant in
repayment of all or part of Funding Advances previously made by
Landlord's Parent or the other Participant, such advance of
funds by the new Participant shall constitute a Funding Advance
hereunder, and the prior Funding Advances so repaid to
Landlord's Parent or the other Participant shall thereupon
cease to constitute Funding Advances for purposes of this
Lease.
(ba) 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 9.(w) (except for changes concurred in by Tenant's
independent public accountants).
(bb) 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; and (iv) 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.
(bc) 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.
(bd) Impositions. "Impositions" shall have the meaning
assigned to it in subparagraph 9.(p) below.
(be) 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.
(bf) 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 through or under
an assignment from Landlord that does not constitute a
Permitted Transfer), (2) the Participants, and (3) any
Affiliate, officer, agent, director, employee or servant of any
of the parties described in clause (1) or (2) preceding.
(bg) Initial Investment. "Initial Investment" means
$37,500,000, being equal to the purchase price and other costs
paid by Landlord to acquire the Leased Property at the closing
under the Existing Contract, plus the advance described in the
definition of Closing Costs in subparagraph 1.(t) above.
(bh) Landlord's Parent. "Landlord's Parent" 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 Funding Advances, and
any successors of such bank and such Affiliates.
(bi) Last Advance Date. "Last Advance Date" means the earlier
of (1) the Completion Deadline (or - if the Completion Deadline
is not an Advance Date, which could occur if Tenant exercises
its rights hereunder to accelerate the Carrying Costs Accrual
Termination Date and to thereafter designate a LIBOR Period
Election of more than one month - then the latest Advance Date
prior to the Completion Deadline), (2) the first Advance Date
that occurs at least ten (10) days after Landlord has received
a Completion Notice or a Notice of Last Advance, or (3) the
Designated Sale Date.
(bj) LIBOR. "LIBOR" means, for purposes of determining the
Effective Rate for each Period, the rate determined by
Landlord's Parent 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 Parent in the London interbank market at
approximately 11:00 a.m. (London time) on the second Business
Day preceding the first day of such period. Landlord shall
instruct Landlord's Parent 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 Period, (ii) in an amount equal or comparable to the
total (projected on the applicable date of determination by
Landlord's Parent) Stipulated Loss Value on the first day of
such Period, and (iii) for a period of time equal or comparable
to the appropriate Period. If Landlord's Parent 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 Parent determines that it is impossible or
unreasonably difficult to determine LIBOR with respect to a
given Period in accordance with the preceding sentences, or if
Landlord's Parent shall determine that it is unlawful (or any
central bank or governmental authority shall assert that it is
unlawful) for Landlord, Landlord's Parent or any other
Participant to provide or maintain any Funding Advances
hereunder during any Period for which Base Rent is computed by
reference to LIBOR, then "LIBOR" for that 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 Parent shall, in the absence of clear and
demonstrable error, be binding and conclusive upon Landlord and
Tenant.
(bk) LIBOR Period Election. "LIBOR Period Election" for any
Base Rent Period means a period of one month, two months, three
months or six months as designated by Tenant at least ten
Business Days prior to the commencement of such Base Rent
Period by a notice given to Landlord in the form of Exhibit L
attached to this Lease. (For purposes of this Lease a LIBOR
Period Election for any Base Rent Period shall also be
considered the LIBOR Period Election in effect on (1) the date
[whether the Carrying Costs Accrual Termination Date or a Base
Rent Date] upon which such Base Rent Period begins and (2)
subsequent Base Rent Dates, if any, which occur before the date
upon which such Base Rent Period ends.) Any LIBOR Period
Election shall remain in effect not only for the entire first
Base Rent Period for which it is designated or becomes
effective, but also for subsequent Base Rent Periods until a
new designation by Tenant becomes effective in accordance with
the provisions set forth in this definition. Notwithstanding
the foregoing, however: (1) any LIBOR Period Election that
would cause a Base Rent Period to extend beyond the end of the
scheduled Term will be shortened as necessary to cause such
Base Rent Period to end when the scheduled Term ends; (2)
changes in the LIBOR Period Election shall become effective
only upon the commencement of a new Base Rent Period; (3) until
such time as Tenant designates another LIBOR Period Election
consistent with the foregoing requirements, Tenant will be
considered to have designated a LIBOR Period Election of one
month; and (4) if an Event of Default shall have occurred and
be continuing on the third Business Day preceding the
commencement of any Base Rent Period, the LIBOR Period Election
for such Base Rent Period shall be one month.
(bl) 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.
(bm) 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.
(bn) Maximum Construction Allowance. "Maximum Construction
Allowance" means $95,000,000, minus the Initial Investment.
(bo) 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.
(bp) 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.
(bq) Outstanding Construction Allowance. "Outstanding
Construction Allowance" means at any time the amount equal to
(1) the total Construction Advances made by Landlord, PLUS (2)
all Carrying Costs added to the Outstanding Construction
Allowance under subparagraph 6.(a)(ii) on or prior to the date
in question, LESS (3) the amount (if any) of Qualified Payments
paid to Landlord and applied to the Outstanding Construction
Allowance on or prior to such date, and LESS (4) any payments
previously made by Tenant to Landlord pursuant to
subparagraph 3.(i).
(br) Participant. "Participant" means any Person, including
Landlord's Parent, 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 Documents.
As of the effective date hereof, the only Participants are
those which have executed the Participation Agreement, but such
Participants and Landlord may agree to share in risks and
rewards of this Lease and the Purchase Documents with other
Participants in the future. However, no Person other than
Landlord's Parent and the Approved Participants shall qualify
as a Participant for purposes of this Lease, the Purchase
Documents or any other agreement to which Tenant is a party
unless, with Tenant's prior written approval or when an Event
of Default had occurred and was continuing, such Person became
a party to the Pledge Agreement and to the Participation
Agreement by executing supplements to those agreements as
contemplated therein.
(bs) Participation Agreement. "Participation Agreement" means
the Participation Agreement dated the date hereof among
Landlord, Landlord's Parent, and the Participants named
therein, pursuant to which Landlord's Parent and such
Participants have agreed to participate in certain risks and
rewards to Landlord of this Lease and the Purchase Agreement,
as such Participation Agreement may be extended, supplemented,
amended, restated or otherwise modified from time to time in
accordance with its terms.
(bt) Period. "Period" means a Construction Period or a Base
Rent Period, as the context requires.
(bu) 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 (but not any deed of trust, mortgage or
other agreement given to secure the repayment of borrowed
funds), 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.
(bv) 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 Improvements permitted by this Lease and
for the operation of the Leased Property for the purposes
expressly permitted under subparagraph 8.(a); 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 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.
(bw) Permitted Hazardous Substances. "Permitted Hazardous
Substances" means Hazardous Substances used and reasonably
required for Tenant's operation of the Leased Property for the
purposes expressly permitted by subparagraph 8.(a) 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 C attached hereto.
(bx) Permitted Transfer. "Permitted Transfer" means any one or
more of the following: (1) the creation or conveyance of
rights and interests under the Participation Agreement in favor
of Landlord's Parent or Participants; (2) subject to the last
sentence of subparagraph 11.(d), any 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 Documents 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 Sale Date.
(by) 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.
(bz) 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.
(ca) Pledge Agreement. "Pledge Agreement" means the
Pledge Agreement dated as of the date hereof between Landlord
and Tenant, pursuant to which Tenant may pledge certificates of
deposit and/or securities as security for Tenant's obligations
under the Purchase Agreement (and for the corresponding
obligations of Landlord to the Participants under the
Participation Agreement), as such Pledge Agreement may be
extended, supplemented, amended, restated or otherwise modified
from time to time in accordance with its terms.
(cb) Prime Rate. "Prime Rate" means the prime interest
rate or equivalent charged by Landlord's Parent in the United
States as announced or published by Landlord's Parent from time
to time, which need not be the lowest interest rate charged by
Landlord's Parent. If for any reason Landlord's Parent does
not announce or publish a prime rate or equivalent, the prime
rate or equivalent announced or published by ABN AMRO Bank N.V.
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.
(cc) 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 in accordance with its terms.
(cd) Purchase Documents. "Purchase Documents" means
collectively the Purchase Agreement, the Pledge Agreement, and
the Custodial Agreement.
(ce) Purchase Price. "Purchase Price" shall have the
meaning assigned to it in the Purchase Agreement.
(cf) 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 Rent 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 Rent 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 Rent Date
in accordance with Paragraph 4 below. (Landlord shall have no
obligation to readvance any portion of the Outstanding
Construction Allowance reduced by Qualified Payments.)
(cg) Qualifying Security Interest. "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 risk weighting of no more
than twenty percent to a portion of their collective investment
in the Leased Property equal to the Value (as defined in and
determined in accordance with the Pledge Agreement) of the
Collateral encumbered by such an interest.
(ch) Remaining Proceeds. "Remaining Proceeds" shall have
the meaning assigned to it in subparagraph 4.(a)(ii).
(ci) Rent. "Rent" means the Base Rent and all Additional
Rent.
(cj) Responsible Financial Officer. "Responsible
Financial Officer" means the chief financial officer, the
controller, the treasurer or the assistant treasurer of Tenant.
(ck) Scope Change. A "Scope Change" means a material
addition to, deletion from or other modification to the
quality, function or capacity of the Designated Improvements as
delineated in descriptions and renderings approved by Landlord
as provided in subparagraph 6.(b)(ii) or in any subsequent
plans and specifications therefor 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 shall mean any
change that (a) is reasonably likely to substantially reduce
the fair market value of the Leased Property (after completion
of the Designated Improvements), or (b) will change the general
character of the Designated Improvements from that described
and shown in the descriptions and renderings approved by
Landlord pursuant to subparagraph 6.(b)(ii).
(cl) Securities Collateral. "Securities Collateral" shall
have the meaning assigned to it in the Pledge Agreement.
(cm) Securities Collateral Percentage. "Securities
Collateral Percentage" for each Period means the Securities
Collateral Percentage for such Period (as defined in and
determined in accordance with the Pledge Agreement); provided,
however, for purposes of this Lease, the Securities Collateral
Percentage:
(i) for any Period ending on or prior to the Last Advance
Date shall be zero; and
(ii) for any Period ending after the Last Advance Date
shall not exceed the lesser of
(A) one minus the Certificate of
Deposit Collateral Percentage for such Period, or
(B) a fraction, the numerator of which
fraction shall equal the Value (as defined below) of
all Securities Collateral that is, on the first day
of such Period, held by the Custodian under the
Custodial Agreement, subject to a Qualifying Security
Interest and free from claims or security interests
held or asserted by any third party, and the
denominator of which fraction shall equal the
Stipulated Loss Value on the first day of such Period
(computed after the subtraction of any Qualified
Payments applied on such first day). "Value" means,
for purposes of determining the Securities Collateral
Percentage under this definition for each Period, the
Value (as defined in and determined in accordance
with the Pledge Agreement) on the Valuation Date (as
defined in the Custodial Agreement) upon which such
Period commences or, if such Period does not commence
upon a Valuation Date, on the most recent Valuation
Date prior to the commencement of such Period.
(cn) Spread. The "Spread" on any date will depend upon a
computation involving (a) the rating by Standard and Poor's
Corporation (the "S&P Rating") or the rating by Moody's
Investor Service, Inc. (the "Moody's Ratings"), whichever
rating is higher, of Tenant's senior, unsecured debt on that
date (whether such ratings are express or published, implied
ratings), and (b) the Debt to Capital Ratio (as defined below)
on that date, such computation to be as follows:
(i) If (1) there is no S&P Rating for the senior,
unsecured debt of Tenant (express or published, implied)
or the S&P Rating is below BBB-, AND (2) there is no
Moody's Rating for senior, unsecured debt of Tenant
(express or published, implied) or the Moody's Rating is
below Baa3, AND (3) the Debt to Capital Ratio is greater
than 0.30, then the Spread will be sixty basis points
(.600%).
(ii) If (1) the S&P Rating is BBB-, OR (2) the Moody's
Rating is Baa3, OR (3) the Debt to Capital Ratio is equal
to or less than 0.30 and more than 0.15, and if Tenant
does not qualify for a lower Spread pursuant to clause
(iii), (iv) or (v) below, then the Spread will be forty-
five basis points (.450%).
(iii) If (1) the S&P Rating is BBB, OR (2) the Moody's
Rating is Baa2, OR (3) the Debt to Capital Ratio is equal
to or less than 0.15, and if Tenant does not qualify for a
lower Spread pursuant to clause (iv) or (v) below, then
the Spread will be thirty-seven and one-half basis points
(.375%).
(iv) If (1) the S&P Rating is BBB+, OR (2) the Moody's
Rating is Baa1, and if Tenant does not qualify for a lower
Spread pursuant to clause (v) below, then the Spread will
be thirty basis points (.300%).
(v) If (1) the S&P Rating is above BBB+, OR (2) the
Moody's Rating is above Baa1, then the Spread will be
twenty-seven and one-half basis points (.275%).
For purposes of calculating the Spread, "Debt to Capital Ratio"
means the quotient determined by dividing (A) funded Senior
Debt (as defined in subparagraph 9.(ac)(ii)), by (B) the total
Capitalization (as defined in subparagraph 9.(ac)(ii)),
including Subordinated Debt (as defined in
subparagraph 9.(ac)(ii)). The parties believe it improbable
that the ratings systems used by Standard and Poor's
Corporation and by Moody's Investor Service, Inc. will be
discontinued or changed, but if such ratings systems are
discontinued or changed, Landlord shall be entitled to select
and use a comparable ratings systems as a substitute for the
S&P Rating or the Moody Rating, as the case may be, for
purposes of determining the Spread. All determinations of the
Spread by Landlord shall, in the absence of clear and
demonstrable error, be binding and conclusive for purposes of
this Lease. Further Landlord may, but shall not be required,
to rely on the determination of the Spread set forth in any
certificate delivered by Tenant pursuant to
subparagraph 9.(w)(iv) below, and no reduction in the Spread
will be effective because of an improvement in the S&P Rating,
the Moody's Rating or the Debt to Capital Ratio before Tenant
has notified Landlord thereof by delivery of such a
certificate.
(co) Stipulated Loss Value. "Stipulated Loss Value" means
at any time the amount equal to (1) the Initial Investment PLUS
(2) the Outstanding Construction Allowance at such time, LESS
(3) the aggregate amount (if any) of Qualified Payments paid to
Landlord in excess of any Qualified Payments deducted in the
computation of such Outstanding Construction Allowance. Under
no circumstances will any payment of Base Rent, the Upfront
Fee, Commitment Fees or Administrative Fees reduce Stipulated
Loss Value.
(cp) 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.
(cq) 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: Alan Groves, Vice President and Corporate
Controller; Christopher B. Paisley, Chief Financial Officer;
Abe Darwish, Vice President of Worldwide Real Estate and Site
Services; and Paul Murray, Director of Worldwide Safety and
Environmental Health. 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.
(cr) Term. "Term" shall have the meaning assigned to it
in Paragraph 2 below.
(cs) 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.
(ct) Upfront Fee. "Upfront Fee" shall have the meaning
assigned to it in subparagraph 3.(b).
(cu) Voluntary Minimum Pledge Commitment. "Voluntary
Minimum Pledge Commitment" means an agreement in form and
substance reasonably satisfactory to Landlord and the other
parties to the Pledge Agreement which Tenant may elect to
execute in connection with a casualty, condemnation or sale in
lieu of condemnation affecting the Leased Property and which
modifies the Pledge Agreement by establishing a Minimum
Collateral Percentage (as defined therein) sufficient to
require Tenant to maintain Collateral under the Pledge
Agreement with a value of no less than the insurance,
condemnation or sale proceeds paid or to be paid because of the
casualty, condemnation or sale in lieu of condemnation until
Tenant has completed any related repairs or restoration
required by this Lease.
(cv) 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. Unless required by the
context in which it is used, the word "or" is not exclusive.
Other capitalized terms are defined in the provisions that
follow.
2. Term. The term of this Lease (herein called the "Term")
shall commence on and include the effective date hereof, and
end at 8:00 A.M. on the first Business Day of September, 2002,
unless extended or sooner terminated as herein provided.
Notwithstanding any other provision of this Lease which may
expressly restrict the early termination hereof, and 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 Sale Date, Tenant may notify Landlord of
Tenant's election to terminate this Lease before the first
Business Day of September, 2002, 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.
The Term may be extended at the option of Tenant for two
successive periods of five (5) years each; provided, however,
that prior to any such extension the following conditions must
have been satisfied: (A) at least one hundred eighty (180) days
prior to the commencement of any such extension, Landlord and
Tenant must have agreed in writing upon, and received the
written consent and approval of Landlord's Parent and all other
Participants to (1) a corresponding extension of the date
specified in clause (iii) of the definition of Designated Sale
Date in the Purchase Agreement, and (2) an adjustment to the
Rent that Tenant will be required to pay for the extension, it
being expected that the Rent for the extension may be different
than the Rent required for the original Term, and it being
understood that the Rent for any extension must in all events
be satisfactory to both Landlord and Tenant, each in its sole
and absolute discretion; (B) there must be no Event of Default
continuing hereunder at the time of Tenant's exercise of its
option to extend; and (C) immediately prior to any such
extension, this Lease must remain in effect. With respect to
the condition that Landlord and Tenant must have agreed upon
the Rent required for any extension of the Term, neither Tenant
nor Landlord is willing to submit itself to a risk of liability
or loss of rights hereunder for being judged unreasonable.
Accordingly, both Tenant and Landlord hereby disclaim any
obligation express or implied to be reasonable in negotiating
the Rent for any such extension. Subject to the changes to the
Rent payable during any extension of the Term as provided in
this Paragraph, if Tenant exercises its option to extend the
Term as provided in this Paragraph, this Lease shall continue
in full force and effect, and the leasehold estate hereby
granted to Tenant shall continue without interruption and
without any loss of priority over other interests in or claims
against the Leased Property that may be created or arise after
the date hereof and before the extension.
3. Rental.
(a) Base Rent. Tenant shall pay Landlord rent (herein called
"Base Rent") in arrears, in currency that at the time of
payment is legal tender for public and private debts in the
United States of America, in installments on each Base Rent
Date through the end of the Term. Each payment of Base Rent
must be received by Landlord no later than 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 Rent
Period (or portion thereof) ending on the date on which the
installment is due. Landlord shall notify Tenant in writing of
the Base Rent due for each Base Rent Period at least fifteen
(15) days prior to the Base Rent 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.
For all Base Rent Periods subject to a LIBOR Period
Election of one month, two months or three months, Base Rent
shall be due in one installment on the Base Rent Date upon
which the Base Rent Period ends. For Base Rent Periods subject
to a LIBOR Period Election of six months, Base Rent shall be
payable in two installments, with the first installment
becoming due on the Base Rent Date that occurs on the first
Business Day of the third calendar month following the
commencement of such Base Rent Period, and with the second
installment becoming due on the Base Rent Date upon which the
Base Rent Period ends. Notwithstanding the foregoing, if
Tenant or any Applicable Purchaser purchases Landlord's
interest in the Property pursuant to the Purchase Agreement,
any accrued unpaid Base Rent and all outstanding Additional
Rent shall be due on the date of purchase in addition to the
purchase price and other sums due Landlord under the Purchase
Agreement.
The Base Rent for each Base Rent Period shall equal the
sum of:
(1) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) one minus the sum of the
Certificate of Deposit Collateral Percentage for such Base
Rent Period and the Securities Collateral Percentage for
such Base Rent Period, times (C) the sum of (i) the
Effective Rate for such Base Rent Period and (ii) the
Spread calculated on the tenth (10th) Business Day prior
to the day upon which such Base Rent Period commences,
times (D) the number of days in such Base Rent Period,
divided by (E) three hundred sixty (360); PLUS
(2) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) the Certificate of
Deposit Collateral Percentage for such Base Rent Period,
times (C) twenty-two and one-half basis points (22.5/100
of 1%), times (D) the number of days in such Base Rent
Period, divided by (E) three hundred sixty (360); PLUS
(3) (A) Stipulated Loss Value on the first day of
such Base Rent Period, times (B) the Securities Collateral
Percentage for such Base Rent Period, times (C) the sum of
(i) the Effective Rate for such Base Rent Period and (ii)
twenty-two and one-half basis points (22.5/100 of 1%),
times (D) the number of days in such Base Rent Period,
divided by (E) three hundred sixty (360).
To ease the administrative burden of this Lease and the
Pledge Agreement, clause (2) in the formula above for
calculating Base Rent reflects a reduction in the Base Rent
equal to the interest that would accrue on any Cash Collateral
required by the Pledge Agreement from time to time if the
Accounts (as defined in the Pledge Agreement) bore interest at
the Effective Rate. Landlord has agreed to such reduction in
the Base Rent to provide Tenant with the economic equivalent of
interest on such Cash Collateral, and in return Tenant has
agreed to the provisions of the Pledge Agreement that excuse
the actual payment of interest on the Accounts. By
incorporating such reduction of Base Rent into the formula
above, and by providing for noninterest bearing Accounts in the
Pledge Agreement, the parties will avoid an unnecessary and
cumbersome periodic exchange of equal payments. It is not,
however, the intent of Landlord or Tenant to understate Base
Rent or interest for financial reporting purposes.
Accordingly, for purposes of determining Tenant's compliance
with the affirmative financial covenants set forth in
subparagraph 9.(ac), and for purposes of any financial reports
that this Lease requires of Tenant from time to time, Tenant
may report Base Rent as if there had been no such reduction and
as if the Cash Collateral from time to time required by the
Pledge Agreement had been maintained in Accounts bearing
interest at the Effective Rate.
Assume, only for the purpose of illustration of the
calculation of Base Rent: that after the Carrying Costs Accrual
Termination Date, a hypothetical Base Rent Period contains
exactly ninety (90) days; that, after taking into account all
Qualified Payments, the Stipulated Loss Value on the first day
of such Base Rent Period is $50,000,000; that the Certificate
of Deposit Collateral Percentage for such Base Rent Period is
twenty percent (20%); that the Securities Collateral Percentage
for such Base Rent Period is thirty percent (30%); that the
Effective Rate for the applicable Base Rent Period is 5.5%; and
that the Spread for the applicable Base Rent Period is 0.5%.
Under such assumptions, the Base Rent for the hypothetical Base
Rent Period will equal:
$50,000,000 x 50% x (5.5% + 0.5%) x 90/360,
or $375,000, PLUS
$50,000,000 x 20% x .225% x 90/360, or
$5,625, PLUS
$50,000,000 x 30% x (5.5% + .225%) x
90/360, or $214,687.5, = $595,312.5
(b) Upfront Fee. Upon execution and delivery of this Lease by
Landlord, Tenant shall pay Landlord an upfront fee (the
"Upfront Fee") as provided in the letter dated July 10, 1997
from Landlord to Tenant, which Tenant executed and returned to
Landlord to indicate (among other things) Tenant's willingness
to proceed with negotiations for this Lease (the "Nonbinding
Term Sheet"). (Tenant shall, however, be entitled to an
appropriate credit against the Upfront Fee for the deposit
already paid by Tenant as provided in the Nonbinding Term
Sheet.) The Upfront Fee shall represent Additional Rent for
the first Base Rent Period.
(c) Commitment Fees. For each Construction Period, Tenant
shall pay Landlord a fee (herein called a "Commitment Fee")
equal to (1) twelve and one-half basis points (12.5/100 of 1%),
times (2) the difference at the end of the first day of such
Construction Period between (A) the 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 under this Lease and all Carrying Costs that
have been added to and made a part of the Outstanding
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 the first
Business Day of February, May, August and November of each
calendar year, beginning with the first Business Day in
November, 1997 and continuing regularly thereafter to and
including the first of such Business Days 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 Sale
Date, such accrued unpaid Commitment Fees shall be due on the
Designated Sale Date.
(d) Administrative Agency Fees. Upon execution and delivery
of this Lease by Landlord, and again on each anniversary of the
date hereof, Tenant shall pay to Landlord an administrative
agency fee (an "Administrative Fee") in the amount equal to one
third of the total per annum administrative agency fees
specified in the Nonbinding Term Sheet. Each Administrative
Fee shall represent Additional Rent for the Construction Period
or Base Rent Period during which it is paid.
(e) 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").
(f) 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.
(g) 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 3.(g), 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.
(h) 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.
(i) Overdrawn Allowance. On any Advance Date on which (1) the
Outstanding Construction Allowance (including any Carrying
Costs added thereto on such Advance Date), plus any Qualified
Payments that have been applied to reduce the Outstanding
Construction Allowance on or prior to such Advance Date, exceed
(2) the Maximum Construction Allowance, Tenant shall pay to
Landlord the amount of such excess. Each payment required by
this subparagraph must be received by Landlord no later than
12:00 noon (San Francisco time) on the Advance 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. Landlord shall notify Tenant in writing of any
payment due pursuant to this subparagraph at least fifteen (15)
days prior to the Advance Date upon which it becomes due. 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. Nothing in this subparagraph shall be construed
to require Landlord to make Construction Advances which could
result in payments required by this subparagraph.
4. Insurance and Condemnation Proceeds.
(a) Subject to Landlord's rights under this Paragraph 4, and
so long as no Event of Default shall have occurred and be
continuing, Tenant shall be entitled to use all casualty
insurance and condemnation proceeds payable with respect to the
Leased Property during the Term for the restoration and repair
of the Leased Property or any remaining portion thereof.
Except as provided in the last sentence of subparagraph 9.(r)
and the last sentence of subparagraph 9.(s), 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 applied as follows:
(i) First, such proceeds shall be used to reimburse
Landlord for any costs and expenses, including Attorneys'
Fees, incurred in connection with the collection of such
proceeds.
(ii) Second, the remainder of such proceeds (the
"Remaining Proceeds"), shall be held by Landlord as
Escrowed Proceeds and applied to reimburse Tenant for the
actual cost of the repair, restoration or replacement of
the Leased Property. However, any Remaining Proceeds not
needed for such purpose shall be applied by Landlord as
Qualified Payments after Tenant notifies Landlord that
they are not needed for repairs, restoration or
replacement.
Notwithstanding the foregoing, 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) apply such proceeds
(net of the deductions described in clause (i) above) as
Qualified Payments.
(b) Any Remaining Proceeds held by Landlord as Escrowed
Proceeds shall be deposited by Landlord in an interest bearing
account as provided in the definition of Escrowed Proceeds and
shall be paid to Tenant upon completion of the applicable
repair, restoration or replacement and upon compliance by
Tenant with such terms, conditions and requirements as may be
reasonably imposed by Landlord, but in no event shall Landlord
be required to pay any Escrowed Proceeds to Tenant in excess of
the actual cost to Tenant of the applicable repair, restoration
or replacement, it being understood that Landlord may retain
any such excess as a Qualified Payment. In any event, Tenant
will not be entitled to any abatement or reduction of the Base
Rent or any other amount due hereunder except to the extent
that such excess Remaining Proceeds result in Qualified
Payments which reduce Stipulated Loss Value (and thus payments
computed on the basis of Stipulated Loss Value) as provided in
the definitions set out above. Further, notwithstanding 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 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 4.
(c) In the event of any taking of all or substantially all of
the Leased Property, Landlord shall be entitled to apply all
Remaining Proceeds as a Qualified Payment, notwithstanding the
foregoing. In addition, if Stipulated Loss Value immediately
prior to any taking of all or substantially all of the Leased
Property by condemnation exceeds the sum of the Remaining
Proceeds resulting from such condemnation, then Landlord shall
be entitled to recover the excess from Tenant upon demand as an
additional Qualified Payment, whereupon this Lease shall
terminate.
(d) Nothing herein contained shall be construed to prevent
Tenant from obtaining 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 2 and purchasing such excess
(which will then be held by Landlord as Escrowed Proceeds),
together with any remaining interest of Landlord in the Leased
Property, pursuant to the Purchase Agreement.
(e) Landlord and Tenant each waive any right of recovery
against the other, and the other's agents, officers or
employees, for any damage to the Leased Property or to the
personal property situated from time to time in or on the
Leased Property resulting from fire or other casualty covered
by a valid and collectible insurance policy; provided, however,
that the waiver set forth in this subparagraph 4.(e) shall be
effective insofar, but only insofar, as compensation for such
damage or loss is actually recovered by the waiving party (net
of costs of collection) under the policy notwithstanding the
waivers set out in this paragraph. Tenant shall cause the
insurance policies required of Tenant by this Lease to be
properly endorsed, if necessary, to prevent any loss of
coverage because of the waivers set forth in this paragraph.
If such endorsements are not available, the waivers set forth
in this paragraph shall be ineffective to the extent that such
waivers would cause required insurance with respect to the
Leased Property to be impaired.
5. No Lease Termination.
(a) Status of Lease. Except as expressly provided herein,
this Lease shall not terminate, nor shall Tenant have any right
to terminate this Lease, nor shall Tenant be entitled to any
abatement of the Rent, nor shall the obligations of Tenant
under this Lease be excused, for any reason whatsoever,
including without limitation any of the following: (i) any
damage to or the destruction of all or any part of the Leased
Property from whatever cause, (ii) the taking of the Leased
Property or any portion thereof by eminent domain or otherwise
for any reason, (iii) the prohibition, limitation or
restriction of Tenant's use of all or any portion of the Leased
Property or any interference with such use by governmental
action or otherwise, (iv) any eviction of Tenant or 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 15 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 15, (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.
(b) 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.
6. Construction Allowance.
(a) Advances; Outstanding Construction Allowance.
(i) 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 Designated
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
Construction Advances which may be required of Landlord, when
added to Carrying Costs accrued or projected by Landlord to
accrue prior to the Carrying Costs Accrual Termination Date
as described below, exceed the Maximum Construction
Allowance. 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.
(ii) Charges (herein collectively called "Carrying Costs")
shall accrue as described below for each Construction Period
ending on or prior to the Carrying Costs Accrual Termination
Date, and 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).
(iii) For each Construction Period prior to or ending on
the Carrying Costs Accrual Termination Date, Carrying Costs
shall equal:
(1)(A) Stipulated Loss Value as of the first day
of such Construction Period, times (B) one minus the
Certificate of Deposit Collateral Percentage in effect
during such Construction Period, times (C) the sum of
(i) the Effective Rate in effect during such
Construction Period and (ii) the Spread calculated on
the tenth (10th) Business Day prior to the day upon
which such Construction Period commences, times (D) the
number of days in such Construction Period, divided by
(E) three hundred sixty (360); PLUS
(2)(A) Stipulated Loss Value as of the first day
of such Construction Period, times (B) the Certificate
of Deposit Collateral Percentage in effect during such
Construction Period, times (C) twenty-two and one-half
basis points (22.5/100 of 1%), times (D) the number of
days in such Construction Period, divided by (E) three
hundred sixty (360).
(iv) To ease the administrative burden of this Lease and
the Pledge Agreement, clause (2)(A) in the formula set forth
in the preceding clause 6.(a)(iii) for calculating Carrying
Costs reflects a reduction in the Carrying Costs equal to the
interest that would accrue on any Cash Collateral required by
the Pledge Agreement from time to time if the Accounts (as
defined in the Pledge Agreement) bore interest at the
Effective Rate. Landlord has agreed to such reduction in the
Carrying Costs to provide Tenant with the economic equivalent
of interest on such Cash Collateral, and in return Tenant has
agreed to the provisions of the Pledge Agreement that excuse
the actual payment of interest on the Accounts. By
incorporating such reduction of Carrying Costs into the
formula above, and by providing for noninterest bearing
Accounts in the Pledge Agreement, the parties will avoid an
unnecessary and cumbersome periodic exchange of equal
payments. It is not, however, the intent of Landlord or
Tenant to understate Carrying Costs or interest for financial
reporting purposes. Accordingly, for purposes of determining
Tenant's compliance with the affirmative financial covenants
set forth in subparagraph 9.(ac), and for purposes of any
financial reports that this Lease requires of Tenant from
time to time, Tenant may report its financial statements as
if there had been no such reduction and as if the Cash
Collateral from time to time required by the Pledge Agreement
had been maintained in Accounts bearing interest at the
Effective Rate.
(b) Designated Improvements.
(i) Responsibility for Construction. Tenant shall construct
all Designated Improvements in a good and workmanlike manner,
in accordance with (1) the descriptions and renderings
approved by Landlord as described in subparagraph 6.(b)(ii)
below, (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 10.(b) (though this clause (2) shall not be
construed to require Tenant to 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 Designated 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 Designated Improvements, it being understood
that Landlord's obligation with respect to the Designated
Improvements shall be limited to the making of advances under
and subject to the conditions set forth in this Paragraph 6.
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 Designated Improvements,
Tenant warrants that it shall cause all Designated
Improvements with respect to which it receives any
Construction Advances to be completed on or prior to the
Completion Deadline.
(ii) Approval of Descriptions and Renderings of the
Designated Improvements. No later than six months after the
date of this Lease, Tenant shall submit to Landlord and
obtain Landlord's approval of descriptions and renderings of
the Designated Improvements. Such descriptions and
renderings must be in form and substance reasonably
satisfactory to Landlord, and in any event they must be in
form and substance sufficient in Landlord's reasonable
judgment to permit Landlord to obtain an As-built Appraisal
that will allow Landlord to evaluate whether Tenant has
satisfied the condition to advances set forth in
subparagraph 6.(c)(x). In this regard, Tenant acknowledges
that its conceptual plans for the Designated Improvements
have yet to be finalized, leaving Tenant unable as of the
date of this Lease to provide Landlord with a description of
the Designated Improvements needed for an As-built Appraisal.
Accordingly, Landlord does not as of the date of this Lease
have an As-built Appraisal meeting Landlord's regulatory and
internal underwriting requirements for the provision of the
full Construction Allowance. Tenant covenants, however, to
complete such conceptual plans, to obtain Landlord's approval
of descriptions and renderings consistent therewith as
required to satisfy the condition to advances set forth in
subparagraph 6.(c)(x), and to thereafter construct the
Designated Improvements in a manner consistent with the
requirements of this Lease, all prior to any Designated Sale
Date on which neither Tenant nor any Applicable Purchaser
purchases the Leased Property pursuant to the Purchase
Agreement for a price to Landlord (when taken together with
any additional payments made by Tenant pursuant to
Paragraph 2(a)(ii) of the Purchase Agreement, in the case of
a purchase by an Applicable Purchaser) of not less than the
Purchase Price.
(iii) Scope Changes Subsequent to Initial Approval. Before
making any Scope Change to the Designated Improvements
contemplated in descriptions and renderings approved by
Landlord as provided in subparagraph 6.(b)(ii), 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.
(iv) Value Added. The Designated Improvements, upon
completion and taken as a whole, must enhance the value of
the Leased Property such that the market value of the Leased
Property shall be no less than fifty percent (50%) of
Stipulated Loss Value when the Designated Improvements are
complete; however:
(1) this subparagraph 6.(b)(iv) will not
preclude Tenant from obtaining Construction Advances
for soft costs (such as architectural fees, consultant
fees, Attorneys' Fees, design costs, and permitting),
demolition costs, environmental remediation costs or
other costs that do not, individually, add value to the
Leased Property but that are incurred in connection
with construction which will in the aggregate satisfy
this subparagraph 6.(b)(iv);
(2) to address any concerns Landlord may
express about Tenant's ability to satisfy this
subparagraph 6.(b)(iv), Tenant shall have the option to
(A) provide a notice to Landlord that unequivocally
stipulates a maximum amount of Construction Advances
that Landlord will be required to make for the
Designated Improvements, in which case Landlord shall
not be required to make Construction Advances in excess
of the amount so stipulated, and/or (B) establish by an
As-built Appraisal that the value of the Leased
Property will be no less than fifty percent (50%) of
Stipulated Loss Value upon completion of the Designated
Improvements and after Landlord has provided the
maximum Construction Advances that may be required of
it hereunder.
(v) Estoppel Letters Required. If requested by Landlord
prior to the substantial completion of the Designated
Improvements, Tenant shall cause the contractor under each
significant general construction contract for the Designated
Improvements to execute and deliver to Landlord an estoppel
letter in the form of Exhibit H attached hereto. Similarly,
if requested by Landlord prior to the substantial completion
of the Designated Improvements, Tenant shall also cause the
architect and engineer under any material architectural or
engineering contract for the Designated Improvements to
execute and deliver to Landlord an estoppel letter in the
form of Exhibit I 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 Designated 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.
(vi) Advances Not a Waiver. No funding of Construction
Advances and no failure of Landlord to object to Designated
Improvements proposed or constructed by Tenant shall
constitute a waiver by Landlord of the requirements contained
in this subparagraph 6.(b).
(c) Conditions to Construction Advances. Landlord's
obligation to make Construction Advances from time to time
under this Paragraph 6 shall be subject to the following terms
and conditions, all of which are intended for the sole benefit
of Landlord:
(i) Prior Notice. Tenant must make a request in
substantially the form attached to this Lease as Exhibit J
for any Construction Advance at least ten (10) Business Days
prior to the Advance 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 Designated
Improvements.
(ii) Amount of the Advances. No Construction Advance
shall exceed the lesser of:
a) the Maximum Construction Allowance, less the sum of
(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
b) (1) the actual costs and expenses previously
incurred and paid by Tenant for the Designated
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 6 to
Tenant as reimbursement for such costs and expenses.
Further, no Construction Advance shall be required that
would cause the cost of completing all Designated
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
Outstanding 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.
(iii) 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 9.(z) below):
a) 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 one or more 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; and
b) Builder's Risk Insurance. Builder's 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 $1,000,000 (or such other amount as Landlord and
Tenant may agree upon in writing from time to time),
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 Designated Improvements.
(iv) Progress of Construction. Construction of the
Designated 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 and
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.
(v) Evidence of Costs to be Reimbursed. To the extent
contemplated by the Construction Advance request forms
attached as Exhibit J and described in subparagraph 6.(c)(i),
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
Designated 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 the right to assert a mechanic's or materialman's
lien against the Leased Property for labor performed in
connection with the Leased Property or materials delivered to
the Leased Property (collectively, "Potential Lien
Claimants") have been paid all sums for which prior
Construction Advances have been advanced under this Lease.
Without limiting the foregoing, Landlord may decline to
advance any amount that would result in an excess of
$5,000,000 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.
(vi) No Event of Default or Change of Control Event. No
Event of Default shall have occurred and be continuing under
this Lease and no Change of Control Event shall have
occurred.
(vii) No Sale of Landlord's Interest. No sale of
Landlord's interest in the Leased Property shall have
occurred pursuant to the Purchase Agreement.
(viii) Certificate of No Default. Landlord shall have
received, together with the notice requesting the
Construction Advance described in clause (i) above, a current
certificate of a Responsible Financial Officer of Tenant in
the form attached as Exhibit E.
(ix) Payments by Approved Participants. None of the
Approved Participants (other than Landlord's Parent) shall
have failed to advance to Landlord their respective
percentage shares of the Construction Advance being requested
as required by Section 3.2 of the Participation Agreement.
However, any such failure shall excuse Landlord's obligation
to provide the Construction Advance requested only to the
extent of the funds that the applicable Defaulting
Participant or Participants should have advanced (but did not
advance) to Landlord. Moreover, in the event of any such
failure:
a) Landlord will, to the extent possible, postpone
reductions of Construction Advances because of the
failure by any one or more Defaulting Participants to
make required advances under Section 3.2 of the
Participation Agreement by adjusting (and readjusting
from time to time, as required) the funding
"Percentages" of other Participants, and by requesting
the other Participants to make advances to Landlord on
the basis of such adjusted Percentages, in each case as
provided in Section 4 of the Participation Agreement;
however, so long as a Defaulting Participant's failure
to make required advances continues, no Construction
Advance shall be required that would cause the
Outstanding Construction Allowance (plus Carrying Costs
to accrue thereafter as projected by Landlord) to
exceed (a) the Maximum Construction Allowance available
under this Lease, less (b) all amounts that should have
been, but have not been, advanced by a Defaulting
Participant as required by Section 3.2 of the
Participation Agreement.
b) Tenant may exercise its rights under Section 3.1.3
of the Pledge Agreement to require Landlord to attempt
in good faith, on and subject to the terms and
conditions set forth in that Section, to assist Tenant
in identifying one or more new Participants to replace
the Defaulting Participants.
(x) Approval of Designated Improvements and As-built
Appraisal. Landlord shall have received and approved
descriptions and renderings of the Designated Improvements as
provided in subparagraph 6.(b)(ii), and based upon such
descriptions and renderings Landlord shall have received an
As-built Appraisal indicating that the Designated
Improvements will add sufficient value to the Leased Property
to satisfy the requirements of subparagraph 6.(b)(iv) above.
(d) Completion Notice. Tenant shall provide a notice to
Landlord (the "Completion Notice") promptly after construction
of the Designated Improvements is substantially complete and
more than fifty percent (50%) of the Designated Improvements
are being occupied by Tenant or any subtenant permitted by
Paragraph 11.(a).
7. Purchase Documents 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 Documents 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
Documents or Environmental Indemnity and the terms and
provisions of this Lease, the terms and provisions of the
Purchase Documents or Environmental Indemnity (as the case may
be) shall control.
8. Use and Condition of Leased Property.
(a) Use. Subject to the Permitted Encumbrances and the terms
hereof, Tenant may use and occupy the Leased Property so long
as no Event of Default occurs hereunder, but only for the
following purposes and other lawful purposes (including
parking) incidental thereto:
(i) research and development of computer-related and other
electronic products; and
(ii) administrative and office space; and
(iii) distribution and warehouse storage of computer-related
and other electronic products; and
(iv) assembly of computer-related and other electronic
products using components manufactured elsewhere, and light
manufacturing of computer-related and other electronic
products, but not including the manufacture of computer chips
on-site; and
(v) 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.
(b) Condition. Tenant accepts the Leased Property (and will
accept the same upon any purchase of the Landlord's interest
therein) in its present state, AS IS, and without any
representation or warranty, express or implied, as to the
condition of such property or as to the use which may be made
thereof. Tenant also accepts the Leased Property without any
representation or warranty, express or implied, by Landlord
regarding the title thereto or the rights of any parties in
possession of any part thereof, except as set forth in
subparagraph 10.(a). Landlord shall not be responsible for any
latent or other defect or change of condition in the Land,
Improvements, fixtures and personal property forming a part of
the Leased Property, and the Rent hereunder shall in no case be
withheld or diminished 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.
(c) Consideration of and Scope of Waiver. The provisions of
subparagraph 8.(b) above have been negotiated by the Landlord
and Tenant after due consideration for the Rent payable
hereunder and are intended to be a complete exclusion and
negation of any representations or warranties of the Landlord,
express or implied, with respect to the Leased Property that
may arise pursuant to any law now or hereafter in effect, or
otherwise. However, such exclusion of representations and
warranties by Landlord is not intended to impair any
representations or warranties made by other parties, including
Seller, the benefit of which is to pass to Tenant during the
Term because of the definition of Personal Property and Leased
Property above.
9. Other Representations, Warranties and Covenants of Tenant.
Tenant represents, warrants and covenants as follows:
(a) Financial Matters. Tenant is solvent 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 May 31, 1997.
(b) Existing Contract. Except to the extent required of
Landlord under subparagraph 10.(b), Tenant shall satisfy all
surviving obligations of Tenant 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 Tenant 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 10.(b)) shall, for the purposes of this
indemnity, be deemed to be caused by the Active Negligence,
gross negligence or willful misconduct of Landlord. The
foregoing indemnity is in addition to the other indemnities set
out herein and shall not terminate upon the closing of any sale
of Landlord's interest in the Leased Property pursuant to the
provisions of the Purchase Agreement or the termination of this
Lease.
(c) No Default or Violation. The execution, delivery and
performance by Tenant of this Lease, the Purchase Documents 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.
(d) 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.
(e) 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.
(f) 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.
(g) Condition of Property. The Land as described in Exhibit A
is shown on the plat included as part of the A.L.T.A. Survey
prepared by J. Coline Toline R.P.S. of SDI Consultants Ltd.,
dated 7/7/97, which was delivered to Landlord at the request of
Tenant. All material improvements on the Land as of the date
hereof are as shown on that survey, and except as shown on that
survey there are no easements or encroachments visible or
apparent from an inspection of the Real Property. Adequate
provision has been made (or can be made at a cost that is
reasonable in connection with development of the Land) 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 can be completed at a cost
that is reasonable in connection with development of the Land).
The Leased Property shall be in a condition satisfactory for
its use and occupancy upon completion of the Designated
Improvements. 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.
(h) Organization. Tenant is duly incorporated and legally
existing under the laws of the State of Delaware. 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 (or has properly applied with
all appropriate authorities to become) 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 States of California and Illinois) or, if it is
not so qualified in a state other than California and Illinois,
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.
(i) Enforceability. The execution, delivery and performance
of this Lease, the Purchase Documents, 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 Documents, 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.
(j) 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).
(k) 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.
(l) Existence. Tenant shall continuously maintain its
corporate existence, and Tenant shall continuously maintain its
qualification to do business in the States of California and
Illinois.
(m) 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.
(n) 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.
(o) Debts for Construction. Tenant shall cause all debts and
liabilities incurred in the construction, maintenance,
operation and development of the Leased Property, including
without limitation all debts and liabilities for labor,
material and equipment and all debts and charges for utilities
servicing the Leased Property, to be promptly paid.
Notwithstanding the foregoing, Tenant may in good faith by
appropriate proceedings contest the validity, applicability or
amount of any asserted mechanic's or materialmen's lien and
pending such contest Tenant shall not be deemed in default
under this subparagraph (or subparagraphs 9.(t) or 9.(u))
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 $3,000,000 (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.
(p) Impositions. Tenant shall reimburse Landlord for (or, if
requested by Landlord, will pay or cause to be paid prior to
delinquency) all sales, excise, ad valorem, gross receipts,
business, transfer, stamp, occupancy, rental and other taxes,
levies, fees, charges, surcharges, assessments or penalties
which arise out of or are attributable to this Lease or which
are imposed upon Landlord or the Leased Property because of the
ownership, leasing, occupancy, sale or operation of the Leased
Property, or any part thereof, or relating to or required to be
paid by the terms of any of the Permitted Encumbrances
(collectively, herein called the "Impositions"), excluding only
Excluded Taxes. If Landlord requires Tenant to pay any
Impositions directly to the applicable taxing authority or
other party entitled to collect the same, Tenant shall furnish
Landlord with receipts showing payment of such Impositions and
other amounts 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 9.(t) or 9.(u)) 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
$1,000,000 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.
(q) 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, 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 $500,000 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 $1,000,000 or more) or (ii)
make any alteration to any Improvements 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 Leased Property 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.
(r) 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 $1,000,000 (or such other amount as Landlord and Tenant
may agree upon in writing from time to time). 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 4, 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 D, 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
$3,000,000, Tenant shall give immediate notice thereof to
Landlord and Paragraph 4 shall apply.
Notwithstanding the foregoing provisions of this
subparagraph 9.(r), following any fire or other casualty
involving the Leased Property, if insurance proceeds totaling
not more than $2,000,000 are to be recovered as a result
thereof, or if in connection therewith Tenant shall have
executed a Voluntary Minimum Pledge Commitment and delivered
any additional Collateral required to satisfy such Voluntary
Minimum Pledge Commitment, Tenant shall be entitled to receive
directly and hold such insurance 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
subparagraph 4.(b).
(s) Condemnation. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the
Leased Property or any portion thereof, or any other similar
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 4 above. Landlord is hereby
authorized, in the name of Tenant, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree
or award concerning condemnation of any of the Leased Property.
Landlord shall not be, in any event or circumstances, liable
or responsible for failure to collect, or to exercise diligence
in the collection of, any such proceeds, judgments, decrees or
awards.
Notwithstanding the foregoing provisions of this
subparagraph 9.(s), following any condemnation or sale in lieu
of condemnation involving the Leased Property, if condemnation
or sale proceeds totaling not more than $2,000,000 are to be
recovered as a result thereof, or if in connection therewith
Tenant shall have executed a Voluntary Minimum Pledge
Commitment and delivered any additional Collateral required to
satisfy such Voluntary Minimum Pledge Commitment, Tenant shall
be entitled to receive directly and hold such condemnation or
sale 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
subparagraph 4.(b).
(t) Protection and Defense of Title. If any encumbrance or
title defect whatsoever affecting Landlord's fee interest in
the Leased Property is claimed or discovered (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 9.(o) or subparagraph 9.(p)), 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.
For purposes of this subparagraph 9.(t), Tenant shall be
deemed to be acting promptly to remove any encumbrance or to
cure any title defect, other than a Lien which Tenant has
itself granted or authorized, so long as Tenant (or a title
insurance company obligated to do so) is in good faith by
appropriate proceedings contesting the validity and
applicability of the encumbrance or defect, and pending such
contest Tenant shall not be deemed in default under this
subparagraph because of the encumbrance or defect; provided,
with respect to a contest of any encumbrance or title defect
which is the subject of subparagraphs 9.(o) or 9.(p), Tenant
(or the applicable title insurance company) must satisfy the
conditions and requirements for a permitted contest set forth
in those subparagraphs, and with respect to a contest of any
other encumbrance or title defect, Tenant (or the applicable
title insurance company) must:
(1) diligently prosecute the contest to completion in
a manner reasonably satisfactory to Landlord;
(2) immediately remove the encumbrance or cure the
defect, as and to the extent reasonably required to preserve
Landlord's indefeasible fee estate in the Leased Property and
to prevent any significant adverse impact the encumbrance or
defect may have on the value of the Leased Property, upon a
final determination by a court of competent jurisdiction that
the encumbrance or defect is valid and applicable to the
Leased Property; and
(3) in any event conclude the contest and remove the
encumbrance or cure the defect and pay any claims asserted
against Landlord or the Leased Property because of such
encumbrance or defect, all prior to (i) any Designated Sale
Date on which neither Tenant nor any Applicable Purchaser
purchases the Leased Property pursuant to the Purchase
Agreement for a price to Landlord (when taken together with
any additional payments made by Tenant pursuant to
Paragraph 2(a)(ii) of the Purchase Agreement, in the case of
a purchase by an Applicable Purchaser) of not less than the
Purchase Price, (ii) the date any criminal charges may be
brought against Landlord or any of its directors, officers or
employees because of such encumbrance or defect or (iii) the
date any action may be taken against Landlord or any property
owned by Landlord (including the Leased Property) by any
governmental authority or any other Person who has or claims
rights superior to Landlord because of the encumbrance or
defect.
(u) 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 Permitted Encumbrances, 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
9.(o) or subparagraph 9.(p)), 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.
(v) 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; provided that so long as
Tenant remains in possession of the Leased Property, Landlord
or Landlord's representative will, before making any such
inspection or copying any such documents, 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 copying by Landlord authorized by this
subparagraph.. 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.
(w) Financial Statements; Required Notices; Certificates as to
Default. Tenant shall deliver to Landlord and to each
Participant of which Tenant has been notified:
(i) 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;
(ii) 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;
(iii) together with the financial statements furnished in
accordance with subparagraph 9.(w)(ii) and 9.(w)(i), a
certificate of a Responsible Financial Officer of Tenant in
substantially the form attached hereto as Exhibit E: (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 9 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 9.(ac);
(iv) promptly after any change in the rating of Tenant's
senior, unsecured debt by Standard and Poor's Corporation or
Moody's Investor Service, Inc. or in Tenant's Debt to Capital
Ratio (as defined in subparagraph 1.(cn)), which will result
in a change in the Spread (as defined in
subparagraph 1.(cn)), a certificate of a Responsible
Financial Officer of Tenant in substantially the form
attached hereto as Exhibit F with computations evidencing
Tenant's calculation of the Spread after giving effect to
such changes;
(v) 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;
(vi) 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;
(vii) 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
(viii) 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 9.(w) to any Participant and to any regulatory
body having jurisdiction over Landlord that requires or
requests it.
(x) Further Assurances. Tenant shall, on request of Landlord,
(i) promptly correct any defect, error or omission which may be
discovered in the contents of this Lease or in any other
instrument executed in connection herewith or in the execution
or acknowledgment thereof; (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 Parent and other Participants to
comply with the requirements or requests of any agency or
authority having jurisdiction over them.
(y) Fees and Expenses; General Indemnification; Increased
Costs; and Capital Adequacy Charges.
(i) Except for any costs paid by Landlord with the proceeds
of the advance described in subparagraph 1.(t) as part of the
Closing Costs, Tenant shall pay (and shall indemnify and hold
harmless Landlord, Landlord's Parent and any Person claiming
through Landlord by reason of a Permitted Transfer from and
against) all Losses incurred by Landlord or Landlord's Parent
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
Documents, the Environmental Indemnity or the Participation
Agreement, (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, (D) the construction of
the Designated Improvements, whether such Losses are incurred
at the time of execution of this Lease or at any time during
the Term, or (E) Tenant's request for assistance in
identifying any new Participant pursuant to Paragraph 18 of
the Purchase Agreement, 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
Parent for any such Losses, Tenant shall reimburse Landlord
for the same notwithstanding that Landlord may have already
received any payment from any other Participant on account of
such Losses, it being understood that the other Participant
may expect repayment from Landlord when Landlord does collect
the required reimbursement from Tenant.
(ii) Tenant shall also pay (and indemnify and hold harmless
Landlord, Landlord's Parent 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 Parent 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.
(iii) 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
Parent or any other 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 Parent or such other Participant, as
the case may be, additional amounts sufficient to compensate
Landlord's Parent or the Participant for such increased cost.
An increase in costs resulting from any imposition or
increase of reserve requirements applicable to Collateral
held from time to time by Landlord's Parent or other
Participants pursuant to the Pledge Agreement would be an
increase covered by the preceding sentence. A certificate as
to the amount of any increased cost covered by this
subparagraph, submitted to Landlord and Tenant by Landlord's
Parent or the other Participant, shall be conclusive and
binding for purposes of determining Tenant's obligations
hereunder, absent clear and demonstrable error.
(iv) Landlord's Parent or any other Participant may demand
additional payments (herein called "Capital Adequacy
Charges") if Landlord's Parent or the other 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
Funding 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 Parent or the other 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 Landlord's
Parent or the other Participant, as the case may be, the
amount so demanded.
(v) Any amount to be paid to Landlord, Landlord's Parent or
any other Indemnified Party under this subparagraph 9.(y)
shall be a demand obligation owing by Tenant. Tenant's
indemnities and obligations under this subparagraph 9.(y)
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.
(z) 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 $1,000,000 (or such other amount as Landlord
and Tenant may agree upon in writing from time to time)
self-insured retention. Such commercial general liability
insurance shall include blanket contractual liability coverage
which insures contractual liability under the indemnifications
set forth in this Lease (other than the indemnifications set
forth in Paragraph 12 concerning environmental matters), but
such coverage or the amount thereof shall in no way limit such
indemnifications. The policy evidencing such insurance shall
name as additional insureds Landlord and all Participants of
which Tenant has been notified (including Landlord's Parent and
the Participants). 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.
(aa) Permitted Encumbrances. Except to the extent expressly
required of Landlord by subparagraph 10.(b), Tenant shall
comply with and will cause to be performed all of the
covenants, agreements and obligations imposed upon the owner of
the Leased Property in the Permitted Encumbrances in accordance
with their respective terms and provisions. Tenant shall not,
without the prior written consent of Landlord, modify or permit
any modification of any Permitted Encumbrance in any manner
that could impose significant monetary obligations upon
Landlord or any subsequent owner of the Leased Property, could
significantly and adversely affect the value of the Leased
Property, could impose any lien to secure payment or
performance obligations against any part of the Leased Property
or would otherwise be material and adverse to Landlord.
(ab) Environmental.
(i) Environmental Covenants. Tenant covenants:
a) 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;
b) not to conduct or authorize others to conduct
Hazardous Substance Activities on the Leased Property,
except Permitted Hazardous Substance Use;
c) 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
d) 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
12.(c) 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 of
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.
(ii) 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.
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).
(iii) 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 9.(e) inaccurate in any material
respect if made at the time of such discovery, (ii) any
remedial action taken by Tenant in response to any (A)
discovery of any Hazardous Substances other than Permitted
Hazardous Substances on, under or about the Leased Property
or (B) any claim for damages resulting from Hazardous
Substance Activities, (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.
(ac) Affirmative Financial Covenants.
(i) 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. As used in this
subparagraph 9.(ac), "Quick Assets" means the sum (without
duplication of any item) of the Collateral held 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. For purposes
of determining Quick Assets, assets will be deemed to be
"unencumbered" if they are actually unencumbered or if they
are encumbered only by Liens, from which, at the time of the
applicable determination of Quick Assets, Tenant is entitled
to a release of such assets upon no more than ninety days'
notice, without any payment (other than the payment of
ministerial fees and costs), without subjecting other assets
to any Lien and without otherwise satisfying any condition
that is beyond Tenant's control. As used herein "Long-Term
Investments" means those investments described below (to the
extent that they are not classified as short term investments
in accordance with GAAP), provided that such investments
shall have maturities of not longer than two years, and shall
be rated not less than A- by Standard & Poor's Corporation or
less than A 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 issued by
either one of the 50 largest (in assets) banks in the
United States or by one of the 100 largest (in assets)
banks in the world; and
(3) Notes and municipal bonds.
As used in this subparagraph 9.(ac), "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.
(ii) Maximum Senior Debt to Capitalization. Throughout the
Term Tenant shall maintain a ratio of Senior Debt to
Capitalization of not more than 0.35 to 1.00. As used in
this subparagraph 9.(ac):
"Senior Debt" means the outstanding Debt of
Tenant and its Subsidiaries (determined on a
consolidated basis), minus the aggregate principal
amount of the Subordinated Debt.
"Capitalization" means the sum of the Debt of
Tenant and its Subsidiaries (determined on a
consolidated basis), including the aggregate principal
amount of the Subordinated Debt, plus Consolidated
Tangible Net Worth of Tenant and its Subsidiaries
(determined on a consolidated basis).
"Subordinated Debt" means the following
unsecured Debt of Tenant: (i) unsecured Debt in respect
of the $110,000,000 aggregate principal amount at
maturity of 10 1/14% Convertible Subordinated Notes due
2001 issued pursuant to the Indenture (in this
definition called the "Existing Subordinated Notes")
but only so long as such unsecured Debt remains
expressly and unconditionally subordinated to the
payment and performance obligations of Tenant in
transactions of the type and structure contemplated by
this Lease and the Purchase Agreement; (ii) other
unsecured Debt of Tenant which is expressly and
unconditionally subordinated to the obligations of
Tenant under this Lease and the Purchase Agreement on
the same terms as the Existing Subordinated Notes or on
other terms approved by the Majority, as defined in the
Participation Agreement (such approval not to be
unreasonably withheld), which together with the
Existing Subordinated Notes, does not exceed at any
time an aggregate amount equal to fifteen percent (15%)
of Tenant's Consolidated Tangible Net Worth at such
time; and (iii) other unsecured Debt of Tenant in an
amount approved in writing by the Majority and which is
expressly and unconditionally subordinated to the
obligations of Tenant under this Lease and the Purchase
Agreement on terms approved in writing by the Majority,
in each case in its sole discretion.
"Consolidated Tangible Net Worth" means, at any
date of determination thereof, the excess determined in
accordance with GAAP 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.
"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.
"Indenture" means the Indenture dated as of
November 1, 1994 by and between Tenant and the First
National Bank of Boston, as trustee.
(iii) Minimum Tangible Net Worth. Tenant shall not permit
its Consolidated Tangible Net Worth, on a consolidated basis,
at the end of any fiscal quarter to be less than the sum of:
(A) eighty percent (80%) of Consolidated Tangible Net Worth
of Tenant as of May 31, 1997 (restated to give effect to
Tenant's subsequent merger with U.S. Robotics, such that
"Consolidated Tangible Net Worth" as used in this clause (A)
reflects not only Tenant's May 31, 1997 Consolidated Tangible
Net Worth as reported prior to the merger, but also the
March 30, 1997 Consolidated Tangible Net Worth of U.S.
Robotics reported prior to the merger); plus (B) fifty
percent (50%) of Tenant's net income (but without deducting
any net losses for any period) earned in each fiscal quarter,
starting with the quarter ended August 31, 1997, and ending
with the quarter which, at such time, is the most recently
ended fiscal quarter; less (C) the amount of write-offs
resulting from acquisitions after May 31, 1997, such amount
not to exceed an aggregate, cumulative amount of
$550,000,000.
(iv) 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 acquisitions, 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.
(ad) Negative Covenants. Without the prior written consent
of Landlord in each case, neither Tenant nor any of its
Subsidiaries shall:
(i) 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:
a) 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;
b) Liens that secure obligations incurred in the
ordinary course of business, that are not past due for
more than thirty (30) days (or that are being contested
in good faith by appropriate proceedings and for which
appropriate reserves have been established) and that:
(1) are imposed by law, such as mechanic's,
materialmen's, landlord's, warehousemen's and
carrier's Liens, and other similar Liens; or
(2) encumber only equipment or other tangible
personal property and any proceeds thereof
(including Liens created by equipment leases) and
are imposed to secure the payment of the purchase
price or other direct costs of acquiring the
equipment or other tangible personal property they
encumber;
c) Liens under workmen's compensation, unemployment
insurance, social security or similar legislation
(other than ERISA);
d) 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;
e) 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;
f) 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;
g) Liens securing obligations of such a Subsidiary to
Tenant or to another such Subsidiary;
h) Liens incurred after the date of this Lease given to
secure the payment of the purchase price 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 such Liens are imposed, 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;
i) existing mortgages and deeds of trust as of the date
of this Lease;
j) Liens created by any real property lease (including
this Lease), or related documents (including the
Purchase Agreement and other separate purchase
agreements), that require Tenant or its Subsidiaries to
purchase or cause another to purchase any interest in
the property covered thereby and thus guarantee a
minimum residual value of the property to the landlord;
provided, that the value of all such leases (including
this Lease) shall not exceed an aggregate, cumulative
amount of $700,000,000 (for purposes of this Section
(ad)(i), the "value" of a lease means the amount,
determined as of the date the lease became effective,
equal to the greater of (1) the present value of
rentals and other minimum lease payments required in
connection with such lease [calculated in accordance
with FASB Statement 13 and other GAAP relevant to the
determination of the whether such lease must be
accounted for as capital leases, and calculated under
the assumption that any allowance for construction to
be provided by the landlord will be fully funded] or
(2) the fair value of the property covered thereby);
k) Liens imposed to secure Debt incurred to finance the
acquisition of property which has been leased or sold
by Tenant or one of its Subsidiaries to another Person
(other than Tenant or a Subsidiary of Tenant) pursuant
to a lease or sales agreement providing for payments
sufficient to pay such Debt in full, provided such Debt
is not a general obligation of Tenant or its
Subsidiaries, but rather is payable only from the
rentals or other sums payable under the lease or sales
agreement or from the property sold or leased
thereunder;
l) Liens not otherwise permitted by this
subparagraph 9.(ad)(i) (and not encumbering the Leased
Property or any Collateral) which secure the payment of
Debt, provided that (i) at no time does the sum of the
aggregate amount of all outstanding Debt secured by
such Liens exceed $50,000,000, and (i) such Liens do
not constitute Liens against Tenant's interest in any
material Subsidiary or blanket Liens against all or
substantially all of the inventory, receivables,
general intangibles or equipment of Tenant or of any
material Subsidiary of Tenant (for purposes of this
clause, a "material Subsidiary" means any subsidiary
whose assets represent a substantial part of the total
assets of Tenant and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP); and
m) Liens incurred in connection with any renewals,
extensions or refundings of any Debt secured by Liens
described in the other clauses of this subparagraph
9.(ad)(i), 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.
(ii) 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.
(iii) Mergers; Sales of Assets.
a) Except to the extent permitted by the last sentence
of this subparagraph 9.(ad), 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 9.(ad), acquire the
assets or business of any Person, other than in the
ordinary course of Tenant's business as presently
conducted.
(iv) 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: a) a sale of
receivables for cash at a discount which is less than fifteen
percent (15%) of the face value of all receivables then
outstanding on the books of Tenant and its consolidated
Subsidiaries, if such sale and all other discounted sales of
receivables permitted by this clause a) during the same
fiscal year of Tenant do not affect more than fifteen percent
(15%) of the individual accounts (excluding intercompany
accounts) comprising the receivables of Tenant and its
Subsidiaries; b) 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 c) 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.
(v) 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
9.(ad)(iii), 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.
(ae) ERISA.
(i) 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
9.(ae)(ii).
(ii) 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.
10. Representations, Warranties and Covenants of Landlord.
Landlord represents, warrants and covenants as follows:
(a) Title Claims By, Through or Under Landlord. Except by a
Permitted Transfer, Landlord shall not assign, transfer,
mortgage, pledge, encumber or hypothecate this Lease or any
interest of Landlord in and to the Leased Property 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, an Approved
Participant, or any other Participant (other than Landlord's
Parent) which Tenant shall have approved, or (iii) any
encumbrance or title defect arising because of Landlord's
compliance with subparagraph 10.(b) or any request made by
Tenant.
(b) Actions Required of the Title Holder. So long as no Event
of Default shall have occurred and be continuing, Landlord
shall take any and all action required 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 Documents, 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
9.(y). Further, for purposes of such indemnification, any
action taken by Landlord will be deemed to have been made at
the request of Tenant if made pursuant to any request of
Tenant's counsel or of any officer of Tenant (or with their
knowledge, and without their objection) in connection with the
closing under the Existing Contract or the execution,
administration or enforcement of any Construction Document.
(c) No Default or Violation. The execution, delivery and
performance of this Lease do not contravene, result in a breach
of or constitute a default under any material contract or
agreement to which Landlord is a party or by which Landlord is
bound and do not, to the knowledge of Landlord, violate or
contravene any law, order, decree, rule or regulation to which
Landlord is subject.
(d) No Suits. To Landlord's knowledge there are no judicial
or administrative actions, suits or proceedings involving the
validity, enforceability or priority of this Lease, and to
Landlord's knowledge no such suits or proceedings are
threatened.
(e) Organization. Landlord is duly incorporated and legally
existing under the laws of Delaware and is or, if necessary,
will become duly qualified to do business in the States of
California and Illinois. Landlord has or will obtain, at
Tenant's expense pursuant to the other provisions of this
Lease, all requisite power and all material governmental
certificates of authority, licenses, permits, qualifications
and other documentation necessary to own and lease the Leased
Property and to perform its obligations under this Lease.
(f) Enforceability. The execution, delivery and performance
of this Lease and the Purchase Documents 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 and the Purchase
Documents 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.
(g) Existence. Landlord will continuously maintain its
existence and, after qualifying to do business in the States of
California and Illinois if Landlord has not already done so,
Landlord will continuously maintain its right to do business in
those states to the extent necessary for the performance of
Landlord's obligations hereunder.
(h) Not a Foreign Person. Landlord is not a "foreign person"
within the meaning of the 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).
11. Assignment and Subletting.
(a) Consent Required. During the term of this Lease, without
the prior written consent of Landlord first had and received,
Tenant shall not assign, transfer, mortgage, pledge or
hypothecate this Lease or any interest of Tenant hereunder and
shall not sublet all or any part of the Leased Property, by
operation of law or otherwise; provided, that, so long as no
Event of Default has occurred and is continuing, Tenant shall
be entitled without the consent of Landlord to sublet all or
any portion of the space in any then completed Improvements if:
(i) any sublease by Tenant is made expressly
subject and subordinate to the terms hereof;
(ii) no sublease has a term longer than the
remainder of the then effective term of this Lease;
(iii) the use permitted by such sublease is
expressly limited to general office use or other uses
approved in advance by Landlord as uses that will not present
extraordinary risks of uninsured environmental or other
liability; and
(iv) no more than forty-five percent (45%) of
the total space of completed Improvements shall be subleased
without Landlord's prior consent to any Person that is
neither (A) an Affiliate of Tenant nor (B) the operator of a
business in the subleased space that is related to the
operation of Tenant's own business (such as another venturer
in a joint venture with Tenant).
(b) Standard for Landlord's Consent to Assignments and Certain
Other Matters. Consents and approvals of Landlord which are
required by this Paragraph 11 will not be unreasonably
withheld, but Tenant acknowledges that Landlord's withholding
of such consent or approval shall be reasonable if Landlord
determines in good faith that (1) giving the approval may
increase Landlord's risk of liability for any existing or
future environmental problem, (2) giving the approval is likely
to substantially increase Landlord's administrative burden of
complying with or monitoring Tenant's compliance with the
requirements of this Lease, or (3) any transaction for which
Tenant has requested the consent or approval would negate
Tenant's representations in this Lease regarding ERISA or cause
this Lease or the other documents referenced herein to
constitute a violation of any provision of ERISA.
(c) 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.
(d) Landlord's Assignment. Landlord shall have the right to
transfer, assign and convey, in whole or in part, the Leased
Property and any and all of its rights under this Lease 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.) If
Landlord sells or otherwise transfers the Leased Property and
assigns its rights under this Lease and the Purchase Documents
pursuant to a Permitted Transfer, then to the extent Landlord's
successor in interest confirms its liability for the
obligations imposed upon Landlord by this Lease and the
Purchase Documents on and subject to the express terms and
conditions set out herein and therein, the original Landlord
shall thereby be released from any obligations thereafter
arising under this Lease and the Purchase Documents, and Tenant
will 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 aggregate of its and Landlord's Parent's
Percentages under and as defined in the Participation Agreement
below the minimum percentage require by paragraph 14.2 of the
Participation Agreement.
12. Environmental Indemnification.
(a) Indemnity. Tenant hereby agrees to assume liability for
and to pay, indemnify, defend, and hold harmless each and every
Indemnified Party from and against any and all Environmental
Losses, subject only to the provisions of subparagraph 12.(c)
below.
(b) Assumption of Defense.
(i) If an Indemnified Party notifies Tenant of any claim,
demand, action, administrative or legal proceeding,
investigation or allegation as to which the indemnity
provided for in this Paragraph 12 applies, Tenant shall
assume on behalf of the Indemnified Party and conduct with
due diligence and in good faith the investigation and defense
thereof and the response thereto with counsel 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.
(ii) If any claim, demand, action, proceeding,
investigation or allegation arises as to which the indemnity
provided for in this Paragraph 12 applies, and Tenant fails
to assume promptly (and in any event within 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 12 so long as, in the written
opinion of reputable counsel to the Indemnified Party, the
settlement or payment in full is clearly advisable.
(c) Notice of Environmental Losses. If an Indemnified Party
receives a written notice of Environmental Losses that such
Indemnified Party believes are covered by this Paragraph 12,
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 12; provided, that if
Tenant is unaware of the matters described in the notice and
such failure renders unavailable defenses that Tenant might
otherwise assert, or precludes actions that Tenant might
otherwise take, to minimize its obligations hereunder, then
Tenant shall be excused from its obligation to indemnify 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 12.(a) 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.
(d) Rights Cumulative. The rights of each Indemnified Party
under this Paragraph 12 shall be in addition to any other
rights and remedies of such Indemnified Party against Tenant
under the other provisions of this Lease or under any other
document or instrument now or hereafter executed by Tenant, or
at law or in equity (including, without limitation, any right
of reimbursement or contribution pursuant to CERCLA).
(e) Survival of the Indemnity. Tenant's obligations under
this Paragraph 12 shall survive the termination or expiration
of this Lease. All obligations of Tenant under this Paragraph
12 shall be payable upon demand, and any amount due upon demand
to any Indemnified Party by Tenant which is not paid shall bear
interest from the date of such demand at a floating interest
rate equal to the Default Rate, but in no event in excess of
the maximum rate permitted by law.
13. Landlord's Right of Access.
(a) 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.
(b) 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.
14. Events of Default.
(a) Definition of Event of Default. Each of the following
events shall be deemed to be an "Event of Default" by Tenant
under this Lease:
(i) Tenant shall fail to pay when due any installment of Rent
due hereunder and such failure shall continue for three (3)
Business Days after Tenant is notified thereof.
(ii) 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 14.(a)), 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 14.(a)), 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.
(iii) Tenant shall fail to comply with any term, provision or
condition of the Purchase Documents and, if any Purchase
Document expressly provides a time within which Tenant may
cure such failure, Tenant shall not cure the failure within
such time.
(iv) Tenant shall abandon the Leased Property.
(v) 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 14.(a)(v), "Debt" shall mean only a Debt of
Tenant now existing or arising in the future, (A) payable to
Landlord or any Participant or any Affiliate of Landlord or
any Participant, the outstanding balance of which has become
due by reason of acceleration or maturity, or (B) payable to
any Person, with respect to which $20,000,000 or more is
actually due and payable because of acceleration or
otherwise.
(vi) Tenant or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against Tenant or
any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief,
or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period of thirty
(30) consecutive days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an
order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for
any substantial part of its property) shall occur; or Tenant
or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this
clause (vi).
(vii) Any order, judgment or decree is entered in any
proceedings against Tenant or any Subsidiary decreeing the
dissolution of Tenant or such Subsidiary and such order,
judgment or decree remains unstayed and in effect for more
than sixty (60) days.
(viii) Any order, judgment or decree is entered in any
proceedings against Tenant or any Subsidiary decreeing a
split-up of Tenant or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the consolidated assets of
Tenant and its Subsidiaries (determined in accordance with
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.
(ix) One or more non-interlocutory judgments, non-
interlocutory orders, decrees, or arbitration awards is
entered against Tenant or any of its Subsidiaries involving
in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer
does not dispute coverage) as to any single or related series
of transactions, incidents, or conditions, of $20,000,000 or
more, and the same shall remain unvacated and unstayed
pending appeal for a period of ten days after the entry
thereof;
(x) 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.
(xi) A Change of Control Event not approved in advance by
Landlord shall occur.
(xii) The subordination provisions of the Indenture (as
defined in subparagraph 9.(ac)(ii) of this Lease) or any
other agreement or instrument governing the Subordinated Debt
(as defined in subparagraph 9.(ac)(ii) of this Lease) shall
be for any reason revoked or invalidated, or otherwise cease
to be in full force and effect; or the Tenant or any of its
Subsidiaries shall contest in any manner the validity or
enforceability of such subordination provisions or shall deny
that it has any further liability or obligation thereunder;
or the obligations of Tenant hereunder or under the Purchase
Documents shall be for any reason subordinated to such
Subordinated Debt or shall not have the priority over such
Subordinated Debt as contemplated by this Lease or by the
Indenture or by such subordination provisions.
Notwithstanding the foregoing, any Default that could become an
Event of Default under clause 14.(a)(ii) 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 Sale Date the next
following date which is an Advance Date or Base Rent 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 Sale 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 9.(y) and the environmental
indemnity set forth in Paragraph 12 shall survive the payment
of such amounts by Tenant to Landlord and the conveyance of
Landlord's interest in the Leased Property to Tenant.
(b) Remedies. Upon the occurrence of an Event of Default
which is not cured within any applicable period expressly
permitted by subparagraph 14.(a), at Landlord's option and
without limiting Landlord in the exercise of any other right or
remedy Landlord may have on account of such default, and
without any further demand or notice except as expressly
described in this subparagraph 14.(b):
(i) By notice to Tenant, Landlord may terminate Tenant's
right to possession of the Leased Property. A notice given
in connection with unlawful detainer proceedings specifying a
time within which to cure a default shall terminate Tenant's
right to possession if Tenant fails to cure the default
within the time specified in the notice.
(ii) Upon termination of Tenant's right to possession and
without further demand or notice, Landlord may re-enter the
Leased Property and take possession of all improvements,
additions, alterations, equipment and fixtures thereon and
remove any persons in possession thereof. Any property in
the Leased Property may be removed and stored in a warehouse
or elsewhere at the expense and risk of and for the account
of Tenant.
(iii) Upon termination of Tenant's right to possession, this
Lease shall terminate and Landlord may recover from Tenant:
a) The worth at the time of award of the unpaid Rent
which had been earned at the time of termination;
b) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount
of such rental loss that Tenant proves could have been
reasonably avoided;
c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the scheduled Term
after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably
avoided; and
d) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's
failure to perform Tenant's obligations under this
Lease or which in the ordinary course of things would
be likely to result therefrom, including, but not
limited to, the costs and expenses (including
Attorneys' Fees, advertising costs and brokers'
commissions) of recovering possession of the Leased
Property, removing persons or property therefrom,
placing the Leased Property in good order, condition,
and repair, preparing and altering the Leased Property
for reletting, all other costs and expenses of
reletting, and any loss incurred by Landlord as a
result of Tenant's failure to perform Tenant's
obligations under the Purchase Agreement.
The "worth at the time of award" of the amounts
referred to in subparagraph 14.(b)(iii)a) and
subparagraph 14.(b)(iii)b) 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 Illinois law at the
time of computation. The "worth at the time of award"
of the amount referred to in subparagraph 14.(b)(iii)c)
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%).
e) Such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by
applicable Illinois law.
(iv) Even if Tenant breaches this Lease and abandons the
Leased Property, this Lease shall continue in effect for so
long as Landlord does not terminate Tenant's right to
possession, and Landlord may enforce all of Landlord's rights
and remedies under this Lease, including the right to recover
the Rent as it becomes due under this Lease. Tenant's right
to possession shall not be deemed to have been terminated by
Landlord except pursuant to subparagraph 14.(b)(i) hereof.
The following shall not constitute a termination of Tenant's
right to possession:
a) Acts of maintenance or preservation or efforts to
relet the Leased Property;
b) The appointment of a receiver upon the initiative of
Landlord to protect Landlord's interest under this
Lease; or
c) Reasonable withholding of consent to an assignment or
subletting, or terminating a subletting or assignment
by Tenant.
(v) No re-entry or reletting of the Leased Property or
any filing or service of an unlawful detainer action or
similar action will be construed as an election by Landlord
to terminate or accept a forfeiture of this Lease or to
accept a surrender of the Leased Property after an Event of
Default by Tenant, unless a written notice of such intention
is given by Landlord to Tenant; but notwithstanding any such
action without such notice, Landlord may at any time
thereafter elect to terminate this Lease by notifying Tenant.
(c) 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.
(d) 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
Documents or the Environmental Indemnity.
(e) Waiver by Tenant. To the extent permitted by law, Tenant
hereby waives and surrenders for itself and all claiming by,
through and under it, including creditors of all kinds, (i) any
right and privilege which it or any of them may have under any
present or future constitution, statute or rule of law to have
a continuance of this Lease for the term hereby demised after
termination of Tenant's right of occupancy by order or judgment
of any court or by any legal process or writ, or under the
terms of this Lease, or after the termination of this Lease as
herein provided, and (ii) the benefits of any present or future
constitution, or statute or rule of law which exempts property
from liability for debt or for distress for rent, and (iii) the
provisions of law relating to notice and/or delay in levy of
execution in case of eviction of a lessee for nonpayment of
rent.
(f) 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.
15. 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.
16. Quiet Enjoyment. Provided no Event of Default has
occurred and is continuing, 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 5 above, no such breach shall entitle
Tenant to terminate this Lease or excuse Tenant from its
obligation to pay Base Rent and other amounts hereunder.
17. 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 Leased Property, 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 Improvements in
the same condition as of the date hereof, 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.
18. 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) the unpaid Purchase Price on
the day in question, times (ii) the Holdover Rate (as defined
below) for such day, 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; provided, however, following any
breach by Landlord of its obligations to tender a deed and
other documents on the Designated Sale Date as provided in the
Purchase Agreement, Tenant may at its option continue its
possession and use of the Leased Property pursuant to this
Lease, as if the Term had been extended, for a period not to
exceed 180 days after the Designated Sale Date or such longer
time as may be proscribed by Applicable Law.
As used herein, the "Holdover Rate" means:
(1) for any day prior to the date on which Landlord
tenders a deed and other documents as required by the
Purchase Agreement (or is excused from its obligation to
tender by Tenant's breach or anticipatory repudiation of the
Purchase Agreement), a rate equal to the Fed Funds Rate on
that day plus one hundred basis points;
(2) for any day on which or within ninety days after
Landlord tenders a deed and other documents as required by
the Purchase Agreement (or is excused from its obligation to
tender by Tenant's breach or anticipatory repudiation of the
Purchase Agreement), the per annum Prime Rate in effect for
such day; and
(3) for any day after the ninety days described in
the preceding clause, a rate which is three percent (3%)
above the per annum Prime Rate.
19. Miscellaneous.
(a) 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:
(i) All Rent required to be paid by Tenant to Landlord
hereunder shall be paid to Landlord in immediately available
funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris
ABA #: 121027234
Reference: 3COM - Rolling Meadows Site
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.
(ii) 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/3COM -
Rolling Meadows Site
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.
(iii) 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 Participants, at the addresses for notice
established by the Participation Agreement) 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 or Will
La Herran
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of Tenant:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Legal Dept. MS - 1308
Telecopy: (408) 764-6434
With copies to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Real Estate Dept. MS - 1220
Telecopy: (408) 764-5718; and
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Treasury Dept. MS - 1307
Telecopy: (408) 764-8403; and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Jonathan E. Rattner, Esq.
Telecopy: (415) 328-3029
(b) 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.
(c) 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.
(d) 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, AND THE PURCHASE
DOCUMENTS.
(e) 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.
(f) 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.
(g) 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
14.(a).
(h) 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.
(i) Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the State of Illinois.
(j) 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.
(k) Not a Partnership, Etc. NOTHING IN THIS LEASE IS
INTENDED TO BE OR TO CREATE ANY PARTNERSHIP, JOINT VENTURE, OR
OTHER JOINT ENTERPRISE BETWEEN LANDLORD AND TENANT. NEITHER
THE EXECUTION OF THIS LEASE NOR THE ADMINISTRATION OF THIS
LEASE OR OTHER DOCUMENTS REFERENCED HEREIN BY LANDLORD, NOR ANY
OTHER RIGHT, DUTY OR OBLIGATION OF LANDLORD UNDER OR PURSUANT
TO THIS LEASE OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE
ANY FIDUCIARY OBLIGATIONS OF LANDLORD TO TENANT.
(l) 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 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.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, this Lease is hereby executed in
multiple originals as of August 11, 1997.
"Landlord"
BNP LEASING CORPORATION, a Delaware corporation
By: /s/ Lloyd G. Cox
----------------------------
Lloyd G. Cox, Vice President
[Continuation of signature pages to Lease Agreement dated to be
effective August 11, 1997]
"Tenant"
3COM CORPORATION, a Delaware corporation
By: /s/ Mark D. Michael
----------------------------
Mark D. Michael, SVP,
General Counsel & Secretary
Exhibit A
Legal Description
PARCEL 1:
Lot 1 in 3800 Golf Road Subdivision of part of Fractional
Section 7, Township 41 North, Range 11, East of the Third
Principal Meridian, according to the plat recorded January
31, 1996 as Document No. 96080514, in Cook County, Illinois.
PARCEL 2:
Easement for the benefit of Parcel 1 aforesaid, to go upon
Lot 2 in 3800 Golf Road Subdivision aforesaid, for the
purpose of performing work of construction and maintenance of
Berm if such work is not timely performed by the owner of
said Lot 2, as granted in paragraph 9.4 of Article 9 of the
Declaration and Grant of Easements, Covenants and
Restrictions executed by AT&T Corp., a New York corporation,
dated January 26, 1996 and recorded February 9, 1996 as
Document No. 96110279, in Cook County, Illinois.
Exhibit B
Permitted Encumbrances
1. Declaration of Restrictions dated July 7, 1965 and
recorded November 8, 1965 as Document No. 19654849 and
amended by Document No. 22518743 made by Chicago Title and
Trust Company, an Illinois corporation, as Trustee under
Trust Agreement dated June 15, 1960 known as Trust No.
42370, American National Bank of Chicago, a National
Banking Association, as Trustee under Trust Agreement
dated December 17, 1958 and known as Trust No. 14073 and
Western Electric Co., Inc., New York, relating to
construction, materials, location, area, height and
approval of plans of buildings to be erected on the land
and other property; specific uses of the land; lot size,
weed control, landscaping; signs and control of junk and
debris.
Note: the rights of Chicago Title and Trust Company
as Trustee under Trust Agreement dated June 15, 1960 and
known as Trust No. 42370 were assigned to Chemplex Company
by Assignment and Notice dated March 7, 1969 and recorded
April 30, 1969 as Document No. 20826795.
Note: said instrument contains no provision for a
forfeiture of or reversion of title in case of breach of
condition.
2. The Land falls in Drainage District No. 1 of the Township
of Elk Grove, Cook County, Illinois.
3. Covenants and conditions contained in the Deed dated
March 4, 1970 and recorded July 16, 1971 as Document No.
21549676 from the Corporation of Illinois, for the use of
the Department of Public Works and Buildings to Western
Electric Company, Inc., a New York corporation, that the
Land shall not be used as a junkyard of for advertising of
any kind except "on premises signs" as defined in the
Rules and Regulations for Outdoor Advertising on
Interstate Highways promulgated by the Department of
Public Works and Buildings, State of Illinois, revised
January 3, 1966, as amended: and there is no access to,
from or over the Land to and from the public highway lying
adjoining to said Land and known as F.A.I. Route 90
previously declared a freeway nor will access be permitted
in the future to, from or over the Land to and from said
public highway, which instrument does not contain a
reverter clause.
(Affects that part of the Land lying westerly of a
line 400 feet easterly of the center line of Rohlwing
Road)
4. Grant from Western Electric Company, Inc., a New York
corporation, to Northern Illinois Gas Company, an Illinois
corporation, contained in the Easement Agreement dated
July 25, 1972 and recorded August 4, 1972 as Document No.
22002493, of a nonexclusive perpetual right of ingress and
egress to Northern's Dubuque right-of-way line together
with the right to use as working space in connection with
construction and maintenance of existing and future
pipelines, now located or to be constructed on Northern's
Dubuque right-of-way, in, under, over and across Western's
parcel described as follows, as shown on Plat of Survey
dated December 27, 1968 prepared by Albert C. Schmitt,
Registered Land Surveyor, marked Exhibit A and attached
thereto; and the covenants and conditions therein
contained.
(Affects that part of Section 7, Township 41 North,
Range 11 East of the Third Principal Meridian, in Cook
County, Illinois. Bounded and described as follows:
commencing at the concrete right-of-way monument at the
intersection of the north line of the south 1/2 of the south
1/2 of said Section 7, with the easterly line of the
Illinois Toll Road; thence North 86 29' 43" East along
said north line a distance of 326.18 feet to an iron stake
for a point of beginning; thence North 62 21' 31" East
along a straight line a distance of 424.07 feet to a
point; thence South 32 29' 31" West along a straight line
a distance of 214.33 feet to a point on said north line of
the south 1/2 of the south 1/2 of Section 7; thence South 86
29' 43" West along said north line a distance of 261.02
feet to the point of beginning)
(Affects Westerly part of the Land)
5. Terms, provisions, conditions and limitations of the
Declaration of Grant of Easements, Covenants and
Restrictions for ingress and egress and for public
utilities and drainage, etc., recorded February 9, 1996 as
Document No. 96110279.
6. Terms, provisions, conditions and limitations of the
Declaration of Restrictive Covenant made by AT&T
Technologies, Inc., recorded March 18, 1996 as Document
No. 88113916.
7. 20 foot water pipeline easement as disclosed by Document
No. 27362784 also as depicted on Plat of 3800 Golf Road
Subdivision recorded January 31, 1996 as Document No.
96080514.
8. Terms, provisions, and conditions relating to the
easement described as Parcel 2, contained in the
instrument creating said easement.
9. Public utilities and drainage easement over the Easterly
line of Lot 1 as shown on Plat of 3800 Golf Road
Subdivision recorded January 31, 1996 as Document No.
96080514.
10. The Plat of Subdivision recorded January 31, 1996 as
Document No. 96080514 includes a certification by the
surveyor that the Land is located within a Special Flood
Area as identified by the Federal Emergency Management
Agency.
Exhibit C
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 D
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 9.(r), then either party may require that the
amount be determined as follows:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
(vi)
Exhibit E
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 or Will La Herran
Re: 3Com Lease Agreement (Rolling Meadows Site)
Gentlemen:
I, the undersigned, the [chief financial officer,
controller, treasurer or the assistant treasurer] of 3Com
Corporation, do hereby certify, represent and warrant that:
1. This Certificate is furnished pursuant to
subparagraph 9.(w)(iii) of that certain Lease Agreement dated
as of August 11, 1997 (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 ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Annex 1 To Compliance Certificate
For the _________________ Ended ________________, ____
I. PARAGRAPH 9.(ac)(i): Quick Ratio
A. Unencumbered Cash and Cash Equivalents
and other "Quick Assets" as defined in
Paragraph 9.(ac)(i) of the Lease: $_____________
B. "Current Liabilities" as defined in
Paragraph 9.(ac)(i) of the Lease: $_____________
C. Ratio of A to B: _____ to 1.00
F. Minimum ratio computed as provided in
Paragraph 9.(ac)(i) of the Lease: 1.00 to 1.00
II. PARAGRAPH 9.(ac)(ii): Maximum Senior Debt to
Capitalization
A. Total "Debt" as defined
in Paragraph 1.(ae) of
Tenant and its consolidated
Subsidiaries: $_____________
B. "Subordinated
Debt" as defined in
Paragraph 9.(ac)(ii) of the Lease: $_____________
C. "Senior Debt" as
defined in Paragraph 9.(ac)(ii)
of the Lease
(A - B): $_____________
D. Consolidated Tangible Net Worth
(from calculation below): $_____________
E. Capitalization as defined in
Paragraph 9.(ac)(ii) of the Lease
(A + D): $_____________
F. Ratio of B to E: _____ to 1.00
D. Maximum ratio: 0.35 to 1.00
III. PARAGRAPH 9.(ac)(iii): Minimum Tangible Net Worth
A. Reported stockholders equity: $_____________
B. "Intangible Assets" as
defined in Paragraph 9.(ac)(iii)
of the Lease: $_____________
D. Consolidated Tangible Net Worth
(A - B): $_____________
E. Minimum computed as
provided in Paragraph 9.(ac)(iii)
of the Lease: $_____________
IV. PARAGRAPH 9.(ac)(iv): Fixed Charge Ratio
A. "Adjusted EBIT" as
defined in Paragraph 9.(ac)(iv)
of the Lease: $_____________
B. "Fixed Charges" as
defined in Paragraph 9.(ac)(iv)
of the Lease: $_____________
C. Ratio of A to B: _____ to 1.00
D. Minimum ratio: 2.00 to 1.00
Exhibit F
CERTIFICATE OF TENANT'S CALCULATION OF THE SPREAD
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: 3Com Lease Agreement (Rolling Meadows Site)
Gentlemen:
I, the undersigned, the [chief financial officer,
controller, treasurer or the assistant treasurer] of 3Com
Corporation, do hereby certify, represent and warrant that:
1. This Certificate is furnished pursuant to
subparagraph 9.(w)(iv) of that certain Lease Agreement dated as
of August 11, 1997 (the "Lease Agreement," the terms defined
therein being used herein as therein defined) between 3Com
Corporation, and you.
2. Annex 1 attached hereto sets forth financial data and
computations evidencing the Tenant's computation of the Spread,
all of which data and computations are complete, true and
correct.
Executed this _____ day of ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Annex 1 To Certificate of Tenant's Calculation of the Spread
As of the ________________, ____
I. S&P'S RATING OF TENANT'S SENIOR UNSECURED DEBT: _____________
II. MOODY'S RATING OF TENANT'S SENIOR UNSECURED DEBT: _____________
III. CALCULATION OF TENANT'S DEBT TO CAPITAL RATIO: _____________
A. Funded "Senior Debt" as defined in
Paragraph 9.(ac)(ii) of the Lease: $_____________
B. Other outstanding Debt as defined in
Paragraph 1.(ae) of the Lease: $_____________
C. Outstanding "Subordinated Debt" as
defined in Paragraph 9.(ac)(ii) of
the Lease: $_____________
D. Debt for purposes of this ratio
(A + B - C): $_____________
E. Reported stockholders equity: $_____________
F. "Intangible Assets" as
defined in Paragraph 9.(ac)(iii)
of the Lease: $_____________
G. Consolidated Tangible Net Worth
(E - F): $_____________
H. Capital for purposes of this test
(A + B + G): $_____________
I. D divided by H: _____________
III. SPREAD AS DEFINED IN PARAGRAPH 1.(cn) OF THE LEASE: _____________
Exhibit G
LIST OF ENVIRONMENTAL REPORTS
As used in this Lease, "Environmental Report" means,
collectively, the following reports provided to Landlord by
3COM or acquired by Landlord from its own consultants:
1. ENSR Consulting, Phase I Environmental Due Diligence
Assessment, AT&T Facility, 3800 Golf Road, Rolling
Meadows, Illinois, June, 1994
2. Kemper Risk Management, Asbestos Survey, AT&T
Facility, 3800 Golf Road, Rolling Meadows, Illinois,
September 7, 1995
3. Specification Report for Removal of Underground
Storage Tanks, AT&T Facility, 3800 Golf Road, Rolling
Meadows, Illinois, July 1, 1993
4. Letter from IEPA Regarding Certification Notice of
Tank Removal, AT&T Facility, 3800 Golf Road, Rolling
Meadows, Illinois, September 2, 1994
5. Letter to IEPA for withdrawal of EMSA Notification
with Certificate of Removal, AT&T Facility, 3800 Golf
Road, Rolling Meadows, Illinois, July 12, 1994
6. Suburban Laboratories Final Report on On-Site Water
Wells
7. Heritage Remediation, Site Classification Report,
AT&T Facility, 3800 Golf Road,
Rolling Meadows, Illinois, January 11, 1994
8. Heritage Remediation, Underground Storage Tank
Removal and Remediation Document, AT&T Facility, 3800
Golf Road, Rolling Meadows, Illinois, June 20, 1994
9. Pioneer Environmental, Phase II Subsurface
Investigation, AT&T Facility, 3800 Golf Road, Rolling
Meadows, Illinois, August 16, 1995
10. Keter, Asbestos Reports:
* Comprehensive Survey
* Asbestos Removal Reports
* Asbestos Clearance Tests
Completed in 1995 and 1996
11. Gaia Tech, Phase I Environmental Site Assessment,
Former AT&T Facility, 3800 Golf Road, Rolling Meadows,
Illinois, July 9, 1997
Exhibit H
Estoppel From Contractors
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents
to BNP Leasing Corporation, a Delaware corporation ("BNP"), and
covenants with BNP as follows:
1. The undersigned has entered into that certain
[Construction Contract] (the "Construction Contract") by and
between the undersigned and 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").
2. The undersigned has been advised that BNP owns the Land.
3. The undersigned has also received a copy of the Lease
Agreement dated as of August 11, 1997 (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.
4. A complete and correct copy of the Construction Contract
is attached to this letter. The Construction Contract is in
full force and effect and has not been modified or amended.
5. The undersigned has not sent 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 - ROLLING
MEADOWS, ILLINOIS" 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 I
Estoppel From Architects/Engineers
_________, 199__
BNP Leasing Corporation
717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: Lloyd Cox
Re: Assignment of Construction Contract
Ladies and Gentlemen:
The undersigned hereby confirms, warrants and represents
to BNP Leasing Corporation, a Delaware corporation ("BNP"), and
covenants with BNP as follows:
1. The undersigned has entered into that certain
[Architect's/Engineer's 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").
2. The undersigned has been advised that BNP owns the Land.
3. The undersigned has also received a copy of the Lease
Agreement dated as of August 11, 1997 (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.
4. A complete and correct copy of the Agreement is attached
to this letter. The Agreement is in full force and effect and
has not been modified or amended.
5. The undersigned has not sent 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, HEADER FOLLOWS THIS COMMENT BOX --
MOVE TO FIT PAGE NUMBERINGbut 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 - ROLLING MEADOW, ILLINOIS" 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 J
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 August 11, 1997 (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 6.(c)(viii) 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 6.(c)(viii) of the Lease dated as of
August 11, 1997 (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 Designated 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
Designated 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 K
Notice to Accelerate the Carrying Costs Accrual Termination Date
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: Lease Agreement/3COM (Rolling Meadows Site)
Gentlemen:
This notice is furnished pursuant to subparagraph 1.(q) of
that certain Lease Agreement dated as of August 11, 1997 (the
"Lease Agreement," the terms defined therein being used herein
as therein defined) between 3Com Corporation and you. I, the
undersigned, the [chief financial officer, controller,
treasurer or the assistant treasurer] of 3Com Corporation, do
hereby notify you that 3COM Corporation irrevocably elects to
accelerate the Carrying Costs Accrual Termination Date and
thereby accelerate the commencement of Base Rent accruals and
the termination of accruals of Carrying Costs. Because of this
notice, the Carrying Costs Accrual Termination Date will occur
on the next following Advance Date that is at least ten (10)
days after the date you receive this notice.
Executed this _____ day of ______________, ____.
3Com Corporation
Name:_________________________
Title:________________________
[cc all Participants]
Exhibit L
Notice of LIBOR Period Election
BNP Leasing Corporation
c/o Banque Nationale de Paris, San Francisco
180 Montgomery Street
San Francisco, California 94104
Attention: Jennifer Cho or Will La Herran
Re: Lease Agreement dated as of August 11, 1997, between
3COM Corporation, as tenant, and BNP Leasing Corporation, as
landlord
Gentlemen:
Capitalized terms used in this letter are intended to have
the meanings assigned to them in the Lease referenced above.
This letter constitutes notice to you that the LIBOR Period
Election under the Lease shall be:
________________ month(s),
beginning with the first Base Rent Period that commences on or after:
______________, ____.
NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE
NUMBER OF MONTHS SPECIFIED ABOVE IS NOT A PERMITTED NUMBER
UNDER THE DEFINITION OF "LIBOR PERIOD ELECTION" IN THE LIST OF
DEFINED TERMS ATTACHED TO THE LEASE, OR IF THE DATE SPECIFIED
ABOVE CONCERNING THE COMMENCEMENT OF THE LIBOR PERIOD ELECTION
IS LESS THAN TEN BUSINESS DAYS AFTER YOUR RECEIPT OF THIS
NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY US IMMEDIATELY IF FOR
ANY REASON YOU BELIEVE THIS NOTICE IS DEFECTIVE.
Executed this _____ day of ______________, 19___.
3COM CORPORATION
Name:_________________________
Title:________________________
[cc all Participants]
Schedule 1
LIST OF APPROVED PARTICIPANTS
"Approved Participants" as used in this Lease will include the
existing Participants, Banque Nationale de Paris and ABN Amro
Bank N.V., and the following prospective participants, to the
extent that any one or more of the following may at the request
of Landlord become parties to the Participation Agreement and
the Pledge Agreement by executing supplements to those
agreements as therein provided:
Credit Suisse First Boston
Industrial Bank of Japan, Limited
Mellon Bank, N.A.
Societe Generale
The Toronto-Dominion Bank
The Bank of Nova Scotia
Union Bank of California
EXHIBIT 10.22
The transactions contemplated in this Purchase Agreement have been
made possible by the following banks, acting in the capacities indicated:
Banque Nationale de Paris, ABN Amro Bank N.V.,
as Administrative/Documentation as Syndication Agent and
Agent and Arranger Co-Arranger
$95,000,000
PURCHASE AGREEMENT
BETWEEN
BNP LEASING CORPORATION,
AS SELLER
AND
3COM CORPORATION,
AS PURCHASER
EFFECTIVE AS OF AUGUST 11, 1997
(Rolling Meadows Site)
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is made as of
August 11, 1997, by 3COM CORPORATION, a Delaware corporation
("3COM") and BNP LEASING CORPORATION, a Delaware corporation
("BNPLC").
R E C I T A L S
---------------
A. BNPLC is acquiring the land described in Exhibit A
attached hereto and the improvements and fixtures located
thereon, if any, and is leasing the same to 3COM pursuant to
that certain Lease Agreement dated as of the date hereof (as
from time to time supplemented, amended or restated, the
"Lease"). (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. BNPLC 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 BNPLC dated as of the date
hereof.
C. 3COM has requested an option to purchase the
Property, which BNPLC 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:
1. Definitions. As used herein, the terms "3COM",
"BNPLC", "Lease", "Leased Property", "Property", 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" means any third party designated
by 3COM to purchase the interest of BNPLC in the Property as
provided in Paragraph 2(a)(ii) below.
"Deposit Taker" shall have the meaning assigned to it in
the Pledge Agreement.
"Deposit Taker Losses" shall have the meaning assigned to
it in the Pledge Agreement.
"Designated Sale Date" means the earlier of:
(1) the effective date of any termination of
the Lease by 3COM pursuant to Paragraph 2 thereof;
(2) any date designated by BNPLC in a written
notice given by BNPLC to 3COM when an Event of Default by
3COM is continuing, provided the notice of the date so
designated is given by BNPLC at least thirty (30) days
before the date so designated; or
(3) the first Business Day in September, 2002.
"Direct Payments to Participants" means the amounts paid
or required to be paid directly to Participants on the
Designated Sale Date as provided in Section 6.2 of the Pledge
Agreement at the direction of and for 3COM by the collateral
agent appointed pursuant to the Pledge Agreement from all or
any part of the Collateral described therein.
"Fair Market Value" means the fair market value of the
Property on or about the Designated Sale 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
the construction of any Improvements which was commenced prior
to the Designated Sale Date; that all such Improvements are
self-sufficient in the sense that any easements or offsite
facilities needed for their use will be available at no
additional cost to the owner of the Improvements; 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 no conditions or
circumstances on or about the Property [such as the presence
of an endangered species] is discovered that will impede the
use or any development of the Property permitted by the Lease;
that any use or development of the Property as permitted by
the Lease will not be hindered or delayed because of the
limited availability of utilities or water; that without undue
cost or delay any purchaser paying fair market value for the
Property can obtain any necessary permits or licenses needed
to use the Property for the purposes permitted by the Lease;
and that 3COM has 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) as determined by an
independent MAI appraiser selected by BNPLC, which appraiser
must have five (5) years or more experience appraising similar
properties in Illinois.
"Qualified Deposit Taker" means one of the fifty largest
(measured by total assets) U.S. banks, or one of the one
hundred largest (measured by total assets) banks in the world,
with debt ratings of at least (i) A- (in the case of long term
debt) and A-1 (in the case of short term debt) or the
equivalent thereof by Standard and Poor's Corporation, and
(ii) A (in the case of long term debt) and P-1 (in the case of
short term debt) or the equivalent thereof by Moody's Investor
Service, Inc. The parties believe it improbable that the
ratings systems used by Standard and Poor's Corporation and by
Moody's Investor Service, Inc. will be discontinued or
changed, but if such ratings systems are discontinued or
changed, 3COM shall be entitled to select and use a comparable
ratings systems as a substitute for the S&P Rating or the
Moody Rating, as the case may be, for purposes of determining
the status of any bank as a Qualified Deposit Taker.
"Purchase Price" means an amount equal to Stipulated Loss
Value outstanding on the Designated Sale Date, plus all costs
and expenses (including appraisal costs, withholding taxes (if
any), documentary or transfer taxes, and reasonable Attorneys'
Fees, as defined in the Lease) incurred in connection with any
sale of the Property by BNPLC hereunder or in connection with
collecting sales proceeds due hereunder, less the aggregate
amounts (if any) of Direct Payments to Participants and
Deposit Taker Losses.
"Prohibited Encumbrance" means any lien or other title
defect encumbering the Property that is claimed by BNPLC
itself or lawfully claimed by a third party through or under
BNPLC, including any judgment lien lawfully filed against
BNPLC and including any tax lien assessed because of BNPLC'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 BNPLC, (ii) is claimed by, through or under
3COM or any of the Participants approved by 3COM (other than
Landlord's Parent), or (iii) exists because of any breach by
3COM of the Lease, because of anything done or not done by
BNPLC in an effort to satisfy subparagraph 9(b) of the Lease,
or because of anything done or not done by BNPLC at the
request of 3COM.
"Remarketing Notice" shall have the meaning assigned to
it in Paragraph 2(b)(1) below.
"Required Documents" means the special warranty deed and
other documents that BNPLC must tender pursuant to Paragraph 3
below.
"Shortage Amount" means any amount payable to BNPLC by
3COM, rather than by the Applicable Purchaser, pursuant to
clause 2(a)(ii) below.
2. 3COM's Options and Obligations on the Designated
Sale Date.
(a) Choices. On the Designated Sale Date 3COM shall
have the right and the obligation to either:
(i) purchase BNPLC'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
BNPLC's interest in the Property and in Escrowed
Proceeds, if any, for a net cash price not less than
the lesser of (a) the Fair Market Value of the
Property, (b) fifteen percent (15%) of Stipulated
Loss Value outstanding immediately prior to the
purchase or (c) the Purchase Price. If, however,
the Fair Market Value is less than fifteen percent
(15%) of Stipulated Loss Value and less than the
Purchase Price, BNPLC may elect to keep the Property
and any Escrowed Proceeds rather than sell to the
Applicable Purchaser, in which case 3COM shall pay
BNPLC an amount equal to (A) eighty-five percent
(85%) of Stipulated Loss Value, less (B) the sum of
(x) any Escrowed Proceeds then held and to be
retained by BNPLC, (y) any Direct Payments to
Participants and (z) any Deposit Taker Losses.
Unless BNPLC elects to keep the Property pursuant to
the preceding sentence, 3COM must make a
supplemental payment to BNPLC on the Designated Sale
Date equal to the excess (if any) of the Purchase
Price over the net cash price actually paid to BNPLC
on the Designated Sale Date by the Applicable
Purchaser for BNPLC'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 (1) eighty-five percent
(85%) of Stipulated Loss Value on the Designated
Sale Date, less (2) any Direct Payments to
Participants and any Deposit Taker Losses. Any
supplemental payment payable to BNPLC 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 BNPLC exceeds
the Purchase Price and all other sums that are then
due from 3COM to BNPLC, 3COM shall be entitled to
such excess.
If any amount payable to BNPLC pursuant to this subparagraph
2(a) is not actually paid to BNPLC on the Designated Sale
Date, 3COM shall pay interest on the past due amount computed
at the Default Rate from the Designated Sale Date. However,
3Com shall be entitled to a reduction of the interest required
by the preceding sentence equal to the Base Rent, if any, paid
by 3Com as provided in Paragraph 17 of the Lease for any
holdover period after the Designated Sale Date.
(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 BNPLC the opportunity to have the
Fair Market Value determined by an appraiser as provided
in the definition of Fair Market Value above before the
Designated Sale Date, 3COM must, unless 3COM concedes
that Fair Market Value will not be less than fifteen
percent (15%) of Stipulated Loss Value on the Designated
Sale Date, provide BNPLC with a Remarketing Notice.
"Remarketing Notice" means a notice given by 3COM to
BNPLC (and to each of the Participants) no earlier than
one hundred eighty (180) days before the Designated Sale
Date and no later than ninety (90) days before the
Designated Sale Date, specifying that 3COM does not
concede that the Fair Market Value is equal to or greater
than fifteen percent (15%) of the Stipulated Loss Value.
A Remarketing Notice will be required only if 3COM does
not concede that Fair Market Value will equal or exceed
fifteen percent (15%) of Stipulated Loss Value on the
Designated Sale Date. But if for any reason (including
but not limited to any acceleration of the Designated
Sale Date pursuant to clause (2) of the definition of
Designated Sale 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 fifteen percent (15%) of Stipulated Loss
Value on the Designated Sale Date.
(2) To give BNPLC the opportunity to prepare
the Required Documents before the Designated Sale 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 BNPLC given
at least seven (7) days prior to the Designated Sale
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 BNPLC'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 Sale Date and BNPLC shall have elected to keep the
Property on such Designated Sale Date in accordance with
clause (ii) of Paragraph 2(a); or
(2) 3COM shall have failed on a Designated Sale
Date to make or cause to be made all payments to BNPLC
required by this Agreement or by the Lease and such failure
shall have continued beyond the thirty (30) day period for
tender specified in the next sentence.
If BNPLC does not receive all payments due under the Lease and
all payments required hereunder on a Designated Sale Date,
3COM may nonetheless tender to BNPLC 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 Sale Date to the date of tender, and
if presented with such a tender within thirty (30) days after
the applicable Designated Sale Date, BNPLC 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 BNPLC. 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 BNPLC,
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
Sale Date 3COM must pay all amounts then due to BNPLC under
the Lease. BNPLC will remit any excess amounts due 3COM
pursuant to the last sentence of clause (ii) of Paragraph 2(a)
promptly after BNPLC's receipt of the same and in no event
later than thirty (30) days thereafter.
(e) Effect of Options on Subsequent Title Encumbrances.
It is the intent of BNPLC 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 BNPLC, including the
Participants (but not any unsatisfied obligations to BNPLC
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
BNPLC in the ordinary course of BNPLC's business. Anyone
accepting or taking any interest in the Property by or through
BNPLC 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 BNPLC notwithstanding any
prior conveyance or assignment by BNPLC, 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 BNPLC.
3. Terms of Conveyance Upon Purchase. Immediately
after receipt of all payments to BNPLC required pursuant to
the preceding Paragraph 2, BNPLC must, unless it is to keep
the Property as permitted by Paragraph 2(a)(ii), deliver all
Escrowed Proceeds, if any, and convey all of its right, title
and interest in the Property by special warranty 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 BNPLC or
that may become due thereafter because of any expense or
liability incurred by BNPLC resulting in whole or in part from
events or circumstances occurring before such conveyance. All
costs of such purchase and conveyance of every kind
whatsoever, both foreseen and unforeseen, shall be the
responsibility of the purchaser, and the form of special
warranty deed used to accomplish such conveyance shall be
substantially in the form attached as Exhibit B. With such
special warranty deed, BNPLC shall also tender to 3COM or the
Applicable Purchaser, as the case may be, the following, each
fully executed and, where appropriate, acknowledged on BNPLC's
behalf by an officer of BNPLC: (1) a Bill of Sale and
Assignment of Contract Rights and Intangible Assets in the
form attached as Exhibit D, (2) 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 BNPLC, (3) a Secretary's
Certificate in the form attached as Exhibit G, (4) a letter to
the title insurance company insuring title to the Property in
the form attached as Exhibit H, (5) a certificate concerning
tax withholding in the form attached as Exhibit I, and (6) to
the extent required by local or state taxing authorities, real
estate transfer tax declarations in standard form like those
executed by Seller in connection with the closing of its sale
of the Property to BNPLC under the Existing Contract.
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 BNPLC 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 BNPLC under this
Agreement, the Lease or any other agreement to which BNPLC is
a party, or (vii) any other cause, whether similar or
dissimilar to the foregoing, any existing or future law to the
contrary notwithstanding. It is the intention of the parties
hereto that the obligations of 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 BNPLC. 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 BNPLC. 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 BNPLC to tender a special warranty
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 BNPLC at the closing of
the sale hereunder, to (i) recover monetary damages
proximately caused by such failure of BNPLC if BNPLC does not
cure the failure within thirty (30) days after 3COM demands a
cure by written notice to BNPLC, or (ii) a decree compelling
performance of BNPLC's obligation to so tender a special
warranty 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 BNPLC is intended to be
exclusive of any other right or remedy BNPLC has with respect
to the Property, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given
hereunder or now or hereafter existing at law or in equity or
by statute. In addition to other remedies available under
this Agreement, 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 BNPLC of any payment hereunder with knowledge of the breach
of this Agreement shall not be deemed a waiver of such breach,
and no waiver by 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 BNPLC 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 BNPLC with respect to the Property.
Neither 3COM nor BNPLC 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 BNPLC, 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 BNPLC hereunder shall be paid to BNPLC
in immediately available funds by wire transfer to:
Federal Reserve Bank of San Francisco
Account: Banque Nationale de Paris
ABA #: 121027234
Reference: 3COM (Rolling Meadows Site)
or at such other place and in such other manner as
BNPLC may designate in a notice to 3COM (provided BNPLC
will not unreasonably designate a method of payment other
than wire transfer). Time is of the essence as to all
payments to BNPLC under this Agreement. Any payments
required to be made by BNPLC 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 BNPLC:
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 or William J. La
Herran
Telecopy: (415) 296-8954
And with a copy to:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Telecopy: (214) 969-1550
Address of 3COM:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Legal Dept. Mail Stop 1308
Telecopy: (408) 764-6434
With copies to:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Real Estate Dept. Mail Stop 1220
Telecopy: (408) 764-5718; and
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052
Attn: Treasury Dept. Mail Stop 1307
Telecopy: (408) 764-8403; and
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Jonathan E. Rattner, Esq.
Telecopy: (415) 328-3029
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 ILLINOIS.
15. Successors and Assigns. The terms, provisions,
covenants and conditions hereof shall be binding upon 3COM and
BNPLC and their respective permitted successors and assigns
and shall inure to the benefit of 3COM and BNPLC and all
permitted transferees, mortgagees, successors and assignees of
3COM and BNPLC with respect to the Property; provided, that
the rights of BNPLC hereunder shall not pass to 3COM or any
Applicable Purchaser or any subsequent owner claiming through
them. Prior to the Designated Sale Date BNPLC 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 BNPLC sells or
otherwise transfers the Property and assigns its rights under
this Agreement and the Lease pursuant to a Permitted Transfer,
then to the extent BNPLC's successor in interest confirms its
liability for the obligations imposed upon BNPLC by this
Agreement and the Lease on and subject to the express terms
set out herein and therein, BNPLC shall thereby be released
from any further obligations thereafter arising under this
Agreement and the Lease, and 3COM will look solely to each
successor in interest of BNPLC for performance of such
obligations.
16. WAIVER OF JURY TRIAL. BNPLC 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 BNPLC each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each
has already relied on the waiver in entering into this
Agreement and the other documents referred to herein, and that
each will continue to rely on the waiver in their related
future dealings. 3COM and BNPLC each further warrant and
represent that it has reviewed this waiver with its legal
counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LEASE, THIS AGREEMENT OR THE ENVIRONMENTAL
INDEMNITY. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
17. Security for 3COM's Obligations. 3COM's
obligations under this Agreement are secured by the Pledge
Agreement, reference to which is hereby made for a description
of the Collateral covered thereby and the rights and remedies
provided to BNPLC thereby. Although the collateral agent
appointed for BNPLC as provided in the Pledge Agreement 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
Shortage Amount or a measure of BNPLC'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, BNPLC may, from time to time, without prejudice to
any other remedy and without notice to 3COM, require the
collateral agent to 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 BNPLC
assigns its interest in the Property before the Designated
Sale Date, BNPLC may also assign BNPLC's interest in the
Collateral to the assignee.
18. Replacement of Participants Proposed by 3COM. So
long as no Event of Default has occurred and is continuing,
BNPLC shall not unreasonably withhold its approval for a
substitution under the Participation Agreement of a new
Participant proposed by 3COM for any Participant, the Deposit
Taker for whom has ceased to be a Qualified Deposit Taker;
provided, however, that (A) the proposed substitution can be
accomplished without a release or breach by BNPLC of its
rights and obligations under the Participation Agreement or
the "Underlying Documents" described therein (including this
Purchase Agreement); (B) the new Participant will agree (by
executing Supplements to the Participation Agreement and
Pledge Agreement as therein contemplated and by other
agreements as may be reasonably required by BNPLC and 3COM) to
become a party to the Participation Agreement and to the
Pledge Agreement, to designate a Qualified Deposit Taker as
the Deposit Taker for it under the Pledge Agreement and to
accept a Percentage under the Participation Agreement equal to
the Percentage of the Participant to be replaced; (C) the new
Participant (or 3COM) will provide the funds required to pay
the termination fee by Section 6.4 of the Participation
Agreement to accomplish the substitution; (D) 3COM (or the new
Participant) agrees in writing to indemnify and defend BNPLC
for any and all Losses incurred by BNPLC in connection with or
because of the substitution, including the cost of preparing
supplements to the Participation Agreement and the Pledge
Agreement and including any cost of defending and paying any
claim asserted by the Participant to be replaced because of
the substitution (but not including any liability of BNPLC to
such Participant for damages caused by BNPLC's bad faith or
gross negligence in the performance of BNPLC's obligations
under the Participation Agreement prior to the substitution);
and (E) the new Participant shall be a reputable financial
institution having a net worth of no less than seven and one
half percent (7.5%) of total assets and total assets of no
less than $10,000,000,000.00 (all according to then recent
audited financial statements). BNPLC shall attempt in good
faith to assist (and cause its Affiliate, Banque Nationale de
Paris, to attempt in good faith to assist) 3COM in identifying
a new Participant that 3COM may propose to substitute for an
existing Participant pursuant to this Paragraph, as 3COM may
reasonably request from time to time. However, in no event
shall BNPLC itself, or any of its Affiliates, be required to
take the Percentage of any Participant to be replaced.
19. Security for BNPLC's Obligations. To secure 3COM's
right to recover any damages caused by a breach of Paragraph 3
by BNPLC, including any such breach caused by a rejection or
termination of this Agreement in any bankruptcy or insolvency
proceeding instituted by or against BNPLC, as debtor, BNPLC
does hereby grant to 3COM a mortgage, lien and security
interest against all rights, title and interests of BNPLC from
time to time in and to the Property. 3COM may enforce such
mortgage, lien and security interest judicially after any such
breach by BNPLC, but not otherwise. 3COM waives any right it
has to seek a deficiency judgement against BNPLC in any action
brought for a judicial foreclosure of such mortgage, lien and
security interest, and in connection therewith, BNPLC hereby
acknowledges that it shall have no right of redemption
following any such judicial foreclosure. Contemporaneously
with the execution of this Agreement, 3COM and BNPLC will
execute a memorandum of this Agreement which is in recordable
form and which specifically references the mortgage, lien and
security interest granted in this Paragraph, and 3COM shall be
entitled to record such memorandum at any time prior to the
Designated Sale Date.
20. Not a Partnership, Etc. NOTHING IN THIS PURCHASE
AGREEMENT IS INTENDED TO BE OR TO CREATE ANY PARTNERSHIP,
JOINT VENTURE, OR OTHER JOINT ENTERPRISE BETWEEN BNPLC AND
3COM. NEITHER THE EXECUTION OF THIS PURCHASE AGREEMENT NOR
THE ADMINISTRATION OF THIS PURCHASE AGREEMENT OR OTHER
DOCUMENTS REFERENCED HEREIN BY BNPLC, NOR ANY OTHER RIGHT,
DUTY OR OBLIGATION OF BNPLC UNDER OR PURSUANT TO THIS PURCHASE
AGREEMENT OR SUCH DOCUMENTS IS INTENDED TO BE OR TO CREATE ANY
FIDUCIARY OBLIGATIONS OF BNPLC TO 3COM.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this
Purchase Agreement as of August 11, 1997.
"BNPLC"
BNP LEASING CORPORATION, a Delaware corporation
By: /s/ Lloyd G. Cox
----------------------------
Lloyd G. Cox, Vice President
[Continuation of signature pages to Purchase Agreement dated
to be effective August 11, 1997]
"3COM"
3COM CORPORATION, a Delaware corporation
By: /s/ Mark D. Michael
---------------------------
Mark D. Michael, SVP,
General Counsel & Secretary
Exhibit A
Legal Description
PARCEL 1:
Lot 1 in 3800 Golf Road Subdivision of part of
Fractional Section 7, Township 41 North, Range 11, East
of the Third Principal Meridian, according to the plat
recorded January 31, 1996 as Document No. 96080514, in
Cook County, Illinois.
PARCEL 2:
Easement for the benefit of Parcel 1 aforesaid, to
go upon Lot 2 in 3800 Golf Road Subdivision aforesaid,
for the purpose of performing work of construction and
maintenance of Berm if such work is not timely performed
by the owner of said Lot 2, as granted in paragraph 9.4
of Article 9 of the Declaration and Grant of Easements,
Covenants and Restrictions executed by AT&T Corp., a New
York corporation, dated January 26, 1996 and recorded
February 9, 1996 as Document No. 96110279, in Cook
County, Illinois.
Exhibit B
Prepared by:
Clint Shouse
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
After Recording Return to:
________________________________
________________________________
________________________________
Attention:______________________
Above Space for Recorder's Use
P.I.N. Nos.: 08-07-401-006-0000; 08-07-402-010-0000;
08-07-402-013-0000; 08-07-403-004-0000;
08-07-403-009-0000
Property Address: 3800 Golf Road, Rolling Meadows, Illinois
SPECIAL WARRANTY DEED
THIS INDENTURE, made this _________ day of __________,
1997, between BNP LEASING CORPORATION, a Delaware corporation
("Grantor"), and [3COM OR THE APPLICABLE PURCHASER, AS THE
CASE MAY BE] having an office at ________________________
("Grantee"), WITNESSETH, that the Grantor for and in
consideration of the sum of [INSERT AMOUNT] and other good and
valuable consideration in hand paid to Grantor by Grantee, the
receipt and sufficiency of which are hereby acknowledged, and
by these presents does REMISE, RELEASE, ALIEN, AND CONVEY unto
Grantee, FOREVER, all of the real estate, situated in the
County of Cook and State of Illinois known and described as
3800 Golf Road, Rolling Meadows, Illinois and legally
described in Annex A attached hereto and made a part hereof
(the "Property"), together with any buildings and other
improvements situated thereon, any fixtures and other property
affixed thereto and all right, title, and interest of Grantor
in and to adjacent streets, alleys, and rights-of-way;
provided, however, this conveyance is made by Grantor and
accepted by Grantee subject to the following, as well as the
Permitted Encumbrances described on Annex B (collectively, the
"Permitted Encumbrances"):
1. Real Estate Taxes not yet due and payable;
2. General or Special Assessments due and
payable after the date hereof; and
3. Encroachments, variations in area or in
measurements, boundary line disputes, roadways and
other matters not of record which would be disclosed
by a survey and inspection of the property conveyed
hereby.
TO HAVE AND TO HOLD the Property, together with all and
singular the rights and appurtenances thereto belonging unto
Grantee, its successors and assigns, forever, and Grantor does
hereby bind Grantor and Grantor's successors and assigns to
WARRANT AND FOREVER defend all and singular the said premises
unto Grantee, its successors and assigns against every person
whomsoever lawfully claiming, or to claim the same, or any
part thereof by, through or under Grantor, but not otherwise;
subject, however, to the Permitted Encumbrances. Except as
expressly set forth in the preceding sentence, Grantor makes
no warranty of title, express or implied.
IN WITNESS WHEREOF, said Grantor has caused its name to
be signed to these presents by its ___________, as of the day
and year first above written.
BNP LEASING CORPORATION
a Delaware corporation
By:________________________________
Its:_______________________________
STATE OF TEXAS )
) SS
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this
__________ day of ______________ , ___________, by __________________,
________________ of BNP Leasing Corporation, a Delaware corporation,
on behalf of the corporation.
______________________________________
NOTARY PUBLIC
My Commission Expires on _____________________.
MAIL SUBSEQUENT TAX BILLS TO:
________________________________
________________________________
________________________________
________________________________
Annex A
LEGAL DESCRIPTION
PARCEL 1:
Lot 1 in 3800 Golf Road Subdivision of part of
Fractional Section 7, Township 41 North, Range 11, East
of the Third Principal Meridian, according to the plat
recorded January 31, 1996 as Document No. 96080514, in
Cook County, Illinois.
PARCEL 2:
Easement for the benefit of Parcel 1 aforesaid, to
go upon Lot 2 in 3800 Golf Road Subdivision aforesaid,
for the purpose of performing work of construction and
maintenance of Berm if such work is not timely performed
by the owner of said Lot 2, as granted in paragraph 9.4
of Article 9 of the Declaration and Grant of Easements,
Covenants and Restrictions executed by AT&T Corp., a New
York corporation, dated January 26, 1996 and recorded
February 9, 1996 as Document No. 96110279, in Cook
County, Illinois.
Annex B
Permitted Encumbrances
[NOTE: TO THE EXTENT THAT SPECIFIC ENCUMBRANCES (OTHER THAN
"PROHIBITED LIENS") ARE IDENTIFIED IN ADDITION TO THOSE
DESCRIBED BELOW, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO
THE LIST BELOW AND THIS "NOTE" WILL BE DELETED BEFORE THIS
DEED IS ACTUALLY EXECUTED AND DELIVERED BY BNPLC. SUCH
ADDITIONAL ENCUMBRANCES WOULD INCLUDE ANY NEW ENCUMBRANCES
APPROVED BY BNPLC AS "PERMITTED ENCUMBRANCES" FROM TIME TO
TIME BECAUSE OF 3COM'S REQUEST FOR BNPLC'S CONSENT OR APPROVAL
TO AN ADJUSTMENT AS PROVIDED IN THE LEASE.]
This conveyance is subject to any encumbrances that do
not constitute "Prohibited Encumbrances" (as defined in the
Purchase Agreement pursuant to which this Deed is being
delivered), including county and city taxes for the Fiscal
Year 1997, a lien not yet due or payable, and including the
following matters to the extent the same are still valid and
in force:
1. Declaration of Restrictions dated July 7, 1965 and
recorded November 8, 1965 as Document No. 19654849 and
amended by Document No. 22518743 made by Chicago Title
and Trust Company, an Illinois corporation, as Trustee
under Trust Agreement dated June 15, 1960 known as Trust
No. 42370, American National Bank of Chicago, a National
Banking Association, as Trustee under Trust Agreement
dated December 17, 1958 and known as Trust No. 14073 and
Western Electric Co., Inc., New York, relating to
construction, materials, location, area, height and
approval of plans of buildings to be erected on the land
and other property; specific uses of the land; lot size,
weed control, landscaping; signs and control of junk and
debris.
Note: the rights of Chicago Title and Trust Company
as Trustee under Trust Agreement dated June 15, 1960 and
known as Trust No. 42370 were assigned to Chemplex
Company by Assignment and Notice dated March 7, 1969 and
recorded April 30, 1969 as Document No. 20826795.
Note: said instrument contains no provision for a
forfeiture of or reversion of title in case of breach of
condition.
2. The Land falls in Drainage District No. 1 of the
Township of Elk Grove, Cook County, Illinois.
3. Covenants and conditions contained in the Deed dated
March 4, 1970 and recorded July 16, 1971 as Document No.
21549676 from the Corporation of Illinois, for the use of
the Department of Public Works and Buildings to Western
Electric Company, Inc., a New York corporation, that the
Land shall not be used as a junkyard of for advertising
of any kind except "on premises signs" as defined in the
Rules and Regulations for Outdoor Advertising on
Interstate Highways promulgated by the Department of
Public Works and Buildings, State of Illinois, revised
January 3, 1966, as amended: and there is no access to,
from or over the Land to and from the public highway
lying adjoining to said Land and known as F.A.I. Route 90
previously declared a freeway nor will access be
permitted in the future to, from or over the Land to and
from said public highway, which instrument does not
contain a reverter clause.
(Affects that part of the Land lying westerly of a
line 400 feet easterly of the center line of Rohlwing
Road)
4. Grant from Western Electric Company, Inc., a New York
corporation, to Northern Illinois Gas Company, an
Illinois corporation, contained in the Easement Agreement
dated July 25, 1972 and recorded August 4, 1972 as
Document No. 22002493, of a nonexclusive perpetual right
of ingress and egress to Northern's Dubuque right-of-way
line together with the right to use as working space in
connection with construction and maintenance of existing
and future pipelines, now located or to be constructed on
Northern's Dubuque right-of-way, in, under, over and
across Western's parcel described as follows, as shown on
Plat of Survey dated December 27, 1968 prepared by Albert
C. Schmitt, Registered Land Surveyor, marked Exhibit A
and attached thereto; and the covenants and conditions
therein contained.
(Affects that part of Section 7, Township 41 North,
Range 11 East of the Third Principal Meridian, in Cook
County, Illinois. Bounded and described as follows:
commencing at the concrete right-of-way monument at the
intersection of the north line of the south 1/2 of the
south 1/2 of said Section 7, with the easterly line of the
Illinois Toll Road; thence North 86 29' 43" East along
said north line a distance of 326.18 feet to an iron
stake for a point of beginning; thence North 62 21' 31"
East along a straight line a distance of 424.07 feet to a
point; thence South 32 29' 31" West along a straight
line a distance of 214.33 feet to a point on said north
line of the south 1/2 of the south 1/2 of Section 7; thence
South 86 29' 43" West along said north line a distance
of 261.02 feet to the point of beginning)
(Affects Westerly part of the Land)
5. Terms, provisions, conditions and limitations of the
Declaration of Grant of Easements, Covenants and
Restrictions for ingress and egress and for public
utilities and drainage, etc., recorded February 9, 1996
as Document No. 96110279.
6. Terms, provisions, conditions and limitations of the
Declaration of Restrictive Covenant made by AT&T
Technologies, Inc., recorded March 18, 1996 as Document
No. 88113916.
7. 20 foot water pipeline easement as disclosed by
Document No. 27362784 also as depicted on Plat of 3800
Golf Road Subdivision recorded January 31, 1996 as
Document No. 96080514.
8. Terms, provisions, and conditions relating to the
easement described as Parcel 2, contained in the
instrument creating said easement.
9. Public utilities and drainage easement over the
Easterly line of Lot 1 as shown on Plat of 3800 Golf Road
Subdivision recorded January 31, 1996 as Document No.
96080514.
10. The Plat of Subdivision recorded January 31, 1996 as
Document No. 96080514 includes a certification by the
surveyor that the Land is located within a Special Flood
Area as identified by the Federal Emergency Management
Agency.
EXHIBIT C
[Intentionally deleted.]
Exhibit D
BILL OF SALE, ASSIGNMENT OF CONTRACT
RIGHTS AND INTANGIBLE ASSETS
Reference is made to that certain Agreement for Purchase
and Sale of Real Estate dated June 20, 1997 (the "Agreement")
between 3Com Corporation, a Delaware Corporation, and 3800
Golf Company, L.L.C. ("Seller"), pursuant to which 3Com
Corporation named BNP LEASING CORPORATION ("Assignor") as its
designee and Seller 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 Seller 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 August 11, 1997 (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: ______________________ , _____.
ASSIGNOR:
BNP LEASING CORPORATION
a Delaware corporation
By:______________________________________
Its:_____________________________________
ASSIGNEE:
[3COM, OR THE APPLICABLE PURCHASER], a
_________ corporation
By:_____________________________________
Its:____________________________________
Annex A
Legal Description
PARCEL 1:
Lot 1 in 3800 Golf Road Subdivision of part of
Fractional Section 7, Township 41 North, Range 11, East
of the Third Principal Meridian, according to the plat
recorded January 31, 1996 as Document No. 96080514, in
Cook County, Illinois.
PARCEL 2:
Easement for the benefit of Parcel 1 aforesaid, to
go upon Lot 2 in 3800 Golf Road Subdivision aforesaid,
for the purpose of performing work of construction and
maintenance of Berm if such work is not timely performed
by the owner of said Lot 2, as granted in paragraph 9.4
of Article 9 of the Declaration and Grant of Easements,
Covenants and Restrictions executed by AT&T Corp., a New
York corporation, dated January 26, 1996 and recorded
February 9, 1996 as Document No. 96110279, in Cook
County, Illinois.
Exhibit E
Acknowledgment of Disclaimer of Representations and Warranties
THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND
WARRANTIES (this "Certificate") is made as of
___________________, ____, 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 ("BNPLC"), 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 BNPLC makes no representations or warranties of any
nature or kind, whether statutory, express or implied, with
respect to environmental matters or the physical condition of
the Subject Property, and Grantee, by acceptance of the
Conveyancing Documents, accepts the Subject Property "AS IS,"
"WHERE IS," "WITH ALL FAULTS" and without any such
representation or warranty by Grantor as to environmental
matters, the physical condition of the Subject Property,
compliance with subdivision or platting requirements or
construction of any improvements. Without limiting the
generality of the foregoing, Grantee hereby further
acknowledges and agrees that warranties of merchantability and
fitness for a particular purpose are excluded from the
transaction contemplated by the Conveyancing Documents, as are
any warranties arising from a course of dealing or usage of
trade. Grantee hereby assumes all risk and liability (and
agrees that BNPLC shall not be liable for any special, direct,
indirect, consequential, or other damages resulting or arising
from or relating to the ownership, use, condition, location,
maintenance, repair, or operation of the Subject Property,
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 BNPLC,
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 BNPLC to act when the duty to act would not have
been imposed but for BNPLC's status as owner of the Subject
Property or as a party to the transactions pursuant to which
BNPLC 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 BNPLC or
participation or facilitation in any manner, directly or
indirectly, of the Applicable Transactions, or (3) the
exercise in a lawful manner by BNPLC (or any party lawfully
claiming through or under BNPLC) 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
BNPLC is entitled to rely and is relying on this Certificate.
EXECUTED as of ________________, ____.
_________________________________
_____________________, a ________
By:______________________________
Name:_________________________
Title:________________________
Exhibit F
[Intentionally deleted.]
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. 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
____________, ________.
______________________________ [signature]
CORPORATE RESOLUTIONS OF
BNP LEASING CORPORATION
WHEREAS, pursuant to that certain Purchase Agreement
(herein called the "Purchase Agreement") dated as of
August 11, 1997, 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 Rolling Meadows, Illinois, 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.
Exhibit H
BNP LEASING CORPORATION
717 N. HARWOOD
SUITE 2630
DALLAS, TEXAS 75201
____________, ______
[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.
To inform [3COM or the Applicable Purchaser] (the
"Transferee") that withholding of tax is not required upon the
disposition of a 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 ______________
__________________________________________.
The Seller understands that this certification may be
disclosed to the Internal Revenue Service 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: ___________, ____.
By:________________________________
Name:___________________________
Title:__________________________
EXHIBIT 10.23
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the
"Amendment"), dated as of August 28, 1997, is entered into by
and among 3COM CORPORATION (the "Company"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for itself
and the Banks (the "Agent"), and the several financial
institutions party to the Credit Agreement (collectively, the
"Banks").
RECITALS
A. The Company, Banks, and Agent are parties to a Credit
Agreement dated as of December 20, 1996 (the "Credit
Agreement"), pursuant to which the Agent and the Banks have
extended certain credit facilities to the Company and its
Subsidiaries.
B. The Company has requested that the Banks agree to
certain amendments of the Credit Agreement.
C. The Banks are willing to amend the Credit Agreement,
subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings, if any,
assigned to them in the Credit Agreement.
2. Amendments to Credit Agreement.
(a) Section 1.01 of the Credit Agreement shall be
amended at the defined term "Applicable Rate" by amending and
restating such defined term in its entirety as follows:
"'Applicable Rate' means, for any day, with
respect to any Offshore Rate Loan or Base Rate Loan
and the commitment and letter of credit fees payable
hereunder, as the case may be, the lower of the
applicable rates per annum set forth in the chart
below under the caption "Base Rate Margin,"
"Offshore Rate Margin," "Commitment Fee,"
"Performance Standby Letter of Credit Fee," and
"Financial Standby Letter of Credit Fee," as the
case may be, based upon the respective Performance
Levels in effect under Test I or Test II; provided,
however, that Performance Level 1and Performance
Level 2 shall apply only if both Test I and Test II
are each met for such Performance Levels.
Performance Level 1
- -------------------
Test I
Adjusted Leverage Ratio
< 0.10 to 1.00 and
Test II
Rating of A or A2 or better
Interest Margin
Base Rate Margin
0.00000%
Interest Margin
Offshore Rate Margin
0.20000%
Commitment Fee
0.06500%
Performance Standby Letter of Credit Fee
0.10000%
Financial Standby Letter of Credit Fee
0.20000%
Performance Level 2
- -------------------
Test I
Adjusted Leverage Ratio
< 0.10 to 1.00 and
Test II
Rating of A- or A3
Interest Margin
Base Rate Margin
0.00000%
Interest Margin
Offshore Rate Margin
0.22500%
Commitment Fee
0.07500%
Performance Standby Letter of Credit Fee
0.11250%
Financial Standby Letter of Credit Fee
0.22500%
Performance Level 3
- -------------------
Test I
Adjusted Leverage Ratio
< 0.10 to 1.00 or
Test II
Rating of BBB+ or Baa1
Interest Margin
Base Rate Margin
0.00000%
Interest Margin
Offshore Rate Margin
0.25000%
Commitment Fee
0.08500%
Performance Standby Letter of Credit Fee
0.12500%
Financial Standby Letter of Credit Fee
0.25000%
Performance Level 4
- -------------------
Test I
Adjusted Leverage Ratio
< 0.25 to 1.00 but >= .10 to 1.00 or
Test II
Rating of BBB or Baa2
Interest Margin
Base Rate Margin
0.00000%
Interest Margin
Offshore Rate Margin
0.31250%
Commitment Fee
0.10000%
Performance Standby Letter of Credit Fee
0.15625%
Financial Standby Letter of Credit Fee
0.31250%
Performance Level 5
- -------------------
Test I
Adjusted Leverage Ratio
< 0.30 to 1.00 but >= 0.25 to 1.00 or
Test II
Rating of BBB- or Baa3
Interest Margin
Base Rate Margin
0.00000%
Interest Margin
Offshore Rate Margin
0.37500%
Commitment Fee
0.12500%
Performance Standby Letter of Credit Fee
0.18750%
Financial Standby Letter of Credit Fee
0.37500%
Performance Level 6
- -------------------
Test I
Adjusted Leverage Ratio
>= 0.30 to 1.00 or
Test II
Rating of BB+ or Ba1 or lower
Interest Margin
Base Rate Margin
0.00000%
Interest Margin
Offshore Rate Margin
0.50000%
Commitment Fee
0.17500%
Performance Standby Letter of Credit Fee
0.25000%
Financial Standby Letter of Credit Fee
0.50000%
The applicable Performance Level under Test I
as of any day shall be determined by reference to
the Adjusted Leverage Ratio as of the last day of
the fiscal quarter most recently ended on or prior
to such day, and any change in the Test I
Performance Level shall become effective upon the
delivery to the Agent of the Compliance Certificate
required to accompany the financial statements
delivered pursuant to Section 7.01 upon which such
change is based, which Compliance Certificate shall
set forth in reasonable detail the calculation of
the Adjusted Leverage Ratio. In the event the
financial statements required to be delivered under
Section 7.01 (or the Compliance Certificate required
to accompany such statements) are not delivered on
or prior to the date due, the Adjusted Leverage
Ratio shall be deemed to be at Performance Level 6
for purposes of Test I during the period from the
applicable due date to the date when such financial
statements and the accompanying Compliance
Certificate are delivered.
The applicable Performance Level under Test II
as of any day shall be determined by reference to
the Ratings by Moody's and S&P, respectively,
applicable on such day to the Index Debt. For
purposes of determining such Performance Level,
(a) if either Moody's or S&P shall not have in
effect a Rating for the Index Debt, then the
Applicable Rates shall be determined solely with
reference to the available Rating; (b) if the
Ratings established or deemed to have been
established by Moody's and S&P for the Index Debt
shall indicate different Performance Levels, the
Applicable Rate shall be based on the higher of the
two Ratings; and (c) if the Rating established or
deemed to have been established by Moody's or S&P
for the Index Debt shall be changed (other than as a
result of a change in the rating system of Moody's
or S&P), such change shall be effective as of the
date on which it is first announced by the
applicable rating agency. If the rating system of
Moody's or S&P shall change, or if both such rating
agencies shall cease to be in the business of rating
corporate debt obligations, the Company and the
Banks shall negotiate in good faith to amend this
definition to reflect such changed rating system or
the unavailability of Ratings from such rating
agencies and, pending the effectiveness of any such
amendment, the Applicable Rate shall be determined
at any time solely by reference to the Test I
Performance Level in effect at such time.
Each change in the Applicable Rate shall apply
during the period commencing on the effective date
of such change and ending on the date immediately
preceding the effective date of the next such
change. Notwithstanding the foregoing, at any time
prior to the time the first delivery of financial
statements under Section 7.01 after the Effective
Date, as defined in the First Amendment to Credit
Agreement among the Company, the Agent and the
Banks, the Applicable Rate shall be determined as if
the Adjusted Leverage Ratio were at Performance
Level 4."
(b) Section 8.16 of the Credit Agreement shall be
amended and restated in its entirety so as to read as follows:
"8.16 Tangible Net Worth. The Company shall not
permit its Tangible Net Worth, on a consolidated
basis, at the end of any fiscal quarter to be less
than the sum of (i) $1,800,000,000, plus (ii) 50% of
the Company's consolidated net income (but without
deducting any net losses for any period) earned in
each fiscal quarter, starting with the quarter ending
August 31, 1997, and ending with the quarter which,
at such time, is the most recently ended fiscal
quarter, less (iii) (without duplication) 100% of
restructuring and acquisition charges related to
Acquisitions permitted hereunder (if they are
expensed in the same fiscal quarter as such
Acquisition is completed) from and after the Closing
Date."
(c) Schedule 2 to the Compliance Certificate
shall be amended and restated in its entirety so as to read
as set forth in Schedule 2 attached hereto.
3. Representations and Warranties. The Company hereby
represents and warrants to the Agent and the Banks as follows:
(a) No Default or Event of Default has occurred and
is continuing.
(b) The execution, delivery and performance by the
Company of this Amendment have been duly authorized by all
necessary corporate and other action and do not and will not
require any registration with, consent or approval of, notice
to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable. The
Credit Agreement as amended by this Amendment constitutes the
legal, valid and binding obligations of the Company,
enforceable against it in accordance with its respective
terms, without defense, counterclaim or offset.
(c) All representations and warranties of the
Company contained in the Credit Agreement, as amended hereby,
are true and correct.
(d) The Company is entering into this Amendment on
the basis of its own investigation and for its own reasons,
without reliance upon the Agent, the Banks or any other
Person.
4. Effective Date. This Amendment will become
effective as of the date first above written (the "Effective
Date"), provided that the Agent has received from the Company
and each of the Banks a duly executed original (or, if elected
by the Agent, an executed facsimile copy) of this Amendment.
5. Reservation of Rights. The Company acknowledges and
agrees that the execution and delivery by the Agent and the
Banks of this Amendment shall not be deemed to create a course
of dealing or otherwise obligate the Agent or the Banks to
execute similar amendments under the same or similar
circumstances in the future.
6. Miscellaneous.
(a) Except as herein expressly amended, all terms,
covenants and provisions of the Credit Agreement are and shall
remain in full force and effect and all references therein to
such Credit Agreement shall henceforth refer to the Credit
Agreement as amended by this Amendment. This Amendment shall
be deemed incorporated into, and a part of, the Credit
Agreement.
(b) This Amendment shall be binding upon and inure
to the benefit of the parties hereto and thereto and their
respective successors and assigns. No third party
beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by and
construed in accordance with the law of the State of
California.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but
all such counterparts together shall constitute but one and
the same instrument. Each of the parties hereto understands
and agrees that this document (and any other document required
herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by
facsimile transmission to be followed promptly by mailing of a
hard copy original, and that receipt by the Agent of a
facsimile transmitted document purportedly bearing the
signature of a Bank or the Company shall bind such Bank or the
Company, respectively, with the same force and effect as the
delivery of a hard copy original. Any failure by the Agent to
receive the hard copy executed original of such document shall
not diminish the binding effect of receipt of the facsimile
transmitted executed original of such document of the party
whose hard copy page was not received by the Agent.
(e) This Amendment, together with the Credit
Agreement, contains the entire and exclusive agreement of the
parties hereto with reference to the matters discussed herein
and therein. This Amendment supersedes all prior drafts and
communications with respect thereto. This Amendment may not
be amended except in accordance with the provisions of
Section 11.01 of the Credit Agreement.
(f) If any term or provision of this Amendment
shall be deemed prohibited by or invalid under any applicable
law, such provision shall be invalidated without affecting the
remaining provisions of this Amendment or the Credit
Agreement, respectively.
(g) The Company covenants to pay to or reimburse
the Agent, upon demand, for all costs and expenses (including
reasonable Attorney Costs) incurred in connection with the
development, preparation, negotiation, execution and delivery
of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Amendment as of the date first above
written.
3COM CORPORATION
By: /s/ Mark D. Michael
----------------------------
Mark D. Michael
Title: SVP, General Counsel & Secretary
By:
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Agent
By: /s/ Roger J. Fleischmann
-------------------------------
Roger J. Fleischmann
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as a Bank
By: /s/ Roger J. Fleischmann
-------------------------------
Roger J. Fleischmann
Title: Vice President
ALLIED IRISH BANKS, p.l.c.
By: /s/ Martin Slattery
----------------------------
Martin Slattery
Title: Senior Manager
CITICORP USA, INC.
By: /s/ Steven R. Victorin
----------------------------
Steven R. Victorin
Title: Attorney-in-Fact
MARINE MIDLAND BANK
By: /s/ William Holland
----------------------------
William Holland
Title: Vice President
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Kathryn Sayko-Yanes
----------------------------
Kathryn Sayko-Yanes
Title: Vice President
THE CHASE MANHATTAN BANK
By: /s/ Joan F. Garvin
----------------------------
Joan F. Garvin
Title: Managing Director
Date: ,
For the fiscal quarter/year
ended ,
Schedule 2
to the Compliance Certificate
($ in 000's) 1/
Actual Required/Permitted
1. Section 8.15 Adjusted Leverage Ratio.
The ratio of:
A. Adjusted Total Debt:
the difference of:
(i) Indebtedness 2/
plus _______
(ii) Guaranty Obligations 2/
plus _______
(iii) Synthetic Lease
Obligations
plus _______
(iv) L/C Obligations
less _______
(v) Existing Subordinated
Debt _______
(i)+(ii)+(iii)+(iv)-(v) = _______
B. Total Capital:
the sum of:
(i) Adjusted Total Debt
(from A above) _______
plus
(ii) Existing Subordinated
Debt _______
plus
(iii) Shareholders' Equity _______
(i)+(ii)+(iii) = _______
A
_____ = _______ Not greater than 0.35
B
2. Section 8.16 Tangible Net Worth.
Tangible Net Worth Not to be less than the sum of:
The difference of: A. $1,800,000,000
A. gross book value of assets plus
less ____ B. 50% of consolidated net
income, commencing with
B. goodwill, licensing the fiscal quarter ending
agreements, patents, 8/31/97 and thereafter (not
trademarks, trade names, reduced by any quarterly
organization expense, loss) ____
treasury stock, unamortized
debt discount and premium, less
deferred charges, and other
like intangibles ____ C. (without duplication) all
restructuring and
less acquisition charges
related to permitted
C. applicable reserves ____ Acquisitions and
expended in same fiscal
less quarter as related
Acquisitions from and
D. liabilities (including after the Closing Date ____
accrued and deferred income
taxes and the Existing A + B - C = ____
Subordinated Debt) _______
= A - B - C - D = _______
3. Company to report on compliance
with Sections 8.01(j), 8.01(k),
8.01(q), 8.01(r), 8.02(c),
8.02(d), 8.02(e), 8.03, 8.04(e)
and 8.10(f) in such reasonable
detail as the Agent, at the
request of any Bank, may request
from time to time
____________
1/ All items determined on a consolidated basis and in accordance with
GAAP, consistently applied.
2/ See definition of Adjusted Total Debt for certain items excluded.
Exhibit 18.1
LETTER RE CHANGE IN ACCOUNTING PRINCIPLE
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California
Dear Sirs/Madams:
At your request, we have read the description included in your
Quarterly Report on Form 10-Q to the Securities and Exchange
Commission for the quarter ended August 31, 1997, of the facts
relating to the Company's adoption during the quarter of a
different fixed asset capitalization policy. We believe, on
the basis of the facts so set forth and other information
furnished to us by appropriate officials of the Company, that
the accounting change described in your Form 10-Q is to an
alternative accounting principle that is preferable under the
circumstances.
We have not audited any consolidated financial statements of
3Com Corporation and its consolidated subsidiaries as of any
date or for any period subsequent to May 31, 1997. Therefore,
we are unable to express, and we do not express, an opinion on
the facts set forth in the above-mentioned Form 10-Q, on the
related information furnished to us by officials of the
Company, or on the financial position, results of operations,
or cash flows of 3Com Corporation and its consolidated
subsidiaries as of any date or for any period subsequent May
31, 1997.
Yours truly,
/s/Deloitte & Touche LLP
San Jose, California
October 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
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